by Sharona H. Sternberg
Just over a century ago, when
buying a book for a dollar still seemed expensive, the Supreme Court first
recognized the "first sale doctrine," a basic exception to a
copyright owner's distribution rights. Once a consumer buys a copyrighted
product, like a book, the copyright holder-whether it be the author or a
publisher-has exhausted all rights to control the product's downstream distribution.
As long as the legitimate buyer does not make any copies, he is free to give
away, lend, or discard his book as he pleases. Most significantly, the buyer
can resell the book at any price, potentially undercutting the demand for new
books sold at prices set by the original copyright owner or publisher.
Following the 1908 Bobbs-Merrill decision (Bobbs-Merrill Co. v. Straus, 210
U.S. 339 (U.S. 1908) [an enhanced version of this opinion is available to lexis.com
subscribers]) and subsequent cases, the first sale doctrine was codified as
17 U.S.C.S. § 109(a) of the Copyright Act. In 1998, the U.S. Supreme Court in
Quality King (Quality King Distribs. v. L'Anza Research Int'l, 523 U.S. 135
(U.S. 1998) [enhanced version])revisited the right of resale, holding
that a copyrighted item manufactured in the United States but sold abroad could
be legally imported and resold in the U.S. The court held that the copyright
owner's importation right [17 U.S.C.S.§ 602(a)(1)] is subject to the general
distribution right, which is expressly limited by the first sale doctrine.
Goods can thus make the round-trip to Malta and back without the permission of
the copyright holder.
The Quality Kingcourt, however, did not resolve the more common scenario in
which a copyrighted product is manufactured abroad and sold abroad (often at a
price lower than for the same product in the United States), and is later
resold in the U.S. at a discount.
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H. Sternberg is an associate at Sunstein Kann Murphy
& Timbers LLP. She concentrates in patent litigation and trademark
clearance, registration and enforcement. Prior to joining Sunstein, Sharona
worked at an international firm in New York City as a litigation associate with
a broad-based general commercial practice including significant intellectual
property experience. Her clients have included well-known pharmaceutical
companies, international e-commerce companies, and financial services