Quality King Distributors, Inc. v. L'Anzaresearch International, Inc.

PETITIONER: Quality King Distributors, Inc.
RESPONDENT: L'Anzaresearch International, Inc.
LOCATION: Knowles' Car

DOCKET NO.: 96-1470
DECIDED BY: Rehnquist Court (1986-2005)
LOWER COURT: United States Court of Appeals for the Ninth Circuit

CITATION: 523 US 135 (1998)
ARGUED: Dec 08, 1997
DECIDED: Mar 09, 1998

ADVOCATES:
Allen R. Snyder - Argued the cause for the petitioner
Lawrence G. Wallace - Argued the cause for the United States, as amicus curiae, by special leave of court, supporting the respondent
Raymond H. Goettsch - Argued the cause for the respondent

Facts of the case

L'anza Research International, Inc., a California based manufacturer and seller of hair care products, has copyrighted the labels that are affixed to its products. Compared to domestic markets, the price of L'anza products in foreign markets is substantially lower. L'anza's distributor in the United Kingdom arranged for the sale of L'anza products, affixed with copyrighted labels, to a distributor in Malta. The Malta distributor then sold the products to Quality King Distributors, Inc., who imported the products back to the U.S. and sold them at discounted prices to unauthorized retailers. In its suit, L'anza alleged that Quality King violated L'anza's exclusive rights under the Copyright Act of 1976 to reproduce and distribute the copyrighted material in the U.S. Rejecting Quality King's defense based on the "first sale" doctrine, the District Court ruled in favor of L'anza. The Court of Appeals affirmed.

Question

Is section 602(a) of the Copyright Act of 1976, which gives the copyright owner the right to prohibit the unauthorized importation of copies, limited by the "first sale" doctrine?

Media for Quality King Distributors, Inc. v. L'Anzaresearch International, Inc.

Audio Transcription for Oral Argument - December 08, 1997 in Quality King Distributors, Inc. v. L'Anzaresearch International, Inc.

William H. Rehnquist:

We'll hear argument first this morning in Number 96-1470, Quality King Distributors v. L'anza Research International.

Mr. Snyder.

Allen R. Snyder:

Mr. Chief Justice, and may it please the Court:

The Members of Congress in 1976 who enacted the copyright law of 1976 would be quite surprised to learn from the Ninth Circuit's decision below that Congress allegedly intended section 602 of that law to override the longstanding and fundamental principle in copyright law known as the first sale doctrine and thus to allow a manufacturer to control the import and the subsequent resale of particular copies of goods that the manufacturer itself had already sold.

This Ninth Circuit decision is inconsistent not only with the statutory language but also with the legislative history and, indeed, Congress simply has not addressed either in the copyright law or elsewhere respondent's efforts to curtail parallel imports--

Sandra Day O'Connor:

Well, Mr. Snyder, the Government has come in and urged us to rely on the section that... 602, dealing with infringing importation of goods, and they tell us that the United States has entered into treaties on the assumption that that provision governs.

What do we do with that argument made by the Government?

Allen R. Snyder:

--Justice O'Connor, I believe the issue before the Court is what did Congress say and what did Congress intend in a statute.

Sandra Day O'Connor:

Yes, I think so, but I would be very interested to know how you evaluate the extent to which this country has relied on some other interpretation, as the Government argues.

Allen R. Snyder:

I believe that the Government has shown that in several bilateral trade agreements that were never submitted to Congress either for consideration or for action, the Government has asserted the position in dealing with the Governments of Cambodia, Trinidad and Tobago, and several other countries, that it is the executive branch's position that parallel imports of the kind at issue here should be curtailed.

We believe that, to the extent the Government is relying on copyright law for that position, that it is up to Congress to pass the law and set the policy, and it is up to this Court to interpret that position of Congress and what Congress said and meant.

Sandra Day O'Connor:

Do we owe deference to any Government agency in interpreting these laws before us?

Allen R. Snyder:

I believe not, Justice O'Connor.

This is not a case where the Government has even alleged Chevron deference.

This is not a case where the Government has been assigned by Congress any duty under 602(a).

There are no regulations.

There is no role for the Copyright Office or any other agency of the executive branch to administer 602(a).

It is solely a private right of action, and under those circumstances we think there is no deference to be accorded.

The executive branch is free to take whatever position it wishes in bilateral negotiations, but if their positions conflict with the position of Congress, we submit they should go to Congress for a change in the law.

Sandra Day O'Connor:

Let me ask you one more question, since I have you interrupted, and then I'll leave it alone.

Section 501, dealing with infringement of copyright, says anyone who violates any of the exclusive rights of the copyright owner covered by sections 106 through 118, or who imports copies into the United States in violation of section 602, is an infringer.

Under your theory, that section wouldn't be needed, I suppose, insofar as it refers to section 602.

Allen R. Snyder:

I think it's correct that that particular language could have been omitted.

However, it would have raised questions where, in... for courts to interpret the language, since section 106 obviously deals with distribution to the extent we're discussing it here, and we all agree that importation is not literally the same thing as distribution, Congress chose to make importation part of the distribution right.

Had section 501 not specifically referred to importation, someone could have argued that the reference there to distribution or to section 106 didn't necessarily cover things that were actually dealt with in 602 but not literally in 106.

I think it was a situation where Congress appropriately tried to be sure that their intention was crystal clear.

Ruth Bader Ginsburg:

Mr. Snyder, I--

--Of course, one of the things they... just on this point.

One of the things they wanted to make sure of, perhaps, is that 602 was kept intact as an independent provision, because 602 says, under their reading, that it is an independent act of infringement to import without the consent.

Allen R. Snyder:

Well, it is an act of infringement.