US Supreme Court to revisit “first-sale” copyright doctrine

The Supreme Court agreed Monday to decide the global reach of US copyright law, in a case testing whether an overseas purchaser of a copyrighted work may resell it in the United States without the copyright holder’s permission.

The justices will hear the case, which considers the “first-sale” doctrine, in its next term and is expected to set a nationwide standard. Federal circuit courts of appeal are split on the issue.

The first-sale doctrine generally allows the purchaser of any copyrighted work to re-sell or use the work in many ways without the copyright holder’s permission. That’s why used bookstores, libraries, GameStop, video rental stores, and even eBay are all legal. But how the doctrine applies to foreign-purchased works—the so-called grey market—has been a matter of considerable debate.

In many ways, this is a battle for non-digital goods. Most digital goods, like software, e-books and MP3s—because of licensing or sandboxing—cannot be resold. However, a US startup, ReDigi, is testing that theory when it comes to online music.

Meanwhile, the high court in 2010 said the first-sale doctrine did not apply to overseas purchases of copyrighted works which were imported for resale in the United States. The 4-4 ruling meant Costco could be liable for copyright infringement for selling foreign-made watches without the manufacturer’s authorization. However, because there was no majority decision, the ruling did not set a nationwide precedent and solely affirmed a lower court’s ruling.

Justice Elena Kagan was recused from the Costco case, as she had worked on it when she was solicitor general. She had urged the justices to side with Omega, the watchmaker. The government’s position was that the “Copyright Act does not apply outside the United States.” Costco had told the Supreme Court that the decision effectively urges US-based manufacturers to flee the United States (.pdf) to acquire complete control over distribution of their goods in the American market, arguments now being made in the latest case.

The case the justices decided to review Monday concerns textbook maker John Wiley & Sons and California entrepreneur Supap Kirtsaeng, who was reselling textbooks purchased overseas to US-based students without the publisher’s consent. The publisher sued, and a New York federal jury agreed with John Wiley & Sons’ position that the first-sale doctrine did not apply, and awarded $600,000 in damages for copyright infringement.

A federal appeals court upheld the judgement. (.pdf)

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Supreme court sets aside Myriad gene patent ruling

WASHINGTON (Reuters) – The Supreme Court set aside on Monday a ruling that Myriad Genetics Inc can patent two genes linked to breast and ovarian cancers, in a case closely watched by the biotechnology industry.

The justices set aside a ruling by the U.S. Court of Appeals for the Federal Circuit that Myriad has the right to patent two human genes, known as BRCA1 and BRCA2, that account for most inherited forms of breast and ovarian cancers, and sent the matter back for more proceedings.

The Supreme Court ordered the further proceedings at the lower court in view of the high court’s ruling last week in a case that raised similar issues and that held that companies cannot patent observations about a natural phenomenon.

Women who test positive using Myriad’s gene test, called BRACAnalysis, have an 82 percent higher risk of breast cancer and a 44 percent higher risk of ovarian cancer in their lifetimes.

The appeals court by a 2-1 vote ruled the genes isolated by the company can be patented because Myriad is testing for distinctive chemical forms of the genes, and not as they appear naturally in the body.

The dissenting judge said the genes could not be patented just because they were isolated from the body.

The appeals court overturned a ruling by a federal judge in New York that the genes could not be patented, a decision that caused widespread concern for the biotechnology industry. It said such patents were essential to foster innovation.

The patents granted to Myriad give the company the exclusive right to perform the genetic tests. The appeals court in its ruling in July also found that Myriad’s method for screening potential therapies can be patented.

The lawsuit filed in 2009 claimed the patents violated patent law, restricting scientific research and patients’ access to medical care.

The appeal to the Supreme Court was backed by a number of organizations representing health care professionals, including the American Medical Association, and other groups.

The appeal argued that the question of whether genes and the information they convey can be patented is of “paramount importance to the future of patent law, the advancement of medical science and patients’ health.”

Myriad opposed the appeal. Its shares rose more than 2 percent after the Supreme Court’s order.

The attorney representing the company, Gregory Castanias, told the Supreme Court that patents involving isolated DNA molecules have been issued for nearly 30 years, resulting in significant investment by biotechnology companies.

Castanias said the challenged patents at issue in the case were filed more than 16 years ago. He said the appeals court’s decision was correct and the “questions presented are unique to this case, factbound and unlikely to recur.”

The Supreme Court case is the Association for Molecular pathology v. Myriad Genetics, No. 11-725.

(Reporting By James Vicini; Editing by Gerald E. McCormick)

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