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First Sale Doctrine

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. 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) 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 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.