December 22, 2014

Supreme Court: You Bought It, You Own It, You Can Resell It

First Sale Doctrine Resale Rights

This past week the United States Supreme Court decided a case that reinforced the right to re-sell something that you had lawfully bought.

Now — you might be wondering what’s so earth shattering about that.  After all, hasn’t that always been true?  You own an iPad and want to get a new tablet instead?  Just sell the old iPad or donate it or recycle it — because it’s yours and you can do what you want with it.  Bought a book and no longer need it? You sell that, too. Right?

Here in the States we have something called the “first sale doctrine.” It simply means that once a tangible copyrighted work (or something with copyright in it) is sold lawfully the first time, the original copyright owner no longer has rights over the physical item. After that, the buyer can do whatever he or she wants with it — sell it again, donate it, whatever.  That’s why you can legally hold a yard sale or sell computers on eBay. The resale right applies only to the physical item sold, not copies.

Most of us take resale rights for granted.

But that right to resell copyrighted items had been challenged in court.  The Supreme Court’s decision this week reaffirmed that owners have resale rights, as Daniel Fisher writes in Forbes:

The U.S. Supreme Court today settled a long-simmering debate over the Copyright Act by holding that publishers can’t prevent the resale of books they produce overseas in U.S. markets.

The decision in Kirtsaeng v. John Wiley & Sons is a victory for Supap Kirtsaeng, a student who was fined $600,000 for importing Wiley textbooks from his native Thailand, where they were cheaper, and selling them in the U.S. It’s also a victory for libraries and retailers like eBay, who argued the “first sale” doctrine — giving owners of published books and recordings the right to sell them to whomever they want — should apply to imported works as well as U.S. publications.

The lawsuit related specifically to U.S. copyrighted items manufactured outside the United States, but re-sold or disposed of inside the U.S.

The Owners’ Rights Initiative hailed the decision as a victory for individuals, organizations and businesses.  The Initiative is an advocacy group founded to protect owner’s rights to buy and sell authentic goods.

Their motto is: “You bought it. You own it. You have a right to resell it.” (Image above)

The Owner’s Rights Initiative says you should be permitted to resell something you’ve legitimately purchased, no matter where it was manufactured.  While the court’s decision puts to rest one attack on resale rights, the group believes  there could be other legal attacks in the future.  Said Lauren Perez of the American Free Trade Association, in a video on the Owner’s Rights site:

If you buy it you own it. If you paid for it, it’s yours. You shouldn’t have to go ask permission of anybody to resell it.  You shouldn’t have to worry about being sued for copyright infringement because the original copyright owner or manufacturer doesn’t like you being the person reselling it… doesn’t want you to realize a profit from your original investment.

The Owner’s Rights Initiative is backed by groups  like eBay, Etsy, Overstock, the American Library Association, the Computer and Communications Industry Association, and even the popular used/out-of-print bookseller Powell’s Books.

Below is the Supreme Court’s decision (only the 4-page summary, also known as a syllabus):

Image credit: Owner’s Rights Initiative

This article was updated to clarify that resale rights do not apply to copies illegally made of a copyrighted item.

17 Comments ▼

Anita Campbell - CEO


Anita Campbell Anita Campbell is the Founder and Publisher of Small Business Trends and has been following trends in small businesses since 2003. She is the owner of BizSugar, a social media site for small businesses, and also serves as CEO of TweakYourBiz.com.

17 Reactions

  1. Thank you for your write up on this subject

  2. Thanks for the info! I’m assuming (without reading the syllabus) that this only applies to physical goods and not digital content. Can you comment on this?

    • Digital content (and other intellectual property) is licensed — not sold, so while first sale doctrine says you can sell the actual music CD you purchased — you can’t sell or give “copies” of the CD, nor can you legally sell the original CD and then keep a digital version on your hard drive for yourself.

      • Yes, but isn’t the license itself a form of property? If I buy a license to play a video game or listen to a song, then I own that license and should be able to transfer it to someone else in exactly the same way that I can transfer a CD or DVD to someone else.

      • A license for intellectual property is not property — it’s a legally binding contract between you and the licensor. You can’t transfer it to someone else. THEY need to purchase their own license to use. Under “First Sale Doctrine” — while you may be able to give someone the actual CD or DVD — it would be breaking the law to first burn yourself a copy. You can see why these laws are important for creators — Realistically, how many users are respectful enough of the rights of the artist to not take advantage of the simple ways to both keep for yourself AND give away digital media?

  3. Well, I’m glad to hear that we do have the right to resell our property. It would be pretty lame if we didn’t. Thanks for sharing.

    Ti

  4. I hope this doesn’t get misinterpreted by people, although I am sure it will be. This does not mean once you buy an item it is yours to do with it as you please. You still cannot copy CDs or DVDs or art prints and resell them, you still cannot take an image, digital or rubber stamp and resell the image. You do not own the art on these items, and while you may resell the item you purchased you cannot use it to produce more to sell, unless of course you have the owner’s permission. I just hate to see people assume that.

    • Hi Michelle,

      Yes, the Supreme court case and the owner’s rights initiative are about selling items you lawfully purchased and own. When you lawfully purchase one music CD or one film DVD, that’s all you can resell — the one item you purchased.

      The Supreme Court did NOT say one could make illegal copies and would own those. Let’s take an example:

      If you purchase one CD, DVD or artwork legitimately, and then make 5 copies of that same CD, DVD or artwork — without express permission to reproduce copies — you don’t lawfully own those extra 5 copies. Since you have no lawful rights in those bootleg copies of the CD, DVD or artwork, you have no rights to sell them. (Not to mention that you’re breaking the law by making bootleg copies without permission in the first place.)

      One final point: anyone with specific questions about their own legal rights should contact an attorney, and not rely on a news article like this for legal advice.

      – Anita

  5. Good to see how this turned out in favor of owners’ rights. I am still a fan of owning a physical hard copy of software just for the fact that it can be resold easily when I no longer use it.

  6. So if i have “fitness” dvd i paid for does the company have the legal right to force me into a contract not to resell? Is it legally binding?

    Ex. Piyo, zumba, les mills, ect. If i buy it then why does ebay say its copywright infringement…..and yes its a physical dvd

    • Jona,

      Not sure of the facts in your situation, but one possibility is that it may be a bootleg version. If it was illegally copied to begin with, then it’s infringing. Without knowing the exact facts, it’s hard to say.

      With the exception of prohibiiting the sale of bootleg or illegal versions of a DVD, it appears eBay is allowing hundreds of thousands of used DVDs to be sold. I just checked and there are over 500,000 listed on the site for sale.

      – Anita

  7. Thanks for the info! I have someone on eBay watching an listing I have (something that I bought from this person. They are sending me messages stating that the “lovely (item) should have gone to someone that would have enjoyed it & appreciated it”. It didn’t sell the first time around, so I re-listed it. This person keeps watching it. It’s a bit creepy.

  8. Hi, what happens if the item has multiple pieces, a double album for example, or pages in a book. Can you resell the original item in pieces without additional copyright, and can you post photos of the piece in order to resell it. Does I own it, I can resell it cover that?

    Thanks

  9. Hello. Thanks for the info. Was wondering if you purchase something and resell it at a profit often should you be keeping track of the income to claim on taxes? And if you are selling for a profit do you need to charge sales tax? Thanks

    • Hi Brandi, Let me give an off-the-cuff answer, with the proviso that you check with your tax advisor for the answer that applies to your situation.

      Generally speaking, you have to report all income, and that includes gains on the sale of an item. That’s the general rule.

      However, let’s say you sold only one thing during the year and it amounts to $20 in net gain. Will it even make a difference on your annual tax liability? For $20 probably not.

      But change the numbers or the facts a bit, and the rules get really tricky, really fast.

      What if the amount is more than a “de minimis” amount? What if you’re talking hundreds or thousands of dollars of net gain? And what if you sell more than one item during the year and have a gain on each? What if you sell more than one item during the year, and have a gain on some things but a loss on others — do the losses cancel out the gains?

      And it quickly raises other questions. Then you have to look at whether the activity is a business or hobby, to see what expenses and losses can be deducted. Is your sales activity a hobby? The IRS has specific definitions of what constitutes a hobby. Or is your activity a business? Did you have other expenses to deduct? Have you made enough profit under IRS rules to deduct any losses that can be offset?

      There are many questions to be answered, and each situation has to be looked at individually. That’s why I’d say if it’s more than a tiny amount such as $20 gain, it needs to be examined further.

      Sorry I couldn’t be more helpful, but that’s the tax law for you.

      – Anita

  10. Anita,
    I would like your opinion on publishers who sell exclusively to schools and school districts. Could you argue that if a teacher has a book that she got or took from the school, and now has it posted for sale, that she did not purchase it, and therefore doesn’t have the right to sell it? Or my second scenario is that UPS sends things lost in transit to auctions where book sellers buy it. If the material was never written or intended for public use, and are consumable student editions meant for schools only, can the bookstore legally resell them?

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