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Calboli, Irene --- "An American tale: the unclear territorial application of the first sale rule in United States copyright law (and its impact on international trade)" [2012] ELECD 1339; in Rosén, Jan (ed), "Intellectual Property at the Crossroads of Trade" (Edward Elgar Publishing, 2012) 67

Book Title: Intellectual Property at the Crossroads of Trade

Editor(s): Rosén, Jan

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781781951682

Section: Chapter 4

Section Title: An American tale: the unclear territorial application of the first sale rule in United States copyright law (and its impact on international trade)

Author(s): Calboli, Irene

Number of pages: 23

Abstract/Description:

Recital 44 asserts that the question of exhaustion does not arise in the context of online delivery of (digital) works, which is generally understood to mean that the owner of copyright maintains full control over the digital dissemination of digital works. Above and beyond impacting upon the question of whether exhaustion may occur online, a broader issue is at stake here. Historically, the exhaustion rule developed out of the notion of an implied licence. The latter was an attempt to explain the loss of control rights of IP owners following the first act of exploitation.The relationship between copyright protection, the ‘first sale’ rule and international trade has traditionally been a complex matter in the United States. Section 106 of the Copyright Act grants copyright owners the right to prevent third parties from, inter alia, copying and distributing unauthorized copies of their copyrighted works. These exclusive rights, however, are limited by the copyright first sale rule, which is also known as the principle of ‘copyright exhaustion’. Under this principle, a third party who has lawfully acquired a copyrighted work can further sell or otherwise dispose of the work without the consent of the copyright owner whose exclusive rights are exhausted after the first lawful sale of the work. As this chapter elaborates, this principle was originally adopted by the Supreme Court in the early twentieth century in the leading case Bobbs-Merrill v Straus to balance the exclusive rights of copyright owners with the rights of retailers, second-hand dealers and consumers to freely resell or otherwise dispose of the possession of the copyrighted products that they had legitimately purchased. Congress codified this principle in the Copyright Act of 1909 and later in section 109(a) of the Copyright Act of 1976, which states that the owners of copyrighted works ‘lawfully made under this title’ are entitled ‘to sell or otherwise dispose of the possession of that [work]’ without the ‘authority of the copyright owner’.