Legal Question in Intellectual Property in California

First Sale Doctrine / DVD rentals

The owner of a video rental store buys multiple DVDs of new video features from us via mail order prior to the national release and rents them out repeatedly. Is this not prevented by 17 U.S.C section 109 (A) that states �neither the owner of a particular phonorecord [**] may, for the purposes of direct or indirect commercial advantage, dispose of [**] the possession of that phonorecord [**] by rental, lease, or lending .�

Question part 1: Is a DVD also considered a �phonorecord,� being digitally fixed in plastic?

Question part 2: Even if an �owner� is allowed to sell, lend, destroy, or even rent out a DVD, it appears that the intent is that he may only do it once. Is he not specifically prohibited from realizing an ongoing profit from a one-time purchase?

He says he is entitled to do so under the First Sale Doctrine because �It means that whenever ANYONE buys a print, DVD, or Tape from Falcon or Tristar or Warner or Disney or any retail store or mail order site they can rent it or sell it to anyone they like for non commercial home exhibition within the states.� But by renting it a second time, has it not become a �commercial� venture? Are we reading this wrong? Your opinions would be greatly appreciated.


Asked on 3/31/04, 5:20 pm

1 Answer from Attorneys
Jeff Lambert Attorney at Law

Re: First Sale Doctrine / DVD rentals

Based on the facts provided, I think your reading of the statute is correct. However, the correct citation is 17 U.S.C. sec. 109(b)(1)(A), not 109(A). If you read the entirety of that statute section, you will see that it applies to "computer program[s] (including any tape, disk, or other medium embondying such program) . . ." in addition to phonorecords. If you have any doubt as to the commercial or non-commercial nature of this person's rental/lease sales, I would advise discontinuing further sales to him/her unless it violates some existing contract you have in place. Otherwise, if he/she is found to be violating section 109(b)(1)(A), you wouldn't want to take the chance of being drawn into a suit based on a contributory or vicarious liability theory. Good luck.

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Answered on 3/31/04, 5:54 pm


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