Advanced Copyright Issues on the Internet - Fenwick & West LLP

F. First Sales in Electronic CommerceThe “first sale doctrine” of copyright law is codified in Section 109 of the copyrightstatute. That section provides, “Notwithstanding the provisions of section 106(3) [the exclusivedistribution right], 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.” 2287 The applicabilityof the first sale doctrine to “sales” through online commerce is uncertain.Section 109 pertains to the sale or disposal of “the possession of [a] copy orphonorecord.” The statute was, of course, originally drafted with tangible copies in mind. Animmediate issue concerns whether an initial “sale” accomplished by an online transmission,rather than the physical distribution of a material object, constitutes a sale of a “copy” that wouldtrigger the application of the doctrine at all. At least one commentator has argued that it doesnot, 2288 and the NII White Paper notes that the issue is uncertain. 2289 However, it seemsplausible to analogize a transmission in which a complete authorized copy of a work ends up inpermanent storage at the recipient’s site (i.e., other than a transitory copy in RAM) as thedistribution of a “copy” for purposes of the first sale doctrine, at least where it was intended thatthe recipient “own” the received copy. 2290 Such a transaction seems highly analogous to atraditional sale of a copy, except for the distribution vehicle.One could readily argue that in such instances the first sale doctrine should apply byanalogy to permit a purchaser to further transmit his or her copy to a third party, so long as thepurchaser deletes his or her original copy from storage, because in that instance, as in the case oftraditional distributions of physical copies, no more total “copies” end up in circulation thanwere originally sold by or under authority of the copyright owner. As one commentator hasnoted:[The first sale doctrine’s] balance was gauged over the years …. Neither thecopyright owner nor the copy owner receives all that it might desire. The balancecould be recut today for cyberspace, but no clear reasons exist to do so. Absentthat, this balance governs treatment of digital works, whether on the Internet or adiskette. Applying it is relatively simple. A purchaser who acquires a digitalproduct that is not subject to a license has a right to retransfer the copy, makecopies essential to use the work, and otherwise act as owner of the copy. If the“copy” is transferred, the transferor must relinquish all copies it possesses.2287 17 U.S.C. § 109(a).2288 K. Stuckey, Internet and Online Law § 6.08[3][b], at 6-54 (2008).2289 NII White Paper at 43-44.2290 In the case of computer programs, copyright owners often distribute copies of the program subject to a licenseagreement which states that the copy is being licensed, not sold, to the user as a vehicle to avoid theapplicability of the first sale doctrine to the transaction.- 499 -