Brilliance Audio, Inc. v. Haights Cross Communication, L.L.C.

Citation: Brilliance Audio, Inc. v. Haights Cross Commc'n 474 F.3d 365, 81 U.S.P.Q.2d (BNA) 1568 (6th Cir. 2007).

Factual Background:
Brilliance Audio, Inc. is the copyright owner of a number of sound recordings, more specifically audiobooks, and the holder of a federally-registered trademark in the “Brilliance” mark. They are in the business of producing versions of their audiobooks for retail sales (“retail editions”) and for libraries and lending institutions (“library editions”). Though the editions are packaged and marketed differently the record does not state if there are differences in the underlying recordings. Brilliance has brought this suit based on copyright and trademark infringement alleging that Haights is repackaging Brilliance’s retail editions and selling them as library editions. The district court dismissed the claims under a summary judgment motion citing the “first sale” exception to the infringement allegations.

Appellate Court:
The Appellate Court reversed the dismissal of Brilliance’s trademark infringement claims and affirmed summary judgment of their copyright claims.

Under the “first sale” exception in trademark law the first purchaser of a trademarked item can resell the item without being susceptible to a trademark infringement claim or unfair competition. To qualify for this exception, a reseller must adequately repackage the item so that “the public has adequate notice that the purchaser has repackaged the trademarked item” and the item sold must not be “materially different than those sold by the trademark owner”. The court held that these questions were fact-based and could not be properly dismissed by summary judgment.

Under copyright law the owner of a copy of a work is free to resell the work subject to the exception contain in 17 U.S.C. Section 109(a); The Record Rental Amendment of 1984. The Appellate Court cites Section 109(a) in relevant part:

Notwithstanding the provisions of subsection (a), unless authorized by the owners of a copyright in the sound recording[,]. . . and. . . in the musical works embodied therein, [] the owner of a particular phonorecords. . . may [not], for the purposes of direct or indirect commercial advantage, dispose of, or authorize the disposal of, the possession of that phonorecords. . . by rental, lease, or lending, or by any other act or practice in the nature of rental, lease, or lending.

The district court agreed with Haights stating that the statute applies only to sound recording of musical works. This court found the language of the statute to be ambiguous and looked to the legislative history. Evidence of Congress contemplating an exception for sound recordings other than musical works was not found in the history and the Appellate Court affirmed the dismissal of the copyright claims.