The House Judiciary Subcommittee on Courts, Intellectual Property, and the Internet is holding a hearing today in New York on the “First Sale” doctrine. It’s worth some attention because often the discussion concerning the doctrine is overly simplistic, especially when it comes to suggestions that the doctrine simply should – poof! – be transported Alice-in-Wonderland-like into today’s digital world.
As I hope the hearing shows, this does not make sense. Simply put, the first sale doctrine, established early in the twentieth century, is a limited exception to a copyright holder’s exclusive right to distribute copies of a copyrighted work. It permits the owner of a copyrighted work to dispose of a physical object on terms of his or her choosing, but not to copy the work before doing so. Thus, you can sell or give away a disc or book that contains a copyrighted work if you don’t first copy it.
The first sale doctrine may make sense when the copyrighted work is embodied in a physical good because of limitations that generally inhere in physical goods – for example, they frequently take up space, often may become worn, usually require effort to transport, are produced in limited quantities so that they become scare over time, and impose costs to reproduce. For these reasons and others, the market for physical goods subject to the limited exception embodied in the first sale doctrine is very different than the market for digital goods. It is wrong simply to conflate the two.
Today’s Internet environment enables the creation of a digital marketplace that – if left unencumbered by improper government restrictions – benefits consumers and copyright holders alike, while, more broadly, respecting intellectual property rights. Here, briefly stated, are some of the reasons why this is so:
- The digital environment allows innovative new business models to develop that allow consumers to access and share content flexibly and conveniently in ways that satisfy their specialized demands. In other words, the Internet eliminates, or at least mitigates, the limitations inherent in physical goods.
- The first sale doctrine applied to digital content risks stifling innovation and investment in new copyrightable works because it is so relatively easy to replicate and distribute exact copies of an original. This ease of copying means that the price of the “first sale” work effectively would become the market price for the “used” work, in all likelihood supplanting the original market. Obviously, the incentive for creation of new works is diminished under this scenario.
There is no reason to believe that, absent government interference which establishes limitations on copyright holders’ rights, the digital marketplace will not continue to develop in ways that benefit consumers and copyright holders alike. Hopefully, today’s hearing will help make clear that there should be "no sale" for changing the first sale doctrine.