No to Digital First Sale

By Keith Calder
In a field hearing this week in New York City, the House Judiciary Committee considered changes to the Copyright Act to create a so-called “Digital First Sale” doctrine that would allow digital copies of copyrighted works to be resold without permission from the copyright holder. We strongly oppose this proposal.
The First Sale Doctrine, which was established in 1908, is a limited exception to a copyright owner’s exclusive right to distribute his or her work. It allows consumers the means to sell or give away physical objects that contain copyrighted material. In other words, it allows individuals and companies to legally sell or give away used books, CDs, DVDs, and other physical products that contain copyrighted material.
Some have proposed creating an analogous doctrine for digital goods. That would be a mistake. Applying the first sale doctrine for content in a non-physical form would alter the purpose of the exception, hurt the creator, and hinder investment and innovation in the digital marketplace.
Innovative companies today have transformed the way consumers digest content. Cloud-based services and online access have given customers the ability to download content though multiple devices within their home or on the go. It also allows consumers an unprecedented ability to share content with friends and families.
These access-based, online services provide flexibility that lessens the limitations that come with physical objects. The U.S. Copyright Office determined: “The tangible nature of a copy is a defining element of the first sale doctrine and critical to its rationale.”
Physical objects take up space, require some effort to transport or duplicate, impose costs to produce additional units, are often manufactured in limited quantities becoming rare over time, and decay with age. When they are resold, the original owner no longer possesses the copy of a copyrighted work.
Rather than buy content in physical form—only to resell it if they tire of it, save space, or recoup some initial investments—consumers can access the content on demand. The beauty of cloud-based services is that you can watch or listen to any content whenever and wherever you want.
The elements of physical copies that justify the First Sale doctrine are not present. Intangible content cannot be lost, broken, or forgotten. A “used” copy is identical in every way to a “new” one. There is no simple way to verify that the person reselling a digital copy did not keep his own copy.
The thing about internet based content is that when consumers pay for the particular content, they are licensing it from the provider, not “buying to own.” That license often offers consumers innovative and convenient features their physical predecessors can’t, often including free software updates.
Nonetheless, if being able to resell is important to you as a consumer, you still have the option to buy physical books, CDs, video games, and DVDs—making legislation that will create a first sale doctrine for intangible content unnecessary.
Online-distribution models have been extremely successful because they offer convenience and value that many consumers prefer over buying copies of copyrighted works in physical form – even though it means foregoing the right to resell. Congress should resist the urge to disrupt the market by creating a Digital First Sale doctrine.