TPW 27: Debating the First Sale Doctrine

by on August 30, 2007 · 16 comments


Lately I’ve been writing about the Electronic Frontier Foundation’s new First Sale Doctrine case, which will consider whether it’s copyright infringement to resell those “promo CDs” that record labels send to DJs, journalists, and others in the hopes of drumming up publicity. Universal Music says that such sales amount to copyright infringement, but EFF’s Fred Von Lohmann charges that UMG’s lawsuit runs afoul of the First Sale Doctrine.

Fred joins us for this week’s podcast along with Prof. Randy Picker of the University of Chicago to discuss the legal and policy implications of the case. In a wide-ranging discussion, they covered the differences between contract and copyright law, the implications for the software industry, and whether the GPL runs afoul of the First Sale Doctrine. TLFer Braden Cox also weighed in, and Adam Thierer hosted.

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  • Tom Coseven

    Excellent open exchange with well-articulated diversity of opinion. Please do more!

  • Tom Coseven

    Excellent open exchange with well-articulated diversity of opinion. Please do more!

  • Soupy

    Yeah, that was a damn good episode. I’d love to hear more about the distinction between promo CDs and shrink wrap, as well as the upcoming patent case that was mentioned.

  • Soupy

    Yeah, that was a damn good episode. I’d love to hear more about the distinction between promo CDs and shrink wrap, as well as the upcoming patent case that was mentioned.

  • Jay

    Good discussion, guys. I’ve been following this case and I wish you luck.

    There is one argument in Mr. Augusto’s favor, though, that I have not seen presented yet, which I heard several years ago and always appealed to me.

    The argument is that a ‘First Sale’ HAS taken place by virtue of Universal mailing out these promotional CDs in the hope or expectation of receiving ‘buzz’ or good press. While no money exchanged hands, Universal did not send these CDs out to everyone. Their court statement reads that the CDs are sent to “a select group of individuals who are in a position to generate “buzz” or interest in the recording among the consuming public”. Universal is not distributing these CDs out of the goodness of their heart – they are distributing them in the specific hope of receiving something in return. I believe you can make an argument that a ‘sale’ now has taken place, even though no money changed hands.

    Further, and specfic to Mr. Augusto’s case, one of the CDs Universal is claiming ownership of is emphatically different by its nature from the others it is contesting. Universal lists The Killers ‘Sam’s Town Best Buy Exclusive’ as one of the CDs they own, but this CD is not like the others, and was not sent out to reviewers. Rather, it was sold to thousands of consumers by Best Buy Stores as a bonus for early purchasers of the Killers album. The Killers CD, unlike the others on Universal’s list, WAS most definitely paid for with cash by the consumers who bought the item at Best Buy, including many CD dealers who buy these limited items specifically to resell them to collectors without access to Best Buy who want the rare CDs.

    Good luck, JAY

  • Jay

    Good discussion, guys. I’ve been following this case and I wish you luck.

    There is one argument in Mr. Augusto’s favor, though, that I have not seen presented yet, which I heard several years ago and always appealed to me.

    The argument is that a ‘First Sale’ HAS taken place by virtue of Universal mailing out these promotional CDs in the hope or expectation of receiving ‘buzz’ or good press. While no money exchanged hands, Universal did not send these CDs out to everyone. Their court statement reads that the CDs are sent to “a select group of individuals who are in a position to generate “buzz” or interest in the recording among the consuming public”. Universal is not distributing these CDs out of the goodness of their heart – they are distributing them in the specific hope of receiving something in return. I believe you can make an argument that a ‘sale’ now has taken place, even though no money changed hands.

    Further, and specfic to Mr. Augusto’s case, one of the CDs Universal is claiming ownership of is emphatically different by its nature from the others it is contesting. Universal lists The Killers ‘Sam’s Town Best Buy Exclusive’ as one of the CDs they own, but this CD is not like the others, and was not sent out to reviewers. Rather, it was sold to thousands of consumers by Best Buy Stores as a bonus for early purchasers of the Killers album. The Killers CD, unlike the others on Universal’s list, WAS most definitely paid for with cash by the consumers who bought the item at Best Buy, including many CD dealers who buy these limited items specifically to resell them to collectors without access to Best Buy who want the rare CDs.

    Good luck, JAY

  • sugger

    Great Podcast, Great Guests.

    One issue that hasn’t been mentioned is the method of distribution. If the Music companies sent the CDs out as unsolicited items via USPS they are considered gifts by law, which means first sale applies and post hoc restrictions don’t.

  • sugger

    Great Podcast, Great Guests.

    One issue that hasn’t been mentioned is the method of distribution. If the Music companies sent the CDs out as unsolicited items via USPS they are considered gifts by law, which means first sale applies and post hoc restrictions don’t.

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