Copyright Law - First Sale Doctrine

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First Sale Doctrine

Last Updated - February 10, 2010

The first-sale doctrine is a limitation upon copyright that was recognized by the U.S. Supreme Court in 1908 and subsequently codified in the Copyright Act of 1976, 17 U.S.C. § 109. The doctrine of first sale allows the purchaser to transfer (i.e. sell or give away) a particular, lawfully made copy of the protected work without permission once it has been obtained. That means the distribution rights of a copyright holder end on that particular copy once the copy is lawfully transferred.

It is the principle that causes people to find the following example absurd:

"If you purchase a Ford car, you may not drive it near a Chevy dealer, or trade it for a Chevy, because it was Ford's car."

Originally (back in 1909), the codification applied to copies that had been sold (hence the "first sale doctrine"), but in the 1976 Act it was made to apply to any "owner" of a lawfully made copy or phonorecord regardless whether it was first sold. So, for example, if the copyright owner licenses someone to make a copy (such as by downloading), then that copy (meaning the tangible medium of expression onto which it was copied under license, be it a hard drive or removable storage medium) may lawfully be sold, lent, traded or given away.

The doctrine of first sale does not include renting and leasing phonorecords (recorded music), does not include renting and leasing tapes and/or DVDs of movies, performances, and television shows, and certain types of computer software, although private non-profit archives and libraries are allowed to lend these items provided they include a notice that the work may be copyrighted on the copy.

In 1908, in Bobbs-Merrill Co. v. Straus, 210 U.S. 339 (1908), the first-sale doctrine was established. In a later opinion (Quality King v. L'Anza), the Court described this opinion:

"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..."

In 1998 in Quality King Distributors Inc., v. L'anza Research International Inc. 523 U.S. 135 (1998) [1] there was a unanimous Supreme Court ruling in a case involving distribution of hair care products bearing a copyrighted label. The Supreme Court found that the doctrine does apply to importation into the US of copyrighted works (the labels) which were made in the US, then exported. This is significant for grey market imports of software, books, movies or other copies of copyrighted works, where the price outside the US may be lower than the price inside. The importation of goods first manufactured outside the US under the copyright laws of other countries was specifically excluded from that decision, leaving undecided whether goods "lawfully made" under the Copyright Act but made outside the United States also benefit from the first sale doctrine. Until that is decided, copyright holders are free to take action against foreign distributors who sell products made in their region into the US market.
Nonetheless, if in the act of reselling the goods, the reseller alters or modifies the product to such an extent that a "material difference" exists, then the trademark owner may refute the first-sale doctrine and bring an action to protect his mark. In such a case, he would rely upon 15 U.S.C. Section 1114.
Court cases involving the First Sale Doctrine and selected comments from them:

Bobbs-Merrill Co. v. Straus, 210 U.S. 339 (1908)
Burke & Van Heusen v Arrow Drug, 233 F.Supp. 881 ( E.D. PA 1964).
American Intl Pictures v Evan H Forman, 576 F.2d 661 (5th Cir, 1978)
Sebastian Intern., Inc. v. Consumer Contacts (PTY) Ltd.,, 847 F.2d 1093 (3d Cir. 1988).
Sebastian Intern., Inc. v. Consumer Contacts (PTY) Ltd.,, 847 F.2d 1093 (3d Cir. 1988).
Step-Saver Data Sys., Inc. v. Wyse Tech.,, 939 F.2d 91 (3d Cir. 1991)
Sebastian v Longs Drug Stores, 53 F.3d 1073 (9th Cir 1994).
Precious Moments vs La Infantil, (1st PR 1997)

LEE v A.R.T. Company, 125 F.3d 580 (7th Cir. 1997)
Novell, Inc. v. Network Trade Ctr., Inc., 25 F. Supp. 2d 1218 (D. Utah 1997)
Quality King Dist, Inc. v. L'Anza Research Intl, Inc., 523 U.S. 135 (1998)
Softman Prods. Co. v. Adobe Sys. Inc., 171 F. Supp. 2d 1075 (C.D. Cal. 2001)
Action Tapes vs Kelly Mattson 462 F.3d. 1010 (8th. Cir. 2006)
UMG Recordings vs Troy Augusto --F.Supp.2d --, 2008 WL 2390037 (C.D. Cal. June 10, 2008)

Federal Court Cases
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Federal Statutes
Copyright Act 17 U.S.C. 5 | Digital Millenium Copyright Act 17 U.S.C. 12 | Lanham Act 15 U.S.C. 22
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