Litigation

Copyright law won't bar resale of promotional CDs

By Lori Bauman

In UMG Recordings, Inc. v. Augusto, the Ninth Circuit earlier this month held that a music company can't prevent resale of CDs it distributed for free, even though the CDs bore labels saying they were distributed for promotional purposes and not for sale.  Plaintiff UMG is a music company that sends promotional CDs to music critics and radio programmers.  Defendant Augusto was not a recipient of the CDs, but he nevertheless obtained a number of them and offered them for sale on eBay.  UMG sued for copyright infringement, contending that the restrictive label on the CDs granted only a license and prevented resale.  The Ninth Circuit disagreed, holding that the promotional distribution was a "sale" for purposes of copyright law, and once plaintiff transferred title it could not prevent re-sale.  The court applied the "first sale" doctrine, which provides that, once a copyright owner places a copyrighted item in the stream of commerce, it cannot prevent resale of that copy.

Full post as published by Northwest Business Litigation Blog on January 17, 2011 (boomark / email).