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Music industry loses promo CD resale ruling

UMG learns that giving something away means you’ve given it away

By Paul McNamara on Wed, 01/05/11 - 7:06am.

Back in April 2008 I wrote about the curious case of UMG vs. Augusto, in which the music Goliath was suing an eBay David for auctioning promotional music CDs he bought up on the cheap from disc jockeys who received them unsolicited and free from UMG.

UMG argued that such resales are prohibited solely because UMG slapped labels on the CDs reading "promotional use only, not for sale."

The eBay guy and the Electronic Frontier Foundation said that's nonsense because UMG had no right to restrict anyone's "first sale" rights on CDs that it had scattered to the wind, so to speak.

Now an appeals court has told UMG the same thing.

From an EFF press release:

The court noted that UMG did not maintain control of the CDs once it mailed them out, did not require the recipients to agree to the "conditions" it sought to impose with the not-for-sale label, and did not require return of the CDs if the recipient did not consent.

"This ruling frees promotional CDs from the shadow of copyright infringement claims, which is good news for music lovers," said EFF Intellectual Property Director Corynne McSherry.  "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."

TechDirt's Mike Masnick dives deeper into the legal thicket, which involves a number of court cases that have produced apparently contradictory results, and the comments on his post take a mind-numbing side street into possible implications for GPL and Creative Commons.

The UMG ruling can be read here.

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