Every day, millions of consumers make use of the first sale doctrine. This copyright doctrine permits the purchaser of a legal copy of a copyrighted work to treat that copy in any way desired, as long as the copyright owner’s exclusive copyright rights are not infringed. This means the copy can be destroyed, sold, given away, or rented. A common example is the rental of movie videos, where the store purchasing the disks is entitled to rent them out without paying any royalties to the owner of the copyright rights in the movie. The term “first-sale doctrine” comes from the fact that the copyright owner maintains control over a specific copy only until it is first sold.
It’s a narrow rule
The doctrine is very narrow and only applies to a specific copy. No rights are granted as to the underlying work. For example, except as provided in the Copyright Act of 1976, the owner cannot reproduce, adapt, publish or perform the work without the authorization of the author. All that the consumer can do is to dispose of the particular copy that has been purchased. For example, the first sale doctrine does not permit the owner of a book of copyrighted art prints to separate the prints, mount them in frames and sell them separately. The first sale doctrine only applies to the owner of the work, not to a person who possesses the property but does not own it. For example, a store purchases a lawfully made disk copy of the movie, Gone With the Wind. As the owner of that copy, the store can rent it to an individual. However, the person renting it cannot rent the copy to someone else. Only the owner has such rights.
Some exceptions to the rule …
There are exceptions to the first-sale doctrine. As a result of lobbying by the computer and music industries, the rental of computer programs and sound recordings is prohibited. The sound recording exception is limited to musical works; it does not extend to audiobooks. (Brilliance Audio, Inc. v. Haights Cross Communications, Inc., 2007 474 F.3d 365 (6th Cir. 2007).) It is also not permissible under the first-sale doctrine to destroy a fine art or photographic work that meets the requirements of the Visual Artists Rights Act (for example, signed and numbered photographs created in limited editions of 200 or fewer copies).
Goods made overseas
In 2013, the U.S. Supreme Court ruled that there are no geographic limitations on the first sale doctrine. In that case, a Thai student came to the U.S. to study and engaged in a business arrangement with his family in Thailand. They would send him the books purchased in Thailand and he would resell them in the U.S. market. The student expanded the business and eventually earned $100,000 profit. U.S. Publishers sued the student arguing that the first sale doctrine did not apply to “gray market goods” – lawfully made goods that were imported into (but not made in) the U.S. The Supreme Court disagreed and ruled for the student, stating that as long as the copies were lawfully made – under the direction of the copyright holder – there was no requirement that the books be manufactured in the U.S. (Kirtsaeng v. John Wiley & Sons, Inc., 562 U.S. ___ (2013).)
Confusing caselaw for software bundles
A 2001 first-sale decision added some confusion regarding the rights of software companies. A federal court ruled that the purchaser of a bundle of software programs could resell the individual components (separate programs on CDs). (Softman Products Co. LLC v. Adobe Systems Inc., 171 F. Supp. 2d 1075 (C.D. Cal. 2001).)