When can license trump first sale?

Question

Alice produces some copyrighted work and commits it to physical form as The Item (e.g. a printed manuscript). Alice then writes "not licensed for resale" on the Item and gives it to Bob (who is aware of the claimed restriction when he receives the Item). Bob then sells the Item to Clarice, who sells it to David, who gives it to Eunice, who dies, resulting in Fred inheriting the Item.

1. Which party, if any, has committed a crime or tort?
2. Which party can Alice compel (or ask a court to compel) to surrender the Item while it is in that party's possession?
3. Ignoring explicit theft (i.e. assuming that all parties surrender possession of the Item willingly), are there other change-of-possession scenarios which would result in different answers to (1) or (2)?
4. How does time factor into the above? (For example, does it make a difference if Fred comes into possession of the Item five days after Alice gives it to Bob, vs. if ten years pass in between each change of possession?)
5. Is there any validity to the conjecture that, while Fred might legally possess the physical Item, he does not have a valid license for the copyrighted material and is therefore not permitted to read the Item?

Note: This is similar, but not identical, to Licencing restriction and first sale doctrine UK re. secondhand book.

Answer 1

No party committed any crime or copyright infringement

There is no crime of breach of contract. Also, since the same item is given away over and over again and neither copies, nor derivatives are made, copyright infringement does not apply.

This is all an issue of contract law

Only Bob can have breached a contract.

Bob was the only person given the work that could have been given it under a specific license contract by Alice telling him not to sell it. Depending on the circumstances, such as giving a manuscript to a publisher, film studio or lector, those terms can be assumed industry standard, but generally there will be a contract. This contract can be verbal ("You may read this, but not sell it" is an exchange of consideration), or written. But remember: Bob is the only one that Alice contracted with, if at all.

All other claims would be barred: Anyone after Bob bought the work from Bob or someone in between and never entered a contract with Alice. Alice's right in the book is exhausted by the "sale" to Bob, and the limit of the (implied/verbal/written) contract only applies to Bob. Sure, he breached it, but only he is doing damage.

Note that the text "not for sale" on the manuscript is not the contract, it is at best a reminder that there is an underlying contract that bans the sale.

Alice can only compel Bob to fix the damage

You ask for specific performance, which is heavily discouraged by courts, discretionary in the first place, and likely won't be given at all. But Bob is liable for the monetary damage his breach of contract caused, such as expected damages. Read more HERE.

Time is not of issue for the sale date unless the license is timed.

Unless the license agreement (NOT the manuscript!) contains an end date or condition, such as "for review till 31.12.2024, return till then", then the license is presumed to not end, and Bob must abide by the license terms till such a point when it is changed. As such, the time since he got the book generally does not play an issue in the act of Bob selling his copy.

Time is of the essence in regards to suing.

If Bob sells his copy in breach of contract and tells Alice, then the statute of limitation starts to run that day. Depending on the jurisdiction, usually somewhere around 1 to 3 years later Alice can not sue Bob anymore. If Bob does not sell Alice, the statute of limitations starts to run the moment Alice knows or should have known that the breach occurred.

Answer 2

Never

The first sale doctrine is an established part of the common law in the USA (and most other common law jurisdictions) that says that when you sell an item, you can no longer control what the owner does with that item, even if you have other interests in it such as copyright. You can’t contract outside the law so Alice’s endorsement on the book is of no legal effect.

Now, if Alice had retained ownership, such as by leasing the book to Bob, then she can impose restrictions, but you state that it was “given” which means Bob owns it and the first-sale doctrine (even in the absence of a sale) applies.

Copyright applies to making copies

The hint is in the name. Anyone can legally possess, read, pass on, or wipe their butt with copyrighted material without infringing copyright. To infringe, they need to make a copy.

This is fundamentally what the first sale doctrine is about. Alice has a right not to have her copyright infringed, Bob has a right to quiet enjoyment of his book. As long as Bob (or anyone else) does not copy the book, Alice has no legal interest in what happens to that particular physical copy.