Universal Attacks First Sale Doctrine

I Don't Believe in Imaginary Property writes "In Universal Music Group v. Augusto, UMG is attacking the first sale doctrine. The issue concerns some promotional CDs that were mailed out, and later found their way to eBay. According to UMG, the stickers on the discs claiming that they still own the CD give them a legal right to control what the recipients do with them, and thus, UMG should be able to dictate terms. The EFF has filed an amicus brief countering that claim, saying that because they were sent by US mail, unrequested by the recipient, they are in fact gifts, no matter what the sticker claims. If UMG somehow wins this, I plan to send them CD of copyrighted expletives with a sticker informing them of the contractually required storage location. We discussed a similar issue with e-books a couple weeks ago."

When would they learn....

When would they learn that these actions are just harming them in the long run.

How much money did they 'lose' versus the amount of bad publicity they are getting in the meantime. And let us not forget all the lawyer fees.

Re:When would they learn....

Well, maybe not. If you think about it, this could be an exciting new revenue model for the labels

1) Send out promo CDs with "This is our property" stickers on it
2) Wait until the CDs end up on eBay
3) Sue.

Imagine the profits they could make here!

Re:when would they learn....

At least under UK law, if the sender claims to retain ownership then the recipients have the option of requesting the sender to collect the goods (or for small items provide pre-paid postage for their return) and if they do not to levy a storage charge. If after the certain period of time the sender does not arrange the return, then the goods become the property of the recipient.

Re:when would they learn....

US law, at least for goods sent through the USPS*, is even better - if you sent me something unsolicited through the mail, it's mine.

They can 'arrange' for pickup all they like, I don't have to do a thing. It's my choice as to whether to give it back or not.

*The USPS is actually part of the Federal Government, it's just self sustaining through the sale of stamps and such.

The EFF brief is well worth reading

Dear record companies:

When your own VP of content protection admits in a deposition that he has bought some of your promo CDs on the second hand market, your case that someone selling them on eBay is infringing your copyrights starts to look, well, ridiculous.

(EFF Brief [eff.org], page 18.)

In the UK, this absolutely clear cut

Unsolicited packages are gifts, as long as you're the intended recipient (and yes "The Occupier" counts). (Unsolicited Goods Act, Consumer Protection [Distance Selling] Act).

I would say "I can't believe the US doesn't have similar laws", but I can, because I recognise a country where Corporations have a massively disproportionate sway on legislators.

Re:In the UK, this absolutely clear cut

"is accepting the CD sufficient to create a contract."

No, acceptance of a gift doesn't create a contract. Otherwise the "free" gift followed by a bill scam would be legal!

That's an open question.

No it isn't.

Silence is not acceptance, but it's a thin line to acceptance.

So it's okay to rape a mute on your planet? Seriously, you can't mail contracts out to people and then claim they're legally bound by them. Even the suggestion is ridiculous.

Next Up

Pretty soon we'll have implants in our heads that will debit our accounts every time we recall a song from memory. Got that Shakira piece stuck in your head again? Boy, you are going to pay....dearly. Shakira-Sha--SHIT!!!

Re:Next Up

The temptation to rickroll you is just too great...

But just the mention should be enough to put 'Never gonna give you up' back in your mind :P

If they win

Next step? Should be obvious, that sticker will be part of every CD sold. You may buy it, but it remains our property.

Impossible? Don't think so. The CD already somehow changed from a necessary evil as a carrier for intangible stuff (you can't simply carry the bits in your hand, so there has to be some sort of place where you put them) to 'the' product. At least that's what the content industry tries to do, and so far quite successfully so. Media shifting is becoming more and more difficult, distributing tools that enable you to media shift easily have been outlawed, and generally the content industry is pushing towards making the medium and the content interchangeable concepts, tying the content to its carrying medium.

This trend does not take into account that I have a valid license to the content (and if it's not, tell me what it is. I certainly don't get to own the content, so please tell me what I get when I purchase the CD). In other words, since that license contract is not limited in time, I should have the right to request the content I bought in case the carrying medium fails for some reason, since moving the content away from its carrier is being made impossible. Do I have the right to get a replacement copy? I wouldn't bet on it. And certainly I would not put any money on being able to get a fresh CD in 10 or 20 years.

If that sticker trick works, soon the only right we'll have around content is paying for it.

Seems like an open and shut case

I not only read the ARStech article, but the EFF article and the actual motion by the EFF. Assuming that they're quoting relevant cases (I'm not that much of a sucker for that kind of stuff), Universal is talking out their ass and trying to squash first sale rights.

To summarize, they sent out the CDs unsolicited, which according to the law, makes them gifts. That means it's as if the recipient bought the CD, and hence triggered first sale doctrine. So the eBay reseller is in no way whatsoever violating copyright. Especially since the guy in charge of copyright at Universal admits that he has, in the past, bought promo CDs from record shop.

Re:What are the long-term effects?

In the case where there was a pre-existing contract to even receive the promo disks, it is a completely different story.

This is a case of promos being sent out unsolicited, with restrictions stickered onto the cover.

Why not ask an easier question, then?

If you're going to ask questions just to see an answer, that is.

How about: what about if the CD sticker said that by reading the sticker you agree to deep throat the VP of marketing? Would that be legally binding?
I mean, if we're going to be making shit up and all, just to ask hypothetical questions, why not go for the gusto?

Re:What are the long-term effects?

They're not doing whatever they want with it. They're selling the physical copy. This is a different.

There was no contract. Therefore, there's no "Well IF they had a contract..." That's totally besides the point. IF they get a contract, then they can expect it to be followed. No one is arguing this.

But if they just send someone a CD -- for free -- then they can't dictate that the person not resell that CD. And since it's for free, I don't know that "first sale" applies.

Re:What are the long-term effects?

First sale absolutely applies, as there is plenty of legal precedent that gifts count as sales for purposes of the first sale doctrine. The EFF brief [eff.org] has all the detailed arguments, and plenty of references. It's also quite readable, and quite thorough about dismantling UMG's arguments.

Re:What are the long-term effects?

This happened to my pal who owns a record shop. He found a *5* year old madonna promo in the back shop. Stuck it on ebay to see what he'd get and the auction got pulled.if it was a pre-release, fair enough. But it was 5 years old...

Re:What are the long-term effects?

Of course, on /. there's the normal "I have the physical copy, I can do whatever I want with it" mentality.

not just here but apparently in the courts as well. they mailed these cds out to people as gifts and then try to claim otherwise.

But what if Universal had signed a contract with each and every DJ and reviewer that got a promo copy that said "in exchange for getting this CD a week early, you have to keep it secret." Would people still be in favor of the rule that the person with their hands on the physical copy gets to do whatever they want with it?

except that they did nothing of the sort. you're trying to shift the argument to one that is completely irrelevant in this case. an existing legal contract that is binding is not the same as mailing our media that is intended as advertising verging on SPAM.

The long term effects

But what if Universal had signed a contract with each and every DJ and reviewer that got a promo copy that said "in exchange for getting this CD a week early, you have to keep it secret."

The key phrase from the parent was unrequested by the recipient. It is fundamental to contract law, that a contract must be accepted by both parties to be valid. The "long term effect" of abandoning that is severe.

The way to deal with reviewers who doesn't treat your unsolicited promo material with proper discretion, is to stop sending unsolicited promo material to those reviewers.

It's not an easy issue and there are arguments on both sides.

Yes, on one side there is respect for the fundamentals of contract law. On the other side, there is the slight inconvenience of labels to have to maintain a list of trusted reviewers (rather than just maintain a list of reviews).

It does say something about how the labels have gotten adjusted to having the law formed for their convenience, that they now want to change how the legal system works, just to avoid the inconvenience of making some minor changes to their internal procedures.

Re:What are the long-term effects?

That is entirely a straw man argument; genuinely incurred contractual obligations are an entirely separate matter.

No one is arguing that if a DJ signs an NDA, he can then turn around and cry, "First Sale, hahahaha!" What we are in fact arguing is that the fact that a disc, sent unrequested, has some words physically printed on it does not constitute a contract.

Consider it this way: The discs, according to TFA, said, "Not for Resale." With whom has the recipient signed a contract? An inanimate object that appeared in his mailbox? What consideration does the recipient gain by this contract that would render it legally supportable?

Remember that contracts require both parties to receive some benefit, even if it's inherently unequal. What benefit does the recipient get by agreeing that the disc is, in fact, not for resale?

Suppose, for a moment, that the recipient does not wish to be a party to the contract in the first place. If he does not agree to it, then doesn't the disc---which was mailed to him without any prior agreement---simply exist as his property? Why shouldn't he be able to sell it, regardless of what's printed on it?

The basic consideration is this: even if we assume that UMG is so incompetent and lazy that they cannot be bothered to arrange even oral agreements with potential reviewers AND we are absolutely desperate to ensure that UMG keeps sending out discs... ...how on Earth could that possibly justify the notion that a person can be contractually bound by the unasked-for appearance of an inanimate object bearing arbitrary terms? You're right that there's more than just this case---but it is an easy issue and there are not legitimate arguments on both sides.

If you can look me in the eye and tell me that you're okay with the notion that I can write "You must give me all your money" on a baseball, hurl it at your head, and thusly legally obligate you to obey my baseball---all to save UMG the trouble of asking DJ's to agree in advance not to share promo discs; then I can look you in the eye and call you an idiot.

Re:What are the long-term effects?

But what if Universal had signed a contract with each and every DJ and reviewer that got a promo copy

Then of course they could enforce this contract. The whole point is that they are trying to UNILATERALLY take away legal rights of people WITHOUT any contract. If you allowed this there is no doubt they would be slapping all kinds of restrictions on every CD, book, DVD they produced.

the world would be better off if the person with the physical object gets to resell it, no matter what the contract says. But is the world better off if Universal sees what happens and stops giving out review and promo copies?

Universal is free to try to make contracts with reviewers before sending them CDs. They choose not to, not wanting to annoy them. Their choice. Will the world be better off? Excuse me while I snicker.

And Universal is going to quite logically not send out promo copies

No, quite logically they will. They NEED promotion. They spend more on promotion than any other single expense. If promotional items turn up on eBay months later, so what? There are only a relative handful of these. If people reproduced them that's another case entirely. Only rabid collectors want this kind of thing, and they buy every release of their favoured artist anyway.

I've got a bunch of prepublication copies of books, various people in the trade have donated to a local thrift shop. Publishers have been sending these out to reviewers and purchasing managers for CENTURIES, and for centuries, the reviewers have given them away or sold them later. It's been going om in music ever since 78 RPM records. There is demonstrably no damage to the music publishers. The only reason it's an issue now is that it's more visible, being on eBay. But the actual number of discs on offer is the same as ever.

Re:An unrequested book?

No, you couldn't copy it, but if they just give you the book, they can't attach a contractual obligation not to resell after the fact. You could sell the copy you received, not make more copies.

Re:Seems like the issue is confused

Actually, it is! First Sale [wikipedia.org] applies to legally obtained work. If I'm allowed to give it away under first sale, then when they 'give' me it, it is mine. It's just like having a License Agreement only after you've already used the service, it's non-binding.

This is very similar to the M$ vs Zamos case. Where M$ tried to stop Zamos from selling M$ discs which said "not for retail or OEM distribution."

Re:Seems like the issue is confused

Actually, the courts are quite clear on the matter. Labels on books or records sold are not sufficient to remove the right of first sale. If it acts like a sale, it's a sale. There have been attempts to sticker books to prevent resale that have been struck down. Furthermore, gifts count as sales for purposes of the doctrine of first sale, as does any other means of legally acquiring a legally produced copy. Merchandise sent through the mail unsolicited may be treated by the recipient as a gift (there's a long court history for this, mostly motivated by people sending unsolicited products and then billing the recipients). And, even if it wasn't a gift, UMG abandoned the CD under California law, since they gave up possession and their actions clearly indicated they had no intent to regain possession (they don't keep records of who has the CDs, and they have never in the past attempted to reaccquire one). So, whether by gifting or abandonmnent, ownership of the CD was legally transferred in a manner equivalent to a sale, and any sticker on it is insufficient to prevent the doctrine of first sale from taking effect.

The brief is quite readable, and quite thorough in explaining how UMG are being completely and utterly ridiculous.

PS, by reading this post you agree to... We've all seen comments like this in regard to EULAs and such; those stickers are no less ridiculous, and no more legally binding.

Re:Seems like the issue is confused

The second party has to accept the contract. The man being sued did not accept the contract, and no one is claiming he did. Since there is no dispute, there is no contract law question.

IANAL, but the EFF brief does a very good job of explaining why the CD was abandoned in the legal sense of California law. It meets the requirements of the abandonment law as far as I can see -- they gave up possession, and their actions demonstrated that they did not intend to regain possession at any time in the future. Is there any legal reason that isn't sufficient to constitute abandonment? UMG says it wasn't abandoned, but offer nothing beyond that assertion as evidence -- and the EFF presents case law that says that assertion is insufficient to create a question of fact. So why shouldn't I believe the EFF brief?

As I said, I'm not a lawyer, but I'm interested, assuming the legalese doesn't get overly dense. The EFF brief was quite readable.

Re:CD's are dead

I don't know Mr. 741N, you sound a little biased.

That would be the resistor between pin 6 and pin 2.