## Facts

- Brilliance Audio, Inc. produced and sold copyrighted audiobook sound recordings and owned a federally registered BRILLIANCE trademark.
- Brilliance marketed two versions of its audiobooks: retail editions for consumers and library editions packaged and marketed for libraries and lending institutions.
- Haights Cross Communications, Inc., a competitor, allegedly acquired Brilliance retail editions, repackaged them as library editions, and sold them to libraries for profit.
- Brilliance alleged Haights used the BRILLIANCE mark on the repackaged products without authorization, making them appear to be Brilliance’s own library-edition products.
- Brilliance sued asserting federal copyright infringement, federal trademark infringement and unfair competition, federal dilution, and related common-law claims.
- The district court dismissed all claims under Rule 12(b)(6), reasoning that first sale barred liability and that the § 109(b)(1)(A) record-rental provision applied.
- Brilliance appealed.

## Issues

1. Whether 17 U.S.C. § 109(b)(1)(A)’s “record rental” limitation applies to audiobooks (sound recordings of literary works), or only to sound recordings of musical works.
2. Whether the trademark first sale doctrine required dismissal at the pleading stage, or whether the complaint sufficiently alleged recognized exceptions based on repackaging, material differences, or interference with quality control likely to cause confusion.

## Decision

- The court affirmed dismissal of the copyright claims.
- The court held that § 109(b)(1)(A) does not apply to audiobooks; the statutory rental restriction is limited to sound recordings of musical works.
- Because audiobooks fall outside § 109(b)(1)(A), the ordinary copyright first sale rule governed, and the complaint did not state a viable copyright infringement claim on the alleged resale/distribution of lawfully purchased copies.
- The court reversed dismissal of the trademark, unfair-competition, and dilution claims and remanded.
- The court held that Brilliance plausibly alleged exceptions to trademark first sale based on repackaging and potential material differences or quality-control disruption creating likely consumer confusion.

## Legal Principles

- Copyright first sale generally permits the owner of a lawfully made copy to dispose of that copy without the copyright owner’s permission, subject to statutory limits.
- The § 109(b)(1)(A) rental restriction applies to sound recordings of musical works, not to audiobook sound recordings of literary works.
- Trademark first sale generally bars infringement claims based solely on resale of genuine trademarked goods.
- Trademark first sale has exceptions, including where resale involves material differences, interference with the trademark owner’s quality control, or repackaging/relabeled presentation likely to cause confusion about source, sponsorship, or authorization.
- On a Rule 12(b)(6) motion, well-pleaded allegations are taken as true and reasonable inferences favor the plaintiff; a first sale defense does not justify dismissal where pleaded facts fit a recognized exception.

## Conclusion

The Sixth Circuit concluded that the Copyright Act’s record-rental limitation does not reach audiobooks and affirmed dismissal of the copyright claims, but it reinstated the trademark-based claims because allegations of repackaging and likely confusion plausibly fell within established exceptions to trademark first sale.


Brilliance Audio, Inc. v. Haights Cross Commc’ns, Inc., 474 F.3d 365 (6th Cir. 2007)