The first sale doctrine is a legal doctrine that applies to copyrights, patents and trademarks. The doctrine is slightly different for the three types of intellectual properties. But, in general, in each case, the first sale doctrine prevents owners/holders of intellectual property rights from controlling what happens to a physical product or work after it is sold. That is, the sale of an item terminates many of the rights possessed by the holder of the intellectual property rights. However, the legal effect of the first sale doctrine can be significantly modified and curtailed by contract.

For example, with patent rights, when the owner first sells a patented item, the seller has no patent-based right to control what happens to the item. As the new owner of the item, the buyer has all the rights that ownership implies. The buyer can use (or not use) the item, display the item, resell, lease, use up, discard or destroy the item. The buyer also has a right to repair the item and keep it in good working order. Patent rights cannot impede these buyer rights.

But the first sale doctrine does not terminate ALL of the rights held by the patent owner/holder. A buyer may NOT, for example, reconstruct a depleted/used-up item or build a new item. Those actions would infringe on the rights granted and protected by the patent.

A similar set of rules applies to trademark rights. When the owner/holder of a trademark sells goods which are marked with the trademark, the seller has no trademark-based right to control what happens to the goods. The buyer may resell them even though the items are trademarked. But, like with patent rights, the first sale doctrine does not terminate ALL of the rights held by the trademark owner/holder. For example, a buyer cannot physically remove the trademark, apply it to a different item and then sell the different item. That would be trademark infringement.

The first sale doctrine applies to copyrights in a similar manner, but with much more nuance and erosion of buyers’ rights via copyright licenses and statutes. When the owner of a copyrighted work sells the work, the seller has no copyright-based right to control what happens to the work. For example, without violating copyright law, the buyer may resell the work. Thus, in the real world, with no infringement of copyrights, one can find old albums, records or books for sale at vintage resale shops or flea markets. This buyers’ right is statutory. See Copyright Act, 17 USC § 109. But, just like for patents, the first sale doctrine does not terminate ALL of the rights held by the copyright owner/holder. A buyer may NOT, for example, make a copy of the work or create works that are derivative of the work.

With respect to copyrights, the rights of buyers provided by the first sale doctrine have been significantly eroded over the last 100-150 years by the ubiquitous use of copyright licenses. Consider sheet music as an example. 150 years ago, a buyer of sheet music would have had the full right to perform the music in both private and public settings. But with the advent of radio, cinema, television and the internet, such an unlimited performance right became untenable for creative artists and copyright owners. As such, performance licenses are now routinely imposed on the sale of copyrighted works. Use rights are also now commonly limited by license as with copyrighted computer software. In addition, the Copyright Act now significantly limits buyers’ rights after purchase of a copyrighted work and there are even statutory limits on buyers’ rights to destroy or modify certain works of art even after the work is sold. See the Visual Artists Rights Act, 17 USC § 106A.

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The First Sale Doctrine in Copyright Law: Critical Limits

The Copyright Act codifies the first sale doctrine at 17 U.S.C. § 109. Section 109(a) provides that the owner of a lawfully made copy of a copyrighted work may sell or otherwise dispose of that copy without the copyright holder’s permission. But the doctrine applies only to the physical copy—it does not transfer the underlying intellectual property rights. The buyer of a book owns the physical book; she does not own the copyright in the text.

The doctrine has several significant carve-outs and limitations:

• Rentals and lending — The Record Rental Amendment of 1984 and the Computer Software Rental Amendments Act of 1990 created explicit exceptions to the first sale doctrine, prohibiting commercial rental of phonorecords and computer programs without the copyright owner’s authorization. These exceptions significantly limit first sale rights in the music and software industries.
• Digital works — Courts have consistently held that the first sale doctrine does not apply to digital goods that are licensed rather than sold. In Capitol Records LLC v. ReDigi Inc., 910 F.3d 649 (2d Cir. 2018), the Second Circuit held that a platform enabling resale of digital music files infringed copyright because reproduction—not merely transfer—occurred in the process. The digital first sale doctrine remains legally unsettled.
• Internationally manufactured goods — The Supreme Court held in Kirtsaeng v. John Wiley & Sons, Inc., 568 U.S. 519 (2013), that the first sale doctrine applies to copies manufactured abroad and lawfully imported—a major decision for the gray-market goods industry.

First Sale Doctrine and Trademark: The Gray-Market Problem

In trademark law, the first sale doctrine (sometimes called the “exhaustion doctrine”) is more nuanced. The general rule—that the authorized sale of trademarked goods exhausts the trademark owner’s rights to control resale—is well established. But courts have recognized the “material differences” exception: if the goods sold in the secondary market are materially different from the goods sold through authorized channels, the resale can constitute trademark infringement even if the goods are genuine.

Material differences can include altered warranty terms, absence of safety instructions in the local language, changed packaging, different product formulations, or missing quality checks that authorized distributors perform. The Ninth Circuit’s decision in Davidoff & Cie SA v. PLD International Corp., 263 F.3d 1297 (11th Cir. 2001), and subsequent cases have developed a substantial body of law analyzing what constitutes a material difference sufficient to remove the first sale protection.

Contractual Modifications of First Sale Rights

Both patent and copyright first sale rights can be significantly modified by contract. End User License Agreements (EULAs) routinely restrict transferability, rental, and modification rights—effectively contracting around the first sale doctrine. Courts’ enforcement of these restrictions has been mixed. In software licensing, the distinction between a “sale” (which triggers first sale rights) and a “license” (which does not) has been heavily litigated. The Ninth Circuit’s decision in Vernor v. Autodesk, Inc., 621 F.3d 1102 (9th Cir. 2010), established a multi-factor test for determining whether a software transaction constitutes a sale or a license. Sellers and buyers of goods subject to EULA restrictions should understand that contractual terms can dramatically alter their legal rights.

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If you have questions about the issues discussed in this article, contact the experienced attorneys at Revision Legal. We handle intellectual property, internet law, and business law matters for clients across the country. Contact us online or call us at 1-855-RL-LEGAL.