By Sharona Sternberg. A member of our Litigation Practice Group
Just over a century ago, when buying a book for a dollar still seemed expensive, the Supreme Court first recognized the “first sale doctrine,” a basic exception to a copyright owner’s distribution rights. Once a consumer buys a copyrighted product, like a book, the copyright holder—whether it be the author or a publisher—has exhausted all rights to control the product’s downstream distribution.
As long as the legitimate buyer does not make any copies, he is free to give away, lend, or discard his book as he pleases. Most significantly, the buyer can resell the book at any price, potentially undercutting the demand for new books sold at prices set by the original copyright owner or publisher.
Following the 1908 Bobbs-Merrill decision and subsequent cases, the first sale doctrine was codified as § 109(a) of the Copyright Act. In 1998, the U.S. Supreme Court in Quality King revisited the right of resale, holding that a copyrighted item manufactured in the United States but sold abroad could be legally imported and resold in the U.S. The court held that the copyright owner’s importation right [§ 602(a)(1)] is subject to the general distribution right, which is expressly limited by the first sale doctrine. Goods can thus make the round-trip to Malta and back without the permission of the copyright holder.
The Quality King court, however, did not resolve the more common scenario in which a copyrighted product is manufactured abroad and sold abroad (often at a price lower than for the same product in the United States), and is later resold in the U.S. at a discount.
Without committing itself, the court implied that the sale into the United States of these “gray market” goods would not be protected by the first sale doctrine. In a 2010 case, Costco v. Omega, the court addressed this exact quandary. However, because of Justice Kagan’s recusal due to her participation in the case as Solicitor General, the court was deadlocked at 4-4 and the debate continued. (More...)
As long as the legitimate buyer does not make any copies, he is free to give away, lend, or discard his book as he pleases. Most significantly, the buyer can resell the book at any price, potentially undercutting the demand for new books sold at prices set by the original copyright owner or publisher.
Following the 1908 Bobbs-Merrill decision and subsequent cases, the first sale doctrine was codified as § 109(a) of the Copyright Act. In 1998, the U.S. Supreme Court in Quality King revisited the right of resale, holding that a copyrighted item manufactured in the United States but sold abroad could be legally imported and resold in the U.S. The court held that the copyright owner’s importation right [§ 602(a)(1)] is subject to the general distribution right, which is expressly limited by the first sale doctrine. Goods can thus make the round-trip to Malta and back without the permission of the copyright holder.
The Quality King court, however, did not resolve the more common scenario in which a copyrighted product is manufactured abroad and sold abroad (often at a price lower than for the same product in the United States), and is later resold in the U.S. at a discount.
Without committing itself, the court implied that the sale into the United States of these “gray market” goods would not be protected by the first sale doctrine. In a 2010 case, Costco v. Omega, the court addressed this exact quandary. However, because of Justice Kagan’s recusal due to her participation in the case as Solicitor General, the court was deadlocked at 4-4 and the debate continued. (More...)
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