Universal Music Group: Keep Your Promo CDs; Tossing Them is Piracy

Yes, you read that right. In a brief filed by Universal Music Group (UMG) in federal court yesterday, UMG said that giving away or even throwing out a promotional CD is piracy.

The brief was filed in the case of UMG against Troy Augusto (aka Roast Beast Music Collectibles, eBay handle roastbeastmusic). He buys collectible promo CDs at used record stores around Los Angeles and resells them on eBay. Although the CDs have "promotional use only" labels, both he and the EFF (who took his case after UMG sued him) feel that he is covered by the "First Sale" doctrine.

The First Sale doctrine in copyright law

allows purchasers of copyrighted material to sell that which they have purchased without violating the copyright laws. The theory here is similar to that of the exhaustion doctrine in patent law. The copyright owner must derive all revenue from the so-called first sale, and cannot control the future disposition of the article originally sold.

The key to understanding the first sale doctrine is to know that the copyright owner only has right to prevent others from copying and distributing (for free or for profit) copies of a work covered by a valid copyright. In the above example there has been no copying and, therefore, no infringement. You have taken what you purchased and transferred all right, title and interest to another. The copyright owner cannot stop this. The key, however, is that there has been no copying.

With this in mind, it would seem that there is no infringement in this case, but UMG feels the stickers make it otherwise. In fact, the brief (.PDF) you can see how they are trying to get around the First Sale doctrine (page 4):

Each promotional item is a copyrighted work. When they initially are distributed they are not sold. They technically remain the property of the record company or the studio that distributed them.

Page 13 has the really egregious statement:

Further, Augusto testified that if he offers a promotional CD for sale and it doesn’t sell, he may re-list it under a new auction number. Alternatively, Augusto testified that “a common way to dispose of them” is to give unsold promotional CD away, or he may throw them away. Both are unauthorized distributions.

See how throwing them away is piracy? Ugh. The EFF isn't taking this lying down, however as they filed their own brief yesterday. It would seem that if a "first authorized disposition" had occurred, Augusto is free and clear via First Sale.

In part, the EFF brief says:

With respect to the “promo CDs” at issue here, the facts surrounding the transactions are not in dispute—at issue is the legal consequence that flows from those facts. Taken together, the following facts indicate that the CDs in question are gifts to their initial intended recipients, and that title to the CDs has thus passed from UMG to those initial intended recipients ...

Yep, that's what I've always thought - they are gifts. Hopefully reasonableness will prevail and the Court will agree. The Court has set a trial date of June 24, 2008.

What do you readers think? I'd probably better head down to Goodwill to grab any promo t-shirts I donated, just in case the EFF loses this case and they expand the ruling, eh?