As a consumer, do you own that ebook for which you just paid and which you can now access via your Kindle, Nook, iPad, or personal computer? Amazon,
Barnes & Noble, Apple and other ebook vendors say you do not. To understand why you do not own your ebook, we turn to a copyright law concept called
the First Sale Doctrine.
What’s the First Sale Doctrine?
The First Sale Doctrine is why we can have a market for used books, CDs, and dvds. If you are the owner of a lawfully-made, lawfully-obtained copy of a
copyrighted work, the First Sale Doctrine allows you to sell, lend, or otherwise transfer that copy in any way you wish.
However, the benefits of the First Sale Doctrine apply only if you own the copy. Manufacturers often try to defeat the First Sale Doctrine by
distributing their products under a license agreement. All the major ebook vendors have used this licensing approach. As a licensee rather than a
purchaser, you may not freely re-sell or loan out your new ebook.
Courts sometimes strike down manufacturers’ licensing characterization. This happened in the music industry when a court decided that promotional
CDs distributed by record company UMG qualified as a sale or gift and not as a license, and could therefore be legally re-sold on eBay.
Do You Merely License that Ebook?
If ebooks-as-licenses were ever challenged, there is a good chance that a court would side with the ebook vendors. When looking at this same issue
in other industries, the courts have ruled in favor of a license rather than a sale when the vendor tells the consumer it’s only a license, restricts
the consumer’s ability to transfer the product, and imposes restrictions on how the consumer may use the product. Ebook vendors do all three.
Even if the First Sale Doctrine did apply to ebooks, there are currently technical barriers to exercising it since many ebooks are locked into or
tethered to the reader’s personal reading device. Vendors would need to establish a technical means by which consumers could transfer their ebooks.
Tag: First Sale Doctrine
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Why You Don’t Really Own Your Ebooks
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Another Victory for the First Sale Doctrine
The First Sale Doctrine (“FSD”) is an exception to the copyright owner’s exclusive
distribution right. Under the FSD, the owner of a lawfully made copy of a
copyrighted work may sell or otherwise dispose of that copy without the
authorization of the copyright owner.
Manufacturers sometimes try to defeat the FSD by distributing the good under a license agreement. Under this licensing approach, the manufacturer argues that (i) it has not
transferred ownership of the good but instead has only granted a limited right
to use the good and (ii) therefore, the FSD does not apply.
Before a new music CD is released for sale to the public, record labels often create and distribute promotional CDs to radio stations and other music industry professionals. UMG, like many other record labels, try to prevent the subsequent re-sale of their promotional CDs by labeling them “for personal use only” and “resale or transfer prohibited”.
UMG filed a copyright infringement lawsuit against Troy Augusto who had obtained second-hand and was selling on eBay promotional CDs. Augusto won. The court decided that UMG's distribution of promotional CDs to the music industry professionals qualified as a sale or as a gift, not as a license. Therefore, the music industry professionals could legitimately transfer the CDs to Troy Augusto who could in turn legally sell them on eBay.