The first-sale rule, also known as the first-sale doctrine or doctrine of patent exhaustion, provides that although a patent/copyright holder has exclusive rights over his product, such right becomes exhausted when he sells his product.
In other words, the first-sale rule is a limitation on one\\\'s patent/copyright. It allows the purchaser of a patented/copyrighted product to transfer it through gift or sale to another person or entity without any need to obtain permission from the owner of the patent or copyright. However, such lawful transfer can only be made once, and that is why it is important for business owners and retailers to familiarize themselves with this rule.
The first-sale rule provides an exception to intellectual property laws, particularly to the law on patents. The law on patents states that a patent owner has the exclusive right to restrain, prohibit, and prevent any unauthorized person or entity from making, using, offering for sale, selling, or importing his patented product.
The purpose of the first-sale rule is to immunize a reseller (such as a retailer) from infringement liability with respect to the sale of products with trademarks. On the other hand, the owner of the trademark or copyright benefits from the rule, for it gives him freedom to sell his product while retaining his possible causes of action against subsequent transferees of the product.
For instance, if you buy a book from your favorite bookstore at the mall or from any other authorized book distributor, the first-sale rule gives you the right to lend or give that book away to anyone you want to without fear of being sued by its author. The first-sale rule is the reason why libraries are not sued for copyright infringement when they lend their books to library users.
Another common application of the first-sale doctrine is when a copyright owner gives someone permission to download copyrighted music; in this case, the copy may lawfully be sold or given away.