Intellectual Property Law

A federal judge is trashing UMG Recordings' claim that it retains perpetual ownership of promotional CDs it sends out before an album's release.

The case was brought by the recording label against a California man who was auctioning off the promo discs on eBay. The music concern claimed Troy Augusto was violating its copyright because the discs were labeled with messages that they could not be resold.

But U.S. District Judge James Otero said the so-called "first sale" doctrine applied because persons in lawful possession of copyrighted material, whether they paid for it or whether it was gifted, have the right to sell the material. The decision set aside UMG's claim that recipients of the promotional CDs were not even free to throw them away.

"UMG's distribution of promo CDs provides the recipient with many critical rights of ownership, including the right to perpetual possession and the freedom from obligations to UMG," the judge ruled Tuesday. The judge said the distribution of the promotional CDs "is properly characterized as a gift or sale, not a license, and title to the CDs transferred." 

The Electronic Frontier Foundation said a contrary ruling could have given copyright owners too much power.

"This is a very important ruling for consumers, and not just those who buy or sell used CDs," said EFF attorney Corynne McSherry. "The right of first sale also protects libraries, used bookstores, and businesses that rent movies and videogames."

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