While there are still several months left in 2014, the IP policy world is already looking to the new year and a new Congress. One issue that we see coming up again is digital First Sale.

All of us, at one time or another, have bought something used. Whether it is a trip to Goodwill or browsing eBay or craigslist, we are all familiar with the “secondary market” for used physical goods like books, CDs, artwork, or video games.

It is legal to sell used physical copies of copyrighted works because of the “First Sale doctrine” (17 U.S.C. § 109), which allows you to lend, resell, or dispose of any lawfully-made copy you own. This means you do not have to get J.K. Rowling’s permission when you want to resell your Harry Potter books (not that you would EVER do that).

However, while the First Sale doctrine works great for physical copies, problems occur when you try to apply this physical copy rule to digital copies.

Digital Goods are Different

It may seem silly but it must be said: digital copies are different than physical copies. And when it comes to a secondary market, the same rules just don’t work for both.

For example, if I sell the physical copy of my textbook to another student, I no longer have a book. I could make a photocopy of the book but that would take hours, the copied pages will not be as good as the original, and the price of printer ink and copy paper will make it cost-ineffective.

However, if I have a digital copy of that same textbook, I can make as many copies as I want in seconds, distribute those and still retain my original digital copy. Further, there is no cost to me to make these copies that are of the same quality as the original.

Think about it – you would probably not buy a photocopy of a text book, but you would pay for a copy of an MP3 song that is the same as the one selling on iTunes or Google Play.

Digital goods being different means that First Sale doesn’t fit. Under the First Sale doctrine, the owner of a particular copy of a copyrighted work may distribute it but may not reproduce it. However, when you transfer a digital file, what you are actually doing is making and sending a copy of that file while the original remains on your hard drive. Transferring the file is a copyright violation since you copied it without authorization from the copyright owner.

What about designing a system that would transfer the original, removing it from the previous owner’s hard drive? That sounds great in theory. In practice, is hard to imagine such a solution surviving the piracy that would certainly come from any attempt at transfer security.

Due to the differences in medium, and the problem of rampant piracy, it makes more sense to treat digital copyrighted works differently than traditional tangible copyrighted goods.

What About Apps?

License vs. Own

It is important to note that apps are not sold but licensed. That means that when you download an app to your mobile device, you don’t own that app but rather have a license to use it. The courts have recognized that there is a difference between an owner of a copyrighted work and a licensee of a copyrighted work. The First Sale doctrine doesn’t have a place in the digital marketplace for apps which are licensed.

Effect on App Developers

The absence of a secondary market for apps means that developers are able to keep prices low and use different business models. They are able to create multiple versions of their app, such as a free one with limited content and a paid version with more features. Developers have said that applying the First Sale doctrine to apps would necessarily mean an increase in prices, since there would be fewer developer-to-consumer sales.

If legislators try to expand the First Sale doctrine onto digital goods and eliminate the license model for apps, developers will face a market where “used” apps will replace lawful purchases, undercutting their ability to keep the price of their apps low. With the app market already crowded, small businesses will be forced out of the market and fewer innovative apps will be available for your mobile devices.

Consumer Choices

Interestingly, not applying the First Sale doctrine to digital goods has given consumers more choices, not fewer. For apps, developers can build better, lower cost apps. In the digital song market, consumers can purchase a single song, the whole album, pay for a subscription to stream music, or listen to free online radio stations. In TV, users can stream episodes on services like Netflix, Hulu, and even on the websites of the networks themselves.

Digital copyrighted goods are a technological advancement not contemplated when the First Sale doctrine was codified in law. The First Sale doctrine is applicable to the physical copies of copyrighted works and not to the digital copies for the reasons stated above. To avoid a potential contraction of the copyrighted market, and in particular the app industry, Congress should proceed with caution with respect to extending the First Sale doctrine licensed digital content.

Image: Getty Images