Promo CDs can be sold, court rules

Posted by Emma Woollacott

It's OK to sell on a CD, DVD or game you got free with a magazine or in a bar - if you can find anyone to buy it, that is.

The Ninth Circuit Court of Appeals has upheld a lower court's decision  that simply sticking a label on the free disc doesn't force the recipient into accepting a license agreement.

Back in 2007, Universal Music Group sued Troy Augusto for offering promo CDs for sale on eBay. It claimed that because it had slapped a sticker on the label saying 'promotional use only, not for sale', Augusto had no right to do so.

But yesterday the appeals court concluded that "UMG transferred title to the particular copies of its promotional CDs and cannot maintain an infringement action against Augusto for his subsequent sale of those copies."

"The Ninth Circuit recognized an important principle: that you can't eliminate consumers' rights just by claiming there's a 'license agreement,'" said Joe Gratz of Durie Tangri, lead counsel for Augusto.

"Once a copyrighted work is freely given, the copyright holder isn't in charge anymore. The copyright owner can't stop you from selling it or lending it to a friend."

The ruling has been welcomed by the Electronic Frontier Foundation, which says it will have ramifications for anyone wanting to sell used goods which could theoretically be subject to copyright - such as used bookstores and video game exchanges.

"This ruling frees promotional CDs from the shadow of copyright infringement claims, which is good news for music lovers," said EFF Intellectual Property Director Corynne McSherry.

"But it also has broader ramifications. The court flatly rejected the argument that merely slapping a notice on a copyrighted work prevents the work from ever being sold. It eliminates the risk of copyright infringement claims against later recipients - regardless of whether they paid for the work."