IP & Art

What is the 'first sale doctrine' in the field of copyright. This a very tricky concept which may be differently interpreted and applied in the field of copyrights, compared with patents and trademarks. Further, the interpretation will be slightly different in the US and EU, etc. In the fields of patents and trademarks, this is also referred to as the “law of exhaustion of rights” which is more often found out in the civil law countries. Even though this principle is used in patents, copyrights and trademarks, there will be a slight difference in terms of its interpretation. 

Wekipedia dictionary explains as follows.

The first-sale doctrine (also sometimes referred to as the "right of first sale" or the "first sale rule") is an American legal concept that limits the rights of an intellectual property owner to control resale of products embodying its intellectual property. The doctrine enables the distribution chain of copyrighted products, library lending, giving, video rentals and secondary markets for copyrighted works (for example, enabling individuals to sell their legally purchased books or CDs to others). In trademark law, this same doctrine enables reselling of trademarked products after the trademark holder puts the products on the market. In the case of patented products, the doctrine allows resale of patented products without any control from the patent holder. The first sale doctrine does not apply to patented processes, which are instead governed by the patent exhaustion doctrine.

First, the principle of exhaustion of rights means that the copyright holder basically has the exclusive right to distribute the work, but after the copyright holder transfers the work, the exclusive distribution right for the work is lost and the transferee is no longer prohibited from selling or distributing the work. But the transferee will not be permitted to reproduce the work without the consent of the copyright holder.

There is a famous early precedent for this in Germany. Although there is a phrase prohibiting the resale of a book below a certain price, a lawsuit has been filed to ban the person who acquired the book by reselling it at a price below that price. The German court rejected this. It is a judgment to the effect that since the copyright holder has already exercised his/her distribution right through transfer, he/she can no longer assert his/her right as the copyright holder against the transferee's distribution right.

In Korea, Article 20 of the Copyright Act has an explicit phrase to this effect. In other words, once the work has been transferred, the copyright holder's exclusive right to distribute can no longer be claimed. The following three requirements are required to assert this principle. First, it must be the original or a copy of the work, it must have obtained the consent of the copyright holder, and finally, it must have been transacted by way of transfer.

On the other hand, in the case of the United States, in applying the first sale doctrine, the conclusion differs depending on whether either the work is sold or just licensed. However, in reality, it is not easy to distinguish whether it is a sale or a license. Therefore, in general, it can be used for an unlimited period, with consideration, and in the case of a lump-sum payment, it will be interpreted as a sale rather than license.

Copyright protection in the digital age

Then, why do we recognize this first-sale doctrine? This is to reasonably limit the excessive monopoly and exclusivity of intellectual property rights such as copyrights. In other words, it is to protect consumer rights and furthermore, to protect trust in transactions.

However, in recognizing this principle, the issue of location restrictions has been controversial. For example, in the United States, the principle of first sale is recognized when selling within the country, and it is not recognized for works sold abroad. Perhaps it is too obvious, but there is a point of liberalizing to some extent what has been restricting cross-border movement, that is, parallel imports, by differential prices according to the price level of each country or standard of living.

And with digital copying or distribution in the digital age, a more complex problem arises. A representative example of this is the question of whether to apply the principle of first sale or exhaustion of rights in the case of duplication of music by streaming (a technique that reproduces audio, video, animation, etc. in real time on the Internet).

In this regard, Europe maintains the principle that the previous principle of exhaustion of rights should be applied even in the case of digital copying or distribution. On the other hand, in the case of the United States, the application of the first sale principle to digital works that are mainly traded in the form of a license rather than a sale is restrained as much as possible.

In the case of Korea, as in the United States, the principle of first sale is adhered to for digital works linked to traditional works and tangible media. However, it seems to refrain from applying the first sale doctrine when it is transacted online as a download method. Otherwise, it will cause unreasonable damage to the copyright holder of the digital work. Therefore, in the case of the download method, it is viewed as 'transmission' which will be calssified as "reproduction" rather than 'distribution' to prevent unfair distribution.

Some say that in the case of such a download method, the first download principle should be applied, not the first sale doctrine. In other words, by forcing the first digital work to be deleted upon downloading, it will actually conform to the basic purpose of the first sale principle. Otherwise, separate distribution or transmission which will be a kind of reproducing( is performed for each download, which should be regarded as infringing on the rights of the copyright holder.

In the digital age, the strict application of the traditional first sale doctrine seems undesirable. However, in the case of Europe, the principle of first sale is still mentioned even in the case of digital works, and there is a significant difference of opinion between the United States and Europe in this area, making it difficult to understand each other.

There is still a lot of controversy about the concept of distribution or transmission( reproduction?)  of digital content, so it will be necessary to interpret it reasonably and harmoniously in accordance with the digital age and technological innovation.