Rebalancing Copyright Exhaustion
Guy A. Rub
Ohio State University (OSU) - Michael E. Moritz College of Law
May 6, 2014
Emory Law Journal, 2015, Forthcoming
Ohio State Public Law Working Paper No. 248
In 2013, in Kirtsaeng v. John Wiley & Sons, the Supreme Court wrote another chapter in the ongoing story of copyright exhaustion. This important decision is part of a series of recent decisions in high-profile cases and a vibrant discourse, domestically and internationally, regarding the scope of copyright exhaustion, and, more broadly, the ability of copyright owners to control the distribution of their work along the chain of commerce. Unfortunately, this discussion rarely explores the modern justifications for copyright exhaustion, which makes it notoriously incoherent, inconsistent, and confusing.
This Article suggests that copyright exhaustion should be primarily perceived as a tool to reduce information costs. Without it, buyers will need to inefficiently waste resources inquiring whether they will be able to resell copyrighted work. Because resale rights are typically socially desirable, especially as they eliminate waste, the law should usually provide those rights to buyers. Copyright exhaustion also has costs. The main cost is the reduction in the incentives to create that is the result of the limitation that copyright exhaustion places on certain price discrimination practices. The balance between the reduction in information costs and the harm to incentives should dictate the scope of the copyright exhaustion.
This Article applies this balanced approach and explores the desired scope of copyright exhaustion. It concludes, inter alia, that it should not prevent copyright owners from exercising control over importation of copyrighted goods or over distribution of digital work. However, contracting around copyright exhaustion should be restricted and copyright owners should not be allowed to circumvent it just by including “magic words” in their standard-form agreements.
Number of Pages in PDF File: 56
Keywords: Copyright, Exhaustion, Intellectual property, first sale doctrine
JEL Classification: K11, K12, K21, L42, O31, O33, O34Accepted Paper Series
Date posted: May 8, 2014 ; Last revised: May 10, 2014
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