EFF Explains Why You Should Be Allowed To Sell Promo CDs

from the first-sale-first-sale-first-sale dept

Thu, Jan 29th 2009 11:38am — Mike Masnick

Last summer, a district court ruled that selling promo CDs is perfectly legal. This was an important ruling, because it reinforced the right of first sale -- which has been a part of copyright law for ages -- and it made it clear that companies couldn't wipe out the limits of copyright law simply by declaring them void. The case involved a guy, Troy Augusto, who was selling CDs on eBay. Many of the CDs were "promo" CDs that had been sent to reviewers and radio stations -- stamped with the words to the effect of "Promo: Not for Resale." I've got a few such CDs in my own collection.

Universal Music Group claimed that these CDs remained its property because of that stamp. However, that goes against the entire first sale doctrine concept -- which has always allowed individuals to resell copyrighted products that they possess. Universal's claim was that the stamp meant that it continued to own the CD, even though it never asked for such CDs back. If allowed, this would effectively let any company create their own copyright laws by simply stamping the content with the rules. So, forget the current, already ridiculous, term for copyright. New authors or musicians could just stamp every product with "Property of the content creator" and you would never actually own the product.

Luckily the court disagreed... but Universal has appealed, and the RIAA has filed a brief siding with UMG as well. The EFF has now filed its own brief, noting the ridiculous consequences of any ruling where Universal wins. Allowing Universal to win would effectively mean that all of the extremely important (and already diminished) limits found on copyright today no longer apply. That would be a travesty and go against everything that copyright was originally designed to represent.

Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.

Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.

While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.

–The Techdirt Team

Filed Under: promotional cds
Companies: eff, riaa, universal music

35 Comments

If you liked this post, you may also be interested in...

Reader Comments

Subscribe: RSS

View by: Time | Thread

Phillip, 29 Jan 2009 @ 11:58am

Well, the implications for this are frightening.

Let's hope that the judge can see the obvious problem with this.
[ link to this | view in thread ]
Skeptical Cynic (profile), 29 Jan 2009 @ 12:02pm

Got to love EFF.
More people need to read their website on a regular basis to really understand the kind of crap that goes on.
[ link to this | view in thread ]
Ima Fish, 29 Jan 2009 @ 12:07pm

Why stop with CDs and DVDs? There are copyrighted materials in automobiles. General Motors, for example, could stamp "Property of General Motors" on each car making any resale illegal.

GM would not even have to do it on the entire car, just on some integral but hard to replace/remove part, making it very costly to resell a car without GM getting a cut.
[ link to this | view in thread ]
Anonymous Coward, 29 Jan 2009 @ 12:09pm

Isn't right of resale the wrong term? Those promo CD's are not purchased in the first place.
[ link to this | view in thread ]
Ima Fish, 29 Jan 2009 @ 12:14pm

Re:
"Isn't right of resale the wrong term?"

Under the law it doesn't really matter. The point is that the ebay seller bought them in bulk from someone and then resells them to someone else.

What UMG and the RIAA are doing is trying to chisel away at first sale rights. Despite the fact that you need a healthy first sale market before having a used market, the music industry has always taken a dim view on used CD sales.
[ link to this | view in thread ]
Anonymous Coward, 29 Jan 2009 @ 12:15pm

What about bulk food items labeled "Not for Individual Sale"? Seems they are treading the same ground.
[ link to this | view in thread ]
Beefcake, 29 Jan 2009 @ 12:26pm

Re:
Not for Individual Sale is not a demand of ownership, but a stipulation for labeling laws. They are not telling someone "you can't sell this individually because we don't want you to", but "it's illegal for you to sell this individually because the federally required nutrition/ingredients labeling is on the bulk packaging and not the individual wrappers."
[ link to this | view in thread ]
JB, 29 Jan 2009 @ 12:28pm

Re:
What about bulk food items labeled "Not for Individual Sale"? Seems they are treading the same ground.

AC,
That label is to indicate the item is not marked with the FDA required nutritional information. I do not believe that there is a similar requirement for items other than foodstuffs. That being said, you personally could turn around and sell those foodstuffs to someone else, but as long as you are not in the business of doing so, I do not think there is a problem. Hell, you could copy the nutritional information from the main box and give a copy with each item you sold. I'm not sure if this would work legally so please do not take this as any semblance of legal advice.
[ link to this | view in thread ]
Anonymous Coward, 29 Jan 2009 @ 12:28pm

That means they are not packaged for resale. They do not have UPC's on them for scanning at the register and are not marked with information that is required on for sale food items such as nutritional and ingredient information. Without this information the packages are illegal to sell in retail stores.
[ link to this | view in thread ]
jonnyq, 29 Jan 2009 @ 12:49pm

EULA
Software is already there. You already don't own software. You own a license to use software. The software is not yours and therefore cannot be resold under the first sale doctrine.

Maybe this is one more step in invalidating EULAs.
[ link to this | view in thread ]
Anonymous Coward, 29 Jan 2009 @ 1:01pm

Yeah, there's no "right of resale" here because the copyright owner never sold them in the first place. It's really that simple. IMA FISH has it entirely backwards.
[ link to this | view in thread ]
Rick, 29 Jan 2009 @ 1:23pm

Re: EULA
EULA's are already invalid.

Their function is merely to make you think they are valid, which most consumers do, just because it says so.
[ link to this | view in thread ]
Eclecticdave (profile), 29 Jan 2009 @ 1:51pm

No Sale
Hate to say it but Anon #11 might have a point here.

When you are given something is there the same legal transfer of ownership as when you are sold something? AIUI this is why you occasionally see things sold for "1 Cent/Penny" (Barings Bank being the most recent example I can think of) - it allows a legally binding bill of sale to be written.

Of course that still means UMG is suing the wrong bloke. They should surely be suing the original seller rather than the reseller - Augusto can easily make the case that he bought the CDs in good faith, I would have thought.
[ link to this | view in thread ]
chris (profile), 29 Jan 2009 @ 1:57pm

Re:
What about bulk food items labeled "Not for Individual Sale"? Seems they are treading the same ground.

they're not packaged for individual sale, meaning that the packaging does not meet the FDA's requirements for labeling (ingredients, nutritional information, etc.)
[ link to this | view in thread ]
Anonymous Coward, 29 Jan 2009 @ 2:01pm

Re:
They gave the physical item to a new owner. Without a contract in place, ownership passes along and it constitutes a sale under the law. If I mail you something purposely, I can come back later and say give it back. I've given it to you unless we had some sort of agreement beforehand. Also, the agreement can't be on the item itself because I can accept the physical item without the agreement.
[ link to this | view in thread ]
Yakko Warner, 29 Jan 2009 @ 2:04pm

Re: Re: EULA
Wouldn't a ruling in UMG's favor here potentially add validity to those, though? If you can dictate law by stamping it on a CD, why not by including it in a text file on that CD?
[ link to this | view in thread ]
Anonymous Coward, 29 Jan 2009 @ 2:13pm

It would be accurate to say:

"Last summer, a district court ruled that selling promo CDs is perfectly legal under circumstances such as exist in the case that was before the court."

Change the facts a bit and it would change the outcome. In this case the CDs were given away like popcorn without any reasonable expectation on the part of the provider and the recipient that the CDs were only being "loaned", so to speak, and had to be returned at the end of the loan period. The outcome was based upon the reality of the situation, and not on the basis of a label on the CDs that did not reflect the reality of what was happening between the provider and the recipient.
[ link to this | view in thread ]
Yakko Warner, 29 Jan 2009 @ 2:28pm

Re: No Sale
When you are given something is there the same legal transfer of ownership as when you are sold something?

It's been a long time, and most of the links I'm trying to dig up are long dead, but you might remember a company at the turn of the millennium called Digital Convergence that came up with a device called a "CueCat". It was a handheld barcode scanner that, in theory, would interact with software that, when you scanned a bar code, would direct you to a web page with product information on what you scanned. They gave away the scanners in copies of Wired magazine and through Radio Shack, free. Their business model was marketing. Each scan on a scanner was sent to their servers with a unique identifier, not just to do the barcode look-up, but so they could track what you were scanning and sell your "scan-stream data" to ad agencies.

The software was Windows only, so when Linux geeks got their hands on them, of course the first thing they did was try to get this gadget working in Linux. To do that, they had to hack the encryption that the scanner was using to send data to the computer. It was very weak encryption, so it was broken very quickly.

When DC learned that its scanners were being used without the software that harvested and reported the scans, they tried to say people couldn't do that with the hardware (despite the fact that it was given to them), saying it really was the property of DC. It didn't fly, one of the arguments being that an unsolicited item sent in the mail is legally considered a gift and property of the recipient.

old /. thread

(Which reminds me, I still have a dozen or so of these things in my closet somewhere. :D )
[ link to this | view in thread ]
Richard 23, 29 Jan 2009 @ 2:35pm

I'm not a criminal?
I bought tons of promo vinyl back in the day. I've been living in fear for decades, waiting for that knock on the door.

"We want our records back."

Just imagine what could have happened if I recorded any of these on a cassette tape. I'd probably still be on bread and water.
[ link to this | view in thread ]
jjjj, 29 Jan 2009 @ 2:49pm

It's a '
[ link to this | view in thread ]
jjjj, 29 Jan 2009 @ 2:50pm

It's a 'Gift' to me
To me, receiving something in the mail that I didn't specifically order or ask for is a Gift. I will do with that Gift whatever I choose to do.
[ link to this | view in thread ]
PaulT (profile), 29 Jan 2009 @ 3:21pm

I used to shop at independent record stores, and can't count the number of "promo" cds, vinyls, etc., I got hold of. At the time, it was great because they were cheap and allowed the record store to recoup some costs while introducing customers to new artists. Later on, they were great for me because I could resell the promos I'd bought that I no longer wanted on eBay, et al., often for more than cost (especially if the promo contained tracks/mixes that weren't included on the final album).

So, win-win situation, right? The label get their advertising, the store get a higher profit margin and the consumer gets a resellable item that encourages them to try out new artists. But, of course, the record industry is too dumb to realise this. If the don't have control over the final item, they're not interested, even if they lose out and kill retail channels in the process...
[ link to this | view in thread ]
Lawrence D'Oliveiro, 29 Jan 2009 @ 4:33pm

Re: EULA
jonnyq expounded:

You own a license to use software.

But if you own the licence, then you can resell the licence, can’t you, on the same terms it was sold to you? Unless you don’t own that either?
[ link to this | view in thread ]
Anonymous Coward, 30 Jan 2009 @ 5:36am

Promotions shouldnt be resold because the cd is being given to listen or "try out" as you will... much like a sample. If nabisco hands out free samples of cookies, you're not allowed to resell them. Same concept with CDs
[ link to this | view in thread ]
hegemon13, 30 Jan 2009 @ 6:26am

Re:
That would never happen because, unlike the CD market, which colludes on pricing and practices, the competition in the auto market is fierce. Taking away the ability to resell your vehicle would dramatically reduce the value, and GM would be out of business within a few short years.

I'm not defending Universal. I think the promo CD stamps are ridiculous. And, seriously, there are a very limited number out there, and the loss has already been taken. Why would they waste all this time, money, and legal effort on something so insignificant? Idiots.
[ link to this | view in thread ]
hegemon13, 30 Jan 2009 @ 6:28am

Re:
It doesn't matter whether you bought it or received it as a gift. Once you own the physical good, you have the right to resell it. Universal's argument is that you don't own it, but the courts have shot that down, saying that a simple stamp cannot change ownership rights or copyright.
[ link to this | view in thread ]
hegemon13, 30 Jan 2009 @ 6:34am

Re:
What are you talking about? Of course you could resell the sample cookie. You'd have to find a complete sucker to buy it, but there is nothing legally stopping you.
[ link to this | view in thread ]
Anonymous Coward, 30 Jan 2009 @ 8:29am

Re: No Sale
Yes. When you give something to someone you are, in effect, giving them the property and all rights and responsibilities of that property.
[ link to this | view in thread ]
Robert, 30 Jan 2009 @ 8:54am

This guy is a sleazeball. He has our stuff up
This Troy Augusto is so sleazy. He has a Willie Nelson cd that we are releasing for sale and it's not even out yet.

http://cgi.ebay.com/WILLIE-NELSON-ASLEEP-AT-THE-WHEEL-Rare-09-Promo-Adv-CD_W0QQitemZ20030367 4949QQcmdZViewItemQQptZMusic_CDs?hash=item200303674949&_trksid=p3911.c0.m14&_trkparms=72%3A1 205%7C66%3A2%7C65%3A12%7C39%3A1%7C240%3A1318

This CD was given to him for free to review, not sell before it's even out.

Unreal. He should be in jail.
[ link to this | view in thread ]
Smart Chick, 30 Jan 2009 @ 11:32am

Re: This guy is a sleazeball. He has our stuff up
The end date on the auction is Feb. 3. The same day the CD is released so technically he's not selling it before it's out.

Why should he be in jail? You sent him the copy?
[ link to this | view in thread ]
Anonymous Coward, 30 Jan 2009 @ 7:19pm

First sale doctrine need also apply to digital goods like drmed mp3s/pdfs, and theoretical goods like seated software licensing; particularly the unenforceable 'student' or 'teacher' editions.
[ link to this | view in thread ]
Jerry Leichter, 1 Feb 2009 @ 11:53am

Absurdities both ways
This whole dispute has absurdities both ways.

There is no doubt that I can produce a CD and sell it to you, under a contract that we both knowingly sign, that prevents you from reselling the CD. We could agree that you will only play the CD during nights when the moon is full. We could agree that you will only play the CD to people while trying to convince them that they, to, should buy a copy.

None of this implicates copyright; none of it implicates the First Sale Doctrine. I could sell you a car on the same basis. That it would be nuts for you to *buy* a car encumbered by such a contract is neither here no there - if no one buys, the company dies, as it should.

Should you violate our agreement and sell the CD anyway, say to a used CD store, I'm in violation of my contract and you can come after me. Whether the CD store is in any way bound my agreement is more complex. It's easy for them to say "well, we didn't enter into any agreement, we can do what we like". Fine claim, but a fence will say exactly the same thing. Nevertheless, receiving stolen property is a crime. The question comes down to whether the alleged fence should reasonably have known that whoever sold him the stuff wasn't authorized to do so.

In this case, the merchandise is clearly labeled "not for resale", so the store can't deny knowledge of the agreement. On the other hand, there was typically no contract between the record company and whoever receives the sample records - they send these things out en masse. Also, it's been accepted practice in the industry for many years that these things get resold, and absent any kind of contract, one should certainly be entitled to rely on it.

The record companies, at this very, very late date, are trying to establish a convention that never existed. If they seriously want to do this, they can - but they need to do the hard work: Sign actual contracts with whoever they distribute to, with agreements that the CD's remain he property of the record company. Put into place some kind of auditing procedure, where they have the right (which they should exercise) to come in and ask to see their CD's - or even take them back.

Absent that kind of effort, they should be told "sorry, the horse left that barn years ago, as a result of your own actions - don't come to the courts now". And copyright law shouldn't enter into this at all, where the individual CD's are concerned. (They already have the right, under copyright law, to say the CD's can't be duplicated, performed in public, etc. That's true whether they've sold the CD's, rented them, or given them away.)
[ link to this | view in thread ]
pijggy, 28 Sep 2009 @ 9:54am

ha
this was ia
[ link to this | view in thread ]
Shapla, 23 May 2014 @ 1:21am

Music Promotions
Buff Bull Is a company that allows users to connect directly with music industry professionals. Buff Bull will Submit your music to tv, multiple agencies and mush more. Do you want to submit your music to record labels? Buff Bull can help you. You can now contact artist management and music supervisors directly and build a relationship with them.!
Music Promotions
[ link to this | view in thread ]
Angela, 13 Jan 2016 @ 9:19pm

CD Duplication
Against the entire first sale doctrine concept The result is based on judge’s decision only, but as information I like your post. CD Duplication Scotland
[ link to this | view in thread ]