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EFF Wins Promo CD Resale Case

DJMajah writes "Universal Music Group's case against Troy Augusto, fought by the Electronic Frontier Foundation, has been dismissed by a federal judge. UMG sued Augusto, the owner of Roast Beast Music, over 26 eBay listings of promotional CDs. UMG argued that promo CDs distributed for free to radio stations, DJs and other industry insiders could not be resold; the discs usually carry a label reading 'For promotional use only, not for resale.' UMG asserted the doctrine of first sale does not apply, as the discs were not actually sold and therefore remained UMG's property. The judge ruled that the doctrine does apply because the discs were gifts. The labels indicate no expectation of their return."

14 of 252 comments (clear)

  1. If I were to donate to any tech foundation by TheDarkener · · Score: 5, Insightful

    it would DEFINITELY be to the EFF. What heroes they are, in today's world!

    --
    It is pitch black. You are likely to be eaten by a grue.
    1. Re:If I were to donate to any tech foundation by ntk · · Score: 5, Informative

      We operate internationally, including in Canada -- see http://www.eff.org/issues/international . A large number of EFF members live outside the US and our work reflects that (there are three of us who work on these topics full time, plus three interns currently:I'm British, our international legal director is Australian; we work at groups like WIPO and arenas like the European Parliament).

      As an aside, if there are any digital rights issues in your country that you think should get wider coverage, or need advice on how to tackle, or technical and logistical support, get in touch with me, danny@eff.org or mail info@eff.org. It really helps us to get feedback and news from our supporters.

    2. Re:If I were to donate to any tech foundation by ntk · · Score: 5, Informative

      (Cut and pasted from the last annual report -- mail info@eff.org if you'd like a copy, or have any questions. Guidestar is a good place to start to make comparisons with other groups)

      Profit and Loss Standard - January through December, 2006

      Ordinary Income/Expense

      Income
      Corporation Contributions $215,229.72
      Event Income 57,630.10
      Foundation Grants 466,858.36
      Individual Major Contributions 1,423,444.26
      Interest Income 18,161.86
      Litigation 430,545.00
      Matching Gifts 35,426.34
      Membership Income 882,710.89
      Combined Federal Campaign (CFC) 10,354.40
      Minor Donations 9,739.50
      Honorarium/Awards 1,300.00
      Fiscal Sponsorship 156,225.89
      Miscellaneous Income 19.50
      Total Income 3,707,645.82

      Expense
      Salaries & Benefits 1,865,393.06
      Building Expenses 192,684.57
      Corporate Insurance 35,645.71
      Office Expenses 153,142.46
      Membership Expenses 48,258.50
      Court Filing and Fees 20,557.99
      Bank & Merchant Fees 31,236.87
      Consultants 82,622.52
      Staff & Board Enrichment 24,150.06
      Travel & Entertainment 66,092.38
      EFF Events 23,216.94
      Grassroots Campaigning 41,868.30
      Taxes 410.00
      Fiscal Sponsorship Expense 189,899.23
      Total Expense 2,775,178.59

      Net Ordinary Income $932,467.23

      Other Income/Expense

      Other Income
      Unrealized Gain or Loss 108,618.85
      Total Other Income 108,618.85
      Net Other Income 108,618.85
      Net Income $1,041,086.08

      2006 was a particularly good fundraising year for us. In early 2007, we
      transferred $1 million of our 2006 net income into EFF's Endowment Fund
      for Digital Civil Liberties, to ensure the long term sustainability of
      the organization. We do not anticipate having a similar surplus of
      operating funds in 2007.

  2. And books? by TenBrothers · · Score: 5, Interesting

    Will this then apply to books who have had their cover torn off and returned to the publisher? Most of those books carry a "if the cover is missing this book cannot be resold" blurb. Booksellers who can't sell a quantity of trade paperbacks return the front cover in lieu of the entire book for a refund. It saves on shipping and the publisher doesn't want the unsold books back anyway. So would these be considered 'gifts' to the bookseller, and presumably under this ruling also viable for resale?

    1. Re:And books? by ivan256 · · Score: 5, Insightful

      There are two distinct situations here:

        - A bookseller signs a sales contract with terms before books are sent to said bookseller. These terms prohibit sale of books who's covers have been removed for refund. If the contract actually says "made not suitable for resale", the publisher would (successfully) argue that if any customer found the refunded book to have any value, the bookseller didn't sufficiently render it unsuitable for sale.

        - A radio station receives an unsolicited CD in the mail from a record label; the label hopes the radio station will play said CD on the air. The front of the CD says "Not for resale"

      In the first case, there is a legally binding contract that the bookseller entered into requiring them to destroy the coverless book or pay the wholesale price of the book to the publisher.

      In the second case, under US law the record label has used the US mail to give the CD to the radio station as a gift. The radio station is free to do whatever they want with it, as they are not bound by any contract, no matter what is printed on the outside of the disc.

  3. Re:The EFF sure taught the industry a lesson! by despe666 · · Score: 5, Interesting

    Let them try. If they write that on that label, they will no doubt have to prove they actually recover the CDs they send, and it's not just there to get around the other judgement. And if the CD is sent unsolicited, then they will have to pay for the return fee or expose themselves to extortion lawsuits or something. Let them try to deal with that logistic nightmare.

  4. Aww the EFF Won? by CogDissident · · Score: 5, Funny

    I'm actually a bit sad that the EFF won on this case. Because if it hadn't of been overturned, you could label "anything" as no-resale and send it to someone. Like, you know, that giant pile of bricks or the entire output of a nuclear reactor and mail it to the RIAA.

    Because, with the policy they were trying to establish precedent for, you could do so, mark it as no-sale and no-disposal, and force them to build warehouses to store the random crap you send them.

    1. Re:Aww the EFF Won? by Paranatural · · Score: 5, Funny

      As fun as that would be, I could see a few problems with it:

      1) I'd lose my job - The warehouse would start to question why I always had my Jeep full of boxes and barrels to ship out to CA, and would complain about the shipping charges.

      2) I'd be arrested - After plundering every Goodwill dropoff area (a.k.a. 'Round back') for weeks on end for used underwear and rugs that have seen more cat urine than most litter boxes.

      3) The ASPCA would track me down - After stealing several monkeys, which I would train to fill buckets full of monkey semen to send to the offices of the lawyers for the RIAA. Imagine hundreds of barrels of monkey semen, all no-resale and no-disposal. Think about it.

      I am.

      And I need a bucket.

  5. Re:The EFF sure taught the industry a lesson! by Volante3192 · · Score: 5, Insightful

    If the CD is sent unsolicited (through USPS at least) and they try to get it back, they get slammed for mail fraud.

    That'll be a trick even for their kettle of lawyers to get out of.

  6. Re:The EFF sure taught the industry a lesson! by Ungrounded+Lightning · · Score: 5, Informative

    And if the CD is sent unsolicited, then they will have to pay for the return fee or expose themselves to extortion lawsuits or something.

    As I understand it: If it's unsolicited (and not the result of a shipping error or a fraudulent order by some third party) there is no obligation to return it, no matter what is printed on it.

    --
    Bantam Dominique roosters crow a four-note song. Once you've heard it as "Happy BIRTHday" you can't NOT hear it that way
  7. Re:The EFF sure taught the industry a lesson! by adolf · · Score: 5, Insightful

    Maybe.

    Here's the thing:

    If [insert RIAA member here] notices that I am a program director at a radio station and sends me a promo CD in the mail with my name on it, then it's mine. I can listen to it, sell it, throw it out, give it away, copy it to my iPod, dupe it for the car stereo, and set it on fire. About the only thing I can't legally do is give a copy to a third party (in violation of copyright law).

    Merely receiving something in the mail does not obligate me to do anything that the sender asks. If the sender wants it returned, that's fine; they can want it all week and it'll still never happen.

    I mean, imagine it if you will, AC: Suppose I sent you a CD with a label on it which said "Please return to avoid a $250,000 fine, 5 years in jail, or both." Worse, suppose such a CD gets lost in the mail.

    Either way, you don't have to do a thing. Were things any other way, we'd see huge numbers of positively ugly scams circulating the USPS, where by inaction alone, simple homeowners would be victimized by their own fucking mail.

    (I'm sure that one of Slashdot's resident lawyers can come up with some fancy polysyllabic Latin verbiage to exactly describe this non-problem, but for now you'll all have to grasp this concept without it having any specific title.)

  8. Re:The EFF sure taught the industry a lesson! by dreamword · · Score: 5, Informative

    I like it!

    But actually, it doesn't have a fancy latin name: it's just called "mailing of unordered merchandise". The federal statute is 39 U.S.C. 3009, and it was cited and analyzed at length in the judge's opinion (linked to from the EFF press release). The statute is designed to combat exactly this sort of scam: a company sends you something you didn't ask for, then imposes conditions on your ownership of it (like saying you can't sell it, or saying you have to pay for it).

    Joe Gratz
    (attorney for the defendant in UMG v. Augusto, but speaking here only for himself)

  9. Re:Sheesh. by Kadin2048 · · Score: 5, Informative

    Not really. The music industry has pretty much tested, since its very inception, the outer bounds of what the legal system would allow.

    The whole idea of "licensing" or "leasing" music rather than selling it isn't a new one. The Victrola Company attempted all sorts of shenanigans with its records, including invalidating your right to play the record if you bought it for less than $1 (that's from 1906!). They attempted to back this up not only with contract law, but with patents as well. Their attempts at price-fixing via this method, both on records but even more significantly on machines, went all the way to the Supreme Court ("STRAUS v. VICTOR TALKING MACH. CO. , 243 U.S. 490").

    So this is really nothing new at all. It's just the music industry playing screw-the-consumer in the same manner they have always done.

    --
    "Ladies and gentlemen, my killbot features Lotus Notes and a machine gun. It is the finest available."
  10. Re:What? by oahazmatt · · Score: 5, Funny

    The RIAA didn't walk away from the case and then try to re-sue using a different judge this time? They would have, but the defense slapped a sticker on the paperwork stating "not for re-trial".
    --
    Those who believe the Internet is private,
    find their privates are on the Internet.