March 25, 2023

Supreme Court Eases Import and Sale of Copyrighted Products

WASHINGTON — In a pair of decisions issued on Tuesday, the Supreme Court made it easier to import textbooks and other copyrighted products from abroad and made it harder for plaintiffs in class-action suits to stay out of federal court.

The copyright case, Kirtsaeng v. John Wiley Sons, No. 11-697, arose from the activities of a Thai student who attended Cornell University and the University of Southern California. The student, Supap Kirtsaeng, helped pay for his education by selling textbooks that his friends and relatives had bought in Thailand at low prices and shipped to him.

A publisher of some of the textbooks, John Wiley Sons, sued Mr. Kirtsaeng for copyright infringement, and it won $600,000 in the lower courts. In a 6-to-3 decision, the Supreme Court threw out that award and ruled that imported copyrighted goods were subject to the same rules as goods bought in the United States: owners of particular copies can do what they like with them.

In legal jargon, the court applied the first-sale doctrine to copyrighted materials from abroad. Under that doctrine, buyers of books, records and other copyrighted goods may lend or sell them as they wish.

The decision will have consequences for all manner of products, including books, records, art and software. Industry groups had told the justices that a decision permitting copyrighted foreign goods to be sold in the United States would limit their ability to sell materials more cheaply in developing markets and result in higher prices overall.

The case turned on a phrase in the Copyright Act, which limits the first-sale doctrine to works “lawfully made under this title.” The lower courts said that textbooks manufactured outside the United States could not have been made under American law and so remained subject to the control of the owner of the copyright.

Justice Stephen G. Breyer, writing for the majority, said the phrase was not concerned with geography. He said he doubted “that Congress would have intended to create the practical copyright-related harms with which a geographical interpretation would threaten ordinary scholarly, artistic, commercial and consumer activities.”

Much of his opinion concerned the potential consequences of a contrary ruling, one that he said “could prevent a buyer from domestically selling or even giving away copies of a video game made in Japan, a film made in Germany or a dress (with a design copyright) made in China.”

He buttressed the point by surveying supporting briefs from libraries, used-book dealers, technology companies and museums, all of which warned that allowing copyright suits over goods imported from abroad would have pernicious consequences. Libraries could be barred from lending foreign books, the briefs said, and museums from displaying foreign art.

In their own briefs, Wiley and its allies discounted this “parade of horribles” as unrealistic. Justice Breyer responded, “We are not so sanguine.” The possible practical problems of ruling the other way, he said, “are too serious, too extensive and too likely to come about for us to dismiss them as insignificant — particularly in light of the ever-growing importance of foreign trade to America.”

An aside in a 1998 decision suggested that the court would rule differently on Tuesday, but Justice Breyer said the court was free to ignore a statement made in passing. “Is the court having once written dicta calling a tomato a vegetable bound to deny that it is a fruit forever after?” he asked.

Chief Justice John G. Roberts Jr. and Justices Clarence Thomas, Samuel A. Alito Jr., Sonia Sotomayor and Elena Kagan joined the majority opinion.

Justice Ruth Bader Ginsburg, joined by Justice Anthony M. Kennedy and, for the most part, Justice Antonin Scalia, dissented, saying the majority’s “bold departure from Congress’s design” was “stunning.” She added that there were many ways to address “the anticipated horribles” that Justice Breyer had outlined.

“It should not be overlooked,” she wrote, “that the ability to prevent importation of foreign-made copies encourages copyright owners such as Wiley to offer copies of their works at reduced prices to consumers in less developed countries who might otherwise be unable to afford them.”

In the class action case, Standard Fire Insurance Company v. Knowles, No. 11-1450, the court unanimously ruled that plaintiffs’ lawyers cannot avoid the requirements of a federal law that allows some kinds of class actions to be moved from state to federal court by promising to accept less money than the class might be owed.

The law, the Class Action Fairness Act of 2005, allows defendants to move some big class actions out of state courts thought to be hostile to business interests as long as the proposed class has more than 100 members, at least one of them is from a different state than a defendant and the amount at stake is more than $5 million.

The case concerned the Standard Fire Insurance Company, which is based in Connecticut and was accused in a proposed class action filed in Arkansas of failing to make full reimbursements for property damage claims. The plaintiffs’ lawyers stipulated that they would limit to $5 million the amount sought by the lead plaintiff and the class he sought to represent.

Justice Breyer, writing for the court, said the tactic would not work. “Stipulations must be binding,” he wrote. But, he said, “a plaintiff who files a proposed class action cannot legally bind members of the proposed class before the class is certified.”

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Economix Blog: Kaushik Basu Named to World Bank Post

On Wednesday, the World Bank announced its new chief economist: Kaushik Basu, a Cornell University economist and the former chief economic adviser to the Indian ministry of finance.

As noted by Justin Sandefur of the Center for Global Development, he will be the first Indian chief economist at the bank and the second from the developing world. (His predecessor, Justin Yifu Lin, is a Chinese national.) For years, developing economies have pushed for a greater voice within the Washington-based Bretton Woods institution.

“Kaushik is uniquely suited to help us offer evidence-based solutions and advice to client countries and provide innovative excellence in leading our development research,” Jim Yong Kim, who took over as the World Bank’s president in July, said in a statement announcing the hire. “Kaushik brings firsthand experience from a developing country and will be a terrific asset to the institution.”

Mr. Basu has “a reputation as an out-of-the-box thinker and a deep understanding of policy issues and their interface with politics,” a former Cornell colleague, Eswar Prasad, wrote in an e-mail.

His academic and government work has focused on development, comparative and public economics. In recent years, he has written on exchange rate manipulation, inflation, recessions and stimulus and child labor, among other topics.

A paper he released last year caused a bit of a stir: While advising the Indian government, Mr. Basu argued that countries could reduce the incidence of “harassment bribes” – e.g., “I’ll approve this home renovation project for you for a small fee…” – by making it legal to give a bribe, though not to receive one.

“This will cause a sharp decline in the incidence of bribery,” Mr. Basu said. “After the act of bribery is committed, the interests of the bribe giver and the bribe taker will be at divergence. The bribe giver will be willing to cooperate in getting the bribe taker caught. Knowing that this will happen, the bribe taker will be deterred from taking a bribe.” (Mr. Basu notably argued against giving an amnesty for past incidents of bribery.)

Mr. Basu is to start at the bank Oct. 1. In the meantime, you can follow him on Twitter.

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Economix Blog: Weekend Business Podcast: Too Big to Fail, Global Growth, Robert Frank and a Madoff Update

In the recent financial crisis, the federal government spent billions of dollars bailing out institutions that were deemed too big to fail.

In the new Weekend Business podcast, Gretchen Morgenson says that despite the passage of the Dodd-Frank law, some financial institutions have grown even bigger. As she writes in Sunday Business, though, there is still some interest in Congress in changing that, despite lobbying from banks.

European leaders reached an agreement aimed at averting a possible breakup of the euro zone, as I discuss in the news update portion of the podcast. But neither Europe nor the United States is likely to be the fastest-growing region in the world in the decades ahead, in the view of Jim O’Neill, the chairman of Goldman Sachs Asset Management, whom I interview in my column in Sunday Business. He says Brazil, Russia, India and China — plus Indonesia, Mexico, Turkey and South Korea — are likely to be global growth engines in the decades ahead.

In another part of the podcast, Diana Henriques provides an update on the case of Bernard Madoff, who ran the biggest Ponzi scheme in history, and who has continued to correspond with her from his prison cell.

Also on the podcast, Robert Frank of Cornell University says the economy depends on better government, not less government, and cites a personal experience at his local Department of Motor Vehicles office as an example of the benefits that more efficiency can bring.

You can find specific segments of the podcast at these junctures: Gretchen Morgenson on scaling back banks (27:03); news headlines (21:03); Diana Henriques on the Madoff case (17:49); Robert Frank (8:20); the week ahead (1:48).

As articles discussed in the podcast are published during the weekend, links will be added to this post.

You can download the program by subscribing from The New York Times’s podcast page or directly from iTunes.

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Moods on Twitter Follow Biological Rhythms, Study Finds

Drawing on messages posted by more than two million people in 84 countries, researchers discovered that the emotional tone of people’s messages follows a similar pattern not only through the day but also through the week and the changing seasons. The new analysis suggests that our moods are driven in part by a shared underlying biological rhythm that transcends culture and environment.

The report, by sociologists at Cornell University and appearing in the journal Science, is the first cross-cultural study of daily mood rhythms within the average person, using such text analysis. Previous studies have also mined the mountains of data pouring into social media sites, chat rooms, blogs and elsewhere on the Internet, but looked at collective moods over time, in different time zones or during holidays.

“There’s just a torrent of new digital data coming into the field, and it’s transforming the social sciences, creating new lenses to look at all sorts of behaviors,” said Peter Sheridan Dodds, a researcher at the University of Vermont who was not involved in the new research. He said the new study “is very exciting, because it complements previous findings” and expands on what is known about how mood fluctuates.

He and other outside researchers also cautioned that drawing on Twitter has its hazards, like any other attempt to monitor the fleeting internal states labeled as moods. For starters, Twitter users are computer-savvy, skew young and affluent, and post for a variety of reasons. “Tweets may tell us more about what the tweeter thinks the follower wants to hear than about what the tweeter is actually feeling,” said Dan Gilbert, a Harvard psychologist, in an e-mail. “In short, tweets are not a simple reflection of a person’s current affective state and should not be taken at face value.”

The study’s authors, Scott A. Golder and Michael W. Macy, acknowledge such limitations and worked to correct for them. In the study, they collected up to 400 messages from each of 2.4 million Twitter users writing in English, posted from February 2008 through January 2010. They performed text analysis on each message, using a standard computer program that associates certain words, like “awesome” and “agree,” with positive moods and others, like “annoy” and “afraid,” with negative states. They included so-called emoticons, the face symbols like “:)” that punctuate digital missives. The researchers gained access to the messages through Twitter, using an interface that allows scientists as well as software developers to work with the data.

The pair found that about 7 percent of the users qualified as “night owls,” showing peaks in upbeat-sounding messages around midnight and beyond, and about 16 percent were morning people, who showed such peaks very early in the day. After accounting for these differences, the researchers determined that for the average user in each country, positive posts crested around breakfast time, from 6 a.m. to 9 a.m.; they fell off gradually until hitting a trough between 3 p.m. and 4 p.m., then drifted upward, rising more sharply after dinner.

To no one’s surprise, people’s overall mood was lowest on Monday afternoons and through Tuesday, the beginning of the work week, and rose later in the week, peaking on Saturday and Sunday. The pattern on weekend days was shifted about two hours later — the morning peak closer to 9 a.m. and the evening one past 9 p.m., most likely because people sleep in and stay up later — but the shape of the curve was the same.

“This is a significant finding because one explanation out there for the pattern was just that people hate going to work,” Mr. Golder said. “But if that were the case, the pattern should be different on the weekends, and it’s not. That suggests that something more fundamental is driving this — that it’s due to biological or circadian factors.”

The researchers found no evidence for the winter blues, the common assumption that short winter days contribute to negative moods. Negative messages were as likely during the winter months as in the summer. But positively rated messages tracked the rate at which day length changed: that is, they trended upward around the spring equinox in late March, and downward around the fall equinox in late September. This suggests that seasonal mood changes are due more to a diminishing of positive emotions in anticipation of short days, the authors say.

Dr. Dodds, the University of Vermont researcher, has been doing text analysis of Twitter messages worldwide as well, to get a reading on collective well-being, among other things. He said the new study comports well with his own recent analysis. “We find that swearing goes up with negative mood in the very same way,” he said. “It tracks beautifully with the pattern they’re showing.”

Social scientists analyzing digital content agree that, for all its statistical appeal, the approach still needs some fine-tuning. On Twitter, people routinely savage others with pure relish and gush sarcastically — and the software is not yet sophisticated enough to pick up these subtleties.

“I suspect that if you counted the good and bad words people said during intercourse, you’d mistakenly conclude that they were having an awful time,” Dr. Gilbert said.

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