Legislating Digital Exhaustion

The digital shift in distribution, from markets premised on disposing of physical artifacts to markets defined by data flows, is among the most important changes in the copyright landscape since the enactment of the 1976 Copyright Act. The disconnect between this new reality and our current statutory rules is particularly evident when it comes to the question of exhaustion. The first sale doctrine embodied within Section 109 was constructed around a mode of dispossession that is rapidly becoming obsolete. As a result, the benefits and functions it has long served in the copyright system are at risk. Building on our earlier work, this Article will argue that a meaningful exhaustion doctrine should survive the digital transition. After explaining the two primary hurdles to digital exhaustion under the existing statutory regime, we outline two possible approaches to legislating digital exhaustion, concluding that a flexible standards-based approach that vests considerable authority with the courts is the better solution