Thursday, March 28, 2013

Parallel Import and Copyright Law

As the Internet has made international transactions easier, there are more and more issues of importation and IP. On March 19, 2013, the US Supreme Court made a new ruling on parallel importation (Kirtsaeng v. John Wiley & Sons, Inc). This is a new opinion on whether or not the First Sale Doctrine (roughly, the doctrine that once a rights holder sells the product embodying the copyright, it cannot control the resale of the product in the secondary market) is applied to international sales. Now, in Kirtsaeng, the U.S. Supreme Court said 'yes' and found that the importation of textbooks produced in foreign countries is acceptable because of the combination of 17 USC 602(a)(1), 106(3), and 109(a). This post is not to explore the potentially intriguing tension between copyright owners and users/consumers on Kirtsaeng but instead to explain briefly the Japanese regulation on parallel importation.  

The controversy in the US has been brought to the Supreme Court because the statutory provisions are vague and ambiguous on this issue. In contrast, in Japanese Copyright law, the international application of First Sale Doctrine is stipulated by the law.  Article 26-2 (2)(v) of the Japanese Copyright Act stipulates the exemption of exclusive rights for distribution in the case when "the original or reproductions of a work the ownership of which has been transferred outside this country, (a) without prejudice to a right that is the equivalent to the rights for distribution, or (b) by a person who has a right equivalent to the rights for distribution or by a person with authorization from such a person."  This means that when a Japanese rights holder licenses production/sales of products in a foreign country like Thailand (as in Kirtsaeng), the rights holder cannot control the secondary distribution of the licensed product even within the territory of Japan. (Note that there are IP Laws other than Copyright Law which may prohibit parallel importation.)  

One important exception is commercial records/CDs. Although there is a lot of controversy on the policy over this exception, basically, the idea is that if Japanese contents business wants to go out to Asian or other international markets and sell Japanese songs, then there would be some people selling a cheaper foreign version of the same song in Japan and avoid liability under Article 26-2 (2)(v). The Japanese music industry claimed that such possibilities would hinder the music industry from actively selling Japanese music abroad. As a result, in 2004, by the amendment of the Copyright Law, Article 113(5) was installed which (partially) prohibits the import of "a commercial phonogram that is the same as said commercial phonogram for domestic distribution and yet which is intended for distribution exclusively outside this country." Although there are many restrictions such as the exception being only applicable when the conduct unreasonably adversely affects the profits of the rights holders, I will not go further into these technical issues here.  

In short, many of the problems regarding the First Sale Doctrine which are dealt with by the court interpretation in the U.S. are resolved by the Congress in Japan.

DISCLAIMER: "IT Law issues in Japan" only provides general information about Japanese information technology law and does not, under any circumstances, constitute legal advice. You should first obtain the advice of professional legal counsel who is qualified in Japan before acting or refraining from acting based on this blog.

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