July 15, 2004
In reading a couple of the links below about eBay’s new music store, I noticed a little confusion (which Techdirt duly noted) about first sale. I dropped a line to Rafat Ali at PaidContent, and he noted that a short explanation might be helpful. So here goes.
Copyright owners hold an exclusive right to distribute copies of their work. The first sale doctrine is an exception to this right. As codified in 17 USC 109, as long as the particular copy was lawfully made, whoever owns it can distribute it however he chooses without infringing. Thus, after a copyright holder distributes a particular copy of a copyrighted work, their right to control distribution of that particular copy is over. Note that the copyright holder retains the right to distribute their copyrighted work in general, but loses rights to the particular distributed copy.
Examples of this doctrine in action are numerous. Video rental stores depend on the doctrine; once they purchase a copy of a video or DVD, they can distribute it to customers on whatever terms they choose, without consulting the copyright owner. Used book and CD stores depend on the doctrine; people can buy a CD, sell it to the store, which can then resell the CD, all without the authorization of the copyright owner. You can lend a book to a friend because of first sale. (Certain restrictions on rental do apply to music and computer programs, with exceptions for libraries and non-profit institutions.)
Having said this, it might seem that eBay could quite easily create a resale market in digital music. After all, given the underlying logic of first sale, it would seem people could download a song from iTunes, then go to eBay, and resell it.
The problem is, the first sale doctrine only provides an exception to the right to distribute. It does not implicate copyright holders’ exclusive right to make copies of their works. If you were to resell your iTunes song, you would necessarily have to makie copies – a copy in RAM, in intermediate computers in transit, and a copy on the buyer’s computer. At least the latter and perhaps all would likely infringe the right to make copies, even though you might not infringe the distribution right. The only way you might be able to resell that song in a clearly legal way is to send the physical hard drive on which the song is stored to the other person.
The Register of Copyrights argued that first sale does not apply to the digital world. People have since suggested an exception for “forward-and-delete” technologies, which would immediately delete the copy on the distributor’s computer if it is being resold. But until such an exception exists, forward-and-delete still involves making copies and thus still could be infringing.
That’s probably a primary reason why eBay will only allow digital songs to be sold with the authorization of the copyright holder. A few other reasons may also apply. First, the first sale doctrine only applies to lawfully made copies. eBay may worry about people trying to resell pirated copies, claiming that they were licensed, and that eBay would somehow be held liable for secondary copyright infringement. Second, both contract and DRM can limit consumer’s rights to resell. While these restrictions apply to the consumers who own the file and not to eBay directly, eBay might worry about people trying to sell songs limited by contract and DRM and then being caught in between the buyer and seller.
For more on first sale as it applies to digital music in particular with a broader look to other jurisdictions, see the Berkman Center’s iTunes Case Study. Regarding first sale in the digital world in general, see this paper by R. Anthony Reese.