Copyright law gives certain exclusive rights to creators of various works. An artist can, for example, sue if his painting is copied and sold on T-shirts without permission. An author can sue if her poem is reprinted in a newspaper without her knowledge. A coder can sue if her code is taken by another Web developer verbatim. Yet, the protections that copyright law extends to these creators has an important limitation: the first sale doctrine.
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 he or she desires, 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 is important to remember that the first sale doctrine is very narrow. It applies only 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.
Moreover, the first sale doctrine applies only to the owner of the work, not to a person who possesses the property but does not own it. For example, imagine that a store purchases a lawfully made 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 of the copy has such rights.
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.
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). The public policy rationale for this is obvious; as a society, we do not want to allow the destruction of original works of art under a narrow copyright provision.
In 2013, the U.S. Supreme Court ruled that there are no geographic limitations on the first sale doctrine. In that case, known as Kirtsaeng v. John Wiley & Sons, Inc., a Thai student came to America to study, and engaged in a business arrangement with his family in Thailand. They would send him the books purchased in Thailand for a low price, and he would resell them in the U.S. market, which charged higher prices.
The student expanded the business and eventually earned $100,000 in profit. U.S. publishers sued the student, arguing that the first sale doctrine did not apply to "gray market goods," which involve lawfully made goods that were imported into (but not made in) the United States.
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 United States. In other words, the student could use the first sale doctrine to do what he wished with his own copy of the book, even though he did not own the copyright.