Question: QUALITY KING DISTRIBUTORS, INC. v. L'ANZA RESEARCH INT'L, INC., 523 U.S. 135 (1998)

FACTS L'Anza Research International, a U.S. manufacturer of hair products, limited its domestic sales to distributors who agreed to sell only to authorized retailers within limited geographic areas. L'Anza promoted its domestic sales with extensive advertising and special retailer training. L'Anza Research sold its shampoo to foreign distributors for 35 percent to 40 percent less than in the United States, but did not engage in comparable advertising or promotion. L'Anza sold the shampoo at issue to a distributor in the United Kingdom, who sold it to a distributor in Malta, who sold it to Quality King Distributors, Inc. Quality King imported the shampoo for resale in the United States without L'Anza's permission and sold it at a discount to unauthorized retailers. L'Anza held a copyright on the labels placed on the packaging. L'Anza did not argue that anyone had made unauthorized copies of the label but rather argued that the domestic resales of the containers containing the labels violated its exclusive right to distribute copies of its labels.

The Copyright Act makes unauthorized importation of copyrighted works illegal. L'Anza sued Quality King for violation of its exclusive right to distribute its copyrighted materials. The trial court entered summary judgment for L'Anza. The Ninth Circuit affirmed. Quality King appealed to the Supreme Court. DECISION The Supreme Court reversed. It found that under the "first sale" doctrine, the copyright owner's exclusive right to sell a work stops with the first sale of that work. The Court stated: "Once the copyright owner places a copyrighted item in the stream of commerce by selling it, he has exhausted his statutory right to control its distribution." Thus, once L'Anza sold the shampoo bottles to the first distributor, L'Anza lost the right to control further distribution of the labels.