What is the First Sale Doctrine?

The first sale doctrine, or the right of first sale or first sale rule, is a legal concept that enables an owner of a good embodying a copyrighted work to resell it and defines the limitations for the resale.

When someone buys a video game or a book or a movie, it insinuates that they own the item they bought. They do not own the underlying intellectual property, but they own the tangible thing they’ve purchased. For copyright protected products, this creates a secondary market. 

A copyright owner gets the exclusive right to “to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending.”

What’s a distribution right versus a copyright reproduction right?

Say a person buys a copy of a video game from a game store. Due to the first sale doctrine in the United States, that person is then entitled to resell that physical good on a secondary market. This is a distribution right.

What the person is not allowed to do is copy that item – there is no reproduction right, as that would violate the copyright law. The person can sell the one item they purchased but they can’t make duplicates of it.

When does first sale doctrine apply?

Lawful ownership of the copy is required. This means the first sale doctrine doesn’t apply if the possession of the copy is via rental, lease, loan or any other means that don’t involve acquiring legitimate ownership of the item.

This leads to confusion in digital sales. Software distributors and digital publishers often make clear in their EULAs that their content is licensed, not sold. A license is a much more limited right of possession and use – not ownership.The first sale doctrine doesn’t apply. 

The first sale doctrine is somewhat at odds with the Copyright Act. The primary example is if a piece of artwork is purchased (for example, a famous work by Picasso) – the purchaser owns the rights to that thing. But the purchaser doesn’t own the copyright.  They cannot then go and make copies, mugs, t-shirts or tote bags with the Picasso artwork on the items. 

It remains to be seen how the first sale doctrine applies to new developments in technology, such as NFTs. The inherent goal of NFTs is to emulate physical goods but what you’re getting with an NFT is code, not the tangible thing. This may be a passing trend (and we might need to delete this paragraph from this post in a few years) or it could be a new wave of digitally recorded ownership; time will tell.

Megan

Megan is a video game industry veteran and guest blogs at Odinlaw.com

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