The right to distribute per s109(a) is limited to the first sale. Once a copies have been released to the stream of commerce, purchasers are free to engage in further distribution without consent or payment of royalties.
Congress has limited a purchaser's right to rent a lawfully purchased copy of computer software or musical recording to prevent unlawful home copying.
DZ: The relationship of original content market and subsequent distribution is a continuing area of controversy, especially with growth of Internet.
Should the importation of goods sold inexpensively overseas be encouraged to save consumer's money? Consider whether domestic copyright owners should be encouraged to set prices realistically in overseas markets.
DZ: Circuit courts are in conflict over the relationship between s109 and s602 and the Supreme Court has granted certoriari to the question.
Hair products seller cannot use its right to distribute copyrighted label affixed to products to prevent importation of products it sells overseas. The "first sale" doctrine endorsed in s109(a) of the Copyright Act of 1976 is applicable to imported copies. Once a copyright owner places a copyrighted item in the stream of commerce by selling it, the owner has exhausted the exclusive statutory right to control its distribution.
Fawcett Publications, Inc. v. Elliot Publishing Co. (So. Dist. NY, 1942)
The right to distribute "is confined to the first sale of any one copy and exerts no restrictions on the future sale of that copy." Therefore it is not infringement to repackage lawfully purchased comic books for resale.
Sebastian International, Inc. v. Consumer Contacts (PTY) Ltd. (3d Cir., 1988)
Case concnering interplay of s109 first sale doctrine and s602 rights against importation of infringing works. The Third Circuit holds that copyright owner receives fair reward in first sales abroad and domestic markets are not protected from the importation of copies sold overseas.
BMG Music v. Perez (9th Cir., 1992)
Holding opposite to SEBASTIAN. Purchaser's rights under the First Sale Doctrine apply only to copies lawfully purchased in the United States and not in overseas markets. Defendant cannot import sound recording licensed and manufactured in overseas markets for domestic resale. The Court concluded any other reading would make s602 "virtually meaningless."