[Infowarrior] - Victory for First Sale Doctrine (another one)

[Richard Forno]

http://www.eff.org/deeplinks/2008/06/liberation-day-promo-cds-victory-umg-v-augusto

June 11th, 2008
Liberation Day for Promo CDs: Victory in UMG v. Augusto
Posted by Fred von Lohmann

In an important victory for the first sale doctrine, a federal  
district court today ruled that selling "promo CDs" on eBay does not  
infringe copyright. The court threw out a lawsuit by Universal Music  
Group (UMG), which had argued that the "promotional use only" labels  
affixed to these CDs somehow conveyed eternal ownership on UMG, making  
it illegal to resell the CDs (or even throw them away).

For decades, record labels have mailed out millions of promotional  
records and CDs to radio stations, music reviewers, DJs, and music  
industry insiders. Troy Augusto, an eBay seller, finds these "promos"  
at used record stores, where he buys those that have value as  
collectibles and resells them on eBay. After an abortive attempt to  
use DMCA takedowns to block Augusto's eBay auctions, UMG ultimately  
sued him in federal court, claiming that the "promotional use only"  
labels on the CDs mean that UMG owns them forever and that any resale  
infringes copyright.

EFF and the San Francisco law firm of Keker & Van Nest took Augusto's  
case to fight for the proposition that a copyright owner can't take  
away a consumer's first sale rights just by putting a "promotional use  
only, not for resale, remains the property of UMG" label on a CD.  
After all, the first sale doctrine had its origin in a Supreme Court  
case involving book publisher's effort to enforce a "may not be sold  
for less than one dollar" label on a book.

In its ruling, the district court found that the initial recipients of  
"promo CDs" own them, notwithstanding "not for resale" labels. The  
court rejected the notion that these labels create a "license,"  
concluding that the CDs are gifts. According to the opinion, "UMG  
gives the Promo CDs to music industry insiders, never to be  
returned. ... Nor does the licensing label require the recipient to  
provide UMG with any benefit to retain possession." (The court also  
found that federal postal laws relating to "unordered merchandise"  
establish that promo CDs are gifts to their recipients.)

With software vendors, laser printer manufacturers, and patent owners  
trying to strip consumers of their first sale rights with unilateral  
labels, licenses, and notices, today's ruling sets an important  
precedent holding the line against these efforts (and comes one day  
after the Supreme Court reaffirmed the same principle in the patent  
context in Quanta v. LG). Here's hoping this ruling is another nail in  
the coffin of "label licenses" that try to strip consumers of their  
privileges under copyright law.