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Promo CD case rules in reseller’s favour again
By CMU Editorial | Published on Monday 10 January 2011
Another interesting court ruling last week came from America’s Court Of Appeals For the Ninth Circuit, where a long running dispute between a record seller and Universal Music regarding the resale of promo CDs was being considered.
As previously reported, Universal took exception to Troy Augusto reselling promo CDs via eBay and took legal action against him back in 2007 on copyright grounds.
But Augusto said he was not sent the promo CDs directly from labels, instead he had bought them from second hand music stores, which had presumably in turn bought them from DJs or journalists selling unwanted promos on to earn some extra cash. This meant, his lawyers argued, that he was covered by the so called ‘first sale’ principle of US copyright law.
This says that if someone buys a legitimate copy of a copyrighted work, that someone can then sell that particular copy on to another person, and profit from the sale if they can, and there is nothing the copyright owner can do – ie once the ‘first sale’ has happened of any one copy, the copyright owner cannot control subsequent resale of the copy.
But Universal said this principle didn’t apply on promo CDs that carried the ‘promotional copy not for resale’ slogan, even once you were two or three steps down the resale chain. But in 2008, at first instance, the US courts did not concur, finding in Augusto’s favour. Universal’s appeal reached court last June, and the appeals court announced its ruling last week. And it too sided with the eBay seller.
So, take that Universal. The major does still have further routes of appeal on this one – either by asking for second hearing in the Ninth Circuit court, or going straight to the Supreme Court, but doing so would be costly and time consuming.
And given victory in a higher court is by no means assured, and this case, after all, relates to the relatively small scale resale of promo CDs, which is likely to die out anyway in the next few years as labels move to digital promos, taking this case any further would be rather foolish. Then again, pursuing the case in the first place was pretty foolish, so further appeals could as yet be launched.
