The U.S. Ninth Circuit Court of Appeals has ruled that consumers have a right to re-sell “promotional” CDs distributed for free by record labels to radio stations, music journalists and others. The court upheld a lower court’s 2008 finding in favor of Troy Augosto, an eBay re-seller of promo CDs who was sued by Universal Music Group (UMG) for copyright infringement. Universa; had argued that the use of a label stating “For Promotional Use Only, Not For Sale” on the discs constituted a term of a “license” of the CDs, meaning they could recall them at any time and prohibit their resale. The Appelate court was having none of this and found that, “UMG transferred title to the particular copies of its promotional CDs and cannot maintain an infringement action against Augosto for his subsequent sale of those copies.” The Court added that Universal did not require recipients of the promo CDs to agree to the “not for sale” condition, nor had it demanded return of the CDs if recipients did not consent. Copyright’s “first sale” doctrine prevents a copyright owner from restricting further sales or uses of a work once title has passed.
Corynnew McSherry, from the Electronic Frontier Foundation, which filed a brief in the case on Augosto’s behalf said “This ruling frees promotional CDs from the shadow of copyright infringement claims, which is good news for music lovers,” adding “But it also has broader ramifications. The court flatly rejected the argument that merely slapping a notice on a copyrighted work prevents the work from ever being sold. It eliminates the risk of copyright infringement claims against later recipients — regardless of whether they paid for the work.”
and see Neil Wilkof’s interesting piece for the IP Kat at http://ipkitten.blogspot.com/2011/01/what-counsel-would-you-have-given-umg.html