Universal Music Gets a Lesson on the First Sale Doctrine

by Lee Gesmer on June 12, 2008

When I started a music blog a couple of years ago (sadly ignored of late), I started getting promotional CDs from some small publishers. I’m not sure how they got my home address, and for the most part the music wasn’t very good. However, I did notice that in a few instances the CD cases were stamped “promotional, not for resale,” or words to that effect.

Had I sold these CDs on eBay or at a garage sale, I might have ended up in the shoes of Troy Augustino, who (like every good eBay entrepreneur) purchased some promotional CDs from music shops and online auctions, and resold them for a higher price on eBay.

Stop! Universal Music said. You have no right to resell the CDs, since we only “licensed” them, and the license prohibits resale. By reselling you’re violating our copyright rights!

No dice, ruled a California federal district court judge. Universal did not “license” the CDs, it gave them away as a gift. And, under the copyright “first sale” doctrine, a purchaser or gift recipient is free to resell (or regift) the promo CDs.

The “first sale” doctrine is easy to understand, since most of us take it for granted: if you buy a CD, DVD or book, you are free to resell it. The copyright owner has the right to prevent you from reproducing the work, distributing copies, publicly performing or creating derivative works. But, you are free under the “first sale” doctrine to resell the physical disk or book which holds the copyrighted work. And that’s what Mr. Augustino did here. The outcome of this case was predictable, and why Universal Music, the largest music company in the world, chose to file this lawsuit will likely forever remain a mystery.

Read this document on Scribd: UMG v Augusto (first sale)

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