Business Law Chapter 39 Homework Act Since 1952 Subject Some Exceptions The

Unlock access to all the studying documents.

View Full Document

CASE 39-3

SUPAP KIRTSAENG v. JOHN WILEY & SONS, INC.

Supreme Court of the United States, 2013

568 U.S. ____, 133 S.Ct. 1351, 185 L.Ed.2d 392

http://scholar.google.com/scholar_case?case=15712401143530412161&q=133+S.Ct.+1351&hl=en&as_sdt=2,34

Breyer, J.

[The business of respondent, John Wiley & Sons, Inc., includes publishing academic

textbooks. Wiley often assigns to its wholly owned foreign subsidiary, Wiley Asia, rights to

publish, print, and sell a foreign edition of Wiley’s English language textbooks abroad. 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.

Thus there are two essentially equivalent versions of a Wiley textbook, each version

Petitioner, Supap Kirtsaeng, a citizen of Thailand, moved to the United States in

1997 to study mathematics at Cornell University. He paid for his education with the help of

a Thai Government scholarship which required him to teach in Thailand for ten years on his

return. 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. 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 bookstores, where they sold at low prices, and mail them to him

in the United States. Kirtsaeng would then sell them, reimburse his family and friends, and

keep the profit.

infringed Wiley’s American copyrights by selling and importing without authorization

copies of eight of Wiley’s copyrighted titles and assessed statutory damages of $600,000

($75,000 per work). On appeal, the Second Circuit affirmed, concluding that the “first sale”

doctrine does not apply to copies of American copyrighted works manufactured abroad.]

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

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

In Quality King Distributors, Inc. v. L’anza Research Int’l, Inc., [citation], 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

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.

* * *

We must decide whether the words “lawfully made under this title” restrict the scope

of §109(a)’s “first sale” doctrine geographically. * * *

Under any of [the] geographical interpretations, §109(a)’s “first sale” doctrine would

* * *

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

consequently conclude that Kirtsaeng’s nongeographical reading is the better reading of the

Act.

Other provisions of the present statute also support a nongeographical interpretation.

* * *

The “first sale” doctrine is a common-law doctrine with an impeccable historic

pedigree. * * *

* * *

The common-law doctrine makes no geographical distinctions * * *

* * *

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

* * *

Technology companies tell us that “automobiles, microwaves, calculators, mobile

phones, tablets, and personal computers” contain copyrightable software programs or

packaging. [Citations.] 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.

[Citation.] 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. * * * 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.

[Citation.] American retailers buy many of these goods after a first sale abroad. [Citation.]

Thus, we believe that the practical problems that petitioner and his amici [parties

filing “friends of the court” briefs] 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

evergrowing importance of foreign trade to America. [Citation.] See The World Bank,

Imports of goods and services (% of GDP) (imports in 2011 18% of U. S. gross domestic

Infringement and Remedies

To sue for infringement the copyright must be registered with the Copyright

Oce unless the work is a Berne Convention work whose country of origin is

not the United States. Infringement occurs when somebody exercises the

rights exclusively reserved for the copyright owner without authorization.

Intent is not necessary for infringement. Remedies after registration include:

(1) injunction; (2) impoundment and destruction of the infringing articles; (3)

*** Chapter Outcome ***

Explain what patents protect and the remedies for infringement.

E. PATENTS

The U.S. Constitution grants Congress the power “to promote the Progress of

Science and useful Arts, by securing for limited Times to . . . Inventors the

exclusive Right to their . . . Discoveries.” A patent is the exclusive right to

make, use, or sell an invention to the absolute exclusion of others. The

patent owner may also pro,t by selling the patent or by licensing others to

use the patent on a royalty basis. The patent may not be renewed, however:

upon expiration, the invention enters the “public domain,” and anyone may

use it.

Patentability

Any new and useful process, machine, manufacture, or composition of

matter or any new and useful improvement thereof may be patented as a

utility patent. Naturally occurring substances and fundamental truths or

ideas are not patentable. To be patentable as a utility patent, the process,

machine, manufacture, or composition must be (1) novel; (2) useful; and (3)

nonobvious.

CASE 39-4

ASSOCIATION FOR MOLECULAR PATHOLOGY v. MYRIAD

GENETICS, INC.

Supreme Court of the United States, 2013

569 U. S. ____, 133 S.Ct. 2107

http://scholar.google.com/scholar_case?q=Association+for+MMolecular+Pathology+v.+Myriad+Genetics,

+Inc.&hl=en&as_sdt=4,60&case=16946808550965094679&scilh=0

Thomas, J.

Respondent Myriad Genetics, Inc. (Myriad), discovered the precise location and sequence of

two human genes, mutations of which can substantially increase the risks of breast and

ovarian cancer. Myriad obtained a number of patents based upon its discovery. This case

involves claims from three of them and requires us to resolve whether a naturally occurring

segment of deoxyribonucleic acid (DNA) is patent eligible under [Section 101 of the Patent

we hold that a naturally occurring DNA segment is a product of nature and not patent

eligible merely because it has been isolated, but that cDNA is patent eligible because it is not

naturally occurring. We, therefore, affirm in part and reverse in part the decision of the

United States Court of Appeals for the Federal Circuit.

* * *

DNA’s informational sequences and the processes * * * occur naturally within cells.

Scientists can, however, extract DNA from cells using well known laboratory methods.

These methods allow scientists to isolate specific segments of DNA—for instance, a

particular gene or part of a gene—which can then be further studied, manipulated, or used. It

is also possible to create DNA synthetically through processes similarly well known in the

field of genetics. * * * This synthetic DNA created in the laboratory * * * is known as

complementary DNA (cDNA).

Changes in the genetic sequence are called mutations. Mutations can be as small as the

alteration of a single nucleotide [a molecule that forms the building block for DNA]—a

change affecting only one letter in the genetic code. Such small-scale changes can produce

This case involves patents filed by Myriad after it made one such medical breakthrough.

Myriad discovered the precise location and sequence of what are now known as the BRCA1

and BRCA2 genes. Mutations in these genes can dramatically increase an individual’s risk

of developing breast and ovarian cancer. The average American woman has a 12– to

13–percent risk of developing breast cancer, but for women with certain genetic mutations,

the risk can range between 50 and 80 percent for breast cancer and between 20 and 50

percent for ovarian cancer. Before Myriad’s discovery of the BRCA1 and BRCA2 genes,

scientists knew that heredity played a role in establishing a woman’s risk of developing

sought and obtained a number of patents. * * *

* * *

Myriad’s patents would, if valid, give it the exclusive right to isolate an individual’s BRCA1

and BRCA2 genes * * * The patents would also give Myriad the exclusive right to

synthetically create BRCA cDNA. In Myriad’s view, manipulating BRCA DNA in either of

these fashions triggers its “right to exclude others from making” its patented composition of

matter under the Patent Act. [Citation.]

Section 101 of the Patent Act provides:

“Whoever invents or discovers any new and useful … composition of matter, or any new

and useful improvement thereof, may obtain a patent therefor, subject to the conditions

and requirements of this title.” [Citation.]

We have “long held that this provision contains an important implicit exception[:] Laws

of nature, natural phenomena, and abstract ideas are not patentable.” [Citation.] Rather,

“‘they are the basic tools of scientific and technological work’” that lie beyond the domain

of patent protection. [Citation.] As the Court has explained, without this exception, there

would be considerable danger that the grant of patents would “tie up” the use of such tools

and thereby “inhibit future innovation premised upon them.” [Citation.] This would be at

odds with the very point of patents, which exist to promote creation. [Citation.]

It is undisputed that Myriad did not create or alter any of the genetic information encoded in

the BRCA1 and BRCA2 genes. The location and order of the nucleotides existed in nature

before Myriad found them. Nor did Myriad create or alter the genetic structure of DNA.

Instead, Myriad’s principal contribution was uncovering the precise location and genetic

sequence of the BRCA1 and BRCA2 genes within chromosomes 17 and 13. The question is

whether this renders the genes patentable.

Myriad recognizes that our decision in [Diamond v. Chakrabarty] is central to this

inquiry. * * * The Chakrabarty bacterium was new “with markedly different characteristics

from any found in nature,” [citation], due to the additional plasmids and resultant “capacity

for degrading oil.” [Citation.] In this case, by contrast, Myriad did not create anything. To be

* * *

cDNA does not present the same obstacles to patentability as naturally occurring, isolated

DNA segments. As already explained, creation of a cDNA sequence * * * results in a * * *

molecule that is not naturally occurring. Petitioners concede that cDNA differs from natural

DNA in that “the non-coding regions have been removed.” [Citation.] They nevertheless

argue that cDNA is not patent eligible because “[t]he nucleotide sequence of cDNA is

dictated by nature, not by the lab technician.” [Citation.] That may be so, but the lab

III

It is important to note what is not implicated by this decision. First, there are no method

claims before this Court. Had Myriad created an innovative method of manipulating genes

while searching for the BRCA1 and BRCA2 genes, it could possibly have sought a method

patent. But the processes used by Myriad to isolate DNA were well understood by

geneticists at the time of Myriad’s patents “were well understood, widely used, and fairly

uniform insofar as any scientist engaged in the search for a gene would likely have utilized a

similar approach,” [citation], and are not at issue in this case.

Similarly, this case does not involve patents on new applications of knowledge about the

BRCA1 and BRCA2 genes. * * *

Procedure

The United States Patent and Trademark Oce (USPTO) issues patents upon

the basis of an application containing a speci,cation and claims. Prior to the

2011 America Invents Act, the applicant must have been the inventor. Under

the America Invents Act, a person to whom the inventor has assigned, or is

under an obligation to assign, the invention may ,le a patent application.

The USPTO determines whether the application meets the required criteria.

Applications are con,dential, but the con,dentiality ends upon the granting

Infringement

A direct infringer makes, uses, offer to sell, or sells a patented invention

without permission. An indirect infringer actively encourages another to

make, use, offer to sell, or sell a patented invention without permission. A

contributory infringer knowingly sells or supplies a part or component of a

patented invention. Good faith and ignorance are defenses to contributory

infringement. . To recover damages a patent owner must give (1) actual

Remedies

Remedies include: 1) injunctive relief; 2) damages of not less than a

reasonable royalty for use; 3) treble damages; 4) attorney’s fees in some

cases; and 5) costs.