Sociology Index

First Sale Doctrine

The first sale doctrine shields a reseller from infringement liability. First-Sale doctrine protection to the reseller extends upto where the said goods have not been altered so as to be materially different from those originating from the trademark owner under trademark law. Kirtsaeng v. John Wiley & Sons. The Supreme Court was right in holding that America benefits from first sale doctrine which is the principle that if you own something it’s yours, and you are free to sell it, rent it or give it away, is considered a natural right in America. Millions of Americans enjoy first sale doctrine in venues ranging from Goodwill to garage sales, Costco to Craigslist, eBay to flea markets.

First sale doctrine originally applied to copies that had been sold, but in the 1976 Act, first sale doctrine was made to apply to any owner of a lawfully made copy regardless of whether it was first sold. According to first sale doctrine, if the copyright owner licenses someone to make a copy, then that copy may lawfully be sold, lent, traded, or given away.

First sale doctrine does not include renting and leasing recorded music and generally computer software, though private nonprofit archives and libraries are allowed to lend them with a notice that the work may be copyrighted.

U.S. courts have allowed manufacturers to restrict the first sale doctrine by a clickwrap contract or other agreement. Though the legality of allowing first sale doctrine rights to be abrogated by contract is questionable.

The claim of software publishers that the first sale doctrine does not apply arose because software is licensed, not sold, under the terms of an End User License Agreement.

First sale doctrine for Bundled Computer Software - Case law:

Softman v. Adobe (2001).
After purchasing bundled software from Adobe Systems, Softman unbundled it and then resold the component programs. The court ruled that Softman could resell the bundled software, no matter what the EULA stipulates, because Softman had never assented to the EULA. The Court decreed that software purchases be treated as sales transactions, rather than explicit license agreements. That is, the court ruling argued that California consumers should have the same rights they would enjoy under existing copyright legislation when buying a CD or a book.

Davidson & Associates v. Internet Gateway Inc (2004). The US District Court for the Eastern District of Missouri issued a ruling which appears to contradict the position of the district courts in California and Texas. The first sale doctrine reasoning of the Softman court was challenged, with the court ruling that the first sale doctrine is only triggered by an actual sale. Accordingly, a copyright owner does not forfeit his right of distribution by entering into a licensing agreement."

In addition, the court found the plaintiff's EULA, which prohibited resale, was binding on the defendants because the defendants expressly consented to the terms of the EULA and Terms of Use by clicking 'I Agree' and 'Agree.' Section 109 specifically leaves the copyright holder bound by the Clayton Antitrust Act of 1915, if the copyright holder allows; rental, lease, or lending, or by any other act or practice in the nature of rental, lease, or lending.

Bobbs-Merrill Co. v. Straus, 210 U.S. 339 (1908). The first-sale doctrine was established in this case. In Quality King v. L'Anza, the Court described this opinion as follows: “In that case, the publisher, Bobbs-Merrill, had inserted a notice in its books that any retail sale at a price under $1.00 would constitute an infringement of its copyright. The defendants, who owned Macy’s department store, disregarded the notice and sold the books at a lower price without Bobbs-Merrill’s consent. We held that the exclusive statutory right to "vend" applied only to the first sale of the copyrighted work.”

'Betamax Case', Sony Corp. of America v. Universal City Studios, Inc., 1979. It was determined that because the VCR was capable of substantial noninfringing uses, copyright owners objecting to infringement could not prevent its sale. The ruling, coupled with the high price of the first few movies on VHS and Betamax tapes ($50 each) created a large market for home video rental. Retailers purchased the expensive tapes and rented them to consumers at an affordable price, while studios earned considerable revenue from volume sales to rental stores. First sale doctrine excused these merchants from seeking permission from the copyright holders.

Novell v. Network Trade Center 25 F. Supp. 2d 1218 (C.D. Utah 1997) - Transfer of a copyrighted work that is subject to the first sale doctrine extinguishes all distribution rights of the copyright holder upon transfer of title. Purchaser is an "owner" by way of sale and is entitled to the use and enjoyment of the software with the same rights as exist in the purchase of any other good. Said software transactions do not merely constitute the sale of a license to use the software. The shrinkwrap license included with the software is therefore invalid as against such a purchaser insofar as it purports to maintain title to the software in the copyright owner. Under the first sale doctrine, NTC was able to redistribute the software to end-users without copyright infringement.

Books on First Sale Doctrine

First-sale doctrine: Copyright infringement, Exhaustion doctrine, Restrictive covenant, Digital rights management Frederic P. Miller, Agnes F. Vandome, and John McBrewster

First-sale doctrine: Copyright, Supreme Court of the United States, Copyright Act of 1976, Copyright infringement, Exhaustion doctrine, Restrictive covenant, Digital rights management by Frederic P. Miller, Agnes F. Vandome, and John McBrewster.