A Material World: Using Trademark Law to Override Copyright\u27s First Sale Rule for Imported Copies

When the Supreme Court held that the first sale rule of copyright law permits the unauthorized importation and domestic sale of lawfully made copies of copyrighted works, regardless of where those copies were made, copyright owners lost much of their ability to engage in territorial price discrimination. Publishers, film and record producers, and software and videogame makers could no longer use copyright law to prevent the importation and domestic resale of gray market copies, and therefore could no longer protect their domestic distributors against competition from cheaper imported copies. However, many of these copyright owners can take advantage of a novel strategy under trademark law in order to reclaim their ability to maintain separate foreign and domestic markets. Copyright owners can invoke trademark law to prevent unauthorized parallel imports of lawful copies of their works as well as domestic distribution of those imported copies, thereby achieving an end-run around copyright’s first sale rule. Thus far this strategy has succeeded, but its validity has not yet been tested in court. Whenever copyright and trademark law overlap, the possibility of using one regime as an end-run around the other raises significant policy concerns. The trademark strategy described here gives copyright owners the power to exclude parallel imports and maintain high prices without conferring any significant public benefit, thus frustrating the goals of copyright law while failing to advance those of trademark law. While current judicial interpretations of trademark law permit this strategy, courts should consider whether their continued adherence to these standards disserves the public interest