First sale doctrine

FIRST SALE DOCTRINE

A fundamental tenet of copyright law, and another limitation on the exclusive rights, is the “first sale doctrine," which prevents an owner of copyright in a work from controlling subsequent transfers of copies of that ]]work]]. Once the copyright owner transfers ownership of a particular copy (a material object) embodying a copyrighted work, the copyright owner's exclusive right to distribute copies of the work is "extinguished" with respect only to that particular copy.

Section 109(a) of the Copyright Act provides:


 * Notwithstanding the provisions of section 106(3) [which grants copyright owners the exclusive right to distribute copies or phonorecords of a work], the owner of a particular copy or phonorecord lawfully made under this title, or any person authorized by such owner, is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord.

This limitation on the copyright owner's distribution right allows wholesalers who buy books to distribute those copies to retailers and retailers to sell them to consumers and consumers to give them to friends and friends to sell them in garage sales and so on &mdash; all without the permission of (or payment to) the copyright owner of the work.

The first sale doctrine allows the owner of a particular copy of a work to dispose of possession of that copy in any way &mdash; for example, by selling it, leasing it, loaning it or giving it away. However, there is an exception to this exemption with respect to two types of works &mdash; computer programs and sound recordings. The owner of a particular copy of a computer program or a particular phonorecord of a sound recording may not rent, lease or lend that copy or phonorecord for the purpose of direct or indirect commercial advantage. These exceptions were enacted because of the ease with which reproductions of those works can be made at a lower cost than the original with minimum degradation in quality.

The rationale for these exceptions may apply to other types of works as more types of works become available in digital form and the "nexus" of rental and reproduction of those works "may directly and adversely affect the ability of copyright holders to exercise their reproduction and distribution rights under the Copyright Act."

This provision of the first sale doctrine limits only the copyright owner’s distribution right; it in no way affects the reproduction right. Thus, the first sale doctrine does not allow the transmission of a copy of a work (through a computer network, for instance), because, under current technology the transmitter retains the original copy of the work while the recipient of the transmission obtains a reproduction of the original copy (i.e., a new copy), rather than the copy owned by the transmitter. The language of the Copyright Act, the legislative history and case law make clear that the doctrine is applicable only to those situations where the owner of a particular copy disposes of physical possession of that particular copy.

If the owner of a particular copy transmits that copy to another person without authorization (either from the copyright owner or the law), such a transmission would involve an unlawful reproduction of the work, and the first sale doctrine would not shield the transmitter from liability for the reproduction nor for the distribution. Under the first sale doctrine, the owner of a particular copy of a copyrighted work may distribute it, but may not reproduce it. Therefore, the transmission would constitute infringement of the copyright owner's reproduction right. If the reproduction is unlawful, further distribution of the unlawful reproduction would not be allowed under the first sale doctrine because the copy distributed would not be one "lawfully made" under the Copyright Act, as required by the statute.

The requirement that copies distributed under the doctrine be "lawfully made" under the Copyright Act does not limit the doctrine's application to copies made or authorized by the copyright owner. A copy could be "lawfully made," for example, if the reproduction is lawful under the fair use provision; the distribution of such a copy would be permitted within the limits of the first sale doctrine.

It has also been suggested that the scope of the first sale doctrine be narrowed to exclude copies obtained via transmission. This would mean, for instance, that if a copy of a literary work is legally purchased online and the copy so purchased is downloaded onto the purchaser's disk, the disk could not be resold. Clearly, the first sale doctrine should apply if the particular copy involved is in fact the copy that is further distributed, even if the copy was first obtained by transmission.

Further, if the technology utilized allows the transmission of a copy without making an unlawful reproduction &mdash; i.e., no copy remains with the original owner &mdash; the first sale doctrine would apply and the transmission would not be an infringement.

Some argue that the first sale doctrine should also apply to transmissions, as long as the transmitter destroys or deletes from his or her computer the original copy from which the reproduction in the receiving computer was made. The proponents of this view argue that at the completion of the activity, only one copy would exist between the original owner who transmitted the copy and the person who received it &mdash; the same number of copies as at the beginning. However, this zero sum gaming analysis misses the point. The question is not whether there exist the same number of copies at the completion of the transaction or not. The question is whether the transaction when viewed as a whole violates one or more of the exclusive rights, and there is no applicable exception from liability. In this case, without any doubt, a reproduction of the work takes place in the receiving computer. To apply the first sale doctrine in such a case would vitiate the reproduction right.

Public Display Right
A copyright owner's exclusive right to publicly display copies of a work is also limited by Section 109:


 * Notwithstanding the provisions of section 106(5) [which grants copyright owners the exclusive right to display publicly copies of a work], the owner of a particular copy lawfully made under this title, or any person authorized by such owner, is entitled, without the authority of the copyright owner, to display that copy publicly, either directly or by the projection of no more than one image at a time, to viewers present at the place where the copy is located.

Thus, the owner of a particular copy of a video game intended for use in coin-operated equipment may also publicly perform or display that game in that equipment.

This exemption from liability would not apply to the public display of a copy of a work on a website or other computer or communications network], because more than one image would likely be [[displayed at a time (to different viewers) and viewers would not be "present at the place where the copy is located."

The first sale doctrine allows the owner of a particular, lawfully made copy of a work to dispose of it in any manner, with certain exceptions, without infringing the copyright owner's exclusive right of distribution. It seems clear that the first sale model &mdash; in which the copyright owner parts company with a tangible copy &mdash; should not apply with respect to distribution by transmission, because transmission by means of current technology involves both the reproduction of the work and the distribution of that reproduction. In the case of transmissions, the owner of a particular copy of a work does not "dispose of the possession of that copy or phonorecord." A copy of the work remains with the first owner and the recipient of the transmission receives another copy of the work.