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Is Resale a Copyright Infringement?

April 9, 2008

In reference to this techdirt article, Kip asks:

Is it a violation of copyright to sell a used book? Is it extortion to threaten to sue over it? (”I think [a] number in the high seven figures will be fair enough for me to suddenly catch amnesia.”)

Of course it’s not a violation of copyright to sell a used book! I have my own thoughts on the matter, but the techdirt article gives the answer, pretty clearly, in the context of modern American jurisprudence. But let’s think for a moment about what would happen if the courts did consider this a violation of intellectual property “rights,” so-called. (For the time being, I’m discussing only excludable property¹).

Does it not follow, that even distribution of these products in a secondary market for free would be a similar violation? That is, if it’s a crime for me to sell a used book, presumably because it deprives the author of income², isn’t it the very same crime for me to give the book to a friend, for free? If not, why not?

What would happen to libraries?

But don’t just stop with “copyrights,” carry the thought-process all the way through to patents and other spurious pseudo-property:

Second-hand stores (think maternity wear, baby clothes, etc.) and thrift stores (lower income people) and consignment/pawn brokers (used sporting goods stores, etc.) would be promptly put out of business. You couldn’t sell your old records, nor could you buy someone els’es old record collection. Ditto for other memorabilia, including America’s beloved baseball card! General Motors would probably be upset if you were selling your 1997 Malibu. Widening the perspective a bit, we find that there would be (essentially) no way to liquidate debtors’ property in the event of default. If you think it’s hard to get business loan now, imagine a legal environment where the creditor’s claim to your pizza ovens, walk-in refrigerators, retarders, and mixing bowls doesn’t allow him to resell these items for cash.

Prohibiting resale, be it books, cars, or collateral, would serve only to impoverish people who need money and are willing to part with slightly used goods, and to impoverish their would-be trading partners. If enforced, there is no up-side to this sort of prohibition. But it probably couldn’t be enforced, in which case it would contribute to the total collapse of the red market.

+++

1. The case against IP with regards to non-rival consumption and zero marginal costs (e.g., digital property) is outside the scope of the current discussion. I have theorized on alternative solutions to copyright laws in the past, “[I]t is difficult to justify protecting entrepreneurs from entrepreneurial risk”

2. “Deprivation of Profits” must be the violation, since in most cases it cannot be alleged that the reseller is profiting from the resale, since the price commanded on the secondary market is in all but the rarest collectors’ item instances, lower than the initial acquisition price. Therefore a profit is not turned. From which we must conclude that the crime is not “profiting unduly” but rather “depriving of profits.” Of course, this depends on the utterlly untenable belief that anyone willing to pay for a second-hand product would also be willing to pay full price for the first-hand product…)

Related posts:

1. IP & Copyright Laws: An Alternative Solution
2. The Customer is Always Right, Except…
3. Economies of Scale, the Faustian Bargain
4. You Can’t Fight City Hall
5. Quick Hits

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Posted in: Legalese, Rent Seeking

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