The U.S. Court of Appeals for the Eleventh Circuit rejected the contention that the first-sale doctrine provided a defense to criminal violation of the copyright laws by the purchaser of copyrighted material. United States v. Harrison, 2008 U.S. App. LEXIS 15096.
Harrison was convicted of selling Microsoft certificates of authenticity (COAs) that Microsoft packages with software to ensure that a particular copy of Microsoft’s product is authentic. Each copy has a numeric key that activates a Microsoft program. Harrison bought stand-alone certificates and then resold them to individuals to activate pirated copies of Microsoft’s programs.
After the district court precluded his “first-sale doctrine” defense, Harrison pled guilty to two counts of trafficking in illicit labels in violation of 18 U.S.C.S. § 2318. The statute forbids “knowingly traffic[ing] in—a counterfeit label or illicit label affixed to, enclosing, or accompanying, or designed to be affixed to, enclose, or accompany” a product. Harrison then appealed his conviction, arguing that the district court erred in precluding him from raising the copyright first-sale doctrine as a defense. Harrison argued that under the first-sale doctrine a copyright purchaser does not violate copyright law by distributing copies of copyrighted works when he owns those copies.
The 11th Circuit noted that Harrison was not charged with copyright infringement, so the first-sale doctrine was not relevant to whether the stand-alone certificates are illicit under § 2318 and held that there is no first-sale defense to § 2318. The Court reasoned that otherwise anyone could avoid the statute by claiming that the illicit labels were properly purchased. As the Court noted, “[t]he statute targets the secondary market in authenticating labels; the first-sale doctrine eliminates restrictions on secondary markets. Therefore, to allow a first-sale defense would be to allow precisely the secondary market Congress intended to eliminate.”