KIRTSAENG v. JOHN WILEY & SONS, INC.

NOTICE: This opinion is subject to formal revision before publication in the preliminary print of the United States Reports. Readers are requested to notify the Reporter of Decisions, Supreme Court of the United States, Washington, D. C. 20543, of any typographical or other formal errors, in order that corrections may be made before the preliminary print goes to press.

SUPREME COURT OF THE UNITED STATES

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No. 11–697

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SUPAP KIRTSAENG, dba BLUECHRISTINE99, PETITIONER v. JOHN WILEY & SONS, INC.

on writ of certiorari to the united states court of appeals for the second circuit

[March 19, 2013]

Justice Breyer delivered the opinion of the Court.

Section 106 of the Copyright Act grants “the owner of copyright under this title” certain “exclusive rights,” including the right “to distribute copies . . . of the copyrighted work to the public by sale or other transfer of ownership.” 17 U. S. C. §106(3). These rights are qualified, however, by the application of various limitations set forth in the next several sections of the Act, §§107 through 122. Those sections, typically entitled “Limitations on exclusive rights,” include, for example, the principle of “fair use” (§107), permission for limited library archival reproduction, (§108), and the doctrine at issue here, the “first sale” doctrine (§109).

Section 109(a) sets forth the “first sale” doctrine as follows:

“Notwithstanding the provisions of section 106(3) [the section that grants the owner exclusive distribution rights], the owner of a particular copy or phonorecord lawfully made under this title . . . is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord.” (Emphasis added.)

Thus, even though §106(3) forbids distribution of a copy of, say, the copyrighted novel Herzog without the copyright owner’s permission, §109(a) adds that, once a copy of Herzog has been lawfully sold (or its ownership otherwise lawfully transferred), the buyer of that copy and subsequent owners are free to dispose of it as they wish. In copyright jargon, the “first sale” has “exhausted” the copyright owner’s §106(3) exclusive distribution right.

What, however, if the copy of Herzog was printed abroad and then initially sold with the copyright owner’s permission? Does the “first sale” doctrine still apply? Is the buyer, like the buyer of a domestically manufactured copy, free to bring the copy into the United States and dispose of it as he or she wishes?

To put the matter technically, an “importation” provision, §602(a)(1), says that

“[i]mportation into the United States, without the authority of the owner of copyright under this title, of copies . . . of a work that have been acquired outside the United States is an infringement of the exclusive right to distribute copies . . . under section 106 . . . .” 17 U. S. C. §602(a)(1) (2006 ed., Supp. V) (emphasis added).

Thus §602(a)(1) makes clear that importing a copy without permission violates the owner’s exclusive distribution right. But in doing so, §602(a)(1) refers explicitly to the §106(3) exclusive distribution right. As we have just said, §106 is by its terms “[s]ubject to” the various doctrines and principles contained in §§107 through 122, including §109(a)’s “first sale” limitation. Do those same modifications apply—in particular, does the “first sale” modification apply—when considering whether §602(a)(1) prohibits importing a copy?

In Quality King Distributors, Inc. v. L’anza Research Int’l, Inc., 523 U. S. 135, 145 (1998) , we held that §602(a)(1)’s reference to §106(3)’s exclusive distribution right incorporates the later subsections’ limitations, including, in particular, the “first sale” doctrine of §109. Thus, it might seem that, §602(a)(1) notwithstanding, one who buys a copy abroad can freely import that copy into the United States and dispose of it, just as he could had he bought the copy in the United States.

But Quality King considered an instance in which the copy, though purchased abroad, was initially manufactured in the United States (and then sent abroad and sold). This case is like Quality King but for one important fact. The copies at issue here were manufactured abroad. That fact is important because §109(a) says that the “first sale” doctrine applies to “a particular copy or phonorecord lawfully made under this title.” And we must decide here whether the five words, “lawfully made under this title,” make a critical legal difference.

Putting section numbers to the side, we ask whether the “first sale” doctrine applies to protect a buyer or other lawful owner of a copy (of a copyrighted work) lawfully manufactured abroad. Can that buyer bring that copy into the United States (and sell it or give it away) without obtaining permission to do so from the copyright owner? Can, for example, someone who purchases, say at a used bookstore, a book printed abroad subsequently resell it without the copyright owner’s permission?

In our view, the answers to these questions are, yes. We hold that the “first sale” doctrine applies to copies of a copyrighted work lawfully made abroad.

I A

Respondent, John Wiley & Sons, Inc., publishes academic textbooks. Wiley obtains from its authors various foreign and domestic copyright assignments, licenses and permissions—to the point that we can, for present purposes, refer to Wiley as the relevant American copyright owner. See 654 F. 3d 210, 213, n. 6 (CA2 2011). Wiley often assigns to its wholly owned foreign subsidiary, John Wiley & Sons (Asia) Pte Ltd., rights to publish, print, and sell Wiley’s English language textbooks abroad. App. to Pet. for Cert. 47a–48a. Each copy of a Wiley Asia foreign edition will likely contain language making clear that the copy is to be sold only in a particular country or geographical region outside the United States. 654 F. 3d, at 213.

For example, a copy of Wiley’s American edition says, “Copyright © 2008 John Wiley & Sons, Inc. All rights reserved. . . . Printed in the United States of America.” J. Walker, Fundamentals of Physics, p. vi (8th ed. 2008). A copy of Wiley Asia’s Asian edition of that book says:

“Copyright © 2008 John Wiley & Sons (Asia) Pte Ltd[.] All rights reserved. This book is authorized for sale in Europe, Asia, Africa, and the Middle East only and may be not exported out of these territories. Exportation from or importation of this book to another region without the Publisher’s authorization is illegal and is a violation of the Publisher’s rights. The Publisher may take legal action to enforce its rights. . . . Printed in Asia.” J. Walker, Fundamentals of Physics, p. vi (8th ed. 2008 Wiley Int’l Student ed.).

Both the foreign and the American copies say:

“No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means . . . except as permitted under Sections 107 or 108 of the 1976 United States Copyright Act.” Compare, e.g., ibid. (Int’l ed.), with Walker, supra, at vi (American ed.).

The upshot is that there are two essentially equivalent versions of a Wiley textbook, 654 F. 3d, at 213, each version manufactured and sold with Wiley’s permission: (1) an American version printed and sold in the United States, and (2) a foreign version manufactured and sold abroad. And Wiley makes certain that copies of the second version state that they are not to be taken (without permission) into the United States. Ibid.

Petitioner, Supap Kirtsaeng, a citizen of Thailand, moved to the United States in 1997 to study mathematics at Cornell University. Ibid. He paid for his education with the help of a Thai Government scholarship which required him to teach in Thailand for 10 years on his return. Brief for Petitioner 7. Kirtsaeng successfully completed his undergraduate courses at Cornell, successfully completed a Ph. D. program in mathematics at the University of Southern California, and then, as promised, returned to Thailand to teach. Ibid. While he was studying in the United States, Kirtsaeng asked his friends and family in Thailand to buy copies of foreign edition English-language textbooks at Thai book shops, where they sold at low prices, and mail them to him in the United States. Id., at 7–8. Kirtsaeng would then sell them, reimburse his family and friends, and keep the profit. App. to Pet. for Cert. 48a–49a.

B

In 2008 Wiley brought this federal lawsuit against Kirtsaeng for copyright infringement. 654 F. 3d, at 213. Wiley claimed that Kirtsaeng’s unauthorized importation of its books and his later resale of those books amounted to an infringement of Wiley’s §106(3) exclusive right to distribute as well as §602’s related import prohibition. 17 U. S. C. §§106(3) (2006 ed.), 602(a) (2006 ed., Supp. V). See also §501 (2006 ed.) (authorizing infringement action). App. 204–211. Kirtsaeng replied that the books he had acquired were “ ‘lawfully made’ ” and that he had acquired them legitimately. Record in No. 1:08–CV–7834–DCP (SDNY), Doc. 14, p. 3. Thus, in his view, §109(a)’s “first sale” doctrine permitted him to resell or otherwise dispose of the books without the copyright owner’s further permission. Id., at 2–3.

The District Court held that Kirtsaeng could not assert the “first sale” defense because, in its view, that doctrine does not apply to “foreign-manufactured goods” (even if made abroad with the copyright owner’s permission). App. to Pet. for Cert. 72a. The jury then found that Kirtsaeng had willfully infringed Wiley’s American copyrights by selling and importing without authorization copies of eight of Wiley’s copyrighted titles. And it assessed statutory damages of $600,000 ($75,000 per work). 654 F. 3d, at 215.

On appeal, a split panel of the Second Circuit agreed with the District Court. Id., at 222. It pointed out that §109(a)’s “first sale” doctrine applies only to “the owner of a particular copy . . . lawfully made under this title.” Id., at 218–219 (emphasis added). And, in the majority’s view, this language means that the “first sale” doctrine does not apply to copies of American copyrighted works manufactured abroad. Id., at 221. A dissenting judge thought that the words “lawfully made under this title” do not refer “to a place of manufacture” but rather “focu[s] on whether a particular copy was manufactured lawfully under” America’s copyright statute, and that “the lawfulness of the manufacture of a particular copy should be judged by U. S. copyright law.” Id., at 226 (opinion of Murtha, J.).

We granted Kirtsaeng’s petition for certiorari to consider this question in light of different views among the Circuits. Compare id., at 221 (case below) (“first sale” doctrine does not apply to copies manufactured outside the United States), with Omega S. A. v. Costco Wholesale Corp., 541 F. 3d 982, 986 (CA9 2008) (“first sale” doctrine applies to copies manufactured outside the United States only if an authorized first sale occurs within the United States), aff’d by an equally divided court, 562 U. S. ___ (2010), and Sebastian Int’l, Inc. v. Consumer Contacts (PTY) Ltd., 847 F. 2d 1093, 1098, n. 1 (CA3 1988) (limitation of the first sale doctrine to copies made within the United States “does not fit comfortably within the scheme of the Copyright Act”).

II

We must decide whether the words “lawfully made under this title” restrict the scope of §109(a)’s “first sale” doctrine geographically. The Second Circuit, the Ninth Circuit, Wiley, and the Solicitor General (as amicus) all read those words as imposing a form of geographical limitation. The Second Circuit held that they limit the “first sale” doctrine to particular copies “made in territories in which the Copyright Act is law,” which (the Circuit says) are copies “manufactured domestically,” not “outside of the United States.” 654 F. 3d, at 221–222 (emphasis added). Wiley agrees that those five words limit the “first sale” doctrine “to copies made in conformance with the [United States] Copyright Act where the Copyright Act is applicable,” which (Wiley says) means it does not apply to copies made “outside the United States” and at least not to “foreign production of a copy for distribution exclusively abroad.” Brief for Respondent 15–16. Similarly, the Solicitor General says that those five words limit the “first sale” doctrine’s applicability to copies “ ‘made subject to and in compliance with [the Copyright Act],’ ” which (the Solicitor General says) are copies “made in the United States.” Brief for United States as Amicus Curiae 5 (hereinafter Brief for United States) (emphasis added). And the Ninth Circuit has held that those words limit the “first sale” doctrine’s applicability (1) to copies lawfully made in the United States, and (2) to copies lawfully made outside the United States but initially sold in the United States with the copyright owner’s permission. Denbicare U. S. A. Inc. v. Toys “R” Us, Inc., 84 F. 3d 1143, 1149–1150 (1996).

Under any of these geographical interpretations, §109(a)’s “first sale” doctrine would not apply to the Wiley Asia books at issue here. And, despite an American copyright owner’s permission to make copies abroad, one who buys a copy of any such book or other copyrighted work—whether at a retail store, over the Internet, or at a library sale—could not resell (or otherwise dispose of) that particular copy without further permission.

Kirtsaeng, however, reads the words “lawfully made under this title” as imposing a non-geographical limitation. He says that they mean made “in accordance with” or “in compliance with” the Copyright Act. Brief for Petitioner 26. In that case, §109(a)’s “first sale” doctrine would apply to copyrighted works as long as their manufacture met the requirements of American copyright law. In particular, the doctrine would apply where, as here, copies are manufactured abroad with the permission of the copyright owner. See §106 (referring to the owner’s right to authorize).

In our view, §109(a)’s language, its context, and the common-law history of the “first sale” doctrine, taken together, favor a non-geographical interpretation. We also doubt that Congress would have intended to create the practical copyright-related harms with which a geographical interpretation would threaten ordinary scholarly, artistic, commercial, and consumer activities. See Part II–D, infra. We consequently conclude that Kirtsaeng’s nongeographical reading is the better reading of the Act.

A

The language of §109(a) read literally favors Kirtsaeng’s nongeographical interpretation, namely, that “lawfully made under this title” means made “in accordance with” or “in compliance with” the Copyright Act. The language of §109(a) says nothing about geography. The word “under” can mean “[i]n accordance with.” 18 Oxford English Dictionary 950 (2d ed. 1989). See also Black’s Law Dictionary 1525 (6th ed. 1990) (“according to”). And a nongeographical interpretation provides each word of the five-word phrase with a distinct purpose. The first two words of the phrase, “lawfully made,” suggest an effort to distinguish those copies that were made lawfully from those that were not, and the last three words, “under this title,” set forth the standard of “lawful[ness].” Thus, the nongeographical reading is simple, it promotes a traditional copyright objective (combatting piracy), and it makes word-by-word linguistic sense.

The geographical interpretation, however, bristles with linguistic difficulties. It gives the word “lawfully” little, if any, linguistic work to do. (How could a book be unlawfully “made under this title”?) It imports geography into a statutory provision that says nothing explicitly about it. And it is far more complex than may at first appear.

To read the clause geographically, Wiley, like the Second Circuit and the Solicitor General, must first emphasize the word “under.” Indeed, Wiley reads “under this title” to mean “in conformance with the Copyright Act where the Copyright Act is applicable.” Brief for Respondent 15. Wiley must then take a second step, arguing that the Act “is applicable” only in the United States. Ibid. And the Solicitor General must do the same. See Brief for United States 6 (“A copy is ‘lawfully made under this title’ if Title 17 governs the copy’s creation and the copy is made in compliance with Title 17’s requirements”). See also post, at 7 (Ginsburg, J., dissenting) (“under” describes something “governed or regulated by another”).

One difficulty is that neither “under” nor any other word in the phrase means “where.” See, e.g., 18 Oxford English Dictionary, supra, at 947–952 (definition of “under”). It might mean “subject to,” see post, at 6, but as this Court has repeatedly acknowledged, the word evades a uniform, consistent meaning. See Kucana v. Holder, 558 U. S. 233, 245 (2010) (“ ‘under’ is chameleon”); Ardestani v. INS, 502 U. S. 129, 135 (1991) (“under” has “many dictionary definitions” and “must draw its meaning from its context”).

A far more serious difficulty arises out of the uncertainty and complexity surrounding the second step’s effort to read the necessary geographical limitation into the word “applicable” (or the equivalent). Where, precisely, is the Copyright Act “applicable”? The Act does not instantly protect an American copyright holder from unauthorized piracy taking place abroad. But that fact does not mean the Act is inapplicable to copies made abroad. As a matter of ordinary English, one can say that a statute imposing, say, a tariff upon “any rhododendron grown in Nepal” applies to all Nepalese rhododendrons. And, similarly, one can say that the American Copyright Act is applicable to all pirated copies, including those printed overseas. Indeed, the Act itself makes clear that (in the Solicitor General’s language) foreign-printed pirated copies are “subject to” the Act. §602(a)(2) (2006 ed., Supp. V) (referring to importation of copies “the making of which either constituted an infringement of copyright, or which would have constituted an infringement of copyright if this title had been applicable”); Brief for United States 5. See also post, at 6 (suggesting that “made under” may be read as “subject to”).

The appropriateness of this linguistic usage is underscored by the fact that §104 of the Act itself says that works “subject to protection under this title” include unpublished works “without regard to the nationality or domicile of the author,” and works “first published” in any one of the nearly 180 nations that have signed a copyright treaty with the United States. §§104(a), (b) (2006 ed.) (emphasis added); §101 (2006 ed., Supp. V) (defining “treaty party”); U. S. Copyright Office, Circular No. 38A, International Copyright Relations of the United States (2010). Thus, ordinary English permits us to say that the Act “applies” to an Irish manuscript lying in its author’s Dublin desk drawer as well as to an original recording of a ballet performance first made in Japan and now on display in a Kyoto art gallery. Cf. 4 M. Nimmer & D. Nimmer, Copyright §17.02, pp. 17–18, 17–19 (2012) (hereinafter Nimmer on Copyright) (noting that the principle that “copyright laws do not have any extraterritorial operation” “requires some qualification”).

The Ninth Circuit’s geographical interpretation produces still greater linguistic difficulty. As we said, that Circuit interprets the “first sale” doctrine to cover both (1) copies manufactured in the United States and (2) copies manufactured abroad but first sold in the United States with the American copyright owner’s permission. Denbicare U. S. A., 84 F. 3d, at 1149–1150. See also Brief for Respondent 16 (suggesting that the clause at least excludes “the foreign production of a copy for distribution exclusively abroad”); id., at 51 (the Court need “not decide whether the copyright owner would be able to restrict further distribution” in the case of “a downstream domestic purchaser of authorized imports”); Brief for Petitioner in Costco Wholesale Corp. v. Omega, S. A., O. T. 2010, No. 08–1423, p. 12 (excepting imported copies “made by unrelated foreign copyright holders” (emphasis deleted)).

We can understand why the Ninth Circuit may have thought it necessary to add the second part of its definition. As we shall later describe, see Part II–D, infra, without some such qualification a copyright holder could prevent a buyer from domestically reselling or even giving away copies of a video game made in Japan, a film made in Germany, or a dress (with a design copyright) made in China, even if the copyright holder has granted permission for the foreign manufacture, importation, and an initial domestic sale of the copy. A publisher such as Wiley would be free to print its books abroad, allow their importation and sale within the United States, but prohibit students from later selling their used texts at a campus bookstore. We see no way, however, to reconcile this half-geographical/half-nongeographical interpretation with the language of the phrase, “lawfully made under this title.” As a matter of English, it would seem that those five words either do cover copies lawfully made abroad or they do not.

In sum, we believe that geographical interpretations create more linguistic problems than they resolve. And considerations of simplicity and coherence tip the purely linguistic balance in Kirtsaeng’s, nongeographical, favor.

B

Both historical and contemporary statutory context indicate that Congress, when writing the present version of §109(a), did not have geography in mind. In respect to history, we compare §109(a)’s present language with the language of its immediate predecessor. That predecessor said:

“[N]othing in this Act shall be deemed to forbid, prevent, or restrict the transfer of any copy of a copyrighted work the possession of which has been lawfully obtained.” Copyright Act of 1909, §41, 35Stat. 1084 (emphasis added).

See also Copyright Act of 1947, §27, 61Stat. 660. The predecessor says nothing about geography (and Wiley does not argue that it does). So we ask whether Congress, in changing its language implicitly introduced a geographical limitation that previously was lacking. See also Part II–C, infra (discussing 1909 codification of common-law principle).

A comparison of language indicates that it did not. The predecessor says that the “first sale” doctrine protects “the transfer of any copy the possession of which has been lawfully obtained.” The present version says that “the owner of a particular copy or phonorecord lawfully made under this title is entitled to sell or otherwise dispose of the possession of that copy or phonorecord.” What does this change in language accomplish?

The language of the former version referred to those who are not owners of a copy, but mere possessors who “lawfully obtained” a copy. The present version covers only those who are owners of a “lawfully made” copy. Whom does the change leave out? Who might have lawfully obtained a copy of a copyrighted work but not owned that copy? One answer is owners of movie theaters, who during the 1970’s (and before) often leased films from movie distributors or filmmakers. See S. Donahue, American Film Distribution 134, 177 (1987) (describing producer-distributer and distributer-exhibitor agreements); Note, The Relationship Between Motion Picture Distribution and Exhibition: An Analysis of the Effects of Anti-Blind Bidding Legislation, 9 Comm/Ent. L. J. 131, 135 (1986). Because the theater owners had “lawfully obtained” their copies, the earlier version could be read as allowing them to sell that copy, i.e., it might have given them “first sale” protection. Because the theater owners were lessees, not owners, of their copies, the change in language makes clear that they (like bailees and other lessees) cannot take advantage of the “first sale” doctrine. (Those who find legislative history useful will find confirmation in, e.g., House Committee on the Judiciary, Copyright Law Revision, Supplementary Report of the Register of Copyrights on the General Revision of the U. S. Copyright Law: 1965 Revision Bill, 89th Cong., 1st Sess., pt. 6, p. 30 (Comm. Print 1965) (hereinafter Copyright Law Revision) (“[W]here a person has rented a print of a motion picture from the copyright owner, he would have no right to lend, rent, sell, or otherwise dispose of the print without first obtaining the copyright owner’s permission”). See also Platt & Munk Co. v. Republic Graphics, Inc., 315 F. 2d 847, 851 (CA2 1963) (Friendly, J.) (pointing out predecessor statute’s leasing problem)).

This objective perfectly well explains the new language of the present version, including the five words here at issue. Section 109(a) now makes clear that a lessee of a copy will not receive “first sale” protection but one who owns a copy will receive “first sale” protection, provided, of course, that the copy was “lawfully made” and not pirated. The new language also takes into account that a copy may be “lawfully made under this title” when the copy, say of a phonorecord, comes into its owner’s possession through use of a compulsory license, which “this title” provides for elsewhere, namely, in §115. Again, for those who find legislative history useful, the relevant legislative report makes this clear. H. R. Rep. No. 94–1476, p. 79 (1976) (“For example, any resale of an illegally ‘pirated’ phonorecord would be an infringement, but the disposition of a phonorecord legally made under the compulsory licensing provisions of section 115 would not”).

Other provisions of the present statute also support a nongeographical interpretation. For one thing, the statute phases out the “manufacturing clause,” a clause that appeared in earlier statutes and had limited importation of many copies (of copyrighted works) printed outside the United States. §601, 90Stat. 2588 (“Prior to July 1, 1982 . . . the importation into or public distribution in the United States of copies of a work consisting preponderantly of nondramatic literary material . . . is prohibited unless the portions consisting of such material have been manufactured in the United States or Canada”). The phasing out of this clause sought to equalize treatment of copies manufactured in America and copies manufactured abroad. See H. R. Rep. No. 94–1476, at 165–166.

The “equal treatment” principle, however, is difficult to square with a geographical interpretation of the “first sale” clause that would grant the holder of an American copyright (perhaps a foreign national, see supra, at 10) permanent control over the American distribution chain (sales, resales, gifts, and other distribution) in respect to copies printed abroad but not in respect to copies printed in America. And it is particularly difficult to believe that Congress would have sought this unequal treatment while saying nothing about it and while, in a related clause (the manufacturing phase-out), seeking the opposite kind of policy goal. Cf. Golan v. Holder, 565 U. S. ___, ___ (2012) (slip op., at 30) (Congress has moved from a copyright regime that, prior to 1891, entirely excluded foreign works from U. S. copyright protection to a regime that now “ensure[s] that most works, whether foreign or domestic, would be governed by the same legal regime” (emphasis added)).

Finally, we normally presume that the words “lawfully made under this title” carry the same meaning when they appear in different but related sections. Department of Revenue of Ore. v. ACF Industries, Inc., 510 U. S. 332, 342 (1994) . But doing so here produces surprising consequences. Consider:

(1) Section 109(c) says that, despite the copyright owner’s exclusive right “to display” a copyrighted work (provided in §106(5)), the owner of a particular copy “lawfully made under this title” may publicly display it without further authorization. To interpret these words geographically would mean that one who buys a copyrighted work of art, a poster, or even a bumper sticker, in Canada, in Europe, in Asia, could not display it in America without the copyright owner’s further authorization.

(2) Section 109(e) specifically provides that the owner of a particular copy of a copyrighted video arcade game “lawfully made under this title” may “publicly perform or display that game in coin-operated equipment” without the authorization of the copyright owner. To interpret these words geographically means that an arcade owner could not (“without the authority of the copyright owner”) perform or display arcade games (whether new or used) originally made in Japan. Cf. Red Baron-Franklin Park, Inc. v. Taito Corp., 883 F. 2d 275 (CA4 1989).

(3) Section 110(1) says that a teacher, without the copyright owner’s authorization, is allowed to perform or display a copyrighted work (say, an audiovisual work) “in the course of face-to-face teaching activities”—unless the teacher knowingly used “a copy that was not lawfully made under this title.” To interpret these words geographically would mean that the teacher could not (without further authorization) use a copy of a film during class if the copy was lawfully made in Canada, Mexico, Europe, Africa, or Asia.

(4) In its introductory sentence, §106 provides the Act’s basic exclusive rights to an “owner of a copyright under this title.” The last three words cannot support a geographic interpretation.

Wiley basically accepts the first three readings, but argues that Congress intended the restrictive consequences. And it argues that context simply requires that the words of the fourth example receive a different interpretation. Leaving the fourth example to the side, we shall explain in Part II–D, infra, why we find it unlikely that Congress would have intended these, and other related consequences.

C

A relevant canon of statutory interpretation favors a nongeographical reading. “[W]hen a statute covers an issue previously governed by the common law,” we must presume that “Congress intended to retain the substance of the common law.” Samantar v. Yousuf, 560 U. S. ___, ___, n. 13 (2010) (slip op., at 14, n. 13). See also Isbrandtsen Co. v. Johnson, 343 U. S. 779, 783 (1952) (“Statutes which invade the common law . . . are to be read with a presumption favoring the retention of long-established and familiar principles, except when a statutory purpose to the contrary is evident”).

The “first sale” doctrine is a common-law doctrine with an impeccable historic pedigree. In the early 17th century Lord Coke explained the common law’s refusal to permit restraints on the alienation of chattels. Referring to Littleton, who wrote in the 15th century, Gray, Two Contributions to Coke Studies, 72 U. Chi. L. Rev. 1127, 1135 (2005), Lord Coke wrote:

“[If] a man be possessed of . . . a horse, or of any other chattell . . . and give or sell his whole interest . . . therein upon condition that the Donee or Vendee shall not alien[ate] the same, the [condition] is voi[d], because his whole interest . . . is out of him, so as he hath no possibilit[y] of a Reverter, and it is against Trade and Traffi[c], and bargaining and contracting betwee[n] man and man: and it is within the reason of our Author that it should ouster him of all power given to him.” 1 E. Coke, Institutes of the Laws of England §360, p. 223 (1628).

A law that permits a copyright holder to control the resale or other disposition of a chattel once sold is similarly “against Trade and Traffi[c], and bargaining and contracting.” Ibid.

With these last few words, Coke emphasizes the importance of leaving buyers of goods free to compete with each other when reselling or otherwise disposing of those goods. American law too has generally thought that competition, including freedom to resell, can work to the advantage of the consumer. See, e.g., Leegin Creative Leather Products, Inc. v. PSKS, Inc., 551 U. S. 877, 886 (2007) (restraints with “manifestly anticompetitive effects” are per se illegal; others are subject to the rule of reason (internal quotation marks omitted)); 1 P. Areeda & H. Hovenkamp, Antitrust Law ¶100, p. 4 (3d ed. 2006) (“[T]he principal objective of antitrust policy is to maximize consumer welfare by encouraging firms to behave competitively”).

The “first sale” doctrine also frees courts from the administrative burden of trying to enforce restrictions upon difficult-to-trace, readily movable goods. And it avoids the selective enforcement inherent in any such effort. Thus, it is not surprising that for at least a century the “first sale” doctrine has played an important role in American copyright law. See Bobbs-Merrill Co. v. Straus, 210 U. S. 339 (1908) ; Copyright Act of 1909, §41, 35Stat. 1084. See also Copyright Law Revision, Further Discussions and Comments on Preliminary Draft for Revised U. S. Copyright Law, 88th Cong., 2d Sess., pt. 4, p. 212 (Comm. Print 1964) (Irwin Karp of Authors’ League of America expressing concern for “the very basic concept of copyright law that, once you’ve sold a copy legally, you can’t restrict its resale”).

The common-law doctrine makes no geographical distinctions; nor can we find any in Bobbs-Merrill (where this Court first applied the “first sale” doctrine) or in §109(a)’s predecessor provision, which Congress enacted a year later. See supra, at 12. Rather, as the Solicitor General acknowledges, “a straightforward application of Bobbs-Merrill” would not preclude the “first sale” defense from applying to authorized copies made overseas. Brief for United States 27. And we can find no language, context, purpose, or history that would rebut a “straightforward application” of that doctrine here.

The dissent argues that another principle of statutory interpretation works against our reading, and points out that elsewhere in the statute Congress used different words to express something like the non-geographical reading we adopt. Post, at 8–9 (quoting §602(a)(2) (prohibiting the importation of copies “the making of which either constituted an infringement of copyright, or which would have constituted an infringement of copyright if this title had been applicable” (emphasis deleted))). Hence, Congress, the dissent believes, must have meant §109(a)’s different language to mean something different (such as the dissent’s own geographical interpretation of §109(a)). We are not aware, however, of any canon of interpretation that forbids interpreting different words used in different parts of the same statute to mean roughly the same thing. Regardless, were there such a canon, the dissent’s interpretation of §109(a) would also violate it. That is because Congress elsewhere in the 1976 Act included the words “manufactured in the United States or Canada,” 90Stat. 2588, which express just about the same geographical thought that the dissent reads into §109(a)’s very different language.

D

Associations of libraries, used-book dealers, technology companies, consumer-goods retailers, and museums point to various ways in which a geographical interpretation would fail to further basic constitutional copyright objectives, in particular “promot[ing] the Progress of Science and useful Arts.” U. S. Const., Art. I, §8, cl. 8.

The American Library Association tells us that library collections contain at least 200 million books published abroad (presumably, many were first published in one of the nearly 180 copyright-treaty nations and enjoy American copyright protection under 17 U. S. C. §104, see supra, at 10); that many others were first published in the United States but printed abroad because of lower costs; and that a geographical interpretation will likely require the libraries to obtain permission (or at least create significant uncertainty) before circulating or otherwise distributing these books. Brief for American Library Association et al. as Amici Curiae 4, 15–20. Cf. id., at 16–20, 28 (discussing limitations of potential defenses, including the fair use and archival exceptions, §§107–108). See also Library and Book Trade Almanac 511 (D. Bogart ed., 55th ed. 2010) (during 2000–2009 “a significant amount of book printing moved to foreign nations”).

How, the American Library Association asks, are the libraries to obtain permission to distribute these millions of books? How can they find, say, the copyright owner of a foreign book, perhaps written decades ago? They may not know the copyright holder’s present address. Brief for American Library Association 15 (many books lack indication of place of manufacture; “no practical way to learn where [a] book was printed”). And, even where addresses can be found, the costs of finding them, contacting owners, and negotiating may be high indeed. Are the libraries to stop circulating or distributing or displaying the millions of books in their collections that were printed abroad?

Used-book dealers tell us that, from the time when Benjamin Franklin and Thomas Jefferson built commercial and personal libraries of foreign books, American readers have bought used books published and printed abroad. Brief for Powell’s Books Inc. et al. as Amici Curiae 7 (citing M. Stern, Antiquarian Bookselling in the United States (1985)). The dealers say that they have “operat[ed] . . . for centuries” under the assumption that the “first sale” doctrine applies. Brief for Powell’s Books 7. But under a geographical interpretation a contemporary tourist who buys, say, at Shakespeare and Co. (in Paris), a dozen copies of a foreign book for American friends might find that she had violated the copyright law. The used-book dealers cannot easily predict what the foreign copyright holder may think about a reader’s effort to sell a used copy of a novel. And they believe that a geographical interpretation will injure a large portion of the used-book business.

Technology companies tell us that “automobiles, microwaves, calculators, mobile phones, tablets, and personal computers” contain copyrightable software programs or packaging. Brief for Public Knowledge et al. as Amici Curiae 10. See also Brief for Association of Service and Computer Dealers International, Inc., et al. as Amici Curiae 2. Many of these items are made abroad with the American copyright holder’s permission and then sold and imported (with that permission) to the United States. Brief for Retail Litigation Center, Inc., et al. as Amici Curiae 4. A geographical interpretation would prevent the resale of, say, a car, without the permission of the holder of each copyright on each piece of copyrighted automobile software. Yet there is no reason to believe that foreign auto manufacturers regularly obtain this kind of permission from their software component suppliers, and Wiley did not indicate to the contrary when asked. See Tr. of Oral Arg. 29–30. Without that permission a foreign car owner could not sell his or her used car.

Retailers tell us that over $2.3 trillion worth of foreign goods were imported in 2011. Brief for Retail Litigation Center 8. American retailers buy many of these goods after a first sale abroad. Id., at 12. And, many of these items bear, carry, or contain copyrighted “packaging, logos, labels, and product inserts and instructions for [the use of] everyday packaged goods from floor cleaners and health and beauty products to breakfast cereals.” Id., at 10–11. The retailers add that American sales of more traditional copyrighted works, “such as books, recorded music, motion pictures, and magazines” likely amount to over $220 billion. Id., at 9. See also id., at 10 (electronic game industry is $16 billion). A geographical interpretation would subject many, if not all, of them to the disruptive impact of the threat of infringement suits. Id., at 12.

Art museum directors ask us to consider their efforts to display foreign-produced works by, say, Cy Twombly, René Magritte, Henri Matisse, Pablo Picasso, and others. See supra, at 10 (describing how §104 often makes such works “subject to” American copyright protection). A geographical interpretation, they say, would require the museums to obtain permission from the copyright owners before they could display the work, see supra, at 15—even if the copyright owner has already sold or donated the work to a foreign museum. Brief for Association of Art Museum Directors et al. as Amici Curiae 10–11. What are the museums to do, they ask, if the artist retained the copyright, if the artist cannot be found, or if a group of heirs is arguing about who owns which copyright? Id., at 14.

These examples, and others previously mentioned, help explain why Lord Coke considered the “first sale” doctrine necessary to protect “Trade and Traffi[c], and bargaining and contracting,” and they help explain why American copyright law has long applied that doctrine. Cf. supra, at 17–18.

Neither Wiley nor any of its many amici deny that a geographical interpretation could bring about these “horribles”—at least in principle. Rather, Wiley essentially says that the list is artificially invented. Brief for Respondent 51–52. It points out that a federal court first adopted a geographical interpretation more than 30 years ago. CBS, Inc. v. Scorpio Music Distributors, Inc., 569 F. Supp. 47, 49 (ED Pa. 1983), summarily aff’d, 738 F. 2d 424 (CA3 1984) (table). Yet, it adds, these problems have not occurred. Why not? Because, says Wiley, the problems and threats are purely theoretical; they are unlikely to reflect reality. See also post, at 30–31.

We are less sanguine. For one thing, the law has not been settled for long in Wiley’s favor. The Second Circuit, in its decision below, is the first Court of Appeals to adopt a purely geographical interpretation. The Third Circuit has favored a nongeographical interpretation. Sebastian Int’l, 847 F. 2d 1093. The Ninth Circuit has favored a modified geographical interpretation with a nongeographical (but textually unsustainable) corollary designed to diminish the problem. Denbicare U. S. A., 84 F. 3d 1143. See supra, at 11–12. And other courts have hesitated to adopt, and have cast doubt upon, the validity of the geographical interpretation. Pearson Educ., Inc. v. Liu, 656 F. Supp. 2d 407 (SDNY 2009); Red-Baron Franklin Park, Inc. v. Taito Corp., No. 88–0156–A, 1988 WL 167344, *3 (ED Va. 1988), rev’d on other grounds, 883 F. 2d 275 (CA4 1989).

For another thing, reliance upon the “first sale” doctrine is deeply embedded in the practices of those, such as booksellers, libraries, museums, and retailers, who have long relied upon its protection. Museums, for example, are not in the habit of asking their foreign counterparts to check with the heirs of copyright owners before sending, e.g., a Picasso on tour. Brief for Association of Art Museum Directors 11–12. That inertia means a dramatic change is likely necessary before these institutions, instructed by their counsel, would begin to engage in the complex permission-verifying process that a geographical interpretation would demand. And this Court’s adoption of the geographical interpretation could provide that dramatic change. These intolerable consequences (along with the absurd result that the copyright owner can exercise downstream control even when it authorized the import or first sale) have understandably led the Ninth Circuit, the Solicitor General as amicus, and the dissent to adopt textual readings of the statute that attempt to mitigate these harms. Brief for United States 27–28; post, at 24–28. But those readings are not defensible, for they require too many unprecedented jumps over linguistic and other hurdles that in our view are insurmountable. See, e.g., post, at 26 (acknowledging that its reading of §106(3) “significantly curtails the independent effect of §109(a)”).

Finally, the fact that harm has proved limited so far may simply reflect the reluctance of copyright holders so far to assert geographically based resale rights. They may decide differently if the law is clarified in their favor. Regardless, a copyright law that can work in practice only if unenforced is not a sound copyright law. It is a law that would create uncertainty, would bring about selective enforcement, and, if widely unenforced, would breed disrespect for copyright law itself.

Thus, we believe that the practical problems that petitioner and his amici have described are too serious, too extensive, and too likely to come about for us to dismiss them as insignificant—particularly in light of the ever-growing importance of foreign trade to America. See The World Bank, Imports of goods and services (% of GDP) (imports in 2011 18% of U. S. gross domestic product compared to 11% in 1980), online at http:// data.worldbank.org/indicator/NE.IMP.GNFS.ZS? (as visited Mar. 15, 2013, and available in Clerk of Court’s case file). The upshot is that copyright-related consequences along with language, context, and interpretive canons argue strongly against a geographical interpretation of §109(a).

III

Wiley and the dissent make several additional important arguments in favor of the geographical interpretation. First, they say that our Quality King decision strongly supports its geographical interpretation. In that case we asked whether the Act’s “importation provision,” now §602(a)(1) (then §602(a)), barred importation (without permission) of a copyrighted item (labels affixed to hair care products) where an American copyright owner authorized the first sale and export of hair care products with copyrighted labels made in the United States, and where a buyer sought to import them back into the United States without the copyright owner’s permission. 523 U. S., at 138–139.

We held that the importation provision did not prohibit sending the products back into the United States (without the copyright owner’s permission). That section says:

“Importation into the United States, without the authority of the owner of copyright under this title, of copies or phonorecords of a work that have been acquired outside the United States is an infringement of the exclusive right to distribute copies or phono-records under section 106.” 17 U. S. C. §602(a)(1) (2006 ed., Supp. V) (emphasis added). See also §602(a) (1994 ed.).

We pointed out that this section makes importation an infringement of the “exclusive right to distribute . . . under 106.” We noted that §109(a)’s “first sale” doctrine limits the scope of the §106 exclusive distribution right. We took as given the fact that the products at issue had at least once been sold. And we held that consequently, importation of the copyrighted labels does not violate §602(a)(1). 523 U. S., at 145.

In reaching this conclusion we endorsed Bobbs-Merrill and its statement that the copyright laws were not “intended to create a right which would permit the holder of the copyright to fasten, by notice in a book . . . a restriction upon the subsequent alienation of the subject-matter of copyright after the owner had parted with the title to one who had acquired full dominion over it.” 210 U. S., at 349–350.

We also explained why we rejected the claim that our interpretation would make §602(a)(1) pointless. Those advancing that claim had pointed out that the 1976 Copyright Act amendments retained a prior anti-piracy provision, prohibiting the importation of pirated copies. Quality King, supra, at 146. Thus, they said, §602(a)(1) must prohibit the importation of lawfully made copies, for to allow the importation of those lawfully made copies after a first sale, as Quality King’s holding would do, would leave §602(a)(1) without much to prohibit. It would become superfluous, without any real work to do.

We do not believe that this argument is a strong one. Under Quality King’s interpretation, §602(a)(1) would still forbid importing (without permission, and subject to the exceptions in §602(a)(3)) copies lawfully made abroad, for example, where (1) a foreign publisher operating as the licensee of an American publisher prints copies of a book overseas but, prior to any authorized sale, seeks to send them to the United States; (2) a foreign printer or other manufacturer (if not the “owner” for purposes of §109(a), e.g., before an authorized sale) sought to send copyrighted goods to the United States; (3) “a book publisher transports copies to a wholesaler” and the wholesaler (not yet the owner) sends them to the United States, see Copyright Law Revision, pt. 4, at 211 (giving this example); or (4) a foreign film distributor, having leased films for distribution, or any other licensee, consignee, or bailee sought to send them to the United States. See, e.g., 2 Nimmer on Copyright §8.12[B][1][a], at 8–159 (“Section 109(a) provides that the distribution right may be exercised solely with respect to the initial disposition of copies of a work, not to prevent or restrict the resale or other further transfer of possession of such copies”). These examples show that §602(a)(1) retains significance. We concede it has less significance than the dissent believes appropriate, but the dissent also adopts a construction of §106(3) that “significantly curtails” §109(a)’s effect, post, at 26, and so limits the scope of that provision to a similar, or even greater, degree.

In Quality King we rejected the “superfluous” argument for similar reasons. But, when rejecting it, we said that, where an author gives exclusive American distribution rights to an American publisher and exclusive British distribution rights to a British publisher, “presumably only those [copies] made by the publisher of the United States edition would be ‘lawfully made under this title’ within the meaning of §109(a).” 523 U. S., at 148 (emphasis added). Wiley now argues that this phrase in the Quality King opinion means that books published abroad (under license) must fall outside the words “lawfully made under this title” and that we have consequently already given those words the geographical interpretation that it favors.

We cannot, however, give the Quality King statement the legal weight for which Wiley argues. The language “lawfully made under this title” was not at issue in Quality King; the point before us now was not then fully argued; we did not canvas the considerations we have here set forth; we there said nothing to suggest that the example assumes a “first sale”; and we there hedged our statement with the word “presumably.” Most importantly, the statement is pure dictum. It is dictum contained in a rebuttal to a counterargument. And it is unnecessary dictum even in that respect. Is the Court having once written dicta calling a tomato a vegetable bound to deny that it is a fruit forever after?

To the contrary, we have written that we are not necessarily bound by dicta should more complete argument demonstrate that the dicta is not correct. Central Va. Community College v. Katz, 546 U. S. 356, 363 (2006) (“[W]e are not bound to follow our dicta in a prior case in which the point now at issue was not fully debated”); Humphrey’s Executor v. United States, 295 U. S. 602 –628 (1935) (rejecting, under stare decisis, dicta, “which may be followed if sufficiently persuasive but which are not controlling”). And, given the bit part that our Quality King statement played in our Quality King decision, we believe the view of stare decisis set forth in these opinions applies to the matter now before us.

Second, Wiley and the dissent argue (to those who consider legislative history) that the Act’s legislative history supports their interpretation. But the historical events to which it points took place more than a decade before the enactment of the Act and, at best, are inconclusive.

During the 1960’s, representatives of book, record, and film industries, meeting with the Register of Copyrights to discuss copyright revision, complained about the difficulty of dividing international markets. Copyright Law Revision Discussion and Comments on Report of the Register of Copyrights on the General Revision of the U. S. Copyright Law, 88th Cong., 1st Sess., pt. 2, p. 212 (Comm. Print 1963) (English editions of “particular” books “fin[d]” their “way into this country”); id., at 213 (works “publi[shed] in a country where there is no copyright protection of any sort” are put into “the free stream of commerce” and “shipped to the United States”); ibid. (similar concern in respect to films).

The then-Register of Copyrights, Abraham Kaminstein, found these examples “very troubl[ing].” Ibid. And the Copyright Office released a draft provision that it said “deals with the matter of the importation for distribution in the United States of foreign copies that were made under proper authority but that, if sold in the United States, would be sold in contravention of the rights of the copyright owner who holds the exclusive right to sell copies in the United States.” Id., pt. 4, at 203. That draft version, without reference to §106, simply forbids unauthorized imports. It said:

“Importation into the United States of copies or records of a work for the purpose of distribution to the public shall, if such articles are imported without the authority of the owner of the exclusive right to distribute copies or records under this title, constitute an infringement of copyright actionable under section 35 [ 17 U. S. C. §501].” Id., Preliminary Draft for Revised U. S. Copyright Law and Discussions and Comments, 88th Cong., 2d Sess., pt. 3, pp. 32–33 (Comm. Print 1964).

In discussing the draft, some of those present expressed concern about its effect on the “first sale” doctrine. For example, Irwin Karp, representing the Authors League of America asked, “If a German jobber lawfully buys copies from a German publisher, are we not running into the problem of restricting his transfer of his lawfully obtained copies?” Id., pt. 4, at 211. The Copyright Office representative replied, “This could vary from one situation to another, I guess. I should guess, for example, that if a book publisher transports [i.e., does not sell] copies to a wholesaler [i.e., a nonowner], this is not yet the kind of transaction that exhausts the right to control disposition.” Ibid. (emphasis added).

The Office later withdrew the draft, replacing it with a draft, which, by explicitly referring to §106, was similar to the provision that became law, now §602(a)(1). The Office noted in a report that, under the new draft, importation of a copy (without permission) “would violate the exclusive rights of the U. S. copyright owner . . . where the copyright owner had authorized the making of copies in a foreign country for distribution only in that country.” Id., pt. 6, at 150.

Still, that part of the report says nothing about the “first sale” doctrine, about §109(a), or about the five words, “lawfully made under this title.” And neither the report nor its accompanying 1960’s draft answers the question before us here. Cf. Quality King, 523 U. S., at 145 (without those five words, the import clause, via its reference to §106, imports the “first sale” doctrine).

But to ascertain the best reading of §109(a), rather than dissecting the remarks of industry representatives concerning §602 at congressional meetings held 10 years before the statute was enacted, see post, at 13–16, we would give greater weight to the congressional report accompanying §109(a), written a decade later when Congress passed the new law. That report says:

“Section 109(a) restates and confirms the principle that, where the copyright owner has transferred ownership of a particular copy or phonorecord of a work, the person to whom the copy or phonorecord is transferred is entitled to dispose of it by sale, rental, or any other means. Under this principle, which has been established by the court decisions and . . . the present law, the copyright owner’s exclusive right of public distribution would have no effect upon anyone who owns ‘a particular copy or phonorecord lawfully made under this title’ and who wishes to transfer it to someone else or to destroy it.

.      .      .      .      .

“To come within the scope of section 109(a), a copy or phonorecord must have been ‘lawfully made under this title,’ though not necessarily with the copyright owner’s authorization. For example, any resale of an illegally ‘pirated’ phonorecord would be an infringement but the disposition of a phonorecord legally made under the compulsory licensing provisions of section 115 would not.” H. R. Rep. No. 94–1476, at 79 (emphasis added).

Accord, S. Rep. No. 94–473, pp. 71–72 (1975).

This history reiterates the importance of the “first sale” doctrine. See, e.g., Copyright Law Revision, 1964 Revision Bill with Discussions and Comments, 89th Cong., 1st Sess., pt. 5, p. 66 (Comm. Print 1965) (“[F]ull ownership of a lawfully-made copy authorizes its owner to dispose of it freely”). It explains, as we have explained, the nongeographical purposes of the words “lawfully made under this title.” Part II–B, supra. And it says nothing about geography. Nor, importantly, did §109(a)’s predecessor provision. See supra, at 12. This means that, contrary to the dissent’s suggestion, any lack of legislative history pertaining to the “first sale” doctrine only tends to bolster our position that Congress’ 1976 revision did not intend to create a drastic geographical change in its revision to that provision. See post, at 18, n. 13. We consequently believe that the legislative history, on balance, supports the nongeographical interpretation.

Third, Wiley and the dissent claim that a nongeographical interpretation will make it difficult, perhaps impossible, for publishers (and other copyright holders) to divide foreign and domestic markets. We concede that is so. A publisher may find it more difficult to charge different prices for the same book in different geographic markets. But we do not see how these facts help Wiley, for we can find no basic principle of copyright law that suggests that publishers are especially entitled to such rights.

The Constitution describes the nature of American copyright law by providing Congress with the power to “secur[e]” to “[a]uthors” “for limited [t]imes” the “exclusive [r]ight to their . . . [w]ritings.” Art. I, §8, cl. 8. The Founders, too, discussed the need to grant an author a limited right to exclude competition. Compare Letter from Thomas Jefferson to James Madison (July 31, 1788), in 13 Papers of Thomas Jefferson 440, 442–443 (J. Boyd ed. 1956) (arguing against any monopoly) with Letter from James Madison to Thomas Jefferson (Oct. 17, 1788), in 14 id., at 16, 21 (J. Boyd ed. 1958) (arguing for a limited monopoly to secure production). But the Constitution’s language nowhere suggests that its limited exclusive right should include a right to divide markets or a concomitant right to charge different purchasers different prices for the same book, say to increase or to maximize gain. Neither, to our knowledge, did any Founder make any such suggestion. We have found no precedent suggesting a legal preference for interpretations of copyright statutes that would provide for market divisions. Cf. Copyright Law Revision, pt. 2, at 194 (statement of Barbara Ringer, Copyright Office) (division of territorial markets was “primarily a matter of private contract”).

To the contrary, Congress enacted a copyright law that (through the “first sale” doctrine) limits copyright holders’ ability to divide domestic markets. And that limitation is consistent with antitrust laws that ordinarily forbid market divisions. Cf. Palmer v. BRG of Ga., Inc., 498 U. S. 46 –50 (1990) (per curiam) (“[A]greements between competitors to allocate territories to minimize competition are illegal”). Whether copyright owners should, or should not, have more than ordinary commercial power to divide international markets is a matter for Congress to decide. We do no more here than try to determine what decision Congress has taken.

Fourth, the dissent and Wiley contend that our decision launches United States copyright law into an unprecedented regime of “international exhaustion.” Post, at 18–23; Brief for Respondent 45–46. But they point to nothing indicative of congressional intent in 1976. The dissent also claims that it is clear that the United States now opposes adopting such a regime, but the Solicitor General as amicus has taken no such position in this case. In fact, when pressed at oral argument, the Solicitor General stated that the consequences of Wiley’s reading of the statute (perpetual downstream control) were “worse” than those of Kirtsaeng’s reading (restriction of market segmentation). Tr. of Oral Arg. 51. And the dissent’s reliance on the Solicitor General’s position in Quality King is undermined by his agreement in that case with our reading of §109(a). Brief for United States as Amicus Curiae in Quality King, O. T. 1996, No. 1470, p. 30 (“When . . . Congress wishes to make the location of manufacture relevant to Copyright Act protection, it does so expressly”); ibid. (calling it “distinctly unlikely” that Congress would have provided an incentive for overseas manufacturing).

Moreover, the exhaustion regime the dissent apparently favors would provide that “the sale in one country of a good” does not “exhaus[t] the intellectual-property owner’s right to control the distribution of that good elsewhere.” Post, at 18–19. But our holding in Quality King that §109(a) is a defense in U. S. courts even when “the first sale occurred abroad,” 523 U. S., at 145, n. 14, has already significantly eroded such a principle.

IV

For these reasons we conclude that the considerations supporting Kirtsaeng’s nongeographical interpretation of the words “lawfully made under this title” are the more persuasive. The judgment of the Court of Appeals is reversed, and the case is remanded for further proceedings consistent with this opinion.

It is so ordered.

SUPREME COURT OF THE UNITED STATES

_________________

No. 11–697

_________________

SUPAP KIRTSAENG, dba BLUECHRISTINE99, PETITIONER v. JOHN WILEY & SONS, INC.

on writ of certiorari to the united states court of appeals for the second circuit

[March 19, 2013]

Justice Ginsburg, with whom Justice Kennedy joins, and with whom Justice Scalia joins except as to Parts III and V–B–1, dissenting.

“In the interpretation of statutes, the function of the courts is easily stated. It is to construe the language so as to give effect to the intent of Congress.” United States v. American Trucking Assns., Inc., 310 U. S. 534, 542 (1940) . Instead of adhering to the Legislature’s design, the Court today adopts an interpretation of the Copyright Act at odds with Congress’ aim to protect copyright owners against the unauthorized importation of low-priced, foreign-made copies of their copyrighted works. The Court’s bold departure from Congress’ design is all the more stunning, for it places the United States at the vanguard of the movement for “international exhaustion” of copyrights—a movement the United States has steadfastly resisted on the world stage.

To justify a holding that shrinks to insignificance copyright protection against the unauthorized importation of foreign-made copies, the Court identifies several “practical problems.” Ante, at 24. The Court’s parade of horribles, however, is largely imaginary. Congress’ objective in enacting 17 U. S. C. §602(a)(1)’s importation prohibition can be honored without generating the absurd consequences hypothesized in the Court’s opinion. I dissent from the Court’s embrace of “international exhaustion,” and would affirm the sound judgment of the Court of Appeals.

I

Because economic conditions and demand for particular goods vary across the globe, copyright owners have a financial incentive to charge different prices for copies of their works in different geographic regions. Their ability to engage in such price discrimination, however, is undermined if arbitrageurs are permitted to import copies from low-price regions and sell them in high-price regions. The question in this case is whether the unauthorized importation of foreign-made copies constitutes copyright infringement under U. S. law.

To answer this question, one must examine three provisions of Title 17 of the U. S. Code: §§106(3), 109(a), and 602(a)(1). Section 106 sets forth the “exclusive rights” of a copyright owner, including the right “to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending.” §106(3). This distribution right is limited by §109(a), which provides: “Notwithstanding the provisions of section 106(3), the owner of a particular copy or phonorecord lawfully made under this title . . . is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord.” Section 109(a) codifies the “first sale doctrine,” a doctrine articulated in Bobbs-Merrill Co. v. Straus, 210 U. S. 339 –351 (1908), which held that a copyright owner could not control the price at which retailers sold lawfully purchased copies of its work. The first sale doctrine recognizes that a copyright owner should not be permitted to exercise perpetual control over the distribution of copies of a copyrighted work. At some point—ordinarily the time of the first commercial sale—the copyright owner’s exclusive right under §106(3) to control the distribution of a particular copy is exhausted, and from that point forward, the copy can be resold or otherwise redistributed without the copyright owner’s authorization.

Section 602(a)(1) (2006 ed., Supp. V) 1 —last, but most critical, of the three copyright provisions bearing on this case—is an importation ban. It reads:

“Importation into the United States, without the authority of the owner of copyright under this title, of copies or phonorecords of a work that have been acquired outside the United States is an infringement of the exclusive right to distribute copies or phonorecords under section 106, actionable under section 501.”

In Quality King Distributors, Inc. v. L’anza Research Int’l, Inc., 523 U. S. 135 –154 (1998), the Court held that a copyright owner’s right to control importation under §602(a)(1) is a component of the distribution right set forth in §106(3) and is therefore subject to §109(a)’s codification of the first sale doctrine. Quality King thus held that the importation of copies made in the United States but sold abroad did not rank as copyright infringement under §602(a)(1). Id., at 143–154. See also id., at 154 (Ginsburg, J., concurring) (Quality King “involve[d] a ‘round trip’ journey, travel of the copies in question from the United States to places abroad, then back again”). 2 Important to the Court’s holding, the copies at issue in Quality King had been “ ‘lawfully made under [Title 17]’ ”—a prerequisite for application of §109(a). Id., at 143, n. 9 (quoting §109(a)). Section 602(a)(1), the Court noted, would apply to “copies that were ‘lawfully made’ not under the United States Copyright Act, but instead, under the law of some other country.” Id., at 147. Drawing on an example discussed during a 1964 public meeting on proposed revisions to the U. S. copyright laws, 3 the Court stated:

“If the author of [a] work gave the exclusive United States distribution rights—enforceable under the Act—to the publisher of the United States edition and the exclusive British distribution rights to the publisher of the British edition, . . . presumably only those [copies] made by the publisher of the United States edition would be ‘lawfully made under this title’ within the meaning of §109(a). The first sale doctrine would not provide the publisher of the British edition who decided to sell in the American market with a defense to an action under §602(a) (or, for that matter, to an action under §106(3), if there was a distribution of the copies).” Id., at 148.

As the District Court and the Court of Appeals concluded, see 654 F. 3d 210, 221–222 (CA2 2011); App. to Pet. for Cert. 70a–73a, application of the Quality King analysis to the facts of this case would preclude any invocation of §109(a). Petitioner Supap Kirtsaeng imported and then sold at a profit over 600 copies of copyrighted textbooks printed outside the United States by the Asian subsidiary of respondent John Wiley & Sons, Inc. (Wiley). App. 29–34. See also ante, at 3–5 (opinion of the Court). In the words the Court used in Quality King, these copies “were ‘lawfully made’ not under the United States Copyright Act, but instead, under the law of some other country.” 523 U. S., at 147. Section 109(a) therefore does not apply, and Kirtsaeng’s unauthorized importation constitutes copyright infringement under §602(a)(1).

The Court does not deny that under the language I have quoted from Quality King, Wiley would prevail. Ante, at 27. Nevertheless, the Court dismisses this language, to which all Members of the Quality King Court subscribed, as ill-considered dictum. Ante, at 27–28. I agree that the discussion was dictum in the sense that it was not essential to the Court’s judgment. See Quality King, 523 U. S., at 154 (Ginsburg, J., concurring) (“[W]e do not today resolve cases in which the allegedly infringing imports were manufactured abroad.”). But I disagree with the Court’s conclusion that this dictum was ill considered. Instead, for the reasons explained below, I would hold, consistently with Quality King’s dictum, that §602(a)(1) authorizes a copyright owner to bar the importation of a copy manufactured abroad for sale abroad.

II

The text of the Copyright Act demonstrates that Congress intended to provide copyright owners with a potent remedy against the importation of foreign-made copies of their copyrighted works. As the Court recognizes, ante, at 3, this case turns on the meaning of the phrase “lawfully made under this title” in §109(a). In my view, that phrase is most sensibly read as referring to instances in which a copy’s creation is governed by, and conducted in compliance with, Title 17 of the U. S. Code. This reading is consistent with the Court’s interpretation of similar language in other statutes. See Florida Dept. of Revenue v. Piccadilly Cafeterias, Inc., 554 U. S. 33 –53 (2008) (“under” in 11 U. S. C. §1146(a), a Bankruptcy Code provision exempting certain asset transfers from stamp taxes, means “pursuant to”); Ardestani v. INS, 502 U. S. 129, 135 (1991) (the phrase “under section 554” in the Equal Access to Justice Act means “subject to” or “governed by” 5 U. S. C. §554 (internal quotation marks omitted)). It also accords with dictionary definitions of the word “under.” See, e.g., American Heritage Dictionary 1887 (5th ed. 2011) (“under” means, among other things, “[s]ubject to the authority, rule, or control of”).

Section 109(a), properly read, affords Kirtsaeng no defense against Wiley’s claim of copyright infringement. The Copyright Act, it has been observed time and again, does not apply extraterritorially. See United Dictionary Co. v. G. & C. Merriam Co., 208 U. S. 260, 264 (1908) (copyright statute requiring that U. S. copyright notices be placed in all copies of a work did not apply to copies published abroad because U. S. copyright laws have no “force” beyond the United States’ borders); 4 M. Nimmer & D. Nimmer, Copyright §17.02, p. 17–18 (2012) (hereinafter Nimmer) (“[C]opyright laws do not have any extraterritorial operation.”); 4 W. Patry, Copyright §13:22, p. 13–66 (2012) (hereinafter Patry) (“Copyright laws are rigorously territorial.”). The printing of Wiley’s foreign-manufactured textbooks therefore was not governed by Title 17. The textbooks thus were not “lawfully made under [Title 17],” the crucial precondition for application of §109(a). And if §109(a) does not apply, there is no dispute that Kirtsaeng’s conduct constituted copyright infringement under §602(a)(1).

The Court’s point of departure is similar to mine. According to the Court, the phrase “ ‘lawfully made under this title’ means made ‘in accordance with’ or ‘in compliance with’ the Copyright Act.” Ante, at 8. But the Court overlooks that, according to the very dictionaries it cites, ante, at 9, the word “under” commonly signals a relationship of subjection, where one thing is governed or regulated by another. See Black’s Law Dictionary 1525 (6th ed. 1990) (“under” “frequently” means “inferior” or “subordinate” (internal quotation marks omitted)); 18 Oxford English Dictionary 950 (2d ed. 1989) (“under” means, among other things, “[i]n accordance with (some regulative power or principle)” (emphasis added)). See also Webster’s Third New International Dictionary 2487 (1961) (“under” means, among other things, “in . . . a condition of subjection, regulation, or subordination” and “suffering restriction, restraint, or control by”). Only by disregarding this established meaning of “under” can the Court arrive at the conclusion that Wiley’s foreign-manufactured textbooks were “lawfully made under” U. S. copyright law, even though that law did not govern their creation. It is anomalous, however, to speak of particular conduct as “lawful” under an inapplicable law. For example, one might say that driving on the right side of the road in England is “lawful” under U. S. law, but that would be so only because U. S. law has nothing to say about the subject. The governing law is English law, and English law demands that driving be done on the left side of the road. 4

The logical implication of the Court’s definition of the word “under” is that any copy manufactured abroad—even a piratical one made without the copyright owner’s authorization and in violation of the law of the country where it was created—would fall within the scope of §109(a). Any such copy would have been made “in accordance with” or “in compliance with” the U. S. Copyright Act, in the sense that manufacturing the copy did not violate the Act (because the Act does not apply extraterritorially).

The Court rightly refuses to accept such an absurd conclusion. Instead, it interprets §109(a) as applying only to copies whose making actually complied with Title 17, or would have complied with Title 17 had Title 17 been applicable (i.e., had the copies been made in the United States). See ante, at 8 (“§109(a)’s ‘first sale’ doctrine would apply to copyrighted works as long as their manufacture met the requirements of American copyright law.”). Congress, however, used express language when it called for such a counterfactual inquiry in 17 U. S. C. §§602(a)(2) and (b). See §602(a)(2) (“Importation into the United States or exportation from the United States, without the authority of the owner of copyright under this title, of copies or phonorecords, the making of which either constituted an infringement of copyright, or which would have constituted an infringement of copyright if this title had been applicable, is an infringement of the exclusive right to distribute copies or phonorecords under section 106.” (emphasis added)); §602(b) (“In a case where the making of the copies or phonorecords would have constituted an infringement of copyright if this title had been applicable, their importation is prohibited.” (emphasis added)). Had Congress intended courts to engage in a similarly hypothetical inquiry under §109(a), Congress would presumably have included similar language in that section. See Russello v. United States, 464 U. S. 16, 23 (1983) (“ ‘[W]here Congress includes particular language in one section of a statute but omits it in another section of the same Act, it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion.’ ” (quoting United States v. Wong Kim Bo, 472 F. 2d 720, 722 (CA5 1972) (per curiam); brackets in original)). 5

Not only does the Court adopt an unnatural construction of the §109(a) phrase “lawfully made under this title.” Concomitantly, the Court reduces §602(a)(1) to insignificance. As the Court appears to acknowledge, see ante, at 26, the only independent effect §602(a)(1) has under today’s decision is to prohibit unauthorized importations carried out by persons who merely have possession of, but do not own, the imported copies. See 17 U. S. C. §109(a) (§109(a) applies to any “owner of a particular copy or phonorecord lawfully made under this title” (emphasis added)). 6 If this is enough to avoid rendering §602(a)(1) entirely “superfluous,” ante, at 26, it hardly suffices to give the owner’s importation right the scope Congress intended it to have. Congress used broad language in §602(a)(1); it did so to achieve a broad objective. Had Congress intended simply to provide a copyright remedy against larcenous lessees, licensees, consignees, and bailees of films and other copyright-protected goods, see ante, at 13–14, 26, it likely would have used language tailored to that narrow purpose. See 2 Nimmer §8.12[B][6][c], at 8–184.31, n. 432 (“It may be wondered whether . . . potential causes of action [against licensees and the like] are more than theoretical.”). See also ante, at 2 (Kagan, J., concurring) (the Court’s decision limits §602(a)(1) “to a fairly esoteric set of applications”). 7

The Court’s decision also overwhelms 17 U. S. C. §602(a)(3)’s exceptions to §602(a)(1)’s importation prohibition. 2 P. Goldstein, Copyright §7.6.1.2(a), p. 7:141 (3d ed. 2012) (hereinafter Goldstein). 8 Those exceptions permit the importation of copies without the copyright owner’s authorization for certain governmental, personal, scholarly, educational, and religious purposes. 17 U. S. C. §602(a)(3). Copies imported under these exceptions “will often be lawfully made gray market goods purchased through normal market channels abroad.” 2 Goldstein §7.6.1.2(a), at 7:141. 9 But if, as the Court holds, such copies can in any event be imported by virtue of §109(a), §602(a)(3)’s work has already been done. For example, had Congress conceived of §109(a)’s sweep as the Court does, what earthly reason would there be to provide, as Congress did in §602(a)(3)(C), that a library may import “no more than five copies” of a non-audiovisual work for its “lending or archival purposes”?

The far more plausible reading of §§109(a) and 602(a), then, is that Congress intended §109(a) to apply to copies made in the United States, not to copies manufactured and sold abroad. That reading of the first sale and importation provisions leaves §602(a)(3)’s exceptions with real, meaningful work to do. See TRW Inc. v. Andrews, 534 U. S. 19, 31 (2001) (“It is a cardinal principle of statutory construction that a statute ought, upon the whole, to be so construed that, if it can be prevented, no clause, sentence, or word shall be superfluous, void, or insignificant.” (internal quotation marks omitted)). In the range of circumstances covered by the exceptions, §602(a)(3) frees individuals and entities who purchase foreign-made copies abroad from the requirement they would otherwise face under §602(a)(1) of obtaining the copyright owner’s permission to import the copies into the United States. 10

III

The history of §602(a)(1) reinforces the conclusion I draw from the text of the relevant provisions: §109(a) does not apply to copies manufactured abroad. Section 602(a)(1) was enacted as part of the Copyright Act of 1976, 90Stat. 2589–2590. That Act was the product of a lengthy revision effort overseen by the U. S. Copyright Office. See Mills Music, Inc. v. Snyder, 469 U. S. 153 –160 (1985). In its initial 1961 report on recommended revisions, the Copyright Office noted that publishers had “suggested that the [then-existing] import ban on piratical copies should be extended to bar the importation of . . . foreign edition[s]” in violation of “agreements to divide international markets for copyrighted works.” Copyright Law Revision: Report of the Register of Copyrights on the General Revision of the U. S. Copyright Law, 87th Cong., 1st Sess., 126 (H. R. Judiciary Comm. Print 1961) (hereinafter Copyright Law Revision). See Copyright Act of 1947, §106, 61Stat. 663 (“The importation into the United States . . . of any piratical copies of any work copyrighted in the United States . . . is prohibited.”). The Copyright Office originally recommended against such an extension of the importation ban, reasoning that enforcement of territorial restrictions was best left to contract law. Copyright Law Revision 126.

Publishing-industry representatives argued strenuously against the position initially taken by the Copyright Office. At a 1962 panel discussion on the Copyright Office’s report, for example, Horace Manges of the American Book Publishers Council stated:

“When a U. S. book publisher enters into a contract with a British publisher to acquire exclusive U. S. rights for a particular book, he often finds that the English edition . . . of that particular book finds its way into this country. Now it’s all right to say, ‘Commence a lawsuit for breach of contract.’ But this is expensive, burdensome, and, for the most part, ineffective.” Copyright Law Revision Part 2: Discussion and Comments on Report of the Register of Copyrights on the General Revision of the U. S. Copyright Law, 88th Cong., 1st Sess., 212 (H. R. Judiciary Comm. Print 1963).

Sidney Diamond, representing London Records, elaborated on Manges’ statement. “There are many situations,” he explained, “in which it is not necessarily a question of the inadequacy of a contract remedy—in the sense that it may be difficult or not quick enough to solve the particular problem.” Id., at 213. “Very frequently,” Diamond stated, publishers “run into a situation where . . . copies of [a] work . . . produced in a foreign country . . . may be shipped [to the United States] without violating any contract of the U. S. copyright proprietor.” Ibid. To illustrate, Diamond noted, if a “British publisher [sells a copy] to an individual who in turn ship[s] it over” to the United States, the individual’s conduct would not “violate [any] contract between the British and the American publisher.” Ibid. In such a case, “no possibility of any contract remedy” would exist. Ibid. The facts of Kirtsaeng’s case fit Diamond’s example, save that the copies at issue here were printed and initially sold in Asia rather than Great Britain.

After considering comments on its 1961 report, the Copyright Office “prepared a preliminary draft of provisions for a new copyright statute.” Copyright Law Revision Part 3: Preliminary Draft for Revised U. S. Copyright Law and Discussions and Comments on the Draft, 88th Cong., 2d Sess., v (H. R. Judiciary Comm. Print 1964). Section 44 of the draft statute addressed the concerns raised by publishing-industry representatives. In particular, §44(a) provided:

“Importation into the United States of copies or records of a work for the purpose of distribution to the public shall, if such articles are imported without the authority of the owner of the exclusive right to distribute copies or records under this title, constitute an infringement of copyright actionable under section 35 [i.e., the section providing for a private cause of action for copyright infringement].” Id., at 32–33.

In a 1964 panel discussion regarding the draft statute, Abe Goldman, the Copyright Office’s General Counsel, left no doubt about the meaning of §44(a). It represented, he explained, a “shif[t]” from the Copyright Office’s 1961 report, which had recommended against using copyright law to facilitate publishers’ efforts to segment international markets. Copyright Law Revision Part 4: Further Discussions and Comments on Preliminary Draft for Revised U. S. Copyright Law, 88th Cong., 2d Sess., 203 (H. R. Judiciary Comm. Print 1964). Section 44(a), Goldman stated, would allow copyright owners to bring infringement actions against importers of “foreign copies that were made under proper authority.” Ibid. See also id., at 205–206 (Goldman agreed with a speaker’s comment that §44(a) “enlarge[d]” U. S. copyright law by extending import prohibitions “to works legally produced in Europe” and other foreign countries). 11

The next step in the copyright revision process was the introduction in Congress of a draft bill on July 20, 1964. See Copyright Law Revision Part 5: 1964 Revision Bill with Discussions and Comments, 89th Cong., 1st Sess., iii (H. R. Judiciary Comm. Print 1965). After another round of public comments, a revised bill was introduced on February 4, 1965. See Copyright Law Revision Part 6: Supplementary Report of the Register of Copyrights on the General Revision of the U. S. Copyright Law: 1965 Revision Bill, 89th Cong., 1st Sess., v (H. R. Judiciary Comm. Print 1965) (hereinafter Copyright Law Revision Part 6). In language closely resembling the statutory text later enacted by Congress, §602(a) of the 1965 bill provided:

“Importation into the United States, without the authority of the owner of copyright under this title, of copies or phonorecords of a work for the purpose of distribution to the public is an infringement of the exclusive right to distribute copies or phonorecords under section 106, actionable under section 501.” Id., at 292. 12

The Court implies that the 1965 bill’s “explici[t] refer[ence] to §106” showed a marked departure from §44(a) of the Copyright Office’s prior draft. Ante, at 29. The Copyright Office, however, did not see it that way. In its summary of the 1965 bill’s provisions, the Copyright Office observed that §602(a) of the 1965 bill, like §44(a) of the Copyright Office’s prior draft, see supra, at 15–16, permitted copyright owners to bring infringement actions against unauthorized importers in cases “where the copyright owner had authorized the making of [the imported] copies in a foreign country for distribution only in that country.” Copyright Law Revision Part 6, at 149–150. See also id., at xxvi (Under §602(a) of the 1965 bill, “[a]n unauthorized importer could be enjoined and sued for damages both where the copies or phonorecords he was importing were ‘piratical’ (that is, where their making would have constituted an infringement if the U. S. copyright law could have been applied), and where their making was ‘lawful.’ ”).

The current text of §602(a)(1) was finally enacted into law in 1976. See Copyright Act of 1976, §602(a), 90Stat. 2589–2590. The House and Senate Committee Reports on the 1976 Act demonstrate that Congress understood, as did the Copyright Office, just what that text meant. Both Reports state:

“Section 602 [deals] with two separate situations: importation of ‘piratical’ articles (that is, copies or phonorecords made without any authorization of the copyright owner), and unauthorized importation of copies or phonorecords that were lawfully made. The general approach of section 602 is to make unauthorized importation an act of infringement in both cases, but to permit the Bureau of Customs to prohibit importation only of ‘piratical’ articles.” S. Rep. No. 94–473, p. 151 (1975) (emphasis added). See also H. R. Rep. No. 94–1476, p. 169 (1976) (same).

In sum, the legislative history of the Copyright Act of 1976 is hardly “inconclusive.” Ante, at 28. To the contrary, it confirms what the plain text of the Act conveys: Congress intended §602(a)(1) to provide copyright owners with a remedy against the unauthorized importation of foreign-made copies of their works, even if those copies were made and sold abroad with the copyright owner’s authorization. 13

IV

Unlike the Court’s holding, my position is consistent with the stance the United States has taken in international-trade negotiations. This case bears on the highly contentious trade issue of interterritorial exhaustion. The issue arises because intellectual property law is territorial in nature, see supra, at 6, which means that creators of intellectual property “may hold a set of parallel” intellectual property rights under the laws of different nations. Chiappetta, The Desirability of Agreeing to Disagree: The WTO, TRIPS, International IPR Exhaustion and a Few Other Things, 21 Mich. J. Int’l L. 333, 340–341 (2000) (hereinafter Chiappetta). There is no international consensus on whether the sale in one country of a good incorporating protected intellectual property exhausts the intellectual property owner’s right to control the distribution of that good elsewhere. Indeed, the members of the World Trade Organization, “agreeing to disagree,” 14 provided in Article 6 of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), Apr. 15, 1994, 33 I. L. M. 1197, 1200, that “nothing in this Agreement shall be used to address the issue of . . . exhaustion.” See Chiappetta 346 (observing that exhaustion of intellectual property rights was “hotly debated” during the TRIPS negotiations and that Article 6 “reflects [the negotiators’] ultimate inability to agree” on a single international standard). Similar language appears in other treaties to which the United States is a party. See World Intellectual Property Organization (WIPO) Copyright Treaty, Art. 6(2), Dec. 20, 1996, S. Treaty Doc. No. 105–17, p. 7 (“Nothing in this Treaty shall affect the freedom of Contracting Parties to determine the conditions, if any, under which the exhaustion of the right [to control distribution of copies of a copyrighted work] applies after the first sale or other transfer of ownership of the original or a copy of the work with the authorization of the author.”); WIPO Performances and Phonograms Treaty, Art. 8(2), Dec. 20, 1996, S. Treaty Doc. No. 105–17, p. 28 (containing language nearly identical to Article 6(2) of the WIPO Copyright Treaty).

In the absence of agreement at the international level, each country has been left to choose for itself the exhaustion framework it will follow. One option is a national-exhaustion regime, under which a copyright owner’s right to control distribution of a particular copy is exhausted only within the country in which the copy is sold. See Forsyth & Rothnie, Parallel Imports, in The Interface Between Intellectual Property Rights and Competition Policy 429, 430 (S. Anderman ed. 2007) (hereinafter Forsyth & Rothnie). Another option is a rule of international exhaustion, under which the authorized distribution of a particular copy anywhere in the world exhausts the copyright owner’s distribution right everywhere with respect to that copy. See ibid. The European Union has adopted the intermediate approach of regional exhaustion, under which the sale of a copy anywhere within the European Economic Area exhausts the copyright owner’s distribution right throughout that region. See id., at 430, 445. Section 602(a)(1), in my view, ties the United States to a national-exhaustion framework. The Court’s decision, in contrast, places the United States solidly in the international-exhaustion camp.

Strong arguments have been made both in favor of, and in opposition to, international exhaustion. See Chiappetta 360 (“[r]easonable people making valid points can, and do, reach conflicting conclusions” regarding the desirability of international exhaustion). International exhaustion subjects copyright-protected goods to competition from lower priced imports and, to that extent, benefits consumers. Correspondingly, copyright owners profit from a national-exhaustion regime, which also enlarges the monetary incentive to create new copyrightable works. See Forsyth & Rothnie 432–437 (surveying arguments for and against international exhaustion).

Weighing the competing policy concerns, our Government reached the conclusion that widespread adoption of the international-exhaustion framework would be inconsistent with the long-term economic interests of the United States. See Brief for United States as Amicus Curiae in Quality King, O. T. 1997, No. 96–1470, pp. 22–26 (hereinafter Quality King Brief). 15 Accordingly, the United States has steadfastly “taken the position in international trade negotiations that domestic copyright owners should . . . have the right to prevent the unauthorized importation of copies of their work sold abroad.” Id., at 22. The United States has “advanced this position in multilateral trade negotiations,” including the negotiations on the TRIPS Agreement. Id., at 24. See also D. Gervais, The TRIPS Agreement: Drafting History and Analysis §2.63, p. 199 (3d ed. 2008). It has also taken a dim view of our trading partners’ adoption of legislation incorporating elements of international exhaustion. See Clapperton & Corones, Locking in Customers, Locking Out Competitors: Anti-Circumvention Laws in Australia and Their Potential Effect on Competition in High Technology Markets, 30 Melbourne U. L. Rev. 657, 664 (2006) (United States expressed concern regarding international-exhaustion legislation in Australia); Montén, Comment, The Inconsistency Between Section 301 and TRIPS: Counterproductive With Respect to the Future of International Protection of Intellectual Property Rights? 9 Marq. Intellectual Property L. Rev. 387, 417–418 (2005) (same with respect to New Zealand and Taiwan).

Even if the text and history of the Copyright Act were ambiguous on the answer to the question this case presents—which they are not, see Parts II–III, supra 16 —I would resist a holding out of accord with the firm position the United States has taken on exhaustion in international negotiations. Quality King, I acknowledge, discounted the Government’s concerns about potential inconsistency with United States obligations under certain bilateral trade agreements. See 523 U. S., at 153–154. See also Quality King Brief 22–24 (listing the agreements). That decision, however, dealt only with copyright-protected products made in the United States. See 523 U. S., at 154 (Ginsburg, J., concurring). Quality King left open the question whether owners of U. S. copyrights could retain control over the importation of copies manufactured and sold abroad—a point the Court obscures, see ante, at 33 (arguing that Quality King “significantly eroded” the national-exhaustion principle that, in my view, §602(a)(1) embraces). The Court today answers that question with a resounding “no,” and in doing so, it risks undermining the United States’ credibility on the world stage. While the Government has urged our trading partners to refrain from adopting international-exhaustion regimes that could benefit consumers within their borders but would impact adversely on intellectual-property producers in the United States, the Court embraces an international-exhaustion rule that could benefit U. S. consumers but would likely disadvantage foreign holders of U. S. copyrights. This dissonance scarcely enhances the United States’ “role as a trusted partner in multilateral endeavors.” Vimar Seguros y Reaseguros, S. A. v. M/V Sky Reefer, 515 U. S. 528, 539 (1995) .

V

I turn now to the Court’s justifications for a decision difficult to reconcile with the Copyright Act’s text and history.

A

The Court asserts that its holding “is consistent with antitrust laws that ordinarily forbid market divisions.” Ante, at 32. See also ante, at 18 (again referring to antitrust principles). Section 602(a)(1), however, read as I do and as the Government does, simply facilitates copyright owners’ efforts to impose “vertical restraints” on distributors of copies of their works. See Forsyth & Rothnie 435 (“Parallel importation restrictions enable manufacturers and distributors to erect ‘vertical restraints’ in the market through exclusive distribution agreements.”). See generally Leegin Creative Leather Products, Inc. v. PSKS, Inc., 551 U. S. 877 (2007) (discussing vertical restraints). We have held that vertical restraints are not per se illegal under §1 of the Sherman Act, 15 U. S. C. §1, because such “restraints can have procompetitive effects.” 551 U. S., at 881–882. 17

B

The Court sees many “horribles” following from a holding that the §109(a) phrase “lawfully made under this title” does not encompass foreign-made copies. Ante, at 22 (internal quotation marks omitted). If §109(a) excluded foreign-made copies, the Court fears, then copyright owners could exercise perpetual control over the downstream distribution or public display of such copies. A ruling in Wiley’s favor, the Court asserts, would shutter libraries, put used-book dealers out of business, cripple art museums, and prevent the resale of a wide range of consumer goods, from cars to calculators. Ante, at 19–22. See also ante, at 2–3 (Kagan, J., concurring) (expressing concern about “imposing downstream liability on those who purchase and resell in the United States copies that happen to have been manufactured abroad”). Copyright law and precedent, however, erect barriers to the anticipated horribles. 18

1

Recognizing that foreign-made copies fall outside the ambit of §109(a) would not mean they are forever free of the first sale doctrine. As earlier observed, see supra, at 2, the Court stated that doctrine initially in its 1908 Bobbs-Merrill decision. At that time, no statutory provision expressly codified the first sale doctrine. Instead, copyright law merely provided that copyright owners had “the sole liberty of printing, reprinting, publishing, completing, copying, executing, finishing, and vending” their works. Copyright Act of 1891, §1, 26Stat. 1107.

In Bobbs-Merrill, the Court addressed the scope of the statutory right to “ven[d].” In granting that right, the Court held, Congress did not intend to permit copyright owners “to fasten . . . a restriction upon the subsequent alienation of the subject-matter of copyright after the owner had parted with the title to one who had acquired full dominion over it and had given a satisfactory price for it.” 210 U. S., at 349–350. “[O]ne who has sold a copyrighted article . . . without restriction,” the Court explained, “has parted with all right to control the sale of it.” Id., at 350. Thus, “[t]he purchaser of a book, once sold by authority of the owner of the copyright, may sell it again, although he could not publish a new edition of it.” Ibid.

Under the logic of Bobbs-Merrill, the sale of a foreign-manufactured copy in the United States carried out with the copyright owner’s authorization would exhaust the copyright owner’s right to “vend” that copy. The copy could thenceforth be resold, lent out, or otherwise redistributed without further authorization from the copyright owner. Although §106(3) uses the word “distribute” rather than “vend,” there is no reason to think Congress intended the word “distribute” to bear a meaning different from the construction the Court gave to the word “vend” in Bobbs-Merrill. See ibid. (emphasizing that the question before the Court was “purely [one] of statutory construction”). 19 Thus, in accord with Bobbs-Merrill, the first authorized distribution of a foreign-made copy in the United States exhausts the copyright owner’s distribution right under §106(3). After such an authorized distribution, a library may lend, or a used-book dealer may resell, the foreign-made copy without seeking the copyright owner’s permission. Cf. ante, at 19–21.

For example, if Wiley, rather than Kirtsaeng, had imported into the United States and then sold the foreign-made textbooks at issue in this case, Wiley’s §106(3) distribution right would have been exhausted under the rationale of Bobbs-Merrill. Purchasers of the textbooks would thus be free to dispose of the books as they wished without first gaining a license from Wiley.

This line of reasoning, it must be acknowledged, significantly curtails the independent effect of §109(a). If, as I maintain, the term “distribute” in §106(3) incorporates the first sale doctrine by virtue of Bobbs-Merrill, then §109(a)’s codification of that doctrine adds little to the regulatory regime. 20 Section 109(a), however, does serve as a statutory bulwark against courts deviating from Bobbs-Merrill in a way that increases copyright owners’ control over downstream distribution, and legislative history indicates that is precisely the role Congress intended §109(a) to play. Congress first codified the first sale doctrine in §41 of the Copyright Act of 1909, 35Stat. 1084. 21 It did so, the House Committee Report on the 1909 Act explains, “in order to make . . . clear that [Congress had] no intention [of] enlarg[ing] in any way the construction to be given to the word ‘vend.’ ” H. R. Rep. No. 2222, 60th Cong., 2d Sess., 19 (1909). According to the Committee Report, §41 was “not intended to change [existing law] in any way.” Ibid. The position I have stated and explained accords with this expression of congressional intent. In enacting §41 and its successors, I would hold, Congress did not “change . . . existing law,” ibid., by stripping the word “vend” (and thus its substitute “distribute”) of the limiting construction imposed in Bobbs-Merrill.

In any event, the reading of the Copyright Act to which I subscribe honors Congress’ aim in enacting §109(a) while the Court’s reading of the Act severely diminishes §602(a)(1)’s role. See supra, at 10–12. My position in no way tugs against the principle underlying §109(a)—i.e., that certain conduct by the copyright owner exhausts the owner’s §106(3) distribution right. The Court, in contrast, fails to give meaningful effect to Congress’ manifest intent in §602(a)(1) to grant copyright owners the right to control the importation of foreign-made copies of their works.

2

Other statutory prescriptions provide further protection against the absurd consequences imagined by the Court. For example, §602(a)(3)(C) permits “an organization operated for scholarly, educational, or religious purposes” to import, without the copyright owner’s authorization, up to five foreign-made copies of a non-audiovisual work—notably, a book—for “library lending or archival purposes.” But cf. ante, at 19–20 (suggesting that affirming the Second Circuit’s decision might prevent libraries from lending foreign-made books). 22

The Court also notes that amici representing art museums fear that a ruling in Wiley’s favor would prevent museums from displaying works of art created abroad. Ante, at 22 (citing Brief for Association of Art Museum Directors et al.). These amici observe that a museum’s right to display works of art often depends on 17 U. S. C. §109(c). See Brief for Association of Art Museum Directors et al. 11–13. 23 That provision addresses exhaustion of a copyright owner’s exclusive right under §106(5) to publicly display the owner’s work. Because §109(c), like §109(a), applies only to copies “lawfully made under this title,” amici contend that a ruling in Wiley’s favor would prevent museums from invoking §109(c) with respect to foreign-made works of art. Id., at 11–13. 24

Limiting §109(c) to U. S.-made works, however, does not bar art museums from lawfully displaying works made in other countries. Museums can, of course, seek the copyright owner’s permission to display a work. Furthermore, the sale of a work of art to a U. S. museum may carry with it an implied license to publicly display the work. See 2 Patry §5:131, at 5–280 (“[C]ourts have noted the potential availability of an implied nonexclusive licens[e] when the circumstances . . . demonstrate that the parties intended that the work would be used for a specific purpose.”). Displaying a work of art as part of a museum exhibition might also qualify as a “fair use” under 17 U. S. C. §107. Cf. Bouchat v. Baltimore Ravens Ltd. Partnership, 619 F. 3d 301, 313–316 (CA4 2010) (display of copyrighted logo in museum-like exhibition constituted “fair use”).

The Court worries about the resale of foreign-made consumer goods “contain[ing] copyrightable software programs or packaging.” Ante, at 21. For example, the Court observes that a car might be programmed with diverse forms of software, the copyrights to which might be owned by individuals or entities other than the manufacturer of the car. Ibid. Must a car owner, the Court asks, obtain permission from all of these various copyright owners before reselling her car? Ibid. Although this question strays far from the one presented in this case and briefed by the parties, principles of fair use and implied license (to the extent that express licenses do not exist) would likely permit the car to be resold without the copyright owners’ authorization. 25

Most telling in this regard, no court, it appears, has been called upon to answer any of the Court’s “horribles” in an actual case. Three decades have passed since a federal court first published an opinion reading §109(a) as applicable exclusively to copies made in the United States. See Columbia Broadcasting System, Inc. v. Scorpio Music Distributors, Inc., 569 F. Supp. 47, 49 (ED Pa. 1983), summarily aff’d, 738 F. 2d 424 (CA3 1984) (table). Yet Kirtsaeng and his supporting amici cite not a single case in which the owner of a consumer good authorized for sale in the United States has been sued for copyright infringement after reselling the item or giving it away as a gift or to charity. The absence of such lawsuits is unsurprising. Routinely suing one’s customers is hardly a best business practice. 26 Manufacturers, moreover, may be hesitant to do business with software programmers taken to suing consumers. Manufacturers may also insist that software programmers agree to contract terms barring such lawsuits.

The Court provides a different explanation for the absence of the untoward consequences predicted in its opinion—namely, that lower court decisions regarding the scope of §109(a)’s first sale prescription have not been uniform. Ante, at 23. Uncertainty generated by these conflicting decisions, the Court notes, may have deterred some copyright owners from pressing infringement claims. Ante, at 23–24. But if, as the Court suggests, there are a multitude of copyright owners champing at the bit to bring lawsuits against libraries, art museums, and consumers in an effort to exercise perpetual control over the downstream distribution and public display of foreign-made copies, might one not expect that at least a handful of such lawsuits would have been filed over the past 30 years? The absence of such suits indicates that the “practical problems” hypothesized by the Court are greatly exaggerated. Ante, at 24. 27 They surely do not warrant disregarding Congress’ intent, expressed in §602(a)(1), to grant copyright owners the authority to bar the importation of foreign-made copies of their works. Cf. Hartford Underwriters Ins. Co. v. Union Planters Bank, N. A., 530 U. S. 1, 6 (2000) (“[W]hen the statute’s language is plain, the sole function of the courts—at least where the disposition required by the text is not absurd—is to enforce it according to its terms.” (internal quotation marks omitted)).

VI

To recapitulate, the objective of statutory interpretation is “to give effect to the intent of Congress.” American Trucking Assns., 310 U. S., at 542. Here, two congressional aims are evident. First, in enacting §602(a)(1), Congress intended to grant copyright owners permission to segment international markets by barring the importation of foreign-made copies into the United States. Second, as codification of the first sale doctrine underscores, Congress did not want the exclusive distribution right conferred in §106(3) to be boundless. Instead of harmonizing these objectives, the Court subordinates the first entirely to the second. It is unsurprising that none of the three major treatises on U. S. copyright law embrace the Court’s construction of §109(a). See 2 Nimmer §8.12[B][6][c], at 8–184.34 to 8–184.35; 2 Goldstein §7.6.1.2(a), at 7:141; 4 Patry §§13:22, 13:44, 13:44.10.

Rather than adopting the very international-exhaustion rule the United States has consistently resisted in international-trade negotiations, I would adhere to the national-exhaustion framework set by the Copyright Act’s text and history. Under that regime, codified in §602(a)(1), Kirtsaeng’s unauthorized importation of the foreign-made textbooks involved in this case infringed Wiley’s copyrights. I would therefore affirm the Second Circuit’s judgment.

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1  In 2008, Congress renumbered what was previously §602(a) as §602(a)(1). See Prioritizing Resources and Organization for Intellectual Property Act of 2008 (PROIPA), §105(b)(2), 122Stat. 4259. Like the Court, I refer to the provision by its current numbering.

2  Although Justice Kagan’s concurrence suggests that Quality King erred in “holding that §109(a) limits §602(a)(1),” ante, at 2, that recent, unanimous holding must be taken as a given. See John R. Sand & Gravel Co. v. United States, 552 U. S. 130, 139 (2008) (“[S]tare decisis in respect to statutory interpretation has ‘special force,’ for ‘Congress remains free to alter what we have done.’ ” (quoting Patterson v. McLean Credit Union, 491 U. S. 164 –173 (1989))). The Court’s objective in this case should be to avoid unduly “constrict[ing] the scope of §602(a)(1)’s ban on unauthorized importation,” ante, at 1 (opinion of Kagan, J.), while at the same time remaining faithful to Quality King’s holding and to the text and history of other Copyright Act provisions. This aim is not difficult to achieve. See Parts II–V, infra. Justice Kagan and I appear to agree to this extent: Congress meant the ban on unauthorized importation to have real force. See ante, at 3 (acknowledging that “Wiley may have a point about what §602(a)(1) was designed to do”).

3  See Quality King Distributors, Inc. v. L’anza Research Int’l, Inc., 523 U. S. 135, 148, n. 20 (1998) (quoting Copyright Law Revision Part 4: Further Discussions and Comments on Preliminary Draft for Revised U. S. Copyright Law, 88th Cong., 2d Sess., 119 (H. R. Judiciary Comm. Print 1964) (hereinafter Copyright Law Revision Part 4) (statement of Harriet Pilpel)).

4  The Court asserts that my position gives the word “lawfully” in §109(a) “little, if any, linguistic work to do.” Ante, at 9. That is not so. My reading gives meaning to each word in the phrase “lawfully made under this title.” The word “made” signifies that the conduct at issue is the creation or manufacture of a copy. See Webster’s Third New International Dictionary 1356 (1961) (defining “made” as “artificially produced by a manufacturing process”). The word “lawfully” indicates that for §109(a) to apply, the copy’s creation must have complied with some body of law. Finally, the prepositional phrase “under this title” clarifies what that body of law is—namely, the copyright prescriptions contained in Title 17 of the U. S. Code.

5  Attempting to show that my reading of §109(a) is susceptible to the same criticism, the Court points to the now-repealed “manufacturing clause,” which required “copies of a work consisting preponderantly of nondramatic literary material . . . in the English language” to be “manufactured in the United States or Canada.” Copyright Act of 1976, §601(a), 90Stat. 2588. Because Congress expressly referred to manufacturing in this provision, the Court contends, the phrase “lawfully made under this title” in §109(a) cannot mean “manufactured in the United States.” Ante, at 19. This argument is a non sequitur. I do not contend that the phrases “lawfully made under this title” and “manufactured in the United States” are interchangeable. To repeat, I read the phrase “lawfully made under this title” as referring to instances in which a copy’s creation is governed by, and conducted in compliance with, Title 17 of the U. S. Code. See supra, at 6. Not all copies “manufactured in the United States” will satisfy this standard. For example, piratical copies manufactured in the United States without the copyright owner’s authorization are not “lawfully made under [Title 17].” Nor would the phrase “lawfully manufactured in the United States” be an exact substitute for “lawfully made under this title.” The making of a copy may be lawful under Title 17 yet still violate some other provision of law. Consider, for example, a copy made with the copyright owner’s authorization by workers who are paid less than minimum wage. The copy would be “lawfully made under [Title 17]” in the sense that its creation would not violate any provision of that title, but the copy’s manufacturing would nonetheless be unlawful due to the violation of the minimum-wage laws.

6  When §602(a)(1) was originally enacted in 1976, it played an additional role—providing a private cause of action against importers of piratical goods. See Quality King, 523 U. S., at 146. In 2008, however, Congress amended §602 to provide for such a cause of action in §602(a)(2), which prohibits the unauthorized “[i]mportation into the United States . . . of copies or phonorecords, the making of which either constituted an infringement of copyright, or which would have constituted an infringement of copyright if [Title 17] had been applicable.” See PROIPA, §105(b)(3), 122Stat. 4259–4260. Thus, under the Court’s interpretation, the only conduct reached by §602(a)(1) but not §602(a)(2) is a nonowner’s unauthorized importation of a nonpiratical copy.

7  Notably, the Court ignores the history of §602(a)(1), which reveals that the primary purpose of the prescription was not to provide a remedy against rogue licensees, consignees, and bailees, against whom copyright owners could frequently assert breach-of-contract claims even in the absence of §602(a)(1). Instead, the primary purpose of §602(a)(1) was to reach third-party importers, enterprising actors like Kirtsaeng, against whom copyright owners could not assert contract claims due to lack of privity. See Part III, infra.

8  Section 602(a)(3) provides: “This subsection [i.e., §602(a)] does not apply to— “(A) importation or exportation of copies or phonorecords under the authority or for the use of the Government of the United States or of any State or political subdivision of a State, but not including copies or phonorecords for use in schools, or copies of any audiovisual work imported for purposes other than archival use; “(B) importation or exportation, for the private use of the importer or exporter and not for distribution, by any person with respect to no more than one copy or phonorecord of any one work at any one time, or by any person arriving from outside the United States or departing from the United States with respect to copies or phonorecords forming part of such person’s personal baggage; or “(C) importation by or for an organization operated for scholarly, educational, or religious purposes and not for private gain, with respect to no more than one copy of an audiovisual work solely for its archival purposes, and no more than five copies or phonorecords of any other work for its library lending or archival purposes, unless the importation of such copies or phonorecords is part of an activity consisting of systematic reproduction or distribution, engaged in by such organization in violation of the provisions of section 108(g)(2).”

9  The term “gray market good” refers to a good that is “imported outside the distribution channels that have been contractually negotiated by the intellectual property owner.” Forsyth & Rothnie, Parallel Imports, in The Interface Between Intellectual Property Rights and Competition Policy 429 (S. Anderman ed. 2007). Such goods are also commonly called “parallel imports.” Ibid.

10  The Court asserts that its reading of §109(a) is bolstered by §104, which extends the copyright “protection[s]” of Title 17 to a wide variety of foreign works. See ante, at 10–11. The “protection under this title” afforded by §104, however, is merely protection against infringing conduct within the United States, the only place where Title 17 applies. See 4 W. Patry, Copyright §13:44.10, pp. 13–128 to 13–129 (2012) (hereinafter Patry). Thus, my reading of the phrase “under this title” in §109(a) is consistent with Congress’ use of that phrase in §104. Furthermore, §104 describes which works are entitled to copyright protection under U. S. law. But no one disputes that Wiley’s copyrights in the works at issue in this case are valid. The only question is whether Kirtsaeng’s importation of copies of those works infringed Wiley’s copyrights. It is basic to copyright law that “[o]wnership of a copyright . . . is distinct from ownership of any material object in which the work is embodied.” 17 U. S. C. §202. See also §101 (“ ‘Copies’ are material objects, other than phonorecords, in which a work is fixed by any method now known or later developed, and from which the work can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device.”). Given the distinction copyright law draws between works and copies, §104 is inapposite to the question here presented. 4 Patry §13:44.10, at 13–129 (“There is no connection, linguistically or substantively, between Section[s] 104 and 109: Section 104 deals with national eligibility for the intangible work of authorship; Section 109(a) deals with the tangible, physical embodiment of the work, the ‘copy.’ ”).

11  As the Court observes, ante, at 29, Irwin Karp of the Authors League of America stated at the 1964 panel discussion that §44(a) ran counter to “the very basic concept of copyright law that, once you’ve sold a copy legally, you can’t restrict its resale.” Copyright Law Revision Part 4, at 212. When asked if he was “presenting . . . an argument against” §44(a), however, Karp responded that he was “neutral on th[e] provision.” Id., at 211. There is thus little reason to believe that any changes to the wording of §44(a) before its codification in §602(a) were made in response to Karp’s discussion of “the problem of restricting [the] transfer of . . . lawfully obtained [foreign] copies.” Ibid.

12  There is but one difference between this language from the 1965 bill and the corresponding language in the current version of §602(a)(1): In the current version, the phrase “for the purpose of distribution to the public” is omitted and the phrase “that have been acquired outside the United States” appears in its stead. There are no material differences between the quoted language from the 1965 bill and the corresponding language contained in the 1964 bill. See Copyright Law Revision Part 6: Supplementary Report of the Register of Copyrights on the General Revision of the U. S. Copyright Law: 1965 Revision Bill, 89th Cong., 1st Sess., 292–293 (H. R. Judiciary Comm. Print 1965).

13  The Court purports to find support for its position in the House and Senate Committee Reports on the 1976 Copyright Act. Ante, at 30–31. It fails to come up with anything in the Act’s legislative history, how-ever, showing that Congress understood the words “lawfully made under this title” in §109(a) to encompass foreign-made copies.

14  Chiappetta, The Desirability of Agreeing to Disagree: The WTO, TRIPS, International IPR Exhaustion and a Few Other Things, 21 Mich. J. Int’l L. 333, 340 (2000) (hereinafter Chiappetta) (internal quotation marks omitted).

15  The Court states that my “reliance on the Solicitor General’s position in Quality King is undermined by his agreement in that case with [the] reading of §109(a)” that the Court today adopts. Ante, at 33. The United States’ principal concern in both Quality King and this case, however, has been to protect copyright owners’ “right to prevent parallel imports.” Brief for United States as Amicus Curiae in Quality King, O. T. 1997, No. 96–1470, p. 6 (hereinafter Quality King Brief). See also Brief for United States as Amicus Curiae 14 (arguing that Kirtsaeng’s interpretation of §109(a), which the Court adopts, would “subver[t] Section 602(a)(1)’s ban on unauthorized importation”). In Quality King, the Solicitor General urged this Court to hold that §109(a)’s codification of the first sale doctrine does not limit the right to control importation set forth in §602(a). Quality King Brief 7–30. After Quality King rejected that contention, the United States reconsidered its position, and it now endorses the interpretation of the §109(a) phrase “lawfully made under this title” I would adopt. Brief for United States as Amicus Curiae 6–7, 13–14.

16  Congress hardly lacks capacity to provide for international exhaustion when that is its intent. Indeed, Congress has expressly provided for international exhaustion in the narrow context of semiconductor chips embodying protected “mask works.” See 17 U. S. C. §§905(2), 906(b). See also 2 M. Nimmer & D. Nimmer, Copyright §8A.06[E], p. 8A–37 (2012) (hereinafter Nimmer) (“[T]he first sale doctrine under [§906(b)] expressly immunizes unauthorized importation.”).

17  Despite the Court’s suggestion to the contrary, this case in noway implicates the per se antitrust prohibition against horizontal “ ‘[a]greements between competitors to allocate territories to minimize competition.’ ” Ante, at 32 (quoting Palmer v. BRG of Ga., Inc., 498 U. S. 46, 49 (1990) (per curiam)). Wiley is not requesting authority to enter into collusive agreements with other textbook publishers that would, for example, make Wiley the exclusive supplier of textbookson particular subjects within particular geographic regions. Instead, Wiley asserts no more than the prerogative to impose vertical restraints on the distribution of its own textbooks. See Hovenkamp, Post-Sale Restraints and Competitive Harm: The First Sale Doctrine in Perspective, 66 N. Y. U. Ann. Survey Am. L. 487, 488 (2011) (“vertical restraints” include “limits [on] the way a seller’s own product can be distributed”).

18  As the Court observes, ante, at 32–33, the United States stated at oral argument that the types of “horribles” predicted in the Court’s opinion would, if they came to pass, be “worse than the frustration of market segmentation” that will result from the Court’s interpretation of §109(a). Tr. of Oral Arg. 51. The United States, however, recognized that this purported dilemma is a false one. As the United States explained, the Court’s horribles can be avoided while still giving meaningful effect to §602(a)(1)’s ban on unauthorized importation. Ibid.

19  It appears that the Copyright Act of 1976 omitted the word “vend” and introduced the word “distribute” to avoid the “redundan[cy]” present in pre-1976 law. Copyright Law Revision: Report of the Register of Copyrights on the General Revision of the U. S. Copyright Law, 87th Cong., 1st Sess., 21 (H. R. Judiciary Comm. Print 1961) (noting that the exclusive rights to “publish” and “vend” works under the Copyright Act of 1947, §1(a), 61Stat. 652–653, were “redundant”).

20  My position that Bobbs-Merrill lives on as a limiting construction of the §106(3) distribution right does not leave §109(a) with no work to do. There can be little doubt that the books at issue in Bobbs-Merrill were published and first sold in the United States. See Bobbs-Merrill Co. v. Straus, 139 F. 155, 157 (CC SDNY 1905) (the publisher claiming copy-right infringement in Bobbs-Merrill was incorporated and had its principal office in Indiana). See also Copyright Act of 1891, §3, 26Stat. 1107–1108 (generally prohibiting importation, even by the copyright owner, of foreign-manufactured copies of copyrighted books); 4 Patry §13:40, at 13–111 (under the Copyright Act of 1891, “copies of books by both foreign and U. S. authors had to be printed in the United States”). But cf. ante, at 18 (asserting, without acknowledging the 1891 Copyright Act’s general prohibition against the importation of foreign-made copies of copyrighted books, that the Court is unable to find any “geographical distinctions . . . in Bobbs-Merrill”). Thus, exhaustion occurs under Bobbs-Merrill only when a copy is distributed within the United States with the copyright owner’s permission, not when it is distributed abroad. But under §109(a), as interpreted in Quality King, any authorized distribution of a U. S.-made copy, even a distribution occurring in a foreign country, exhausts the copyright owner’s distribution right under §106(3). See 523 U. S., at 145, n. 14. Section 109(a) therefore provides for exhaustion in a circumstance not reached by Bobbs-Merrill.

21  Section 41 of the 1909 Act provided: “[N]othing in this Act shall be deemed to forbid, prevent, or restrict the transfer of any copy of a copyrighted work the possession of which has been lawfully obtained.” 35Stat. 1084. This language was repeated without material change in §27 of the Copyright Act of 1947, 61Stat. 660. As noted above, see supra, at 2, 17 U. S. C. §109(a) sets out the current codification of the first sale doctrine.

22  A group of amici representing libraries expresses the concernthat lower courts might interpret §602(a)(3)(C) as authorizing onlythe importing, but not the lending, of foreign-made copies ofnon-audiovisual works. See Brief for American Library Associationet al. 20. The United States maintains, and I agree, however, that §602(a)(3)(C) “is fairly (and best) read as implicitly authorizing lending, in addition to importation, of all works other than audiovisual works.” Brief for United States as Amicus Curiae 30, n. 6.

23  Title 17 U. S. C. §109(c) provides: “Notwithstanding the provisions of section 106(5), the owner of a particular copy lawfully made under this title, or any person authorized by such owner, is entitled, without the authority of the copyright owner, to display that copy publicly, either directly or by the projection of no more than one image at a time, to viewers present at the place where the copy is located.”

24  The word “copy,” as it appears in §109(c), applies to the original of a work of art because the Copyright Act defines the term “copies” to “includ[e] the material object . . . in which the work is first fixed.” §101.

25  Principles of fair use and implied license may also allow a U. S. tourist “who buys a copyrighted work of art, a poster, or . . . a bumper sticker” abroad to publicly “display it in America without the copyright owner’s further authorization.” Ante, at 15. (The tourist could lawfully bring the work of art, poster, or bumper sticker into the United States under 17 U. S. C. §602(a)(3)(B), which provides that §602(a)(1)’s importation ban does not apply to “importation . . . by any person arriving from outside the United States . . . with respect to copies . . . forming part of such person’s personal baggage.”). Furthermore, an individual clearly would not incur liability for infringement merely by displaying a foreign-made poster or other artwork in her home. See §106(5) (granting the owners of copyrights in “literary, musical, dramatic, and choreographic works, pantomimes, and pictorial, graphic, or sculptural works” the exclusive right “to display the copyrighted work publicly” (emphasis added)). See also §101 (a work is displayed “publicly” if it is displayed “at a place open to the public or at any place where a substantial number of persons outside of a normal circle of a family and its social acquaintances is gathered” (emphasis added)). Cf. 2 Nimmer §8.14[C][1], at 8–192.2(1) (“[A] performance limited to members ofthe family and invited guests is not a public performance.” (footnote omitted)).

26  Exerting extensive control over secondary markets may not always be in a manufacturer’s best interest. Carmakers, for example, often trumpet the resale value of their vehicles. See, e.g., Nolan, UD grad leads Cadillac marketing, Dayton Daily News, Apr. 2, 2009, p. A8 (“Cadillac plays up its warranty coverage and reliable resale value to prospective customers.”). If the transaction costs of reselling vehicles were to rise, consumers’ perception of a new car’s value, and thus the price they are willing to pay for such a car, might fall—an outcome hardly favorable to automobile manufacturers.

27  It should not be overlooked that the ability to prevent importation of foreign-made copies encourages copyright owners such as Wiley to offer copies of their works at reduced prices to consumers in less developed countries who might otherwise be unable to afford them. The Court’s holding, however, prevents copyright owners from barring the importation of such low-priced copies into the United States, where they will compete with the higher priced editions copyright owners make available for sale in this country. To protect their profit margins in the U. S. market, copyright owners may raise prices in less developed countries or may withdraw from such markets altogether. See Brief for United States as Amicus Curiae 26; Brief for Text and Academic Authors Association as Amicus Curiae 12; Brief for Association of American Publishers as Amicus Curiae 37. See also Chiappetta 357–358 (a rule of national exhaustion “encourages entry and participation in developing markets at lower, locally more affordable prices by eliminating them as risky sources of cheaper parallel imports back into premium markets”). Such an outcome would disserve consumers—and especially students—in developing nations and would hardly advance the “American foreign policy goals” of supporting education and economic development in such countries. Quality King Brief 25–26.

SUPREME COURT OF THE UNITED STATES

_________________

No. 11–697

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SUPAP KIRTSAENG, dba BLUECHRISTINE99, PETITIONER v. JOHN WILEY & SONS, INC.

on writ of certiorari to the united states court of appeals for the second circuit

[March 19, 2013]

Justice Kagan, with whom Justice Alito joins, concurring.

I concur fully in the Court’s opinion. Neither the text nor the history of 17 U. S. C. §109(a) supports removing first-sale protection from every copy of a protected work manufactured abroad. See ante, at 8–16, 28–31. I recognize, however, that the combination of today’s decision and Quality King Distributors, Inc. v. L’anza Research Int’l, Inc., 523 U. S. 135 (1998) , constricts the scope of §602(a)(1)’s ban on unauthorized importation. I write to suggest that any problems associated with that limitation come not from our reading of §109(a) here, but from Quality King’s holding that §109(a) limits §602(a)(1).

As the Court explains, the first-sale doctrine has played an integral part in American copyright law for over a century. See ante, at 17–19; Bobbs-Merrill Co. v. Straus, 210 U. S. 339 (1908) . No codification of the doctrine prior to 1976 even arguably limited its application to copies made in the United States. See ante, at 12. And nothing in the text or history of §109(a)—the Copyright Act of 1976’s first-sale provision—suggests that Congress meant to enact the new, geographical restriction John Wiley proposes, which at once would deprive American consumers of important rights and encourage copyright holders to manufacture abroad. See ante, at 8–16, 28–31.

That said, John Wiley is right that the Court’s decision, when combined with Quality King, substantially narrows §602(a)(1)’s ban on unauthorized importation. Quality King held that the importation ban does not reach any copies receiving first-sale protection under §109(a). See 523 U. S., at 151–152. So notwithstanding §602(a)(1), an “owner of a particular copy . . . lawfully made under this title” can import that copy without the copyright owner’s permission. §109(a). In now holding that copies “lawfully made under this title” include copies manufactured abroad, we unavoidably diminish §602(a)(1)’s scope—indeed, limit it to a fairly esoteric set of applications. See ante, at 26–27.

But if Congress views the shrinking of §602(a)(1) as a problem, it should recognize Quality King—not our decision today—as the culprit. Here, after all, we merely construe §109(a); Quality King is the decision holding that §109(a) limits §602(a)(1). Had we come out the opposite way in that case, §602(a)(1) would allow a copyright owner to restrict the importation of copies irrespective of the first-sale doctrine. 1 That result would enable the copyright owner to divide international markets in the way John Wiley claims Congress intended when enacting §602(a)(1). But it would do so without imposing downstream liability on those who purchase and resell in the United States copies that happen to have been manufactured abroad. In other words, that outcome would target unauthorized importers alone, and not the “libraries, used-book dealers, technology companies, consumer-goods retailers, and museums” with whom the Court today is rightly concerned. Ante, at 19. Assuming Congress adopted §602(a)(1) to permit market segmentation, I suspect that is how Congress thought the provision would work—not by removing first-sale protection from every copy manufactured abroad (as John Wiley urges us to do here), but by enabling the copyright holder to control imports even when the first-sale doctrine applies (as Quality King now prevents). 2

At bottom, John Wiley (together with the dissent) asks us to misconstrue §109(a) in order to restore §602(a)(1) to its purportedly rightful function of enabling copyright holders to segment international markets. I think John Wiley may have a point about what §602(a)(1) was designed to do; that gives me pause about Quality King’s holding that the first-sale doctrine limits the importation ban’s scope. But the Court today correctly declines the invitation to save §602(a)(1) from Quality King by destroying the first-sale protection that §109(a) gives to every owner of a copy manufactured abroad. That would swap one (possible) mistake for a much worse one, and make our reading of the statute only less reflective of Congressional intent. If Congress thinks copyright owners need greater power to restrict importation and thus divide markets, a ready solution is at hand—not the one John Wiley offers in this case, but the one the Court rejected in Quality King.

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1  Although Quality King concluded that the statute’s text foreclosed that outcome, see 523 U. S., at 151–152, the Solicitor General offered a cogent argument to the contrary. He reasoned that §109(a) does not limit §602(a)(1) because the former authorizes owners only to “sell” or “dispose” of copies—not to import them: The Act’s first-sale provision and its importation ban thus regulate separate, non-overlapping spheres of conduct. See Brief for United States as Amicus Curiae in Quality King, O. T. 1996, No. 96–1470, pp. 5, 8–10. That reading remains the Government’s preferred way of construing the statute. See Tr. of Oral Arg. 44 (“[W]e think that we still would adhere to our view that section 109(a) should not be read as a limitation on section 602(a)(1)”); see also ante, at 32–33; post, at 21, n. 15 (Ginsburg, J., dissenting).

2  Indeed, allowing the copyright owner to restrict imports irrespective of the first-sale doctrine—i.e., reversing Quality King—would yield a far more sensible scheme of market segmentation than would adopting John Wiley’s argument here. That is because only the former approach turns on the intended market for copies; the latter rests instead on their place of manufacture. To see the difference, imagine that John Wiley prints all its textbooks in New York, but wants to distribute certain versions only in Thailand. Without Quality King, John Wiley could do so—i.e., produce books in New York, ship them to Thailand, and prevent anyone from importing them back into the United States. But with Quality King, that course is not open to John Wiley even under its reading of §109(a): To prevent someone like Kirtsaeng from re-importing the books—and so to segment the Thai market—John Wiley would have to move its printing facilities abroad. I can see no reason why Congress would have conditioned a copyright owner’s power to divide markets on outsourcing its manufacturing to a foreign country.

Print this transcript Transcript: 

ORAL ARGUMENT OF E. JOSHUA ROSENKRANZ ON BEHALF OF THE PETITIONER

Chief Justice John G. Roberts: We'll hear argument next in Case 11-696 -- 697, Kirtsaeng v. John Wiley & Sons.

Mr. Rosenkranz.

E. Joshua Rosenkranz: Thank you, Mr. Chief Justice, and may it please the Court:

This case presents a stark choice between two plausible definitions of the phrase, lawfully made under this title.

Our definition is the more consistent with the English language, and is the only definition that does not do mischief with the same use of that phrase each time it's repeated.

Ours is the only one consistent with a 400-year common law history, and 65-year-old right that was in the statute through 1976, and consistent with the principle that Congress doesn't abolish those things without being clear.

Ours gives the copyright owners much of what they asked for when they were seeking an importation provision, just not everything; whereas, Wiley's grants them rights far beyond anything that anyone could have imagined asking for back then.

Ours--

Justice Ruth Bader Ginsburg: But your reading -- your reading is essentially, once a copy is sold anywhere, the copyright owner loses control of distribution everywhere.

That is essentially your argument.

E. Joshua Rosenkranz: --That is correct, Your Honor.

And to put a finer point on it, ours is that lawfully made under this title means made wherever, in a way that satisfies U.S. copyright standards, made in accordance with--

Justice Ruth Bader Ginsburg: No -- but -- so this notion of sold anywhere, end of distribution rights everywhere, that has been called, I think, the universal exhaustion principle.

E. Joshua Rosenkranz: --International exhaustion.

Yes, Your Honor.

Justice Ruth Bader Ginsburg: And we are told that no country has adopted that international exhaustion regime, that most countries adhere to the national exhaustion regime, which nobody is contesting here.

That is, if it's manufactured in the United States and sold in the United States, that copy belongs to the person who purchased it, end of case.

But if the exhaustion doctrine applies only nationally, then your argument is asking for something that runs against the regime that is accepted in most places.

E. Joshua Rosenkranz: Your Honor, I have a few answers to that.

The first is it is not true that no country adopts national exhaustion.

Congress adopted national exhaustion in sections 905 and 906 6 years after the statute was passed, as to microchips.

But second, Wiley is making the point that there is now a norm.

They say most States -- most countries, that is.

Back in 1976 Wiley is not even arguing that there was any international norm, much less that the drafters of the statute were focused on international norms; and the truth is that there isn't an international consensus around national exhaustion.

We know that for a fact.

In 1994 when 125 nations got together, they -- they agreed to disagree on international copyright exhaustion principles, and they codified that disagreement, to each his own, in the TRIPS agreement.

Justice Ruth Bader Ginsburg: Well, let's take, for example, the European Union, the position in -- in those countries.

Suppose we -- we just transformed -- transferred this case to one of those countries, the exact same case; and my understanding is that they would follow the national exhaustion.

E. Joshua Rosenkranz: No, Your Honor, not to quibble; they don't follow national exhaustion.

They follow regional exhaustion.

So--

Justice Ruth Bader Ginsburg: Yes, but not -- not exhaust -- you sell a copy in -- in Thailand; then it's home free all over the world.

E. Joshua Rosenkranz: --Agreed, Your Honor, but it is regional, it's not national.

And -- and the point here is we've got to of course read what Congress wrote.

What Congress wrote was “ lawfully made under this title ”, not

"lawfully made in the United States. "

or not

"lawfully made under this title and made in the United States. "

When Congress wants to say that, Congress says that very explicitly.

Justice Antonin Scalia: Do you mean by “ lawfully made under this title ”, simply lawfully made in a manner that does not violate United States copyright law?

E. Joshua Rosenkranz: No, Your Honor.

Just, I -- I would say “ lawfully made under this title ” means lawfully made in a manner that does not violate the standards articulated.

Justice Antonin Scalia: The standards, okay.

So -- so it could be lawfully made in England, let's say; in a country that has compulsory licensing, it could be lawfully made there, but it would not be lawfully made under our -- under our copyright law, because we don't have that.

E. Joshua Rosenkranz: Yes, Your Honor.

Let me give a -- an example that actually is consistent with what--

Justice Antonin Scalia: So -- so at least they are correct in contending that what you are arguing for is -- is not lawfully made under -- lawfully made if the United States copyright law had applied where it was made; is that what you are saying?

E. Joshua Rosenkranz: --No, Your Honor.

And the reason is--

Justice Antonin Scalia: No?

E. Joshua Rosenkranz: --that that statute that you just described would only do a third of the job of the first-sale doctrine.

Everyone agrees the first-sale doctrine applies at a minimum to products made in the United States.

And if you use that counterfactual, if U.S. law had applied, it would indicate that it, the first-sale doctrine, does not apply in situations where it was made in the United States.

So the counterfactual--

Justice Antonin Scalia: I don't -- I don't follow that.

E. Joshua Rosenkranz: --So the first-sale doctrine applies to goods made in the United States--

Justice Antonin Scalia: Right.

E. Joshua Rosenkranz: --and to goods made outside of the United States, is our argument.

Justice Antonin Scalia: Okay.

E. Joshua Rosenkranz: If it applies in the United States, if we're talking about goods made in the United States, the counterfactual “ if this title had applied ” would not work, because this title does apply to the goods made in the United States, and that's the core of the first-sale doctrine.

Justice Elena Kagan: So, Mr. Rosenkranz, is what -- is your theory of this statute essentially that this language means nonpiratical copies as that is defined by U.S. copyright law?

E. Joshua Rosenkranz: Yes, Your Honor, if I may just change one word, because “ piratical ” is a mischievous word.

Back in the day when the 1976 statute was passed, “ piratical ” meant unlawful under the laws of other countries.

Justice Elena Kagan: No.

E. Joshua Rosenkranz: Yes.

So--

Justice Elena Kagan: I said as defined by U.S. copyright law.

E. Joshua Rosenkranz: --Absolutely.

And -- and the key--

Justice Elena Kagan: So that's, that's what the statute means.

It's -- the statute in your view is setting up a distinction between piratical, pirated, whatever the term is -- copies--

E. Joshua Rosenkranz: --Counterfeit.

Justice Elena Kagan: --and other copies, and saying that that distinction should be measured by U.S. copyright law?

E. Joshua Rosenkranz: That is right.

And Your Honor, the reason was -- what was driving copyright owners crazy was this notion that there were lawless states out there that had no significant copyright protection.

And we were applying their standards to products that were infiltrating the U.S. market.

And one of the most important things to underscore here, which I think got lost in the Costco argument, is that the space -- that 602 does an enormous amount of work even with 109, the first-sale doctrine, carved out of it.

Copyright owners wanted three things out of the 1976 act with respect to importation, and they got two and a half of them.

The first was what we've just been talking about, Your Honor.

It was driving them crazy that there were lawless states out there; they gave the example of Russia, which -- where an agency approved the making and distribution within Russia of classic English language works.

They got imported to the U.S. and they were competing with U.S. works, U.S. copies within our domestic market.

And they got their wish to shut that down, to use U.S. law as the standard for those works.

Secondly, they got coverage for copies that were lawfully made but stolen.

And this was the one ask that the film industry had.

We see it in the colloquies.

They rented films abroad.

The films -- that was their business model.

The films would get stolen; and the U.S. market would be awash with stolen films.

And so they wanted to shut down with the importation provision those stolen goods coming into the U.S. market.

And the third thing that they wanted is -- is what's been dominating this debate.

But it's only the third thing, and that was help dividing geographic markets, so that they could go after the rogue distributors, yes, but also go after the downstream sales.

They got half of that.

They got a cause of action against the rogue distributors.

They did not get a cause of action that went downstream.

Justice Sonia Sotomayor: Mr. Rosenkranz, can I ask you, just -- it is a practical question, but I think it has theoretical impact.

A manufacturer can choose to contract or a copyright holder choose to contract with someone here to manufacture their goods.

They could contract with someone abroad, anywhere in the world, directly.

They can choose to license their trademark and permit a distributor abroad to manufacture under their U.S. copyright; or they can permit the licensee to register the copyright abroad and distribute.

In your definition of “ lawfully made under this title ”, does “ lawfully made under this title ” apply to all of those situations, i.e.--

E. Joshua Rosenkranz: Yes.

Justice Sonia Sotomayor: --I think clearly to the manufacturer who manufactures abroad--

E. Joshua Rosenkranz: Yes.

Justice Sonia Sotomayor: --clearly to the manufacturer who licensed a distributor to do it for it.

But does it also apply to the -- to the copyright owner who basically gives the copyright to a foreign distributor and lets the foreign distributor register it abroad?

E. Joshua Rosenkranz: Yes, Your Honor.

The only question under our definition is, was the making lawful, which is to say, was it authorized, whether it's by transfer of licensing or by transfer of copyright or in any other way?

Is it lawful as measured by U.S. standards?

And -- and that--

Justice Sonia Sotomayor: That is -- that is broader than I thought.

And I'm not quite sure why you don't mean if this title applied.

Because if the--

E. Joshua Rosenkranz: --If--

Justice Sonia Sotomayor: --the manufacturer who is manufacturing under the English copyright, because the distributor has an English copyright, is not manufacturing under the U.S. copyright, they are manufacturing under the English copyright.

E. Joshua Rosenkranz: --Right.

And, Your Honor, the reason that the language works the way we've described is because we are not focusing on whether the making was under this title; we're focusing on whether it was lawful under this title.

Does this -- would this title, when you apply it to wherever it happens to be, whether in the United States or abroad, would this title say that this is authorized?

Now, let me just circle back again.

The reason if this title had been applicable doesn't work is because there are enormous numbers of situations, probably three-quarters of them, that the First Sale Doctrine applies to where this title does apply.

And so trying to say where -- you know, if this title had applied would work for foreign goods coming in, but not for U.S. goods, which is the core of the First Sale Doctrine.

Justice Stephen G. Breyer: But you don't have to say -- you can say both, either it was manufactured directly and received an American copyright and satisfied all the conditions, or, if that wasn't the case, it was manufactured in a way that satisfied the conditions of the American statute, even though, for technical reasons, it didn't apply.

E. Joshua Rosenkranz: Yes, Your Honor.

And, in fact, (a)(2)--

Justice Stephen G. Breyer: That's what your argument is, I take it.

E. Joshua Rosenkranz: --Yes.

In 2008--

Justice Stephen G. Breyer: So we are off on a kind of curly cue here.

E. Joshua Rosenkranz: --Yes, Your Honor.

But -- so what Congress did was to find a much simpler, more efficient way to say all of that.

In 2008, it figured that out and put--

Justice Stephen G. Breyer: I took it that the reason they wrote -- or changed the statute was just because they were worried about bailees or lessees or somebody under the old statutes not satisfying the first -- they were worried about that -- somebody -- a printer lawfully obtains a book, and he shouldn't have advantage of the First Sale Doctrine.

E. Joshua Rosenkranz: --Well, Your--

Justice Stephen G. Breyer: He's in the middle of printing it.

And therefore you have to change the language.

So they changed the language to lawfully made under this title.

E. Joshua Rosenkranz: --Correct.

Justice Stephen G. Breyer: Am I right; or, if I am wrong, why did they change it?

E. Joshua Rosenkranz: Your Honor, that is exactly right.

And just not to diminish it--

Justice Ruth Bader Ginsburg: Did they give all rights -- wasn't there also the question of allowing manufacturers to segment markets so we'd have the copyright by abroad, governed by foreign law, copyright in the United States governed by U.S. law?

Wasn't segmentation of the market allowing people to do just what these people are doing?

E. Joshua Rosenkranz: --So, Justice Ginsburg, my answer to Justice Breyer was about why the language in 109 was changed, that is, from obtained possession to lawfully made.

And that was -- what Justice Breyer pointed out was exactly why, because -- and not to minimize bailees, bailees was the movie industry problem.

Bailees was stealing things from the manufacturers' loading docks or from shippers.

But yes, Your Honor, there was also a segment of the publishing industry that wanted that third thing.

Justice Stephen G. Breyer: I couldn't find a word.

I could not find a word of that in the legislative history.

Irvin Carp, who was the strongest representative for the publishers, said you couldn't do that ten years earlier.

So is there--

E. Joshua Rosenkranz: No.

Justice Stephen G. Breyer: --No, but you just said yes in answer to Justice Ginsburg's question.

So she'll find exactly what there is there, so I would like to know what it is.

E. Joshua Rosenkranz: Your Honor, I was answering yes to was this a motivation of the publishers.

And if I misunderstood the question, Your Honor--

Justice Elena Kagan: But a motivation for 109, or a motivation for 602?

E. Joshua Rosenkranz: --A motivation for 602.

When the conversation turned to 109, Your Honor, not a word was uttered about dividing distribution or divided markets.

It was all about this problem--

Justice Elena Kagan: So on 602, you said that one of the things that they wanted was the segmentation of markets.

They got half of it.

They got the rogue distributors' half.

And I guess Mr. Olson makes the point, and it seems a good one, it's like that's a crazy half to have gotten.

That's the kind that they don't need because they have a contractual remedy about -- against the distributors.

And then they don't get people like, frankly, your client, who are rogue something elses, with no contractual privity.

And what sense does that make?

E. Joshua Rosenkranz: --Well, it makes perfect sense, Your Honor.

Obviously, you know, the industry, at least back in 1976, did not get everything that they wanted.

What they got was a much more powerful weapon than a contract.

I mean, a copyright weapon gives you injunctive relief, gives you multiples of damages which you don't get out of a contract remedy.

But to Justice Breyer's point, because I think it's an important one, when you go to the history -- and I think you are right, Your Honor, that there is exactly one spot in the drafting history where the relationship between 602 and 109 was discussed.

It was that conversation between Clark and Goldman, who was the general counsel of the copyright office.

It's on pages 11 to 12 of our reply brief.

It's recited in extensive detail in the amicus brief that Costco submitted.

And here's what happened.

They got their importation provision.

And Carp says, now, wait a minute, I don't get it.

You have got this importation provision, and you've got this First Sale Doctrine.

They are at war with each other.

Which one wins?

They seem to be agreeing that first sale wins, but they realize that there is this problem.

And what they do, the general counsel of the copyright office says, we obviously haven't thought this through.

We need to do more work on this, says the librarian of Congress.

And the next thing that happens, you see it in a red line on page 13 of our reply brief, is that for the first time in the drafting history, the two are reconciled by making 602 subordinate to 109, in exactly the way that Quality King found it to be.

So the copyright owners got half the loaf.

It may not have been the half that was more important to them, but they got a lot more from the extension of the importation provision.

Justice Elena Kagan: Mr. Rosenkranz, there is that passage in Quality King, which is, I think it's fair to say, unfortunate to your position.

Is your basic view of that passage that it was simply ill-considered dicta that we should ignore?

E. Joshua Rosenkranz: To put it bluntly, yes.

That's my ultimate position.

But I do think it can be reconciled with our position.

Let's start with the question presented in Quality King is exactly the question that is presented here, and the Court answered it yes, that is, do imports -- is 109 applicable to imports.

The whole driving logic of Quality King is about 109 trumping 602.

And it's only in that part IV, where the court is rebutting various attacks on its position, that it gets to that dictum, and that dictum is in the third tier explanation to one of five rebuttals.

I believe it can be reconciled, certainly in result.

What you had there was the foreign distributor who had only British rights importing directly into the United States.

There was never a first sale.

Justice Elena Kagan: Well, in result, but not in reasoning.

The passage specifically says this was presumably not to be lawfully made under this title.

E. Joshua Rosenkranz: And I have an -- I agree with you, Your Honor.

I have an explanation.

I offer it tentatively.

I'm not sure whether it's right or not, either as to what the Court intended or under the statute.

My hunch is the Court was thinking about a scenario where the British publisher only needs 10,000 copies to cover Britain; but, instead, what it does is to print 100,000 copies.

Everyone would know that that is not authorized, it's not lawfully made under this title, because the intent is to send it over to the United States.

So it's not lawfully made at that moment.

Let me also just mention an important undergirding to our position, which is that our position is the only one that does not make a complete hash out of every uses of the same phrase -- every use of the same phrase in the rest of the statute.

Wiley's reading makes almost all of them nonsensical.

So let me just give you an example.

Section 110, the classroom provision.

Wiley acknowledges this is the result but doesn't explain why Congress would ever have wanted it.

The result is that a teacher can go and buy a Beethoven record and play it to her class if it was made in the United States.

But if she flips one past it to the next Beethoven record that happens to have been made in Asia, she can't play that for her class.

Or section 109(c), the public display, the Buffalo Cafe owner is allowed to purchase something in the United States and put it up on her walls, you know, say, a picture of Niagara Falls.

That is permissible if it was made in the United States.

But off the same retail rack, she flips one past; if it was made in Asia, it's not permissible.

Nor does Wiley explain why Congress would adopt an exception to the First Sale Doctrine that is not at all about sales, that is only about where copies were made.

So a U.S. manufacturer who wants to sell into the U.S. market has this incentive to go and send jobs overseas.

It's an irresistible incentive if the law is -- if this Court says the law is what Wiley says.

Justice Ruth Bader Ginsburg: Has that ever happened?

I mean, the Ninth Circuit cases have been around for some time.

Has any manufacturer ever moved abroad?

E. Joshua Rosenkranz: Your Honor, I'm sure it has.

They haven't announced it.

Now, let me just be clear.

The Ninth Circuit came out with its opinion, this Court has intervened twice, so the law has never been settled in Wiley's favor.

The courts were split.

The moment that a manufacturer learns that this Court says you get what we've called the Holy Grail of manufacturing, endless eternal downstream control over sales and rentals, you can ruin secondary markets that are competing with you, the moment that happens, that will be yet another reason for manufacturers silently to decide that they're headed -- that they're sending their manufacturing overseas.

Justice Antonin Scalia: Of -- of those -- of those courts that did hold the way your -- your opponent would -- would have it, am I correct that only one of them adopted the absolutist rule?

E. Joshua Rosenkranz: Well, Your Honor, there are only three courts of appeals that have weighed in, but yes, the Second Circuit is the only one that has adopted the absolutist rule, and that's yet another problem with Wiley's position.

Wiley urges its position as a matter of statutory interpretation, but is refusing to stand by it.

The moment it gets past the language of the statute, every argument it makes is an argument that is about tempering what -- you know, like a sky hook coming down from on high, tempering its interpretation in a manner that is completely inconsistent with the statutory language.

Justice Anthony Kennedy: The government argues in effect for -- what we might call it -- a common law adaptation of Bobbs-Merrill.

E. Joshua Rosenkranz: Yes, Your Honor, which -- which is even -- creates even more mischief.

The government's position, as I understand it, is 109 doesn't have to do any work.

In service of giving more berth, you know, greater magnitude to 602, we're going to make 109 completely superfluous because Bobbs-Merrill does all of the work.

Now, 109 Congress said -- it put into the statute, it said it on every recodification to codify Bobbs-Merrill, and the government is now making 109 completely irrelevant, but picking and choosing, deciding that it wants the limitation on us from 109, but borrowing from Bobbs-Merrill some reservoir of law that modifies the first-sale doctrine.

If there are no further questions, I would like--

Justice Elena Kagan: Mr. Rosenkranz, can I take you back to Justice Ginsburg's opening question?

Just as a matter of copyright theory, I had always understood copyright to -- a copyright holder has a kind of a bundle of rights.

It's not one right that applies everywhere in the world.

It's you have your U.S. rights and you have your Chinese rights, you have your rights under each jurisdiction's law.

And your position is essentially to say that when I sell my Chinese rights to somebody, I'm also selling my U.S. rights to that same person, because the person who has the Chinese rights can just turn around and import the goods.

I mean, that's the nature of your position, isn't it, that your U.S. rights are always attached when you sell more -- your rights under the jurisdiction of another country?

E. Joshua Rosenkranz: --Well -- so first, Your Honor, back in 1976, this notion of geographic division was very, very new, so it's not at all clear what Congress was thinking with that -- with respect to that.

But secondly, no, we're not -- we're not saying that when the owner sells his Chinese -- its Chinese rights to the Chinese company, it is selling all rights.

Certainly, the Chinese company cannot sell everywhere, but after that first sale, all of the manufacturer's rights are cut off.

If I may reserve the rest of my time for rebuttal.

Chief Justice John G. Roberts: Thank you, counsel.

E. Joshua Rosenkranz: Thank you, Your Honors.

Chief Justice John G. Roberts: Mr. Olson.

ORAL ARGUMENT OF THEODORE B. OLSON ON BEHALF OF THE RESPONDENT

Theodore B. Olson: Mr. Chief Justice, and may it please the Court:

Petitioner's commercial enterprise is precisely what Section 602(a)(1) was enacted to address, an international gray market in copyrighted works.

This Court unanimously recognized in the Quality King case that 602(a)(1) encompasses copies of books that were lawfully made not under the United States' Copyright Act, but under the law of some other country.

602(a) is broader than 6 -- 109(a), because it encompasses copies not subject to the first-sale doctrine, for example copies made under the law of another country.

These are the words of every member of this Court in the Quality King case.

Now, referring to it as dicta misstates what was going on, on the Quality King case.

The argument was that if you interpret 602(a) and 109(a) as allowing a defense, a first-sale defense, you emasculate Section 602(a), and so the Court was explaining on page 147 and 148, I believe, why there were three reasons why 602(a) would have viability.

And one of those reasons had to do with direct action against someone that was engaged in pirating, and some of it had to do with bailees and lessees.

These are relatively small problems either otherwise dealt with by contract law or otherwise dealt with by the provisions of the statute.

But the third reason for the Court's interpretation and its decision in that case was precisely the case that we're talking about here.

Justice Samuel Alito: Well, it may be important dictum, but do you really want to argue it wasn't dictum?

Theodore B. Olson: I do.

Justice Samuel Alito: It was the holding of the case?

Theodore B. Olson: It was the holding of the case in the sense that it was necessary, the Court felt.

And we could -- you know, I don't -- I don't feel I want to spend a lot of time arguing what the word “ dicta ” means, but it was a necessary ingredient to what the Court felt was an explanation for why it was deciding the case that it was deciding.

Justice Stephen G. Breyer: You don't need that.

Justice Elena Kagan: It wasn't necessary, was it?

Justice Stephen G. Breyer: Your -- 602(a) has plenty of meaning.

I mean, an American copyright holder licenses a British company to publish the work under British copyright law.

602(a) says he can't import the books into the United States, period.

Theodore B. Olson: That's--

Justice Stephen G. Breyer: Now, the only -- so there's plenty of meaning there.

The question is what happens when he sells it to his bookstore and you or I go in and buy it and we want to give a copy to our wife when we get back to the United States.

The question is, did -- is that unlawful?

Theodore B. Olson: --Well, we're -- well, if we're reading the provisions of the statute, is that copy -- now, there are exceptions for the books that are brought in--

Justice Stephen G. Breyer: No, no exception I take it once I bring back five copies and I give one to my son.

Theodore B. Olson: --Well, there are fair use exceptions and there's--

Justice Stephen G. Breyer: Oh, fair use.

Theodore B. Olson: --other exceptions and -- and there are exceptions for the one that you bring back for your wife and your--

Justice Sonia Sotomayor: I'm sorry.

Is your reading now that when the library imports in a book or a film or whatever it's importing in, it goes to the customs agent and it says to the customs agent: I don't have the express authorization of the copyright owner, but I'm a library, so I can import this book in?

Theodore B. Olson: --It says--

Justice Sonia Sotomayor: I'm -- I'm a person who's bought the book in England and I'm bringing it to my wife?

What provision gives me the right to do that?

Theodore B. Olson: --The provisions in the statute that deal with the libraries talk about bringing -- importing books for lending--

Justice Sonia Sotomayor: So deal with the wife.

Theodore B. Olson: --for lending purposes.

Justice Sonia Sotomayor: How does the wife get her book?

Theodore B. Olson: What I'm -- what I'm--

Justice Sonia Sotomayor: No, no.

Is there -- what provision gives the wife a right under your reading?

Theodore B. Olson: --With respect to the copy brought in, in the suitcase for -- to give to a -- a family member or to turn over to someone else?

Justice Sonia Sotomayor: No, to keep for yourself.

As far as I understand--

Theodore B. Olson: Oh, to keep for yourself--

Justice Sonia Sotomayor: --your reading, I brought it abroad, I can't import it in.

Theodore B. Olson: --What -- I believe that that is covered by the various provisions of the copyright statute.

And the question is, is it covered by section 2 -- 602(a)(1)?

Yes, it's an import of an acquired copy.

Do you have a defense under the first-sale doctrine?

And I go to the exact explicit language of the statute.

There may be exceptions under other provisions of the copyright law, but the first-sale doctrine, 109(a) specifically says “ lawfully made under this title ”.

Justice Stephen G. Breyer: The reason -- what I was trying to bring up and I didn't do it artfully--

Theodore B. Olson: Well, and this--

Justice Stephen G. Breyer: --is, imagine Toyota, all right?

Millions sold in the United States.

They have copyrighted sound systems.

They have copyrighted GPS systems.

When people buy them in America, they think they're going to be able to resell them.

Now, under your reading -- now, this is one of their horribles, I gather, and I want to know your answer to it.

Under their reading, the millions of Americans who buy Toyotas could not resell them without getting the permission of the copyright holder of every item in that car which is copyrighted?

Theodore B. Olson: --There may be--

Justice Stephen G. Breyer: Is that right?

Theodore B. Olson: --There may be just--

Justice Stephen G. Breyer: Am I right or am I wrong?

Am I off base or am I wrong -- am I right?

Theodore B. Olson: --There are other defenses, but that is not this case.

This case is not--

Justice Stephen G. Breyer: Well, how do you distinguish?

How do you distinguish?

Theodore B. Olson: --The government -- the government would argue for a broader interpretation under what was made under this statute, whether that would include the importation or the distribution in commerce.

That's an argument that the government makes, but it's not necessary to decide this case.

Justice Stephen G. Breyer: Now, explain to me, because they're horribles if I summarize them, millions and millions of dollars' worth of items with copyrighted indications of some kind in them that we import every year; libraries with three hundred million books bought from foreign publishers that they might sell, resale, or use; museums that buy Picassos that now, under our last case, receive American protection as soon as that Picasso comes to the United States, and they can't display it without getting permission from the five heirs who are disputing ownership of the Picasso copyrights.

Those are some of the horribles that they sketch.

And if I am looking for the bear in the mouse hole, I look at those horribles, and there I see that bear.

So I'm asking you to spend some time telling me why I'm wrong.

Theodore B. Olson: Well, I'm -- first of all, I would say that when we talk about all the horribles that might apply in cases other than this -- museums, used Toyotas, books and luggage, and that sort of thing -- we're not talking about this case.

And what we are talking about is the language used by the statute that does apply to this case.

And that--

Justice Stephen G. Breyer: But we need--

Justice Sonia Sotomayor: Don't those horribles--

Justice Stephen G. Breyer: --interpretation--

Justice Anthony Kennedy: But you have to look at those hypotheticals in order to decide this case.

Theodore B. Olson: --Well, and that's--

Justice Anthony Kennedy: You're aware of the fact that if we write an opinion with the -- with the rule that you propose, that we should, as a matter of common sense, ask about the consequences of that rule.

And that's what we are asking.

Theodore B. Olson: --And -- exactly, Justice Kennedy.

And that's what you were doing in the -- in the Quality King, when we were -- we were discussing with Justice Alito whether this is dicta or not.

The Court was specifically saying what it would apply to, and it -- what -- what the Court was talking about in that case was books made not pursuant to title, but pursuant to some other country's copyright law.

This copyright law provisions--

Justice Sonia Sotomayor: --Why is it that a U.S. copyright owner who contracts in England to make books -- he doesn't have an English copyright, he just simply chooses that place to manufacture as opposed to the U.S. -- why is he making that copy under English law and not under his rights of U.S. copyright?

Theodore B. Olson: --Well, if he is doing -- if he is manufacturing the book in England, he's not -- because the copyright law does not have extraterritorial application, he is not making those copies under this title.

And this Court--

Justice Sonia Sotomayor: But he's selling it no -- no differently than Quality King was -- or the Quality King--

Theodore B. Olson: --But the problem is -- the statutes may not be perfect with respect to this, and there may be horribles that occur under one set of interpretations of the statute, and the other interpretation of the statute is to interpret it as -- as the petitioner--

Justice Sonia Sotomayor: --Mr. Olson, we know from the Carp exchange that the response was, this is something that we have to study with care, in 1976.

The parade of horribles is now causing the Solicitor General and at least one, if not two, courts of appeals to write exceptions into the language to take care of what they perceive as horribles.

Isn't it incumbent upon us to give the statute what is plainly a more rational plain meaning than to try to give it a meaning and then fix it because we understand that the meaning doesn't make sense?

Theodore B. Olson: --I -- there -- there is a body of the government of the United States that is entitled and capable of fixing this.

These parade of horribles have been -- people have been arguing about these for years.

For 30 years, the statute has been interpreted the way that we are suggesting that it should be under this title, which this Court earlier this year, in another case, in the Novo Nordisk case, specifically said, under this title means pursuant to the provisions of this title.

This Court said that before in -- in the Ardestani case.

The under this title occurs not only in section 109(a), but under this title occurs in 602(a) itself; and then under this section appears twice in section 602(a)--

Justice Ruth Bader Ginsburg: Mr. Rosenkranz told us that under this title means different things in other sections, and he gave a number of examples.

Theodore B. Olson: --Yes, and -- and in each case -- first of all, if the interpretation that my opponent is arguing for was the law, that -- those are the words that are in 602(b) and 602(a)(2).

So Congress could have used those words that our opponents are arguing for, and did use those words, one of which was written on the same time in the same -- passed in the same time, in 1976, that 602(a)(1) was.

Justice Elena Kagan: Well, Mr. Olson, can I just take you to--

Theodore B. Olson: With respect to those other--

Justice Elena Kagan: --Please.

Theodore B. Olson: --With respect to those other provisions, Justice Ginsburg, the -- the government specifically goes over each one of those, but each one of those, if you interpret the statute as under this title as pursuant to this title, each one of those provisions makes sense in the context in which that term is used there.

And -- and there is only one real way to interpret under this title in the provisions in 109(a) in -- in conjunction with 602(a)(1), and that is the way the Court decided it in the Quality King case, specifically looking at this question.

Now the facts were slightly different in the sense that that was a round trip; this isn't a round trip.

Justice Elena Kagan: Can I take you back to the words here, lawfully made under this title, which you say clearly means what you say it means.

So, I find this language a little bit perplexing, and I can kind of see it both ways.

So what you say is made under this title, that must mean made in the United States, and lawfully, just as this little word that's -- that modifies that basic phrase, made under this title, which means made in the United States.

But what Mr. Rosenkranz essentially says -- he doesn't say it in these words, but he says,

"The focus of this provision is on “ lawfully made ”. "

That is what the focus is on.

It's on lawfully made as opposed to unlawfully made.

Now, when we just say lawfully made, you know, we need something to measure, well, how do we know whether it's lawfully made?

Well, you look to the rules in the copyright law.

So if you just -- if you focus more on the lawfully word, lawfully made, and then under this title doesn't mean made in the United States, it means lawfully made under the rules of this title.

Theodore B. Olson: Lawfully made under this title is lawfully made under the copyright laws of the United States.

It can't say, lawfully made in the United States, because then something might--

Justice Elena Kagan: Well, lawfully made, under the rules of the United States, regardless where the thing was manufactured, is what I'm saying.

That's the way -- it just seems to me as though--

Theodore B. Olson: --It--

Justice Elena Kagan: --you are saying made must be manufactured.

But lawfully made is a lawfully made copy.

How do we know if it's lawfully made?

We look to this title.

Theodore B. Olson: --I think under this title means that it was made pursuant to the provisions of the copyright law.

I can't imagine the difficulties that would ensue with litigation over whether or not something made in another country, made under another country's different laws -- and they vary enormously throughout the world -- whether that was somehow compatible with the laws of the United States.

Justice Stephen G. Breyer: --But what about litigation in this respect?

I want to bring you back to the horribles.

Theodore B. Olson: Because the--

Justice Stephen G. Breyer: The main point is that horribles haven't occurred.

Right?

Theodore B. Olson: --The main -- main--

Justice Stephen G. Breyer: Sometimes horribles don't occur because no one can believe it.

Now, for example, I believe there is going to be a storm, but it hasn't started yet.

So I would like to know -- I would like to know, if you were the lawyer for the Toyota distributor, and if you were the lawyer for the Metropolitan Museum of Art, or you are the lawyer for a university library, and your client comes to you and says, my God, I just read the Supreme Court opinion.

It says that we can't start selling these old books or -- or lending them or putting them in our word processor or reselling the Toyota without the -- without looking -- displaying the Picasso without the permission of the copyright holder, who may or may not be Toyota itself.

What, as their lawyer, do you tell them?

Do you tell them, hey, no problem; or, do you tell them, you might become a law violator; or, do you tell them, I better litigate this?

What do you tell them?

Theodore B. Olson: --Well, each one of those situations that you posit, Justice Breyer, has a whole panoply of set of facts.

With respect to the museums, with respect to the person bringing books into the United States, there are other defenses, including fair use.

There are other defenses under the copyright law.

But -- and one of the things is that, to a certain extent, if you're going to use the product created by someone else in a way that's contemplated by the copyright laws, maybe it's required that you actually comply with the copyright laws by going to the owner of the copyright and saying, look, here's what I propose to do, can I have a license to do this?

It's a nonprofit.

It's a museum.

And I'm--

Chief Justice John G. Roberts: Counsel, you said there are other defenses, including fair use.

In -- in the catalogue that Justice Breyer recited, are all those fair uses?

Theodore B. Olson: --No.

And some of -- but -- but they're--

Chief Justice John G. Roberts: Well, which ones are -- I mean, I'm -- it seems unlikely to me that, if your position is right, that a court would say, it's a fair use to resell the Toyota, it's a fair use to display the Picasso.

Theodore B. Olson: --It may be a fair use.

It may be an implied license, for example, with respect to copyrighted items or trademarked items that appear in a product that was licensed abroad.

The government has offered another alternative interpretation of the word “ made ”, as putting it in the flow of commerce.

That might deal with some of these situations.

But the point I guess I am making, Mr. Chief Justice, is that Congress was clearly intending to talk about the vast gray market problem.

This provision--

Justice Elena Kagan: Well, intending where?

I mean, I -- you spend a lot of time talking about the legislative history and the purposes behind 602.

But the language that we're supposed to be interpreting is the language in section 109.

And the language in section 109, as far as I can see, there's really nothing to support your argument that that language was intended to address this gray market problem.

Isn't that correct?

Theodore B. Olson: --Well, no.

I think that section 109 and 602(a) were adopted in the same statute.

They were put in the draft of the statute at the same time, in 1964.

Justice Elena Kagan: But you know, section 109 is just a rewording of a prior provision that you would clearly lose under, where the prior wording had nothing to do with where any product was manufactured.

And what you're suggesting is that we should read this change in wording -- which actually, there's a real theory behind what the change in wording meant that has nothing to do with the place of manufacture, that we should read it as incorporating a place of manufacture requirement, because there was a separate debate going on in section 602 about that question.

Theodore B. Olson: But the two pro -- what I'm -- I guess what I'm trying to explain is that the two were enacted at the same time.

They were out there and available to the public for 12 years before they were finally adopted.

These parade of horribles could have been addressed by Congress in a different way at the time, and the interpretation -- this is a -- 109 is a defense -- is offered as a defense to section -- to section 602(a)(1).

So what does it mean?

What provide -- what is the defense that's provided?

And you then have to interpret, “ made under this ” -- “ lawfully made under this title ”.

What does that mean?

And you have done that in the Quality King case.

You explained in the Quality King unanimously that it makes a difference because you are -- exhausting -- Congress intended to allow segmentation of the market.

It only makes sense to interpret it this way if you allow segmentation of the market pursuant to these provisions, because it is exhausting the copyright under the laws of the United States once you make a sale of a product produced in the United States subject to the United States' copyright laws.

You are not exhausting your U.S. copyright when you make something, or allow something to be made abroad.

You are not exhausting that copyright.

You have not done that yet.

So the first sale is not something that happens abroad that uses up the copyright laws -- of the protection under the copyright laws of the United States.

So it seems to me that this does make perfect sense.

And it makes -- there is not going to be a perfect solution in every case.

The Court has dealt with that frequently with respect to copyright laws.

But if you interpret it as my opponent interprets it, you are opening the door to commercial enterprises precisely like this.

It's not necessary in this case to decide every single permutation of a problem that someone crosses a border with a product, but this section 602 specifically contemplates products that are acquired abroad and then brought back into the United States.

Here, we have a commercial enterprise doing exactly what is contemplated by the people who were talking about 602(a) and section 109 when the two were adopted at the same time.

Justice Ruth Bader Ginsburg: Mr. Olson, do you have an answer to the outsourcing problem and the charges that if you read the statute as you are urging, then you are inviting the outsourcing of manufacturing jobs?

Theodore B. Olson: There are several answers to that.

One, that's Congress's concern.

And -- and there is no evidence that that would really actually happen.

And Congress was concerned with creating a segmentation of the market.

But it's entirely speculative as to whether or not people are going to start manufacturing books or other items outside the United States.

Congress can address that if that should become a problem, but it's not something that was suggested as a part of what was taking place at that time.

Chief Justice John G. Roberts: Thank you, Mr. Olson.

Mr. Stewart.

ORAL ARGUMENT OF MALCOLM L. STEWART, ON BEHALF OF THE UNITED STATES, AS AMICUS CURIAE, SUPPORTING THE RESPONDENT

Malcolm L. Stewart: Mr. Chief Justice, and may it please the Court:

I would like to discuss -- begin by discussing our Bobbs-Merrill argument, because it's a part of our brief that's different from both the parties' submissions, and I do think it's very important to understanding the practical implications of the Court's decision.

Justice Ruth Bader Ginsburg: Mr. Stewart, may I ask you a preliminary question.

In Quality King the government took the position that the Petitioner is taking here.

What led the government to change its mind?

Was it just what has been called dictum in Quality King, or is there another reason why the government has switched sides?

Malcolm L. Stewart: I think there are two related reasons, and one of them is the dictum, but I'll get to that second.

I think in both cases, our overriding objective was to offer a reading of section 109(a) that would not supersede, or would not effectively negate the implication prohibition in section 602(a)(1), because from the Copyright Office's perspective, we agree with Mr. Olson that the primary reason for the enactment of 602(a)(1) was to facilitate market segmentation.

And the argument we made in Quality King was you can accomplish that; you can prevent section 109(a)--

Justice Sonia Sotomayor: Could you point to something in the legislative history to support that?

Malcolm L. Stewart: --I think the best thing I could point to is a report of the Registrar of Copyrights that was issued in 1965, in which the Copyright Office identified as one of the circumstances that would be covered by the importation ban, the situation in which, quote,

"the copyright owner had authorized the manufacture of copies in a foreign country for distribution only in that country. "

It didn't use the phrase “ market segmentation ”, but clearly, the point was the same.

You are authorizing copies to be made abroad for distribution only in that place, not for redistribution here.

And so--

Justice Elena Kagan: So Mr. Stewart, if I understand your argument, both here and in Quality King you want the copyright holder to have some control over importation, but at the same time you don't want the copyright holder to have control over all downstream sales.

Malcolm L. Stewart: --That's correct.

Justice Elena Kagan: And that's what your Bobbs-Merrill argument is designed to do.

It's designed to prevent that.

Malcolm L. Stewart: That's correct.

Justice Elena Kagan: Coming back to Justice Ginsburg's question, do you think that truly the way to do those two things, to give the copyright holder control over importation but not over downstream sales, that our problem really is, do you think in your heart of hearts that we got it wrong in Quality King?

Malcolm L. Stewart: Well, we lost that case 9-0, and so I am not arguing too vociferously that the Court should change its opinion.

But yes, we think that we still would adhere to our view that section 109(a) should not be read as a limitation on section 602(a)(1).

If the Court had gone that path, it could read “ lawfully made under this title ” to encompass both foreign-made and domestic-made copies, without doing damage to the copyright holder's ability to segment markets.

On the other hand--

Justice Sonia Sotomayor: So you get what you wanted anyway.

That's really the bottom line.

We undo Quality King, except that the price is that people have to ship their manufacturing abroad.

Malcolm L. Stewart: --Well, we're not urging the Court to take that course, but yes, that would have been one way to accomplish the same objective.

And so--

Justice Elena Kagan: So you are essentially saying that the appropriate way to read this statute, to make sense of all of its provisions, is to give the copyright holder control over the importation, to give Wiley the ability to go after this importer, Mr. Kirtsaeng, but to find a way to stop it there.

Malcolm L. Stewart: --I think that's correct, but I think our Bobbs-Merrill argument does provide a very principled way to stop it there without going back on what the Court said in Quality King.

That is, Bobbs-Merrill was a 1908 case in which the publisher sold books to retailers on the proviso that they not be sold at retail for less than a specified amount.

One of the retailers violated that resale restriction and was sued for copyright infringement.

And this Court in Bobbs-Merrill said -- parsed the statutory language, which at that time gave the copyright owner the exclusive right to vend copies of the work.

Justice Samuel Alito: But you're saying Bobbs-Merrill means something beyond section 109, but when -- the 1909 Copyright Act said that it was codifying the holding in Bobbs-Merrill, and the 1976 statute which is now before us said it wasn't changing the meaning of the earlier law.

So I don't know how -- Bobbs-Merrill wasn't a constitutional decision, it was a question of statutory interpretation.

So how does some sliver of Bobbs-Merrill still survive all of this?

Malcolm L. Stewart: Maybe I can put it this way: If I buy a piratical copy of a book, one that was illegally made without the consent of the copyright owner, and all I do is read it and put it on my shelf, I can't rely on 109(a) because the copy was not lawfully made under this title.

But I still couldn't be held liable for copyright infringement because there is no exclusive right to read the book or to own it.

I wouldn't have been infringing any of the copyright owner's rights.

And so in order to have a valid claim for copyright infringement, the copyright holder would have to show both that 109(a) was inapplicable, and that what the defendant was doing was a violation, an infringement of one of the exclusive rights.

And Mr. Rosenkranz seems to postulate a situation in which a cagey manufacturer would locate its facilities overseas, make the copies there, import them into the United States, sell them in this country, subject to conditions on resale.

And if the goods were resold in violation of those restrictions, the copyright owner would sue for infringement.

And I think the first argument the defendant would make is that is exactly the conduct that the Court in Bobbs-Merrill said did not infringe the exclusive right to vend.

Now -- namely the resale in violation of restrictions on resale.

How can you now say it's now an infringement of the exclusive right to distribute?

And it would be a particularly difficult argument for the copyright owner to make because what the House Report said in 1909, it didn't say exactly that it was codifying the holding of Bobbs-Merrill; it said that it was amending the statute in other respects, and it wanted to make clear that there was no intent to enlarge the exclusive right to vend.

And so the Plaintiff, in Mr. Rosenkranz's hypothetical, would in effect be arguing that by codifying section 109(a), Congress had implicitly expanded the scope of the implicit -- of the exclusive right to vend or distribute, even though it said it was doing the various opposite.

Chief Justice John G. Roberts: That's an awfully difficult maze for somebody to -- to get through.

You have to start with the difficulty of the language here, and then you have to proceed and put the Quality King gloss over it; and, when you finally get to that point, you say, well, now you've got to read Bobbs-Merrill and figure out how the common law governs all that.

Malcolm L. Stewart: But I think that would be true under anybody's reading.

That is, once a court in a case determined for whatever reason that section 109(a) was inapplicable, it didn't provide a safe harbor, the next step could never be simply to proceed to judgment and say that there was infringement.

The next step would always have to be to look at what the defendant had done--

Chief Justice John G. Roberts: Well, it's not that complicated under the Petitioner's approach.

It says once you've you had a first sale, that's it.

Malcolm L. Stewart: --The other point I would make about the Petitioner's approach is that it -- it really has no grounding in the statutory text.

That is, the Petitioner is arguing that if the publisher in Thailand, if the manufacturer of the books had shipped them directly into this country, that person could have been sued for infringement for the importation and--

Justice Stephen G. Breyer: Well, the word has grounding.

It is Coke upon Littleton, 1628, where it says that if a man be possessed of a chattel and give or sell his whole interest upon a condition, that condition is no good.

And Coke says, and that's how it should be.

And now that's picked up in Bobbs-Merrill; it's picked up in Dr. Miles.

It's been the law.

Now if, in fact, there are two ways of interpreting the statute, and one is consistent with that basic principle of commercial law, and the other produces some of the complexities that you have just mentioned, isn't it better to go with the common law and simply reaffirm a principle that's been in the commercial law almost forever?

Malcolm L. Stewart: --I -- I give two answers for that.

And the first is that Coke was saying that, in most circumstances at least, a sale is sufficient in order to divest the owner of his prior right to control distribution, but it doesn't say that a sale is necessary.

And my point is that when Mr. Rosenkranz says the hypothetical foreign publisher who makes copies with authorization but ships it into the -- them into the United States without could be held liable for infringement, there is nothing in section 109(a) that would allow a court to draw that distinction; that is, although 109(a) is sometimes referred to as a codification of the First Sale Doctrine, it doesn't require an antecedent first sale.

So as long as the foreign publisher was the owner of the books at the type -- time they were manufactured, if those books were lawfully made under this title, under Petitioner's reading they could be imported and distributed.

We know also that this was not an oversight, that Congress didn't intend the provision to be subject to a sort of implicit first authorized sale requirement, because the language was intended to cover copies that were made pursuant to a compulsory license.

Justice Samuel Alito: Which of the following is worse: All of the horribles that the Petitioner outlines to the extent they are realistic, or the frustration of market segmentation, to the extent that would occur, if Petitioner's position were accepted?

Malcolm L. Stewart: Well, if they actually happened, then I think the -- the horribles would be worse.

But, as I say, we -- we feel that we have offered a reading of all the statutory provisions together that would avoid both.

The other couple of things I would say as to why a first sale by itself--

Justice Samuel Alito: If the -- if that middle ground is -- were found to be not viable, which of the two sets of consequences is worse from the government's perspective, or can you not say?

Malcolm L. Stewart: --I would say that the consequence that all foreign-made goods, even if imported into the United States with the authorization of the U.S. copyright owner, are subject to continuing licensing requirements, etc.

, I would say that would be worse than the frustration of market segmentation that would occur under Petitioner's view.

Chief Justice John G. Roberts: Thank you, counsel.

Mr. Rosenkranz, you have four minutes.

REBUTTAL ARGUMENT OF E. JOSHUA ROSENKRANZ ON BEHALF OF THE PETITIONER

E. Joshua Rosenkranz: Thank you, Mr. Chief Justice.

I just want to step back and take a look at what the government's doing here.

After eloquently arguing in Quality King in the last two pages of its brief that our position on the meaning of this language is right, it's saying our position is wrong.

And then, it's trying to come up with a middle ground that has absolutely no basis in the statute.

If Bobbs-Merrill provides the content for the First Sale Doctrine, then what does section 109 do?

And so the government is creating a scenario in which, in order to save 602 from being superfluous in the way it is described, although we believe it's not superfluous at all, it is making 109 superfluous.

Justice Kagan asked a question about essentially sentence diagramming.

Our view is that under this title modifies lawfully.

You use the U.S. metric of U.S. law to figure out whether it's lawful.

The government's and Wiley's position is that under this title modifies both made and lawfully.

And at least the way I learned grammar, you can't use the same phrase to modify both terms.

I want to correct something that I said to Justice Ginsburg because I said it backwards.

905 and 906 are examples of the United States Congress in a copyright context applying national exhaustion, and that was six years after this statute was passed.

To Justice Breyer's question, the bear is there.

It is very much there.

The only reason no one has ever pursued these legal arguments is that the legal arguments that are the baseline for all of this have yet to be accepted by this Court.

But I have not heard any argument for why the vast majority of them will not necessarily obtain, and they are not in any of the briefs.

To use the Toyota example, there simply is no other defense.

There is none.

Fair use doesn't apply to the vast majority of the scenarios that I've just described.

Finally, outsourcing: Congress did not want U.S. jobs to go overseas.

Congress in the very same statute in section 601 was hoarding manufacturing jobs to the United States; and as the government said on the last page of its Quality King,

"it is highly unlikely that the same Congress that hoarded jobs in the United States was prepared to tolerate a situation in which there was eternal downstream control. "

that the copyright owners would be encouraged to seize by sending jobs overseas.

So unless there are further questions from the Court -- I saw, I just realized I said the same thing twice incorrectly to Justice Ginsburg.

905 and 906 are examples of international exhaustion.

Unless there are further questions, I thank the Court and respectfully request that the Court reverse the judgment below.

Chief Justice John G. Roberts: Thank you, counsel, counsel.

The case is submitted.