First Sale? Free Promo?
Copyright law protects the author from unauthorized distribution of their work. However, there is one caveat to this, this caveat is commonly known as the “first sale” doctrine. The doctrine is really exactly what it sounds like. Once a first sale has been made, where presumable the author has been compensated/rewarded for his/her work, the subsequent LEGALLY authorized owner of that work may distribute that work as they please. Legal scholars and U.S. case law has furthered construed the doctrine to expand beyond just “sales” and to apply to any work that was legal given to another party, as William Patry terms is it, the doctrine applies when a work has been “exhausted”.
Following this extension of “sale” to encompass “exhaustion”, a summary judgment motion is pending in Federal Court in California, UMG Recordings, Inc. v. Augusto, 2:07-cv-3106 SJO (AJWx). In short, UMG is suing Augusto for his sale on ebay of a promotional CD purchased from a second hand music store and stamped not for resale, promotional use only. So Augusto legally obtained copies of copyrighted works, which under the first sale doctrine he should not be prevented from disposing of at his own will by the original copyright holder. However, UMG is taking the position that by affixing language such as “promotional use only” there has been no sale or relinquishment of rights to any subsequent holder of that work. The Court has not yet decided on this motion, and even if the summary judgment motion is not granted the case could still go to trial and the issue litigated. So we may not have California’s answer to this question for quite some time.
I came across this case when browsing through the Electronic Frontier Foundation website. You can check out EFF yourself to see their insight on it. It is their point of view that allowing UMG to win and making copyright owners able to affix restrictions on their products circumvents copyright law. I have to agree with them on that point, and then the “slippery slope” argument can be made. But it is important, being a neutral observer, to look at the other side. The motion was just filed on April 7, 2008 so UMG’s reply is not yet available, and I have not had the opportunity to see if they filed their own summary judgment motion. So to discuss the other side I have to use pure speculation. Valid promotional materials have significant value to its owners. They are given for free or at reduced costs in order to illicit recognition of the public and jump start sales at full price. While the law does not limit the doctrine to only applying when there is a sale, it is meant to not allow the original holder to not profit more than one (monetarily or otherwise), in this instance, however, there will be no profiting because they will undercut by the seller of the second hand owner of the good.
This leads me to my next question, why is Augusto the only named defendant, why not the second hand store he purchased it from? That probably isn’t too difficult of a question, as some of those places were the Salvation Army and other such stores. Additionally, UMG was aided by the RIAA, where a focus has been on online issues. Arguably, had Augusto sold the promos through another medium other than the internet, specifically ebay, he may not have been tracked down by UMG and the RIAA.
Regardless, this should be an important decision, especially since it is in the 9th District, which mean California, where a large portion of music, literature, film, etc. comes from.
