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James Grimmelmann
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Randy, I tend to think of first sale as a negotiability regime; it makes sure that holders in due course of copies can give good title. That rule makes a lot of sense for analog goods on information-costs grounds. I'm open to arguments either that we need a corresponding rule for digital goods that's less tied to the MAI-style formality of the "copy" or that first sale is unnecessary for digital goods in light of their easy reproduction and the decreased costs of licensing. Regardless of where we each come down on this question, I think we share a concern that the court may have just weighed in on it without realizing the implications.
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Nicely put. The court reaches the right outcome, but for the wrong reasons. First sale is supposed to be a buy one-get one deal: buy a copy of The Castaway and you can resell it, regardless of whether Bobbs-Merrill slaps a sticker on it saying you can't. CTA here is economically trying to engage in a buy one-get two deal: it paid only the upgrade price but wants to be treated in law as owning two copies that it can use or sell as it chooses. (That's a deal that Autodesk would almost certainly not have offered if the law supported CTA and everyone did what it did.) The danger of the holding is that the court's test effectively underrules Bobbs-Merrill in practice. Make the sticker on the book a "license" that doesn't just prohibit you from selling the book but also prohibits you from reading it aloud or taking it to the beach, and you have turned the transaction into a buy one-get none deal. While trying to protect the first sale compromise from being undermined in one direction, the court accidentally undermines it in the opposite direction. I would have preferred that the court confront the economic substance of Autodesk's deal with CTA. Autodesk agreed to improve CTA's copy in various ways, in return for a fee. For first sale purposes, this should be regarded as CTA's having returned legal ownership of the version 14 copy to Autodesk, and received a copy of version 15 in return. CTA is left with bare possession of its copy version 14, and that only because Autodesk has not demanded return or proof of destruction of the physical medium (an inefficient step that it benefits neither party to require). My reading of the transaction would say, in other words, that Autodesk's license is effective to prevent the resale of version 14 but not the resale of version 15.
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Sep 11, 2010