Game Over or Just Time Out? Exhaustion and Misuse of Intellectual Property Rights in the United States Before and After Kirtsaeng v. Wiley & Sons
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In this chapter, I address the intricate relationship between the protection of intellectual property rights and the principle of intellectual property exhaustion in the United States in the context of international trade. In particular, I address the principle of exhaustion in trademark and copyright law, the overlap of trademark and copyright protection, and the impact of such overlap on the regulation of parallel imports of gray market products. I additionally focus my analysis on the important developments that have occurred in this area as a result of the Supreme Court’s decision in Kirtsaeng v. Wiley and Sons. After decades of conflicting interpretations, the Supreme Court clarified in Kirtsaeng that genuine (non-counterfeit) copyrighted products can be freely imported into the United States not solely by copyright owners but also by independent third parties (gray marketers), regardless of where the products were made and first sold with the authority of the copyright owners. Even though Kirtsaeng concerned gray market books, the impact of the decision goes far beyond international trade in “traditional” copyrighted products - books, pictures, disks, software, and so on. Notably, the effects of Kirtsaeng directly extend to international trade in consumer products such as shampoos, watches, and chocolate. Generally, these products cannot be copyrighted because they constitute uncopyrightable useful articles, yet they frequently carry copyrightable “incidental features” - designs, product packaging, creative labels, logos, and so forth. In recent decades, businesses turned to copyright law to protect these features in growing numbers and, in many instances registered these features with the Copyright Office. Why this trend? Because, by securing copyright protection in these features, businesses could benefit from the effects of both trademark and copyright protection for their products. This chapter proceeds as follows. In Part I, I provide a brief overview of the principle of intellectual property exhaustion, and the positions that the United States followed with respect to trademark and copyright exhaustion before the Supreme Court decision in Kirtsaeng. In this Part, I also recount the pre-Kirtsaeng trend of businesses recurring to copyright protection for incidental features of otherwise uncopyrightable products in order to leverage this protection and prevent as copyright infringement the importation of gray market products carrying those features. In Part II, I consider the Supreme Court decision in Kirtsaeng, which brought the United States’ position in line with the international exhaustion standard adopted under the rule of trademark law. In this Part, I also note that the effects of Kirtsaeng may be, unfortunately, short-lived. In particular, I highlight that, just a few days after the decision, calls for copyright reforms were made by the United States Register for Copyrights and the Chairman of the House Judiciary Committee and this may imply the possibility that Congress overrules Kirtsaeng, in particular due to the lobbying activity that may certainly be taking place in this respect. Yet, should Congress overturn Kirtsaeng, this would recreates a system of territorially different exhaustion regimes in copyright and trademark law where businesses could again resort to, and leverage copyright protection for incidental product features in order to prevent the importation of gray market products. This should not need to be the case, however, and does not need to be the case if the courts and Congress adopt preventative measures against this practice. In particular, in Part III, I conclude the chapter arguing that courts should follow the example of the District Court for the Eastern District of California, which, on remand after the Supreme Court decision in the case Costco v. Omega, declared that Omega’s practice of leveraging copyright protection on the Omega Globe Design amounted to copyright misuse. I additionally suggest that Congress could follow the example of countries such as Australia and Singapore, and adopt an ad hoc legislative amendment rendering copyright protection for “accessories” in the context of parallel imports unenforceable.
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Distribution des Intangibles - La Propriété Intellectuelle dans le Commerce des Nouveaux Biens