First Sale Exception To Copyright
The first sale exception is an exception to a copyright holder’s distribution and display rights. The first sale exception provides that when someone lawfully purchases a copy of a copyrighted movie, book, song, computer program or other copyrighted work, the purchaser may generally sell, lease, loan, gift, display or otherwise dispose of his or her copy of the work.
The first sale exception is what allows consumers to give copies of copyrighted works that they own to a friend, throw them in the garbage, sell them at a flea market etc. and art galleries to publicly display paintings without paying or getting permission from the copyright owner of the work to display the work. But the first sale exception is also limited in scope. For example:
The exception does not apply to licensed works: The first sale doctrine applies only to the “owner of a particular copy.” To qualify as an owner, ownership of the copy must be transferred by some means, for example, through a sale or as a gift. The first sale defense does not apply where the goods are licensed, because a license does not transfer ownership rights in the copy. For example, because most software is licensed, not sold, someone who purchases a software license is not the “owner of a particular copy,” as defined in the copyright law, (they are an “owner of a license to use a copy” of the software) and the first sale defense does not apply. Because most digital content is also obtained through a license, the first sale doctrine would likewise not apply to that licensed content as well. Just because the first sale defense is inapplicable does not necessarily mean the licensee cannot redistribute the licensed copy. There may be a provision in the license agreement that allows the licensee to redistribute the copy under certain circumstances.
The exception does not apply to digital transmissions: The first sale exception only applies to the copyright owner’s distribution right. It does not apply to the reproduction right. When someone transmits a copy from one point to another over a network, like the internet, the transmitter retains the original copy of the work and the recipient of the transmission gets a new copy. Because a new copy is generated by the transmission and the reproduction right is not covered by the first sale exception, the first sale exception does not excuse the transmission of a copyrighted copy of a work. The law is clear that the first sale exception only applies to those situations where the owner of a copy disposes of physical possession of the particular copy. So, for example, emailing a friend a copy of a music file or a magazine article would not be excused by the first sale exception.
The exception does not apply to rental of software and sound recordings: Although the first sale exception generally allows rental of purchased goods, there is a limited carve out to the first sale exception that applies to computer programs and sound recordings. Copyright owners of computer programs and sound recordings retain the right to control the rental, lease or lending of a copy when it is for the purpose of direct or indirect commercial advantage. This is commonly known as the rental right.
The exception only applies to certain types of displays: With regard to displays, the first sale exception only applies to copies publicly displayed directly or by the projection of no more than one image at a time, to viewers present at the place where the copy is located.
The exception does not apply to unauthorized copies: The copyright law states that the first sale exception only applies to copies that are “lawfully made.” As a result, the first sale exception would not apply to the distributions or displays of illegally made copies. It should be noted that the making of a copy that was permitted by the fair use exception would be considered to be “lawfully made” and therefore would be covered by the first sale exception.