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Universal Attacks First Sale Doctrine 297

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."
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Universal Attacks First Sale Doctrine

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  • by ArIck ( 203 ) on Friday April 11, 2008 @02:18AM (#23033282)
    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.
    • 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!
      • shouldn't that be...

        1. send out promo CDs clearly identifying them as property of UMG despite the fact that they're unsolicited and no exchange of money or other compensation to receive them.

        2. ?

        3. profit!

        • The worst case would be if UMG said, "PReturn our property or else," and I have to waste a dollar on postage returning a piece of junk I never wanted in the first place!

          I don't like other people making me lose money.

          Personally I think UMG is looking at this issue all wrong. They should be happy that the CDs are being passed person-to-person, thereby doing the job they were intended to do (promote songs), rather than getting thrown into a landfill.

          • by PopeRatzo ( 965947 ) * on Friday April 11, 2008 @08:11AM (#23034736) Journal
            There's some sleazy outfit, I can't remember the name, that keeps sending my wife stockings or pantyhose or some other feminine-type accouterments. We never requested any of this stuff. A week later, they start sending requests for payment for the stuff they sent us. As far as I'm concerned, if somebody puts something in my mailbox that I didn't ask for, it's a gift or a free sample.

            We started getting increasingly threatening mail from them demanding payment.

            Finally, I tracked down the "CEO" of this "Company" and beat him to death with one of those little souvenir baseball bats I got at a White Sox game. Then I left his rotting corpse in the parking lot of a local telemarketing company as a warning.

            Oh wait, that was last part was in my dreams.

            The first two paragraphs above are true.
              • by jahudabudy ( 714731 ) on Friday April 11, 2008 @09:40AM (#23035506)
                If my legal-fu is working today, this would seem to imply that Universal's claims that the promotional CDs are not a gift is an admission that they broke whichever statute your link refers to. If these aren't gifts, and Universal isn't a charity, that blurb makes it pretty clear everything else is illegal to send without the recipient's permission.
                • by sumdumass ( 711423 ) on Friday April 11, 2008 @10:29AM (#23036130) Journal
                  One of the issues of confusion here is that UMG specifically reserves their copyright privileges and rights but aren't asking for payment. This jumps into some gray area because they didn't ask for a payment and aren't asking for one. The effect is something along the lines of me mailing you a letter and a key saying since your lawnmower broke last year, you can use mine on these days but you can't let anyone else use it and you can't attempt to sell it or otherwise dispose of it. If you post my mower on Ebay, then we have issues that this law might not cover.

                  Personally, I am of the thought that it would be a gift, but I can see the logic where even a gift would have limitations.
                  • Re: (Score:3, Insightful)

                    by Kierthos ( 225954 )
                    They can reserve the copyrights all they want. You're not selling the copyrights on eBay, you're selling the CD, which was a free gift.
        • by grahamm ( 8844 ) <> on Friday April 11, 2008 @06:16AM (#23034240) Homepage
          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.
          • by Firethorn ( 177587 ) on Friday April 11, 2008 @07:10AM (#23034470) Homepage Journal
            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.
            • Re: (Score:2, Informative)

              by mishehu ( 712452 )
              Not to be pedantic, but the USPS is no longer a part of the federal government. They are regulated by the federal government. However, the laws on the books still treat the USPS as if it is a part of the federal government. The population of civil servants still working at the USPS is dwindling rapidly. The rest of the employees are no longer government employees.
          • by Nuskrad ( 740518 ) on Friday April 11, 2008 @08:40AM (#23034924)
            Actually, UK law says that if it's sent to you unsolicited, it's yours unconditionally from when you receive it, and it's an offence to demand any form of payment for it or to threaten legal action. I think that this only applies if it's sent to an individual though, the law may be different if it's sent to a business. []
            • Re: (Score:3, Informative)

              by digitrev ( 989335 )
              Doesn't matter in this case. Universal sent out the CD to Joe Reviewer. Mr. Reviewer never asked for it, and Universal made no attempt to reclaim it, so the compact disk (not the music on it) is now legally Mr. Reviewers. So he sells it to a used record store, where Mr. eBay buys it and resells it on eBay. At no point does copyright enter the issue, nor does being a business matter.
  • by iluvcapra ( 782887 ) on Friday April 11, 2008 @02:23AM (#23033300)

    I don't think this is a First Sale issues, since, clearly, the discs are at no time sold. They send them promotionally to people in the recording, film, and media industries for review, evaluation etc. I get them all the time because some random label hopes I'll tell a director to put in these "hot new tracks" (or not). They got a big sticker on them that says, essentially, "NFR". I don't think they're the property of the label, strictly, but the labels and the media endpoints that consume the NFR discs both benefit from having them. Maybe selling them is de jure legal, but it's really dickish.

    Any developers wanna opine on how they'd feel if some software reviewer at cnet started selling their NFR copies of pre-release software?

    • I don't think that's what meant by First Sale in this context. Typically the First Sale Doctrine is a protection against the copyright holder: namely that the copyright holder cannot control a particular copy beyond the point of first sale.

      It is not a doctrine, however, that says the copy must be sold for the own to be protected; merely instead that who ever owns a particular copy is entitled to control that copy--including being entitled to resell it.
    • by hcmtnbiker ( 925661 ) on Friday April 11, 2008 @02:44AM (#23033410)
      Actually, it is! First Sale [] 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."
    • by evanbd ( 210358 ) on Friday April 11, 2008 @02:51AM (#23033444)

      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: (Score:3, Funny)

        by cammoblammo ( 774120 )

        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.


        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.

        Heh, the only thing those stickers have to do with the doctrine of first sale is the fact that they are also covered. The CD recipients now own the stickers too, and can do with them anything they jolly well want to, with the possible exception of copying them.

        They could be nice to UMG. They could bundle those stickers up, send them back and get shirty when they end up in the bin.

      • Re: (Score:2, Interesting)

        First off, sending a gift is not abandonment. It might be relinquishing your own ownership or title, but abandonment it is not. Second, contracts can continue to operate even absent ownership. Any number of contracts have nothing to do with ownership--let's say a lease on an apartment. The contracts are simply you do X and I do Y, and we have a deal. That's what's at issue here. The question is a classic contract law question--was there a contract.
        • by evanbd ( 210358 ) on Friday April 11, 2008 @04:35AM (#23033882)

          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.

        • by uglyduckling ( 103926 ) on Friday April 11, 2008 @04:51AM (#23033944) Homepage
          And the answer is... no there wasn't a contract. If I did some detective work and found out who pimpin_apollo is, worked out your street address and mailed something to you, would there be a contract? No! These guys are sending take-down notices to Ebay for traders that are selling promo copies on the basis that they are promo copies with no idea of thier provenance. If there had been some sort of record, e.g. numbered copies sent to named individuals with whom an agreement (i.e. contract) had been made then things might be a bit different, but that's apparently not the case here.

          Also, you're a little of the mark with the gift/abandonment thing. The GP is saying that that are a gift, but if it is argued that they're not a gift then they are in fact abandoned. I said similar with another comment - if they claim they have not given these items to the recipient and that claim is upheld then they should be charged with fly-tipping/dumping/whatever is the local equivalent because they are sticking object in people's mailboxes without prior consent.
        • You can't form a binding contract with someone by sending an unsolicited item to them. See baseball argument above.
      • by jamesh ( 87723 )
        You might know the answer to this then... I go to the supermarket and buy a bag containing 15 bags of chips. They little bags say 'not for individual sale'. Is that enforceable? I'm in Australia so whatever you say may not apply but i'd be interest in the answer anyway.

        I mostly just assumed that there would be a problem because the little bags wouldn't have the statutory ingredients, nutrition, and expiry info on them, but school fete's etc do it all the time.
        • Re: (Score:2, Insightful)

          by Anonymous Coward

          Nor Am I A Lawyer (NAIAL), but there is a variant of that labeling that sheds light:

          "*Not Labeled* for individual sale". The shortened you mention only serves to masquerade as a contract problem. The labeling situation means that the original company met the food labeling requirements on the external package only. This means that if you tried to sell the individual units, you would be acting as a reseller, but the responsibility for selling an insufficiently labeled item falls to you. If you taped copies of
    • by Wordplay ( 54438 )
      I'm pretty sure the companies I've worked for have usually gotten something like a contract agreement before sending out pre-releases to anyone.

      Post-release, you can sell freebie copies. The stuff we get as release-party schwag has been known to hit eBay.
    • Re: (Score:3, Informative)

      Giving away is essentially the same as selling. If you're sent something unsolicited in the mail, then it has deemed to have been given to you just as if you had bought it in a shop or got it as a gift for your birthday. This neatly avoids some very old scams, such as sending a book or an encyclopedia through the mail and then following it with an invoice.

      What's going on here is nothing special to CDs - if you send something through the mail unsolicited then it belongs to the intended recipient, and they
    • Re: (Score:2, Informative)

      by DCFC ( 933633 )
      I agree, I see this as a loan, not a sale. I review software for various publications, and I used to do hardware as well. S/W firms do not ask for their disks back, but I do not feel I have an ethical right to sell this stuff. Same with h/w. The nominal value of the s/w I've had over the years is in the 100's of K$ But I would regard it as wholly wrong to bung the 1500-2000 disks I have been sent on Ebay, regardless of the legalities. I do use it for my own purposes, and the s/w firms like this of course s
    • I don't think this is a First Sale issues, since, clearly, the discs are at no time sold.

      Whether or not this falls under first sale, the title is still misleading - Universal isn't attacking "first sale". They're claiming it doesn't apply here since they're not sold. That would exclude things like, say, second-hand albums that were actually bought. Typically inaccurate, incendiary headline.

  • by evanbd ( 210358 ) on Friday April 11, 2008 @02:26AM (#23033310)

    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 [], page 18.)

  • by gowen ( 141411 ) <> on Friday April 11, 2008 @02:39AM (#23033380) Homepage Journal
    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.
    • by techno-vampire ( 666512 ) on Friday April 11, 2008 @02:52AM (#23033448) Homepage
      US law says exactly the same thing. They can't send you unsolicited merchandise and then charge you for it, and you don't have to return it if you didn't ask for it. It's yours, and you can do whatever you want with it. Whoever came up with this case should be disbarred for incompetence.
      • Re: (Score:3, Insightful)

        Both posts are true, but before we talk about the hyperbole of "absolutely clear cut" and "they should be disbarred" a point of clarification is in order.

        At common law in most of the U.S. and England, when there's a prior relationship between the parties--even if unrequested (that may well be the case here; it's not as if they're sending these out of the blue), treating unsolicited merchandise as your own may constitute an acceptance. If it's not an acceptance, it's the tort of conversion.

        See both the Resta
        • by evanbd ( 210358 )
          It's not a contract case if there is no contract, and accepting a gift is not sufficient to create a contract.
          • Re: (Score:3, Insightful)

            That's exactly the question. Calling the CD a gift also answers the question. It would be better to frame it as "is accepting the CD sufficient to create a contract."

            That's an open question. Despite what some people have said on here, acceptance can be manifested by "any act inconsistent with the seller's ownership" UCC 2-608. Silence is not acceptance, but it's a thin line to acceptance.

            Through the mail may be a different issue, but remember this is because of 39 USC 3009, not inspite of it.
            • by Anonymous Coward on Friday April 11, 2008 @04:27AM (#23033846)

              "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.
              • Re: (Score:2, Insightful)

                by Anonymous Coward
                Disclaimer: I am not a lawyer but a law student.

                I don't think the issue is as cut and dry as you say.

                While it's clear that the mere receipt of a gift is not binding as a contract, and that under normal circumstances silence is not acceptance, retention of a good may be sufficient to justify enforcement of a shrinkwrap contract. (e.g., if consideration requirements are met. [Note to nonlawyers--The fact that gifts aren't binding is due to the lack of "consideration," a legal term meaning a "bargained-for
    • by evanbd ( 210358 )
      The US is the same way, and the EFF brief explains all the gory details with plenty of references. Furthermore, gifts trigger the first sale doctrine -- again, there is plenty of precedent -- and stickers on the CDs are not enough to prevent the doctrine from taking effect.
  • Next Up (Score:5, Funny)

    by introspekt.i ( 1233118 ) on Friday April 11, 2008 @02:41AM (#23033388)
    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!!!
  • by TRRosen ( 720617 ) on Friday April 11, 2008 @02:43AM (#23033406)
    any attorney associated with this should not be allowed to practice law. any law 101 student can tell you this is pure BS. you have to have a contract before you can enforce one. A contract requires compensation by both parties (both get something) you can't enforce any limits on something you give away for free. This is why often when property is given to charity etc its actually sold for one dollar. You learn this in the first 5 minutes of contract law!!
    • Re: (Score:3, Funny)

      by Yvanhoe ( 564877 )
      Do you know what's left for a disbarred attorney ? That's right, he can only work in record companies legal staff.
      • Do you know what's left for a disbarred attorney ? That's right, he can only work in record companies legal staff.

        Or a government position perhaps?
  • If they win (Score:5, Insightful)

    by Opportunist ( 166417 ) on Friday April 11, 2008 @02:45AM (#23033420)
    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.
    • If that sticker trick works, soon the only right we'll have around content is paying for it.
      If the sticker works they will never get any of my money... ever.
      DRM on music was one thing but having a EULA for a music CD is a bit much.
  • by digitrev ( 989335 ) <> on Friday April 11, 2008 @02:56AM (#23033462) Homepage
    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.
  • ...if it succeeds, then you can surely be held responsible for all those AOL CDs!
    I hope you kept them in a safe place ;)
  • not being an American I don't have any special interest in how this case turns out from the social realities of living with laws like this, but if this does go through then people could cause serious problems for the record labels. For example 100,000 people could get together and send riaa companies CDs through the post with stickers saying they have to be stored at the central lobby of head office. Under their rules they would have accepted the contract by opening the package - the best they could do woul
  • Where would they be contractually required to stick said CD, then? ...
  • If the record companies are claiming they still own all of these millions of CDs out there it seems the states should haul there asses into court for not paying the proper property Tax on them. Wouldn't be any different then leased/rental equipment. Oh and the SEC might be interested in why they don't show up on there balance sheets as assets.
  • by TRRosen ( 720617 ) on Friday April 11, 2008 @04:41AM (#23033906)
    these lawyers should really read there own briefs. There is no copyright law in play here. Universal is the copyright holder and Universal made the copies. filing a DMCA is harassment and abuse of process. By there own statements there claiming that they own the cd's ... So its a case of selling stolen property. There saying to original recipients did not have standing to sell the cds to the defendant. But i can guarantee the cds are not listed as assets by the company. So we have a company claiming this guy is selling stolen merchandise that in other legal fillings (read SEC) they don't claim to own. If this guys lawyers are any good he'll retire to a nice island in the bahamas after this.
  • Donate to the EFF! (Score:2, Insightful)

    by trawg ( 308495 )
    Support the EFF [] so they can keep stomping stuff like this!
  • eff universal
  • I remember when I was in college, many of the textbooks that I bought used were in perfect condition, and underneath the "used" stickers the book was stamped "promotional copy, not for resale." The textbook publishers send out free copies to professors, hoping that they will select the book for their class. The professors often sell them to used book companies.
    • by ancarett ( 221103 ) on Friday April 11, 2008 @08:59AM (#23035110)
      As a professor, I'm inundated with unrequested "examination copies" of textbooks (oftentimes irrelevant for the subfields I teach). Nowadays these same annoying shipments come with specially printed covers outlining all the restrictions on what I can do with the books I didn't request and don't want.

      Preferentially, I'll do the rep's work for them and give the book to a professor who might actually find it useful. If there are no takers, I'll dump the books near the grad students' office and offer them first dibs. And, generally speaking, I won't adopt other books from those publishers because I know they're racking up huge bills with these unnecessary promotions and special printings that end up being reflected in the insane costs of textbooks (particularly those for introductory level courses).

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