What is the First Sale Doctrine in Copyright Law?

First formal acknowledgement of copyright protection in India, the Copyright Act of 1857, set the foundation for the regulation of creative works under imperial governance. Acknowledging the existence of copyright as a property right, the law stipulated the creation of exclusive rights over creative works that might be legally sold and traded. As authors tried to enable the limited dissemination of creative works in the markets, the said law shielded their economic rights.

What is the Doctrine of First Sale in Copyright Law?

Commonly known as the exhaustion doctrine, the first sale rule of copyright declares that once an author has sold or transferred a specific copy of a work, he exhausts his exclusive control over its distribution. Free from the copyright owner’s oversight, the buyer is deemed to possess the copy and so has the right to sell, loan, or get rid of the copy as he sees fit. This regulation only applies to copies legitimately purchased physically; it does not allow digital reproduction or unauthorised dissemination.

Applicability of the First Sale Doctrine in Copyright Law

Also known as the exhaust of rights doctrine, the First Sale Doctrine is a key tenet of copyright law restricting the control copyright owners have over the distribution of copies of their creations following their first legitimate sale. One of the most important concepts of copyright law, the First Sale Doctrine—also known as the doctrine of exhaustion of rights—limits the control copyright holders have over the spread of copies of their works following the first lawful sale. The first sale doctrine is an essential part that constrains copyright control after the first lawful sale with the intention of ensuring equity, freedom, and the interests of the public while still taking care of the basic rights of the copyright owners.

Legal Basis

1. In India, this is tacitly recognized under section 14 of the Copyright Act, 1957, which defines the exclusive rights of a copyright owner.
2. The “distribution” right is considered exhausted after a single lawful sale of a copy.
3. The judiciary in India has been applying this legal maxim under judicial interpretation, thereby supporting that copyright cannot grant an indefeasible right to a lawfully sold copy.

Scope

1. The doctrine applies only to physical copies of the copyrighted work, such as a book, CD, DVD, painting, or software sold physically.
2. It applies only when the first sale is legal and authorised by the copyright owner.
3. It provides scope for things such as the resale of books, second-hand markets, the lending of books from libraries, as well as renting copies which have been lawfully purchased (after exceptions are met).

Applicability to Digital Works

1. The applicability of the first sale doctrine to digitised content (ebooks, online music, software downloads) remains limited and/or controversial.
2. In light of the fact that a digital transfer is typically a reproduction, rather than a transfer of the same copy, the law has not clarified whether the doctrine applies to digital works, as is the case in India.

Exceptions to the Doctrine of First Sale in Copyright Law

The first sale rule limits the power of the copyright owner on the distribution of a copy of a work that has been lawfully sold once. The law on copyright recognises several exceptions in which the power of the copyright owner is not entirely depleted, even after resale.

1. Work is Licensed, but Not Sold

• The principle of the first sale applies only when the ownership of a copy is transferred at the sale.
• In many cases, especially in software, digital media, and databases, the transaction is merely a license agreement, rather than a sale.
• If a user only buys a license to use a work, the ownership of a copy is not transferred, and resale is not permitted.

2. Digital Content and Online Distribution

• The rule, as a rule, is not applicable when the work is in the form of e-books, music, movies, etc.
• In most digital transfers, a copy is generated rather than the same copy being physically transferred.
• Since reproduction rights are involved, the rights of the copyright holders remain intact under further distribution.

3. Rental and Commercial Lending

• Certain works are protected by rental rights, even after the first sale.
• Films for cinematographic purposes, sound recordings, and computer programs are commonly excepted from the free commercial rental.
• This ensures that work is prevented from unauthorised commercial use through rental services.

4. Parallel Imports and Territorial Restrictions

• The First Sale Rule may not necessarily apply to international exhaustion in every jurisdiction.
• Rightsholders can set conditions on importing copies that are sold elsewhere than a particular territory.
• In India, different approaches have been adopted by courts based on the job being carried out and the agreements that exist.

5. Copies Acquired Through Unlawful Means

• The rule applies only to copies that are lawfully made.
• Copies made by pirating, infringing, or illegal reproduction are not eligible.
• Resale or distribution of such copies is considered a form of copyright infringement.

6. Moral Rights of Authors

• The moral rights of the author are thus retained even after the sale of a copy.
• The writer has a right to object to the distortion, mutilation, or alteration of the work that damages his/her reputation.
• The first sale doctrine is not preempted by these moral rights.

7. Contractual Restrictions

• The owners of copyright may stipulate conditions on the date of sale or licensing.
• The resale, export, or commercial use of works might be restricted on grounds which are not contrary to law.
• Such agreements may also restrict the application of the doctrine.

8. Performance and Communication Rights

• The first sale doctrine is limited to the right of distribution.
• The rights concerning public performance, communication to the public, or adaptation are not exhausted by sale.
• The use of the work in a public manner still requires permission.

Landmark Case Laws

The Indian judiciary has relied on international norms and comparative jurisprudence on the issue to support the doctrine, specifically in relation to parallel imports and resale of copyrighted works. The importance of this doctrine is that it helps to balance the law of copyright with the law of free trade.

1. Penguin Books Ltd. Vs India Book Distributors (1984)

• Facts: The activity of Penguin Books sought to suppress the India Book Distributors from importing and publishing Penguin Books in India.
• Issue: Was there copyright infringement with regard to the resale and importing of lawfully published copies of the books?
• Held: The Delhi High Court upheld the doctrine of exhaustion, thus declaring that once copies are lawfully sold, the rights of the copyright owner to control the distribution of such copies are exhausted.
• Significance: This case is one of the earliest instances in the Indian judiciary that has upheld the “first sale doctrine,” particularly in respect to the resale of physical copies of books.

2. Warner Bros. Entertainment Inc. Vs Santosh V.G. (2009)

• Facts: The defendant has been renting DVDs of Warner Bros. movies obtained from the open market but with no license acquired.
• Issue: Can the first sale rule be used to permit the commercial renting of cinematograph films?
• Held: The Delhi High Court held that the doctrine of first sale cannot be extended to the rights to rent cinematograph films, as under the Copyright Act, the rights to rent are specifically vested in the copyright owner.
• Significance: The case made it clearer that the doctrine is not exempt from statutory provisions, especially when renting and commercially exploiting.

3. Kapil Wadhwa Vs Samsung Electronics Co. Ltd. (2011)

• Facts: The plaintiff, Samsung, sought to prevent the parallel importing of its goods into India.
• Issue: Whether resale of lawfully purchased goods in another country constitutes infringement.
• Held: The Delhi High Court upheld the law of international exhaustion, which permitted resale of legitimate copies.
• Significance: The implications of this consideration, although largely a trademark matter, are highly pertinent to copyright law and the application of the first sale rule within authentic articles.

4. Super Cassettes Industries Ltd. Vs MySpace Inc. (2011)

• Facts: The matter concerned the illegal upload of copyrighted music on a web portal.
• Issue: Can the first sale doctrine be considered when computer software is delivered via the Internet?
• Held: The court held that reproduction and the communication to the public, which occur with digital distribution, are not exhausted by the first sale.
• Significance: This case supported that the first sale rule is not applicable to a computer program.

5. Tips Industries Ltd. Vs Wynk Music Ltd. (2019)

• Facts: Wynk offered copyrighted sound recordings for online listening and download with an invalid license.
• Issue: Whether “purchase” or “access” to digital music is sufficient to invoke the first sale doctrine.
• Held: The Bombay High Court stated that the first sale rule is not applicable to online music providers.
• Significance: This definition is significant because it specifically excludes cyber content from the Doctrine in India.

Conclusion

The principle of first sale is an integral limitation on the concept of copyright, ensuring that once a valid sale of a work of copyright has occurred, the right of the copyright owner over the distribution of that specific copy is exhausted. By allowing resale, lending, and movement of lawfully possessed copies, the doctrine strengthens consumer rights, market freedom, and fair trade, without impairing the author’s exclusive rights with regard to reproduction and commercial use.

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