First Sale (or Exhaustion) Doctrine in Copyright

“First Sale” (also called the “exhaustion doctrine”) is the name in US copyright law for the idea that owners of copies of copyrighted works have the right to re-sell, lend, give away, or even destroy their personal copies of works.  The copyright holder’s right to control the distribution of their work goes away after the “first sale” of the work.  The “First Sale Doctrine” is codified in U.S. copyright law at 17 U.S.C. Section 109.

In other areas of law, such as patent law, this principle is called the “exhaustion” principle.

Imported Works

The relationship of the First Sale Doctrine to goods made out of the United States was at issue in the 2013 case of Kirtsaeng v. Wiley. The Supreme Court in 2013 held that the first sale doctrine is applicable to copyrighted goods made lawfully overseas, and imported into the US.

The similar case, Liu v. Pearson, was remanded to the Second Circuit for reconsideration in light of Kirtsaeng.  (Supreme Court, March 25, 2013.)

“Digital First Sale”

While the First Sale Doctrine has traditionally applied to all copyrighted works, electronic works such as MP3s, ebooks, and videostreams have generally been treated as “licensed”, not “sold”, and thus not subject to the First Sale Doctrine.  So even though a consumer “buys” an ebook, the First Sale Doctrine may not apply.  Moreover, because electronic materials are generally copied when they are sold or distributed, rightsholders have argued that even if the First Sale Doctrine applies to digital works, the copies that are made when the items are transferred necessarily infringe their copyrights.

This issue was litigated in Capitol Records v. ReDigi, a 2013 case in the District Court of Massachusetts, in which the trial court determined that digital copies necessarily implicate the reproduction right of 17 USC 106, and therefore are not protected by the first sale doctrine.  ReDigi planned to appeal.

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