Selling Promo CDs Is Not Copyright Infringement! Woo Hoo!

A federal district court has thrown out Universal Music Group’s lawsuit against Troy Augusto, who had the gall to sell pre-release CDs on eBay. More and more promos are copy-protected, or released sans artwork, and soon labels may just issue MP3s (if anything) to critics and other industry hangers-on with entitlement issues, but it’s good to know people are allowed to get rid of the crappy promotional CDs they already have. Plus, by stipulation this decision means that people are even allowed to 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.)

So, how you do plan to celebrate “Promo CD Liberation Day?”

Liberation Day for Promo CDs: Victory in UMG v. Augusto [EFF]