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68-425: Copyright law grants a copyright owner an exclusive right "to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending". This is called a "distribution right" and differs from the copyright owner's "reproduction right" which involves making copies of the copyrighted works. Rather than the right to copy, the distribution right involves

136-627: A House Appropriations subcommittee that the consensus among the justices of the Supreme Court of the United States was that the Ninth Circuit was too large and unwieldy and should be split. Congressional officials, legislative commissions, and interest groups have all submitted proposals to divide the Ninth Circuit such as: The more recent proposals have aimed to redefine the Ninth Circuit to cover California, Hawaii, Guam, and

204-409: A case involving an online marketplace for pre-owned digital music. E-books have the same issue. Because the first sale doctrine does not apply to electronic books, libraries cannot freely lend e-books indefinitely after purchase. Instead, electronic book publishers came up with business models to sell the subscriptions to the license of the text. This results in e-book publishers placing restrictions on

272-441: A circuit judge. When the office was created in 1948, the chief judge was the longest-serving judge who had not elected to retire, on what has since 1958 been known as senior status , or declined to serve as chief judge. After August 6, 1959, judges could not become or remain chief after turning 70 years old. The current rules have been in operation since October 1, 1982. The court has 29 seats for active judges, numbered in

340-447: A compact cassette tape , a compact disc , an audio DVD , and an MP3 file stored on a computer, compact disc or USB flash drive . To explain the legal distinction between definitions, suppose a person or group takes a song and makes a performance. The recorded performance is a sound recording (also called phonogram); the physical media that the sound recording is stored upon is a phonorecord. This sound technology article

408-400: A copy by a nonprofit library for nonprofit purposes, provided the library affixes an appropriate warning. The amendment also specifically excluded: With reference to trade in tangible merchandise, such as the retailing of goods bearing a trademark, the first-sale doctrine serves to immunize a reseller from infringement liability. A guiding principle for determining if a resale is protected by

476-580: A copyrighted design on the back of the watches, through the gray market and resold them in its stores in the US. Omega manufactured these watches outside the US and did not authorize their importation into the US. Based on the Quality King case, the 9th Circuit held that "application of first-sale doctrine to foreign-made copies would impermissibly apply" the Copyright Act extraterritorially. However,

544-636: A four-prong test that a trademark owner must satisfy: Phonorecord A phonorecord is defined by the United States Copyright Act of 1976 to be a material object that embodies sounds (other than those accompanying audio-visual recordings such as movies). From the Copyright Act: “Phonorecords” are material objects in which sounds, other than those accompanying a motion picture or other audiovisual work, are fixed by any method now known or later developed, and from which

612-505: A lower price) can be legally imported and sold in the US without any post-sale restrictions. The first sale doctrine only limits the distribution rights of copyright holders. This principle sometimes clashes with the holder's other rights, such as the right of reproduction and derivative work rights. For example, in Lee v. A.R.T. Co. , the defendant bought plaintiff's artworks in the form of notecards and then mounted them on ceramic tiles, covering

680-414: A phonorecord that embodies a sound recording or musical work from renting it to the public for direct or indirect commercial advantage. This exception was designed to prevent music stores from renting records and thereby facilitating home copying. Section 109(b) is an exception to the first sale doctrine, but it is limited in several ways. It applies only to rentals, and not to resale or other transfers. It

748-628: A secondary market. In a notable case, the High Court of Paris found against Valve for not allowing the resale of games from the Steam digital storefront, requiring Valve to comply with the European Union Directives of first-sale doctrine within three months, pending appeals. For the first sale doctrine to apply, lawful ownership of the copy or phonorecord is required. As §109(d) prescribes, first sale doctrine does not apply if

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816-452: A term of seven years, or until age 70, whichever occurs first. If no judge qualifies to be chief, the youngest judge over the age of 65 who has served on the court for at least one year shall act as chief until another judge qualifies. If no judge has served on the court for more than a year, the most senior judge shall act as chief. Judges can forfeit or resign their chief judgeship or acting chief judgeship while retaining their active status as

884-723: A total of nine states and two territories and with 29 active judgeships. The court's regular meeting places are Seattle at the William Kenzo Nakamura United States Courthouse , Portland at the Pioneer Courthouse , San Francisco at the James R. Browning U.S. Court of Appeals Building , and Pasadena at the Richard H. Chambers U.S. Court of Appeals . Panels of the court occasionally travel to hear cases in other locations within

952-456: A transfer of ownership in EU law, thus the first sale doctrine applies; the ruling thereby breaks the "licensed, not sold" legal theory, but leaves open numerous questions. Section 602(a)(1) of the US copyright statute states that "importation into the United States, without the authority of the owner of copyright under this title, of copies or phonorecords of a work that have been acquired outside

1020-460: A user is granted a license; 2) whether the copyright owner significantly restricts the user's ability to transfer the software to others; and 3) whether the copyright owner imposes notable use restrictions on the software. In Vernor , Autodesk 's license agreement specified that it retains title to the software and the user is only granted a non-exclusive license. The agreement also had restrictions against modifying, translating, or reverse-engineering

1088-518: Is a stub . You can help Misplaced Pages by expanding it . United States Court of Appeals for the Ninth Circuit The United States Court of Appeals for the Ninth Circuit (in case citations , 9th Cir. ) is the U.S. federal court of appeals that has appellate jurisdiction over the U.S. district courts for the following federal judicial districts : The Ninth Circuit also has appellate jurisdiction over

1156-523: Is a relatively rare occurrence in all circuits and Ninth Circuit rules provide for full en banc review in limited circumstances. All recently proposed splits would leave at least one circuit with 21 judges, only two fewer than the 23 that the Ninth Circuit had when the limited en banc procedure was first adopted. In other words, after a split at least one of the circuits would still be using limited en banc courts. In March 2007, Associate Justices Anthony Kennedy and Clarence Thomas testified before

1224-617: Is also limited to a subset of sound recordings—only those sound recordings that contain only a musical work. It does not apply to sound recordings that contain other content, such as commentaries or dialog soundtrack, or to non-musical sound recordings, for example audiobooks . Lastly, libraries and educational institutions are exempt from this restriction, and may rent or loan musical sound recordings. The Copyright Software Rental Amendments Act of 1990 amended §109(b) further to prohibit rentals of computer software for direct or indirect commercial advantage. The exception does not apply to lending of

1292-413: Is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord. The elements of the first sale doctrine can be summarized as follows: (1) the copy was lawfully made with the authorization of the copyright owner; (2) ownership of the copy was initially transferred under the copyright owner's authority; (3) the defendant is a lawful owner of

1360-459: Is licensed to the intended recipient for personal use only. Acceptance of this CD shall constitute an agreement to comply with the terms of the license. Resale or transfer of possession is not allowed and may be punishable under federal and state laws." Augusto tried to sell these CDs on eBay and UMG argued that first sale doctrine did not apply since the CDs were not sold and only a licensing relationship

1428-540: Is not national in scope....It is easy to make a mistake construing these laws when unfamiliar with them, as we often are, or not interpreting them regularly, as we never do." From 1999 to 2008, of the Ninth Circuit Court rulings that were reviewed by the Supreme Court, 20% were affirmed, 19% were vacated, and 61% were reversed; the median reversal rate for all federal appellate courts was 68.29% for

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1496-482: The United States Supreme Court held in a 6–3 decision that the first-sale doctrine applies to goods manufactured abroad with the copyright owner's permission and then imported into the US. The case involved a plaintiff who imported Asian editions of textbooks that had been manufactured abroad with the publisher-plaintiff's permission. The defendant, without permission from the publisher, imported

1564-664: The territorial courts for the District of Guam and the District of the Northern Mariana Islands . Additionally, it sometimes handles appeals that originate from American Samoa , which has no district court and partially relies on the District of Hawaii for its federal cases. Headquartered in San Francisco, California , the Ninth Circuit is by far the largest of the 13 U.S. Courts of Appeals, covering

1632-576: The Court of Appeals for the Hollywood Circuit." Judges from more remote parts of the circuit note the contrast between legal issues confronted by populous states such as California and those confronted by rural states such as Alaska, Idaho, Montana, and Nevada. Judge Andrew J. Kleinfeld , who maintains his judicial chambers in Fairbanks, Alaska , wrote in a letter in 1998: "Much federal law

1700-457: The MP3 files are merely licensed to them and hence they may not be able to resell those MP3 files. However, MP3 songs bought through iTunes Store may be characterized as "sales" because of Apple's language in its EULA and hence they may be resellable, if other requirements of first sale doctrine are met. Courts have struggled and taken dramatically different approaches to sort out when only a license

1768-410: The Ninth Circuit faces several adverse consequences of its large size, such as "unwieldly size, procedural inefficiencies, jurisprudential unpredictability, and unusual en banc process." Chief among these is the Ninth Circuit's unique rules concerning the composition of an en banc court. In other circuits, en banc courts are composed of all active circuit judges, plus (depending on the rules of

1836-478: The Ninth Circuit's decisions were reversed at a rate of 2.50 cases per thousand, which was by far the highest rate in the country, with the Sixth Circuit second as 1.73 cases per thousand. Fitzpatrick also noted that the 9th Circuit was unanimously reversed more than three times as often as the least reversed circuits and over 20% more often than the next closest circuit. Many commentators have argued that

1904-409: The Northern Mariana Islands, and to create a new Twelfth Circuit to cover Alaska, Arizona, Idaho, Montana, Nevada, Oregon, and Washington. As of November 15, 2023 : Chief judges have administrative responsibilities with respect to their circuits, and preside over any panel on which they serve, unless the circuit justice (the Supreme Court justice responsible for the circuit) is also on

1972-455: The U.S. and sell them at discount prices, undercutting the authorized U.S. dealers. The gray market exists where the price for goods outside the US is lower than the price inside. On the surface, §602(a), barring unauthorized importation, would seem to clash with the first-sale doctrine, which permits the resale of lawfully made copies. The issue comes down to whether §602(a) creates an affirmative right to bar all unauthorized importation, or does

2040-476: The United States is an infringement of the exclusive right to distribute copies or phonorecords." This provision provides the copyright owner an opportunity to stop goods from entering the United States market altogether. Application of this provision created difficult legal issues in the context of gray market products. Gray market dealers buy the genuine goods in foreign countries at a significant discount from U.S. prices. They then import these genuine goods into

2108-892: The West were placed in the Ninth Circuit: the newly acquired Territory of Hawaii in 1900, Arizona upon its admission to the Union in 1912, the Territory of Alaska in 1948, Guam in 1951, and the Commonwealth of the Northern Mariana Islands in 1977. The Ninth Circuit also had jurisdiction over certain American interests in China , in that it had jurisdiction over appeals from the United States Court for China during

First-sale doctrine - Misplaced Pages Continue

2176-515: The artworks with transparent epoxy resin. Despite plaintiff's assertion of violation of his right to prepare derivative works, the 7th Circuit held that the derivative work right was not violated and that defendant's sale of the tiles was protected under the first sale doctrine. However, based on very similar facts, the 9th Circuit in Mirage Editions, Inc. v. Albuquerque A.R.T. Company held that plaintiff's right to prepare derivative works

2244-774: The circuit. Although the judges travel around the circuit, the court arranges its hearings so that cases from the northern region of the circuit are heard in Seattle or Portland, cases from southern California and Arizona are heard in Pasadena, and cases from northern California, Nevada , Hawaii , and the Pacific territories are heard in San Francisco. Additionally, the court holds yearly sittings in Anchorage and Honolulu . For lawyers who must come and present their cases to

2312-559: The copy in question; and (4) the defendant's use implicates the distribution right only; not the reproduction or some other right given to the copyright owner. Although copyright has always been treated as a limited territorial right, in 2013 in Kirtsaeng v. John Wiley & Sons, Inc. the US Supreme Court eliminated the territorial restriction on the first sale. Since then, copyrighted products legally bought abroad (often at

2380-436: The copyright owner from restraining the free alienability of goods . Without the doctrine, a possessor of a copy of a copyrighted work would have to negotiate with the copyright owner every time they wished to dispose of their copy. After the initial transfer of ownership of a legal copy of a copyrighted work, the first-sale doctrine eliminates the copyright holder's right to control ownership of that specific copy. The doctrine

2448-416: The copyright owner or a licensee, but they would not be lawfully made under US copyright law. Rather, they would be lawfully made under the copyright laws of the other country; and the first-sale doctrine would therefore not limit the §602 importation restriction. The 2008 case Omega v. Costco involved this exact unresolved issue, where the defendant Costco obtained authentic Omega watches, which feature

2516-589: The court in person, this administrative grouping of cases helps to reduce the time and cost of travel. Ninth Circuit judges are also appointed by the United States Secretary of the Interior to serve as temporary acting Associate Justices for non-federal appellate sessions at the High Court of American Samoa in Fagatogo . The Ninth Circuit's large size is due to the dramatic increases in both

2584-457: The court stated that first-sale doctrine might still apply to a foreign manufactured copy if it was imported "with the authority of the U.S. copyright owner". The Supreme Court granted certiorari to Omega v. Costco , and affirmed 4–4. However, as an evenly split decision, it set precedent only in the 9th Circuit, not nationwide. However, in Kirtsaeng v. John Wiley & Sons, Inc. , in 2013,

2652-482: The digital good has been downloaded directly from the Internet, and that the first sale doctrine applied whenever software was originally sold to a customer for an unlimited amount of time, as such sale involves a transfer of ownership, thus prohibiting any software maker from preventing the resale of their software by any of their legitimate owners. The court requires that the previous owner must no longer be able to use

2720-531: The existence of that court from 1906 through 1943. However, the Philippines was never under the Ninth Circuit's jurisdiction. Congress never created a federal district court in the Philippines from which the Ninth Circuit could hear appeals. Instead, appeals from the Supreme Court of the Philippines were taken directly to the Supreme Court of the United States . In 1979, the Ninth Circuit became

2788-573: The first federal judicial circuit to set up a Bankruptcy Appellate Panel as authorized by the Bankruptcy Reform Act of 1978 . The cultural and political jurisdiction of the Ninth Circuit is just as varied as the land within its geographical borders. In a dissenting opinion in a rights of publicity case involving the Wheel of Fortune star Vanna White , Circuit Judge Alex Kozinski sardonically noted that "[f]or better or worse, we are

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2856-487: The first sale doctrine to digital copies affects the market for the original to a greater degree than transfers of physical copies. The U.S. Copyright Office stated that "[t]he tangible nature of a copy is a defining element of the first sale doctrine and critical to its rationale." The Court of Justice of the European Union ruled, on July 3, 2012, that it is indeed permissible to resell software licenses even if

2924-448: The first sale principle, is any "material differences" between a non-authorized seller and a seller not authorized by the trademark holder. Such protection to the reseller extends to the point where said goods have not been altered so as to be materially different from those originating from the trademark owner. Alterations or "material differences" don't have to be physical in nature, but may also apply to warranties and service offered by

2992-504: The first-sale doctrine does apply to importation into the US of copyrighted works (the labels), which were made in the US and then exported. However, the Supreme Court did not decide the issue where gray-market products are initially manufactured abroad and then imported into the US. The Court indicated that importation of goods made outside the US could perhaps be barred under §602(a), since such goods would not be "lawfully made under this title". Such products might be lawfully made, either by

3060-570: The first-sale doctrine limit the reach of §602(a), thus permitting the resale of at least some lawfully made imported copies. In 1998, the U.S. Supreme Court in Quality King v. L'Anza found that first-sale doctrine applied to imported goods at least where the imported goods are first lawfully made in the United States, shipped abroad for resale, and later reenter the United States. That case involved importation of hair care products bearing copyrighted labels. A unanimous Supreme Court found that

3128-447: The licensed software after the resale, but finds that the practical difficulties in enforcing this clause should not be an obstacle to authorizing resale, as they are also present for software which can be installed from physical supports, where the first-sale doctrine is in force. The ruling applies to the European Union, but could indirectly find its way to North America; moreover the situation could entice publishers to offer platforms for

3196-408: The licensing relationship, but not sufficient. Other terms of the agreement should be consistent with such a licensing relationship. In Vernor v. Autodesk, Inc. the 9th Circuit created a three-factor test to decide whether a particular software licensing agreement is successful in creating a licensing relationship with the end user. The factors include: 1) whether a copyright owner specifies that

3264-411: The material object can then dispose of it as they see fit. Thus, one who buys a copy of a book is entitled to resell it, rent it, give it away, or destroy it. However, the owner of the copy of the book will not be able to make new copies of the book because the first-sale doctrine does not limit the restrictions allowed by the copyright owner's reproduction right. The rationale of the doctrine is to prevent

3332-453: The notice and sold the books at a lower price without Bobbs-Merrill's consent. The Supreme Court held that the exclusive statutory right to "vend" applied only to the first sale of the copyrighted work. Today, this rule of law is codified in 17 U.S.C. § 109(a), which provides: Notwithstanding the provisions of section 106 (3), the owner of a particular copy or phonorecord lawfully made under this title, or any person authorized by such owner,

3400-496: The number of times an e-book can circulate and/or the amount of time a book is within a collection before a library's license expires, then the book no longer belongs to them. The question is whether the first-sale doctrine should be retooled to reflect the realities of the digital age. Physical copies degrade over time, whereas digital information may not. Works in digital format can be reproduced without any flaws and can be disseminated worldwide without much difficulty. Thus, applying

3468-418: The other circuits. This results in the Supreme Court reviewing a smaller proportion of its cases, letting stand the vast majority of its cases. However, a detailed study in 2018 reported by Brian T. Fitzpatrick , a law professor at Vanderbilt University , looked at how often a federal circuit court was reversed for every thousand cases it terminated on the merits between 1994 and 2015. The study found that

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3536-500: The panel. Unlike the Supreme Court, where one justice is specifically nominated to be chief, the office of chief judge rotates among the circuit judges. To be chief, a judge must have been in active service on the court for at least one year, be under the age of 65, and have not previously served as chief judge. A vacancy is filled by the judge highest in seniority among the group of qualified judges, with seniority determined first by commission date, then by age. The chief judge serves for

3604-475: The particular court) any senior judges who took part in the original panel decision. By contrast, in the Ninth Circuit it is impractical for 29 or more judges to take part in a single oral argument and deliberate on a decision en masse. The court thus provides for a limited en banc review by the Chief Judge and a panel of 10 randomly selected judges. This means that en banc reviews may not actually reflect

3672-495: The population of the western states and the court's geographic jurisdiction that have occurred since the U.S. Congress created the Ninth Circuit in 1891. The court was originally granted appellate jurisdiction over federal district courts in California , Idaho , Montana , Nevada , Oregon , and Washington . As new states and territories were added to the federal judicial hierarchy in the twentieth century, many of those in

3740-533: The possession of the copy is "by rental, lease, loan, or otherwise without acquiring ownership of it". Some software and digital content publishers claim in their end-user license agreements (EULA) that their software or content is licensed, not sold, and thus the first sale doctrine does not apply to their works. These publishers have had some success in contracting around first sale doctrine through various clickwrap , shrink wrap , and other license agreements. For example, if someone buys MP3 songs from Amazon.com,

3808-418: The right to transfer physical copies or phonorecords (i.e., recorded music) of the copyrighted work. For example, the distribution right could be infringed when a retailer acquires and sells to the public unlawfully made audio or video tapes. Although the retailer may not have copied the work in any way and may not have known that the tapes were made unlawfully, they nevertheless infringe the distribution right by

3876-407: The sale. The distribution right allows the copyright owner to seek redress from any member in the chain of distribution. The first-sale doctrine creates a basic exception to the copyright holder's distribution right. Once the work is lawfully sold or even transferred gratuitously, the copyright owner's interest in the material object in which the copyrighted work is embodied is exhausted. The owner of

3944-416: The same period. From 2010 to 2015, of the cases it accepted to review, the Supreme Court reversed around 79% of the cases from the Ninth Circuit, ranking its reversal rate third among the circuits; the median reversal rate for all federal circuits for the same time period was around 70 percent. Some argue the court's high percentage of reversals is illusory, resulting from the circuit hearing more cases than

4012-454: The software on eBay without Autodesk's permission. However, the same 9th Circuit panel that decided Vernor v. Autodesk , refused to apply Vernor 's three-factor test in UMG v. Augusto to a purported licensing agreement created when UMG sent unsolicited promotional CDs to music critics. The promotional CDs' packaging contained the language: "This CD is the property of the record company and

4080-486: The software, or removing any proprietary marks from the software packaging or documentation. The agreement also specified that software could not be transferred or leased without Autodesk's written consent, and could not be transferred outside the Western Hemisphere. Based on these facts, the 9th Circuit held that the user is only a licensee of Autodesk's software, not an owner and hence the user could not resell

4148-415: The sounds can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device. The term “phonorecords” includes the material object in which the sounds are first fixed. For example: all of the following are "phonorecords" under the law: A wire recording ; a 16-rpm, 33-rpm, 45-rpm or 78-rpm phonograph record (vinyl disc), a reel-to-reel tape , an 8-track tape ,

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4216-430: The textbooks and resold on eBay. The Supreme Court's holding severely limits the ability of copyright holders to charge vastly different prices in different markets due to ease of arbitrage . The decision removes the incentive to US manufacturers of shifting manufacturing abroad purely in an attempt to circumvent the first-sale doctrine. The Record Rental Amendment of 1984, codified in 17 USC §109(b) prohibits an owner of

4284-464: The trademark holder. The holding notion is if any alteration constitutes "material differences" between goods originating from copyright holder and the sold item. Such that the sale "may mislead the consumer and damage the [trademark] owner's goodwill." A trademark owner can overcome the first sale doctrine defense if it can show that the unauthorized reseller is using the trademark on goods that lack its quality control standards. Courts have identified

4352-417: The views of the majority of the court and indeed may not include any of the three judges involved in the decision being reviewed in the first place. The result, according to detractors, is a high risk of intracircuit conflicts of law where different groupings of judges end up delivering contradictory opinions. That is said to cause uncertainty in the district courts and within the bar. However, en banc review

4420-470: Was created. However the court held that first sale doctrine applies when a copy is given away and that recipients of the promotional CDs did not accept the terms of the license agreement by merely not sending back the unsolicited CDs. In the case UsedSoft v Oracle , the Court of Justice of the European Union ruled that the sale of a software product, either through a physical support or download, constituted

4488-544: Was first recognized by the Supreme Court of the United States in 1908 (see Bobbs-Merrill Co. v. Straus ) and subsequently codified in the Copyright Act of 1909 . In the Bobbs-Merrill case, the publisher, Bobbs-Merrill, had inserted a notice in its books that any retail sale at a price under $ 1.00 would constitute an infringement of its copyright. The defendants, who owned Macy's department store, disregarded

4556-413: Was granted to the end user as compared to ownership. Most of these cases involved software-licensing agreements. In general, courts look beneath the surface of the agreements to conclude whether the agreements create a licensing relationship or if they amount to, in substance, sales subject to first sale doctrine under §109(a). Thus, specifying that the agreement grants only a "license" is necessary to create

4624-563: Was infringed and that the first sale doctrine did not protect the defendant under such circumstances. The first-sale doctrine does not neatly fit transfers of copies of digital works because an actual transfer does not actually happen—instead, the recipient receives a new copy of the work while, at the same time, the sender has the original copy (unless that copy is deleted, either automatically or manually). For example, this exact issue played out in Capitol Records, LLC v. ReDigi Inc. ,

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