San Francisco – The U.S. Ninth Circuit Court of Appeals has
ruled that consumers have a right to re-sell "promotional" CDs
distributed for free by record labels to radio stations, music journalists and
others. The court upheld a lower court’s 2008 finding in favor of Troy Augosto,
an eBay re-seller of promo CDs who was sued by Universal Music Group for
copyright infringement.

Universal had argued that its label "For
Promotional Use Only, Not For Sale" on the discs constituted a "license" of
the CDs, meaning they could recall them at any time and prohibit their resale.

Ninth Circuit found that, "UMG transferred title to the particular copies
of its promotional CDs and cannot maintain an infringement action against
Augosto for his subsequent sale of those copies."

The Court added that
Universal did not require recipients of the promo CDs to agree to the "not
for sale" condition, nor had it demanded return of the CDs if recipients
did not consent.

"This ruling frees promotional CDs from the shadow of
copyright infringement claims, which is good news for music lovers," said Corynne
McSherry, intellectual property director at the Electronic Frontier Foundation,
which filed a brief in the case on Augosto’s behalf.

"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."



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