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For example, I take a poetry book and cut out the poems, frame them, and sell them individually.
Or I take a book with Star Wars™ art and cut out the pictures and decoupage a dresser and offer it for sale.
What intellectual property principles are implicated?
This question has been addressed directly, with very similar facts, by the federal courts, and the answer, based on those decisions, is: Maybe.
The most famous case in this area is Mirage Editions v. Albuquerque A.R.T. Co., 856 F.2d 1341 (9th Cir. 1988). In that case, the defendant had bought a copy of plaintiff's art book, cut out the pages, and affixed them to ceramic tiles, which it sold.
The defendant relied on the first sale doctrine, codified in 17 U.S.C. 109. The first sale doctrine says that if you own a copy of a copyrighted work, you can resell it without the copyright holder's permission.
The plaintiff argued that, by altering the original artwork, the defendant had created a new derivative work. The first sale doctrine gives you the right to sell the book to someone else, but not the right to create derivative works, whether by writing and publishing an unauthorized sequel or, they argued, cutting and pasting and tiling and kilning the physical pages.
The Mirage Editions court agreed with the plaintiff that the tiles were a derivative work outside the scope of the first sale doctrine, and therefore the defendants had infringed the plaintiffs' copyrights. However, other courts faced with similar facts have disagreed, and to date I'm not aware of any Supreme Court decision resolving the issue.
The bottom line is: you are allowed to sell what you bought; you aren't allowed to transform it into something new and sell that. Where the line gets drawn is muddy and likely to remain so at least until the Supreme Court addresses the issue.
