Edited by Irene Calboli and Edward Lee
Chapter 20: Using trademark law to override copyright’s first sale rule for imported copies in the United States
Can copyright owners use trademark law to circumvent the first sale rule of copyright law in the United States (U.S.)? In the case of parallel imports, the answer appears to be “yes.” In both trademark and copyright law, non-counterfeit goods that are imported without the consent of the owner of the domestic intellectual property rights are referred to as parallel imports, or “gray market goods.”1 Legal restrictions on parallel imports benefit domestic intellectual property owners by enabling them to maintain separate markets in different territories. In some cases, this benefits consumers by enabling merchants to tailor their offerings to meet the needs and preferences of consumers in different territories.2 However, it also allows merchants to engage in price discrimination, by offering their goods at higher prices in the U.S. than in foreign markets without facing competition from imports of the cheaper foreign goods or from domestic secondhand sales of the imported goods. Because secondhand sales by third parties generate no royalties for copyright owners, any strategy that reduces the number of secondhand copies on the market can increase revenues for copyright owners by enabling them (1) to sell more new copies; and (2) to charge higher prices for those new copies due to the absence of price competition from secondhand sales.
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