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25 October 2021

Copyright Exhaustion

By Amalyah Keshet, Senior Consultant

Those of us toiling in the cultural heritage sector may all feel the occasional bit of copyright exhaustion. As it happens, that is actually a legal term, and it’s come up in the news recently. The U.K. Intellectual Property Office has announced a consultation on the matter of post-Brexit exhaustion (once again, no, not that kind of exhaustion) and it is worth a look.[i]

An article in The Guardian[ii] put it rather dramatically: “Bestselling writers … are warning of a ‘potentially devastating’ change to the UK’s copyright laws that could damage authors’ livelihoods by flooding the UK market with cheap foreign editions.”  It’s a bit more complicated than that, of course, but “One option under consideration would see a change to the “copyright exhaustion” rule, which governs when the control of a rights holder over the distribution of their [intellectual] property expires. For example, if a customer buys a book, then the owner of the book’s copyright would not then be able to prevent the customer selling that book to another person in the same territory.” In the U.S. this is referred to as the First Sale doctrine.[iii] Let’s just call the concept Copyright is Exhausted after the First Sale –longer, but a bit clearer.

The Guardian continues, “As part of the EU single market, a first sale within the European Economic Area has been the point [after which] the copyright owner can no longer control onward distribution, but Brexit means the rules for the UK are being reconsidered.”

The UK consultation focuses on parallel imports of non-counterfeit physical goods into the UK, and does not impact purely digital content (such as downloaded music or books).

Parallel imports (as defined in the consultation) are goods that are lawfully manufactured by a rights holder themself, or under licence.  For example, a book produced by an author or by a publisher, placed on the market, but then moved on across territorial borders. Another sector for parallel trade includes “luxury goods” – but it isn’t clear (to this author) whether this includes works of art.  

The U.K. consultation identifies a number of factors that may be affected by the IP rights exhaustion regime eventually chosen: a change in the exhaustion regime could impact licensing (in terms of the value of a particular licence), and contractual clauses relating to what can and cannot be imported and exported into a particular area.  Further explanation of parallel imports can be found here, as well as here, and here.

The complete consultation document, with a thorough explanation of the matter, can be found here.

None of the above should be confused with the Right of Revocation of a copyright or Reversion Rights, in themselves interesting subjects that beg to be explored.

More closely related to the exhaustion issue is the proposed new partnership between U.K. used book retailers World of Books and Bookbarn International, together with the Authors’ Licensing and Collecting Society (ALCS) [iv]and the Society of Authors[v] in the U.K., aiming to rebalance the lack of income from second-hand book sales.They propose a new royalties scheme[vi] that favours authors, called AuthorSHARE[vii].

“At launch, royalties will be paid on used book sales made from worldofbooks.com and bookbarninternational.com, although the aim is to expand the scheme to include other used book retailers…  At present, royalties on used books can only be paid on purchases made directly from the World of Books and Bookbarn International websites, but both retailers hope others within the industry will join the scheme to enable more authors to benefit.”

Interestingly, the proposed scheme both contradicts the U.S. First Sale Doctrine (just as a point of comparison), but does invite comparison with the Artists Resale Right (which never succeeded in becoming law in the U.S.). It has inevitably met with scepticism in the American publishing community, and they aren’t betting on its success or expansion. It has also been pointed out that it is a voluntary scheme, outside the realm of law. One presumes that it will increase the price of second-hand books in the UK, particularly as the Society of Authors has told its members that “We want all writers, illustrators and translators to benefit from AuthorSHARE.”. Imagining the royalties from a second-hand illustrated translation, split three ways, after transaction costs, does not leave one overly optimistic.


[ii] https://www.theguardian.com/books/2021/jun/10/leading-authors-sound-alarm-over-post-brexit-changes-to-copyright

[iii] https://blogs.umass.edu/lquilter/copyright/first-sale/

[iv] https://www.alcs.co.uk/

[v] https://www2.societyofauthors.org/

[vi] https://www.theguardian.com/books/2021/jun/01/authors-to-earn-royalties-on-secondhand-books-for-first-time 

[vii] https://www2.societyofauthors.org/authorshare/

© Naomi Korn Associates, 2021. Some Rights Reserved. The text is licensed for use under a Creative Commons Attribution Share Alike Licence (CC BY SA)

Disclaimer: The contents of this blog post are based on the assessment of Naomi Korn Associates Ltd at the time in which the resource was created (October 2021). The contents should not be considered legal advice. If such legal advice is required, the opinion of a suitably qualified legal professional should be sought.