“DOCTRINE OF FIRST SALE”

DEFINITION

Doctrine of First sale

a legal principle allowing the purchaser of alawfully made copy of a copyright-protectedwork to sell or give away that copy withoutpermission but not to reproduce it.

When a buyer legitimately purchases a productprotected by copyright (a book, for example) theFirst Sale Doctrine grants that buyer a set ofrights regarding control and use of thepurchased product. The buyer has the authorityto sell, lend, or give away the legitimatelypurchased product.

Under the First Sale Doctrine, a buyer does not acquire the

copyright associated with the work, however, the buyer

does acquire a range of ownership rights as to the single

copy of the work which was purchased. This grant of

rights of use and control to the buyer is an important aspect

of copyright law.

The first-sale doctrine creates a basic exception to the copyright holder'sdistribution right. Once the work is lawfully sold or even transferredgratuitously, the copyright owner's interest in the material object in which thecopyrighted work is embodied is exhausted. The owner of the material objectcan then dispose of it as he sees fit. Thus, one who buys a copy of a book isentitled to resell it, rent it, give it away, or destroy it. However, the owner of thecopy of the book will not be able to make new copies of the book because thefirst-sale doctrine does not limit copyright owner's reproduction right. Therationale of the doctrine is to prevent the copyright owner from restraining thefree alienability of goods. Without the doctrine, a possessor of a copy of acopyrighted work would have to negotiate with the copyright owner every timehe wished to dispose of his copy. After the initial transfer of ownership of alegal copy of a copyrighted work, the first-sale doctrine exhausts copyrightholder's right to control how ownership of that copy can be disposed of. For thisreason, this doctrine is also referred to as "exhaustion rule."

SEC 109 U.S.C THE FIRST SALE/EXHAUSTION

DOCTRINE

Limitations on exclusive rights

Notwithstanding the provisions of sec106(3) the owner of a particular copy or phonorecord lawfully made under this title or any person authorized by such owner, is entitled without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord.

Sec109(a) is a limitation only on the distribution and display rights; it is not a limitation on the rights to reproduce copies.

THE DISTRIBUTION RIGHT:

SEC. 106(3) OF THE COPYRIGHT ACT

Section 106 of the Copyright Act:

Exclusive rights in copyrighted works

Subject to sections 107 through 122, the owner of

copyright under this title has the exclusive rights to

do and to authorize any of the following: …

(3) to distribute copies … of the copyrighted

work to the public by sale or other transfer of

ownership, or by rental, lease, or lending;….

ORIGIN OF DOCTRINE

The doctrine was first recognized by the Supreme Court ofthe United States in 1908 (see Bobbs-Merrill Co. v. Straus)and subsequently codified in the Copyright Act of 1976, 17U.S.C. § 109. In the Bobbs-Merrill case, the publisher,Bobbs-Merrill, had inserted a notice in its books that anyretail sale at a price under $1.00 would constitute aninfringement of its copyright. The defendants, who ownedMacy's department store, disregarded the notice and soldthe books at a lower price without Bobbs-Merrill's consent.The Supreme Court held that the exclusive statutory rightto "vend" applied only to the first sale of the copyrightedwork.

BOBBS MERILL CO. V. STRAUSS 210 U.S.339

(1908)

Justice Day Delivered the opinion of the court

Court held that the right to vend those copies was granted and that the right was exhausted once the first sale was made.

The purchaser of a book once sold by authority of the owner of the copyright may sell it again, although he could not publish a new edition of it.

The defendants were not in privity with plaintiff and cannot be subject to contractual obligations

Reflects a policy judgement that Copyright owner’s did not extend beyond a need to prohibit unauthorized reproductions.

The following year Congress codified Bobbs-Merill in Sec 27 of 1909 Act:

“Nothing in this Act shall be deemed to forbid ,prevent, or restrict the transfer of any copy of a copyrighted work the possession of which has been lawfully obtained.”

US STAND

In the case, Kirtsaeng v. Wiley & Sons, theUnited States Supreme Court is consideringa significant potential limitation to the FirstSale Doctrine. At issue in this case is theapplicability of the First Sale Doctrine toeducational textbooks printed outside of theU.S. and sold in the U.S. The Court hasbeen asked to limit application of the FirstSale Doctrine only to copyright protectedmaterial created in the United States.

The US Supreme Court held that Kirtsaeng was protected by the first sale doctrine. Writing for the court, Justice Stephen Breyer stated that that Section 109’s first sale doctrine was not limited by geography. So long as a copy was lawfully made with the consent of the US copyright owner, the first sale doctrine applies – no matter where in the world the copy was made.

This ruling will make it much harder for US music, movie and software companies to stop copies intended for foreign sales from being resold into the US and undercutting domestic sales.

INDIAN COPYRIGHT ACT,1957

Sec 14 meaning of copyright

Explanation- For the purposes of this section a copy which has been sold once shall be deemed to be a copy already in circulation.

Section 51 deals with infringement of copyright. It is a basic provision. It says : " Copyright in a work shall be deemed to be Infringing when any person, without a license granted by the owner of the Copyright or the Registrar at Copyrights under this Act or in contravention of the conditions of a license so granted or of any condition imposed by a competent authority under this Act.....

INDIA STAND

John Wiley & Sons & Ors. v. Prabhat Chander Kumar Jain & Ors. CS (OS)

No.1960/2008

In this particular case the Delhi High Court held that the first sale doctrine was

applicable only qua the exclusive licensees and not the owners who will continue

to have a cuase of action against the Defendants!!!! (para 100) It is

inconsequential as to whether a copy of the work has been sold by the licensee

or the owner. The only criterion is whether the copy of the work has been

legitimately sold i.e. as long as the licensee is duly authorized by the owner,

the sale is valid and the doctrine of first sale will kick in. The judgment further

states “The purchaser after purchasing from the exclusive licensee cannot

by claiming the principle of exhaustion or extinguishment of rights defeat

the rights of the owner. This is the only harmonious interpretation possible

by invocation of doctrine of first sales in the present case.” This is a prima

facie wrong conclusion and is not substantiated by any cogent reasoning,

especially since the judgment very conveniently avoids an in depth analysis of

Section 14 which expressly provides for such a right.

.

The Judgment instead pointlessly meanders arounddiscussing the principle of international exhaustionand regional exhaustion as understood in variousIndian, American and English precedents. Adiscussion on international and regionalexhaustion is wholly and completely irrelevant forthe purposes of this case. International andregional exhaustion are relevant only in a factualscenario where the goods are being imported intothe country and not exported. If anything, this is asubject for an American Court dealing with the importof these copies into the U.S.A

PENGUIN BOOKS LTD. VS INDIA BOOK

DISTRIBUTORS AND ORS. ON 1 AUGUST, 1984

Finally, the judge does note that “It is true that IndiaDistributors are not printing these books and are notguilty of what is called primary infringement” but goeson to state however, that “when they issue copies ofthese titles for public distribution they are guilty ofsecondary infringement”.

The plaintiffs are ordered to furnish within one montha bank guarantee in the sum of Rs. one lakh as across-undertaking in damages for the loss which thedefendants may sustain in case the plaintiffs fail inthe suit.

The facts in this case are identical to the case above.Since the defendants did not put in an appearance in thiscase there was no discussion on the doctrine of first saleand exhaustion. The Court instead just analysed all of theevidence that was put forward by the Plaintiff during thetrial and came to a conclusion that the Defendants wereviolating the copyright of the Plaintiffs. The Courttherefore granted the reliefs prayed for by the Plaintiffsalong with Rs. 3,50,000 towards damages. Thisjudgment was delivered by Justice Bhat, last year,which isan excellent judgment in the case of Warner Bros. v.Santosh wherein he extensively discussed the doctrine offirst sale, exhaustion of rights etc. In fact this judgmentwas discussed extensively by Justice Manmohan Singh inhis judgment.

AMENDMENT (INDIA)

1994

the Penguin judgment was sought to be overturned by anamendment to section 14 in 1994. That amendment removed theright to “publish”, and instead made it a right to “to issue copies ofthe work to the public not being copies already in circulation”. Itstands to reason that this not only ensures the centrality ofthe doctrine of first sale in India, but also allows forinternational exhaustion, thus allowing for parallel import.This is clear from the fact that we, in Indian law (as per section40), makes it clear that “all or any provisions of this Act shallapply to work first published in any class territory outsideIndia to which the order (under section 40) relates in likemanner as if they were first published within India

Thus, even books published internationally are, under thelegal fiction under section 40, akin to books published inIndia. Since we are granting foreign works all theprotection under the Act as though they had beenpublished in India by Indian authors, it is but natural thatthey should be subject to all the same limitations as well(such as the doctrine of first sale).

As one commentator puts it, “with amendments, thedecision of the Penguin case is no more the law. Likemost other nations, we have also accepted the principleof international exhaustion. This seems to be after takinginto view the public interest angle.”

Unfortunately, legal commentators seemed to have paidgreater attention to legislative changes than did thecourts.