Parallel importers
importers face
face penalties
(continued
from page
page 79)
79)
Parallel
penalties (continu
ed from
and received
received the
the maximum
maximum prison
prison sentence
sentence of
of five
five
and
years . Additionally,
Additionally, O'Reilly
O'Reilly was
was ordered
ordered to
to pay
pay
years.
restitution to
to the
the copyright
copyright holder,
holder, Data
Data East
East U.S.A.,
U .S.A.,
restitution
Inc . Tom
Tom Goss,
Goss, arreste
arrested
in
the
same
sting
operation
Inc.
d in the same sting operation
as O'Reilly,
O'Reilly, was
was also
also convicted.
convicted .
as
The most
most recent
recent sting
sting operation
operation involving
involving video
video
The
games was
was concluded
concluded in
in January,
January, 1986.
1986. The
The FBI
FBI
games
arrested 28
28 individuals
individuals involved
involved in
in illegal
illegal operations
operations
arrested
from fencing
fencing to
to selling,
selling, distributing,
distributing, and
and operating
operating
from
illegal video
video games
games from
from New
New Jersey
Jersey to
to Florida.
Florida .
illegal
As the
the successful
successful sting
sting operations
operations and
and con-
con-
As
victions
of
video-game
pirates
have
shown,
copy-
victions of video-game pirates have shown, copy-
right laws
laws do
do indeed
indeed provide
provide "teeth"
"teeth" with
with which
which to
to
right
put convicted
convicted pirates
pirates in
in jail.
jail. The
The courts
courts recently
recently
put
have shown
shown an
an understanding
understanding of
of the
the devastation
devastation
have
upon
the
video-game
industry
from
pirates
and
upon the video-game industry from pirates, , and
have been
been willing
willing to
to impose
impose maximum
maximum sentences
sentences
have
where warranted.
warranted . The
The question
question is,
is, while
while criminal
criminal
where
sanctions
have
been
imposed
upon
pirates
who
sanctions have been imposed upon pirates who
have
manufactured
and/
or
distributed
unauthorized
have manufactured and/or distributed unauthorized
copies of
of video
video games,
games, can
can such
such criminal
criminal penalties
penalties
copies
be imposed
imposed upon
upon parallel
parallel importers-those
importers-those who
who
be
purchase
games
or
components
from
legitimate
purchase games or components from legitimate
sources overseas,
overseas, but
but illegally
illegally distribute
distribute the
the games
games
sources
here? Parallel
Parallel imports
imports do
do constitute
constitute infringement
infringement of
of
here?
the U.S.
U.S. copyright,
copyright, and
and the
the purchaser,
purchaser, the
the illegal
illegal
the
distributor, as
as well
well as
as the
the importer,
importer, are
are subject
subject to
to
distributor,
criminal penalties.
penalties .
criminal
Importers, distributors,
distributors, and
and buyers
buyers of
of parallel
parallel
Importers,
goods
subject
to
fines
and
imprisonment
goods subject to fines and imprisonment
Section 602
602 of
of the
the Copyright
Copyright Act
Act provides
provides that
that
Section
"i mportation into
into the
the United
United States,
States, without
without the
the
"importation
authority
of
the
owner
of
copyright
under
this
title,
authority of the owner of copyright under this title,
of copies
copies or
or phono
phono records
records of
of a a work
work that
that have
have
of
acquired outside
outside of
of the
the United
United States
States is
is an
an
acquired
infringement of
of the
the exclusive
exclusive right
right to
to distribute
distribute
infringement
copies or
or phono
phono records
records under
under Section
Section 106."
106."
copies
Section
106
(3)
of
the
copyright
act
provides
that
the
Section 106 (3) of the copyright act provides that the
copyright owner
owner has
has the
the "exclusive
"exclusive rights
rights to
to do
do and
and
copyright
to authorize"
authorize" distribution
distribution of
of copies
copies to
to the
the public
public by
by
to
sale,
rental,
lease,
or
lending
.
The
Copyright
Act
sale, rental, lease, or lending. The Copyright Act
thus makes
makes illegal
illegal not
not only
only the
the importation
importation of
of
thus
unauthorized copies
copies into
into this
this country,
country, but
but also
also the
the
unauthorized
distribution of
of such
such copies.
copies. Are
Are parallel
parallel imports
imports
distribution
"
unauthorized"?
After
all,
they
have
been
"unauthorized"? After all, they have been
manufactured by
by a a legitimate
legitimate manufacturer,
manufacturer, even
even if
if
manufactured
overseas . Case
Case law
law has
has held
held that
that "authorized"
" authorized"
overseas.
means authorized
authorized by
by the
the copyright
copyright holder
holder in
in the
the
means
United States.
States. Unless
Unless the
the copyright
copyright holder
holder in
in this
this
United
country authorized
authorized copying
copying or
or distribution
distribution within
within
country
this country,
country, the
the activities
activities are
are illegal.
illegal . Columbia
Columbia
this
Broadcasting System,
System, Inc.
Inc. v. v. Scorpio
Scorpio Music
Music
Broadcasting
Distributors, Inc.
Inc. (hereafter
(hereafter "CBS").
" CBS"). In
In this
this case,
case,
Distributors,
CBS , the
the original
original copyright
copyright holder,
holder , granted
granted
CBS,
exclusive authorization
authorization to
to a a Philippines
Philippines corporation
corporation
exclusive
to
manufacture
and
sell
records
exclusively
within
to manufacture and sell records exclusively within
the Philippines.
Philippines . A
A U.S.
U .S . importing
importing company
company
the
purchased the
the records
records in
in the
the Philippines
Philippines and
and
purchased
shipped
them
into
the
United
States,
where
it
sold
shipped them into the United States, where it sold
the records
records to
to Scorpio
Scorpio Music.
Music .
the
In CBS
CBS the
the court
court also
also held
held that
that the
the "First
" First Sale
Sale
In
Doctrine" exception
exception provided
provided under
under Section
Section 106
106 (3)
(3)
Doctrine"
of
the
Copyright
Act
did
not
apply
to
the
parallel
of the Copyright Act did not apply to the parallel
60
80
importer or
or distributor
distributor of
of parallel
parallel goods.
goods. The
The "First
" First
importer
Sale Doctrine,"
Doctrine ," Section
Section 109
109 of
of the
the Copyright
Copyright Act,
Act ,
Sale
provides that
that anyone
anyone who
who possesses
possesses a a copy
copy
provides
"lawfully made"
made" may
may without
without the
the authority
authority of
of the
the
"lawfully
copyright
owner
dispose
of
that
copy
in
whatever
copyright owner dispose of that copy in whatever
way he
he sees
sees fit.
fit. In
In CBS,
CBS , Scorpio
Scorpio defended
defended the
the copy-
copy-
way
right
charges
on
the
basis
that
it
had
obtained
right charges on the basis that it had obtained
copies "lawfully
"lawfully made"
made" because
because the
the Philippines
Philippines
copies
manufacturer had
had produced
produced the
the copies
copies in
in accor-
accor-
manufacturer
dance with
with its
its agreement
agreement with
with Columbia
Columbia Broad-
Broad-
dance
casting Systems.
Systems. However,
However, the
the federal
federal court
court held
held
casting
that the
the "First
"First Sale
Sale Doctrine"
Doctrine " exception
exception does
does not
not
that
apply to
to purchases
purchases of
of imported
imported goods.
goods. Because
Because the
the
apply
entire
parallel-importing
problem
of
video
games
entire parallel-importing problem of video games
involves goods
goods coming
coming into
into this
this country
country from
from
involves
outside the
the United
United States,
States , the
the "First
" First Sale
Sale Doctrine"
Doctrine"
outside
exception would
would not
not apply
apply to
to relieve
relieve copyright
copyright
exception
infringers from
from liability
liability or
or criminal
criminal penalties.
penalties .
infringers
As pointed
pointed out
out in
in the
the CBS
CBS case,
case , not
not only
only
As
importers but
but any
any person
person in
in the
the chain
chain of
of distribution
distribution
importers
can be
be held
held liable
liable for
for infringing
infringing activities.
activities. In
In CBS,
CBS ,
can
for
example,
defendent
Scorpio
argued
that
it
was
for example, defendent Scorpio argued that it was
not the
the proper
proper party
party because
because it it did
did not
not actually
actually
not
import any
any records
records from
from the
the Philippines,
Philippines, but
but rather
rather
import
purchased records
records from
from a a trading
trading company
company in
in the
the
purchased
United States
States who
who had
had imported
imported them.
them . This
This court
court
United
held that
that "it
"it is
is well
well established
established that
that a a suit
suit for
for
held
infringement is
is analagous
analagous to
to other
other tort
tort actions,
actions , and
and
infringement
infringers are
are jointly
jointly and
and severely
severely liable;
liable; hence
hence plain-
plain-
infringers
tiff need
need sue
sue only
only participants
participants as
as it it sees
sees fit."
fit ." The
The
tiff
federal court
court held
held that
that defendant
defendant Scorpio
Scorpio was
was at
at
federal
least "a
"a contributory
contributory infringer,"
infringer," since
since it
it was
was
least
conceded that
that it it purchased
purchased the
the goods
goods from
from an
an
conceded
importer, that
that is,
is, the
the goods
goods were
were brought
brought in
in from
from
importer,
outside the
the United
United States.
States . As
As this
this court
court noted,
noted ,
outside
"intent is
is not
not a a necessary
necessary element
element of
of infringement,
infringement ,
"intent
and the
the copyright
copyright holder
holder may
may proceed
proceed against
against any
any
and
member of
of the
the chain
chain of
of distribution."
distribution ."
member
Although
CBS
is
the
only case
case to
to date
date where
where the
the
Although CBS is the only
court discusses
discusses the
the application
application of
of the
the Copyright
Copyright Act
Act
court
to parallel
parallel imports,
imports, the
the leading
leading treatise
treatise in
in copyright
copyright
to
law
,
"Nimmer
on
Copyright
(1985)
"
supports
law, "Nimmer on Copyright (1985)" supports
imposing
criminal
sanctions
on
illegal
distributors
imposing criminal sanctions on illegal distributors
(Section 15.01,
15.01, 1985).
1985) . Nimmer
Nimmer supports
supports the
the CBS
CBS
(Section
holding
that
the
buyer
may
be
liable
as
a
holding that the buyer may be liable as a
contributory
infringer
(Section
8.11
).
contributory infringer (Section 8.11).
The CBS
CBS case
case involved
involved illegal
illegal importation
importation of
of
The
records , not
not video
video games.
games. However,
However, this
this is
is not
not a
a
records,
point of
of distinction
distinction since
since video
video games,
games , as
as already
already
point
noted, are
are classified
classified as
as "other
" other audio
audio visual
visual works"
works "
noted,
under the
the Copyright
Copyright Act,
Act , and
and receive
receive the
the same
same
under
protection from
from the
the copyright
copyright registration
registration as
as sound
sound
protection
recordings . As
As applied
applied to
to the
the video-game
video-game industry,
industry,
recordings.
this means
means an
an operator
operator who
who purchases
purchases a a parallel
parallel
this
import is
is in
in the
the same
same position
position as
as defendant
defendant Scorpio
Scorpio
import
and subject
subject to
to conviction.
conviction .
and
Conclusion
Conclusion
The Copyright
Copyright Act
Act provides
provides substantial
substantial
The
sanctions , including
including prison
prison sentences,
sentences, to
to importers,
importers,
sanctions,
distributors
,
and
buyers
of
parallel
goods
This
distributors, and buyers of parallel goods. . This
conclusion is
is supported
supported both
both by
by case
case law
law and
and the
the
conclusion
leading authority
authority in
in copyright
copyright law.
law.
leading
The
question
of
parallel
imports
has generated
generated
The question of parallel imports has
PLAY METER,
METER. March
March 1,
1, 1986
1966
PLAY