Canadian Government Agency Distribution Of US Copyrighted Material Copied By Defendant Does Not Render Those Copies “Lawfully Made” Under US Copyright Law, And The Statutory “First Use” Doctrine Does Not Protect That Copying And Transmittal Of The Material To The US

The World in U.S. Courts: Winter 2018 - Intellectual Property – Copyrights | November.22.2017

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Geophysical Services, Inc. v. TGS–NOPEC Geophysical Services, US District Court for the Southern District of Texas, November 22, 2017

Plaintiff Geophysical Service is a Canadian company in the business of creating “seismic lines”—visual cross-sections of land below the earth’s surface from seismological data. Under Canadian law, it is required to submit all such seismic lines to a Canadian governmental entity, which in turn is authorized to release copies upon request after a ten-year waiting period. Defendant TGS-NOPEC Geophysical Services (TGS) is a Texas company that obtained copies of 33 of Geophysical’s lines and is alleged to have committed copyright infringement by sending them to US customers, and contributory copyright infringement. TGS sought to dismiss the case on grounds that Geophysical failed to allege US domestic copyright infringement, as the law required.

The case had already once been decided and appealed, and it returned to the District Court for resolution of the remaining issues. (The appellate decision in the case was handed down in March 2017 and was discussed in the Spring 2017 issue of this report.) Specifically, the Court considered the meaning of 17 USC 109(a), which codifies the “first sale doctrine” and, as relevant here, permits a person to sell a copy of a copyrighted document that was “lawfully made” under Title 17 of the US Code. In the transnational context presented, the Court was required to determine whether a copy is “lawfully made” with reference to the law of the place where the copying occurred (in this case, Canada) or whether only copies lawfully made under US law would trigger the provision.

The Court noted that the US Supreme Court, in the 2013 Kirtsaeng case, ruled that Section 109(a) applied to imported goods. But the lawfulness of the goods’ manufacture outside the US was not questioned, and so the case did not provide the standard for determining “lawfulness.” The Court considered a number of alternatives and ultimately concluded in essence that the “first sale” provision of Section 109(a) should apply extraterritorially:

The court interprets “lawfully made under this title” to mean that a copy is lawful if it was made in the United States in compliance with Title 17 or in a foreign country in a manner that would comply with Title 17 if United States copyright law applied.

Some of the conceptual difficulties of the issue were made apparent by application of this rule to the facts of the case. The Court noted that both US and Canadian law required the submission of seismic data to the respective Governments with an expectation that the data would ultimately be released, but that Title 17 of the US Code (the Copyright provisions) contained neither the submission requirement nor the expectation of public disclosure. It concluded as a consequence that the submission/distribution regimes of the governments did not render subsequent copying “lawfully made,” and the first-use exception to an infringement action established by Section 109(a) was inapplicable.

The Court thus declined to dismiss the plaintiff’s copyright infringement claim based on Section 109(a). The defendant advanced two additional defenses, however—“fair use” and an implied license—and the Court determined that it was premature to address them on the record presented.

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