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Universal Attacks First Sale Doctrine

Soulskill posted more than 6 years ago | from the aol-could-be-sitting-on-a-gold-mine dept.

The Courts 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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When would they learn.... (5, Insightful)

ArIck (203) | more than 6 years ago | (#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.

Re:When would they learn.... (4, Funny)

interstellar_donkey (200782) | more than 6 years ago | (#23033608)

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.... (1)

ed.han (444783) | more than 6 years ago | (#23034076)

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!

ed

Re:when would they learn.... (1)

electrictroy (912290) | more than 6 years ago | (#23034210)

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.

Re:when would they learn.... (4, Interesting)

grahamm (8844) | more than 6 years ago | (#23034240)

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.... (4, Interesting)

Firethorn (177587) | more than 6 years ago | (#23034470)

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.

What are the long-term effects? (0, Offtopic)

WaltBusterkeys (1156557) | more than 6 years ago | (#23033286)

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

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?

It seems like if this were a once-off transaction there'd be no doubt that 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? People complained when Maxim reviewed a CD without listening to it [msn.com] but there's no way for print publications to review albums without advance/promo copies. The print publication cycle is so slow that if a magazine had to wait to buy its copy at Amazon or the iTunes store then the review would be three months stale. And Universal is going to quite logically not send out promo copies if they find their way out before the release date; they don't want an unfinished product on the shelf any more than you want your neighbors looking at you before you finish dressing.

There's more than just this case. Maybe the tradeoff is that we're willing to give up promo copies in exchange to keep the doctrine of first sale pure. But maybe we're not. It's not an easy issue and there are arguments on both sides.

Re:What are the long-term effects? (4, Insightful)

snkline (542610) | more than 6 years ago | (#23033332)

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.

Re:What are the long-term effects? (1)

WaltBusterkeys (1156557) | more than 6 years ago | (#23033384)

I totally agree about this case.

I was just asking about a more difficult case that implicates a lot of the same ideas.

Re:What are the long-term effects? (2, Funny)

electrictroy (912290) | more than 6 years ago | (#23034274)

Does AOL own the 10 billion discs they mailed-out?

Maybe we should all unite and send them back..... them videotape the scene as the AOL office finds itself buried under a massive mound of discs.

Re:What are the long-term effects? (1)

Oktober Sunset (838224) | more than 6 years ago | (#23034438)

Does that mean If I throw a heap of the CDs into hte street and a cop comes along and asks who is littering, I can tell them the CDs belong to AOL and he will send them a fine?

Why not ask an easier question, then? (5, Funny)

Anonymous Coward | more than 6 years ago | (#23034308)

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? (4, Insightful)

Khaed (544779) | more than 6 years ago | (#23033382)

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? (4, Informative)

evanbd (210358) | more than 6 years ago | (#23033468)

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? (4, Interesting)

Library Spoff (582122) | more than 6 years ago | (#23033536)

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? (3, Insightful)

Danga (307709) | more than 6 years ago | (#23033828)

Wow, that is crazy they pulled it even though it was 5 years old! Do you know if it was pulled by an automated system or not? If it was something like a computer program that checks the auctions for "CD" and "Promo" and then pulls the auction if both of those are found then that would not be as bad but that still would be horrible to have happen. If it was a human screener on the other hand then this is just crazy and probably the result of some draconian standard operating procedures being in place.

On another note, what effect would this have on collectors if Universal wins? Collectors usually want EVERYTHING and rare things such as this CD are worth even more to them. I know this is just eBay and collectors can always go to stores/swap meets/etc but it is just hard to me to understand how something sent to you for free and unsolicited cannot be sold.

Re:What are the long-term effects? (2, Funny)

TapeCutter (624760) | more than 6 years ago | (#23034302)

"There was no contract."

Bugger, I've just mailed them photo with a EULA that takes effect when they open the envelope, and a bill for...(cue: pinky)...ONE MILLION DOLLARS.

Re:What are the long-term effects? (4, Insightful)

wizardforce (1005805) | more than 6 years ago | (#23033442)

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.

Re:What are the long-term effects? (2, Funny)

jonaskoelker (922170) | more than 6 years ago | (#23034574)

advertising verging on SPAM.
Specially processed and assorted music?

The long term effects (5, Interesting)

Per Abrahamsen (1397) | more than 6 years ago | (#23033486)

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? (5, Insightful)

Anonymous Coward | more than 6 years ago | (#23033508)

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? (2, Funny)

Anonymous Coward | more than 6 years ago | (#23033602)

Idiot or not, baseballs and markers are damn cheap cheap.

Re:What are the long-term effects? (2, Insightful)

uglyduckling (103926) | more than 6 years ago | (#23033896)

Another angle is that UMG put an object into someone's mail box. If they don't want that object to be treated as a gift for the recipient to be done with as they pleased, and if there is no prior agreement for that object to be placed there, they are effectively dumping litter, just as if they had placed an empty coke can in the mail box. I should imagine there's laws on dumping or 'fly tipping' in most states, and UMG must be doing it on a grand scale, so if they win this case they should be prosecuted on those grounds.

Read this carefully. (3, Insightful)

twitter (104583) | more than 6 years ago | (#23033554)

By reading this comment, you agree that 10% of your gross income belongs to Twitter. I know that you did not ask for this but you will be one of the first few to read it and that, by your own argument, is worth more than your freedom. Be glad I don't ask for more, but Moses once argued that a happy slave is more productive than a hungry one so this works out for both of us.

Seriously, it's that bad. If the MAFIAA was not happy with people selling their crappy little promo copy, they could simply strike those people off the promo list. That's easier and cheaper than filing a laughably stupid lawsuit. The only explanation for the suit is that the MAFIAA needs the DJs more than the DJs need the MAFIAA and the only way to make the DJs do as they are told is to harass them with lawsuits. Let's hope the MAFIAA loses this one and has to pay cost and damages.

Re:Read this carefully. (-1, Troll)

Anonymous Coward | more than 6 years ago | (#23033690)

You'll have to share it with your four sockpuppets though.

Oh, the person who moderated you up probably didn't know that you're the current running joke [slashdot.org] on Slashdot. They'll figure it out soon enough.

Re:What are the long-term effects? (4, Insightful)

1u3hr (530656) | more than 6 years ago | (#23034104)

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.

Eh? (0)

Jurily (900488) | more than 6 years ago | (#23033288)

If it's still theirs, why not just sue them for theft?

Seriously, whoever came up with the idea of this lawsuit should be dismembered and have their body parts on display in every major city, just to warn the lawyers.

Re:Eh? (1)

Jurily (900488) | more than 6 years ago | (#23033342)

Seriously, whoever came up with that summary should be dismembered and have their body parts on display in every major city
There, fixed it for myself.

Yes, I just RTFA. I learned my lesson.

An unrequested book? (0, Offtopic)

G3ckoG33k (647276) | more than 6 years ago | (#23033298)

So, if I'm sent a promotional, but unrequested book, would it lose its copyright?! I could photocopy it of course and give it to friends, possibly as an example of "promotional products handed over to me". But, it sounds far reaching that it would lose its copyright. If I'm sent unrequested GPL Code, which relies on copyright, I don't think that code would lose its copyright either.

Re:An unrequested book? (4, Insightful)

snkline (542610) | more than 6 years ago | (#23033346)

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:An unrequested book? (2, Insightful)

G3ckoG33k (647276) | more than 6 years ago | (#23034174)

Yes, I had misread the scenario. Thanks for the corrections. I guess I deserved that "(Score:-1, Offtopic)". :)

Re:An unrequested book? (1)

digitrev (989335) | more than 6 years ago | (#23033446)

It's not a copyright issue because no copies were made.

In your example, if they send you the book, the book is yours. You can give it to a friend, sell it to a friend, donate it to a library, burn it, toss it in the ocean, and do just about anything you want with it as if you had purchased it. It's a gift, which means you own it, you do whatever the hell you want with it.

Re:An unrequested book? (0)

Anonymous Coward | more than 6 years ago | (#23033472)

Didn't RTFA, but what you're saying seems to be completely different from what's actually going on. You're comparing unlawfully duplicating and distributing a copyrighted work to merely selling it.

IMO there is no reason why one ought to not be able to sell music that they own (or has been given to them). After all, you can own books, right?

Re:An unrequested book? (1)

Eivind Eklund (5161) | more than 6 years ago | (#23033710)

The question isn't about copying the CD, it is about selling the physical CD.

Seems like the issue is confused (3, Interesting)

iluvcapra (782887) | more than 6 years ago | (#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?

Re:Seems like the issue is confused (1)

drmerope (771119) | more than 6 years ago | (#23033360)

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.

Re:Seems like the issue is confused (4, Informative)

hcmtnbiker (925661) | more than 6 years ago | (#23033410)

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 (5, Interesting)

evanbd (210358) | more than 6 years ago | (#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:Seems like the issue is confused (2, Funny)

cammoblammo (774120) | more than 6 years ago | (#23033580)

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:Seems like the issue is confused (2, Interesting)

pimpin apollo (664314) | more than 6 years ago | (#23033588)

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.

Re:Seems like the issue is confused (5, Informative)

evanbd (210358) | more than 6 years ago | (#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.

Re:Seems like the issue is confused (3, Interesting)

uglyduckling (103926) | more than 6 years ago | (#23033944)

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.

Re:Seems like the issue is confused (1)

RockModeNick (617483) | more than 6 years ago | (#23033966)

You can't form a binding contract with someone by sending an unsolicited item to them. See baseball argument above.

Re:Seems like the issue is confused (1)

jamesh (87723) | more than 6 years ago | (#23034326)

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:Seems like the issue is confused (2, Insightful)

Anonymous Coward | more than 6 years ago | (#23034624)


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 the external ingredients labeling to the smaller units, you might be okay.

Re:Seems like the issue is confused (1)

Wordplay (54438) | more than 6 years ago | (#23033456)

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:Seems like the issue is confused (1, Insightful)

Anonymous Coward | more than 6 years ago | (#23033630)

Any developers wanna opine on how they'd feel if some software reviewer at cnet started selling their NFR copies of pre-release software?
Any developer stupid enough to give out copies of pre-release software without the recipient entering into a contract that limits their right to sell it deserves everything they get.

Want to take people's rights away? Make them sign a contract. No contract? Don't run crying to mommy when they take advantage of their legal rights.

Re:Seems like the issue is confused (1)

Anonymous Coward | more than 6 years ago | (#23033734)

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

If I sent the review copy without an agreement beforehand of the reviewer that he would not distribute it I consider it my fault if he then sells the copy. Of course if the reviewer agreed beforehand to get the copy with a promise not to sell it then I would be upset.
IMO this is where one should draw the line.

greets,
Staf.

Re:Seems like the issue is confused (0)

TRRosen (720617) | more than 6 years ago | (#23033750)

your right in the fact that its not really a first sale issue as they are not sold--thus there can be no contract.

Comparison to NFR software however is invalid as they always make you sign a NDA or an agreement that the Software is NFR first. And usually violation of such just means you wont ever get NFR stuff again.

Re:Seems like the issue is confused (2, Informative)

uglyduckling (103926) | more than 6 years ago | (#23033920)

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 have every right to do with it as they please within the confines of applicable law. It would be illegal to make a copy of a copyright work without permission of the copyright owner, but it would not be illegal to sell or give it away, so that's fine.

If you had joined a book club then received a book+invoice, fair enough - or in this case joined a 'promo club' with T&Cs - then there might be extra terms in addition to the law (i.e. you entered into a contract). Otherwise the sender can write whatever they want on the object and it doesn't matter - the recipient never agreed to those terms and doesn't have to abide by them, in which case they can treat the object as they would anything else they happen to own.

Of course it is first sale. (0)

Anonymous Coward | more than 6 years ago | (#23033938)

Call it "first transfer of ownership" if it makes you happier. I am of course free to do with the physical content sent unsolicited into my mailbox as I please. Including auctioning it off at Ebay.

Nobody has a right to stuff my mailbox with stuff that is not even supposed to be mine.

Re:Seems like the issue is confused (2, Informative)

DCFC (933633) | more than 6 years ago | (#23033992)

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 since it means a minor journo is more embraced into their product. I do know that some DJs make a good % of their income from selling CDs they are sent. Some come in promotional packaging which gives them more value to collectors or serious fans. To me there is an issue of potential corruption here. I discount the idea that a major label is significantly hurt by a DJ giving a CD to a friend, but a radio DJ is to me a sort of journalist, and if a supplier gives me something that has a significant realisable cash value, then there is a conflict of interest here. Not one CD of course, but if (say) Umg gives a DJ 50 CDs a week, (they release far more), and he selles them, that's a few hundred bucks per week. When I was at PC Magazine, one staffer requested to be allowed to remain a music reviewer because of the huge wave of free music she got in a narrow speciality. Entertainingly, this may even protect DJs a little against the tax authorities. Say 100 CDs a week, that's 5000 CDs, with a face value of $75-100,000. Is this income ? Is it declared ?

CD's are dead (-1, Offtopic)

LM741N (258038) | more than 6 years ago | (#23033302)

In a few years they will be just like 8 track tapes and cassettes. You will only find them at yard sales. Contrastingly vinyl is actually growing again in market share. Imagine that. Audiophiles simply won't listen to CD's, and rappers and DJ's want the albums and singles on vinyl.

So the record companies can stick their promo CD's up their......

Re:CD's are dead (3, Funny)

zippthorne (748122) | more than 6 years ago | (#23033416)

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

You got some evidence that vinyl is growing?

Re:CD's are dead (5, Funny)

Gordonjcp (186804) | more than 6 years ago | (#23033776)

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

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

Re:CD's are dead (1)

MadMidnightBomber (894759) | more than 6 years ago | (#23034152)

I think that is possibly the first op-amp joke I've ever seen/heard. Congratulations.

Re:CD's are dead (4, Insightful)

Icarium (1109647) | more than 6 years ago | (#23033924)

Fringe groups A,B and C are buying less CD's, so CD's must be dying. Except that not-so-fringe group D (Being the other 95% of the population that are not Audiophiles, DJ'd or Rappers) are simply never going to be interested in Vinyl ever again.

Digital Distribution may kill CD's, vinyl sure as hell won't.

Didn't we already see this with the cuecat (1, Interesting)

Anonymous Coward | more than 6 years ago | (#23033308)

Wasn't there some stupid company 6-7 years sending unsolicited barcode scanners called the "cat-something-or-other"? They had some hare brained scheme of money by having people scan bar codes of products and transmit them back to the company.

Unfortunately for the company, people had better ideas what to do with the product. The company tried to sue and they were laughed out of court.

Re:Didn't we already see this with the cuecat (2, Informative)

Aphex Junkie (633436) | more than 6 years ago | (#23033356)

CueCat. And it was RadioShack that distributed them. I still have mine -- they read any barcode with a simple mod.

Re:Didn't we already see this with the cuecat (1)

petermgreen (876956) | more than 6 years ago | (#23034224)

iirc you don't even really need to mod them you can just decode the encrypted stream in software.

The EFF brief is well worth reading (4, Interesting)

evanbd (210358) | more than 6 years ago | (#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 [eff.org] , page 18.)

Copytight (1, Insightful)

sadgoblin (1269500) | more than 6 years ago | (#23033358)

Copyright gets more and more ridiculus over time.

Re:Copytight (0, Flamebait)

Aphex Junkie (633436) | more than 6 years ago | (#23033398)

Spelling skills of Slashdot users get more and more crappy over time.

In the UK, this absolutely clear cut (5, Interesting)

gowen (141411) | more than 6 years ago | (#23033380)

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 (3, Informative)

techno-vampire (666512) | more than 6 years ago | (#23033448)

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:In the UK, this absolutely clear cut (3, Insightful)

pimpin apollo (664314) | more than 6 years ago | (#23033566)

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 Restatement (Second) of Contracts  69 and Section 2-606 of the Uniform Commercial Code. There is an exception, however, in modern U.S. law for items sent through the postal service. See 39 U.S.C.  3009.

Before we rant too much, you ought to have some sense of the history here. Again, this is not a COPYRIGHT case--fair use is a red herring here. This is a contract case.

Re:In the UK, this absolutely clear cut (1)

evanbd (210358) | more than 6 years ago | (#23033606)

It's not a contract case if there is no contract, and accepting a gift is not sufficient to create a contract.

Re:In the UK, this absolutely clear cut (3, Insightful)

pimpin apollo (664314) | more than 6 years ago | (#23033700)

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.

Re:In the UK, this absolutely clear cut (5, Interesting)

Anonymous Coward | more than 6 years ago | (#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:In the UK, this absolutely clear cut (1)

evanbd (210358) | more than 6 years ago | (#23033482)

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.

Re:In the UK, this absolutely clear cut (0)

Anonymous Coward | more than 6 years ago | (#23034122)

because I recognise a country where Corporations have a massively disproportionate sway on legislators.
Wait, you mean there's others?

Next Up (5, Funny)

introspekt.i (1233118) | more than 6 years ago | (#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!!!

Re:Next Up (4, Funny)

aproposofwhat (1019098) | more than 6 years ago | (#23033660)

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

they should be disbarred (3, Insightful)

TRRosen (720617) | more than 6 years ago | (#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:they should be disbarred (2, Funny)

Yvanhoe (564877) | more than 6 years ago | (#23033756)

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

If they win (5, Insightful)

Opportunist (166417) | more than 6 years ago | (#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.

Re:If they win (1)

psychicsword (1036852) | more than 6 years ago | (#23033632)

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.

Re:If they win (0)

cgenman (325138) | more than 6 years ago | (#23033842)

They do this with software. You can buy a copy of a program, but first-sale doctorine does not necessarily apply. The company "owns" the right to the media and the program, and you're simply buying a "license" to use it. Which is strange since "using" software is not actually a delineated right that one can reserve.

Nearly all software media like this says that "This disk owned by X, and must be returned upon demand." Of course, no court has outlined the company's obligations to the consumer when their disk is scratched.

Re:If they win (2, Insightful)

rfunches (800928) | more than 6 years ago | (#23034602)

The argument is about whether first sale doctrine applies to unsolicited product, not products you pay for. Presumably UMD claims that the sticker is a contract, and that UMD can enforce this contract the second it arrives (presumably unsolicited) into a person's mailbox.

IANAL, and I don't know what precedents exist for first sale doctrine and software delivered on a physical medium, but what you're bringing up is a different issue.

Re:If they win (1)

StuckInSyrup (745480) | more than 6 years ago | (#23034016)

Next step? "woodrowpaul48@yahoo.co.uk" will sue me for forwarding his "Canadian pharmacy" spam.

Re:If they win (0)

Anonymous Coward | more than 6 years ago | (#23034604)

If they could succeed with implementing this, then DRM would be successful today in music, but it's not.

Seems like an open and shut case (4, Insightful)

digitrev (989335) | more than 6 years ago | (#23033462)

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.

Great Monetary Expectations (1)

fireheadca (853580) | more than 6 years ago | (#23033572)

What I really want to know is what do they expect us
to do with these cds (bought or given).

Should we even be listening to them really?

Can you listen to your copy with a friend?
Can you listen to your copy with a group of friends?
Can you lend out the cd to a friend?
Can you lend out the cd a stranger?
Can you lend out the cd to a group of strangers?

So why not sell it to a group of stangers?
Where is the line drawn?
---
Music is freedom - the medium is not.

Same BS argument (-1, Troll)

edwardpickman (965122) | more than 6 years ago | (#23033586)

My Troll a day to keep mod points away. This is that same bullshit argument that seems to keep coming up. It okay for some one to make a buck off music and movies so long as they didn't have a financial interest in creating the work in the first place. It's cool for some one to sell it on Ebay but the record company is evil for selling music and not giving it away. The whole point is promotional copies have been around from day one and the same rules have always applied and that includes posters. Technically you aren't supposed to sell them in spite a thriving industry selling old movie posters. The industry has looked the other way but music sales have dropped like a rock so probably a lawyer told them you better get this under control. The point is they may now start to require agreements with radio stations and such before they will give away promotional copies. Everyone benefited because they got their music out there and the radio stations kept costs down since they saved tens of thousands on buying CDs and replacing them. Yes I know technically, blah blah. Why is the guy selling a CD he boosted for free the good guy and the music company that was providing it the bad guy? What will be the result no matter what happens in court is the process will change and it will hurt everyone. The guy was being a dick selling a freebie copy that the record company was nice enough to provide. Would everyone be happier if there were no promotional copies? The record companies have always looked the other way when DJs handed them out to friends when they were supposed to be used in on air promotions and for air play but a lot of the tolerance may be drying up. They feel they are fighting for survival. Yes I know good riddance. All the garage bands will happily provide for all your music needs. Well here's food for thought, if you can get all your music from garage bands then why do you care what the music companies do? I know the fantasy is you'll eventually get slick studio music from top artists for free and the record companies will one day cave in and give away all the music no matter what it costs to produce. Time to wake up it's an industry and without profits they will do something else for a living.

Re:Same BS argument (0)

Anonymous Coward | more than 6 years ago | (#23033692)

The whole point is promotional copies have been around from day one and the same rules have always applied and that includes posters. Technically you aren't supposed to sell them in spite a thriving industry selling old movie posters.

Technically, you are perfectly entitled to sell an old movie poster. You are not entitled to duplicate and distribute it, but as long as it's a legitimately produced original, you can sell it to whomever you please.

The rules for promotional copies are no different than for anything else---you may resell original copies as you see fit, but duplication is the sole right of the copyright holder.

There is an exception, of course, and that's where terms were agreed to in advance. That, I think, is where you're getting your notions about movie posters. I would be shocked if the studios didn't require theater owners to sign boilerplate contracts covering promotional materials before they rent them films.

As such, I'd be willing to bet the vast majority of original movie posters on the market right now are or have been sold in violation of contract terms.

Note, however, that that's not what's happening in this case. UMG didn't arrange any agreements in advance, they just wrote something on a CD and mailed it.

"The record companies have always looked the other way when DJs handed them out to friends when they were supposed to be used in on air promotions and for air play but a lot of the tolerance may be drying up."

As regards airplay, the studios are perfectly within their rights to crack down. Public performances aren't fair use. As regards giving the discs to friends, DJ's have just as much right to that as you do to, say, give a friend of yours a chair you no longer wanted.

"Well here's food for thought, if you can get all your music from garage bands then why do you care what the music companies do?"

When they obey the law, I don't. My concern, and I think this goes for a lot of people around here, is for the consequence on the legal system and the basic framework of how contractual obligations work and are incurred.

You imply the record companies are simply getting desperate and asserting rights they always had---that simply isn't the case.

Here's the distinction, using your movie poster analogy (which works perfectly:)

A:) A movie theater owner has a contract with a movie studio that says he can't resell promotional items. The studio sends him a poster. He cannot legally sell it.

B:) A movie theater sends some random guy (or a movie theater owner with whom they have no contract) a poster which simply says, "This poster not for resale." He doesn't have to take orders from uppity posters he didn't ask for.

I hope you weren't really trolling, because that took a little while to type.

Re:Same BS argument (1)

meringuoid (568297) | more than 6 years ago | (#23034004)

They feel they are fighting for survival. Yes I know good riddance. All the garage bands will happily provide for all your music needs. Well here's food for thought, if you can get all your music from garage bands then why do you care what the music companies do? I know the fantasy is you'll eventually get slick studio music from top artists for free and the record companies will one day cave in and give away all the music no matter what it costs to produce. Time to wake up it's an industry and without profits they will do something else for a living.

Fine, whatever, let 'em burn. The Internet is orders of magnitude bigger than rock and roll. If the preservation of the music and movies industry means we have to cripple the freedom of the network, to give Hollywood a veto over every new technology, to mandate lockouts in all computers to protect their imaginary property, then it's not worth it. Even if it means there'll never be another international rock superstar.

This is about CONTRACTS not COPYRIGHT (1)

pimpin apollo (664314) | more than 6 years ago | (#23033646)

Despite what the snippet claims, this is NOT about first sale at all.

First off, even in a world without copyright law, UMG would argue that they had a contract with whoever got the CD to never redistribute it. If this contract was in fact made (offer and acceptance for consideration) then BOOM, contract law does the rest. This issue is complicated because while the items were unrequested, they were subsequently used by those who received them (which normally is enough since there was clearly some pre-existing contact here), and is further complicated because they were sent through the mail (which makes it almost surely a gift).

So, either it's not a gift and there's a contract, or it's a gift and there's no contract.

Then fair use / copyright comes into play. Normally 17 USC 106(3) makes it a violation to publicly distribute (including sell) protected material. However, 109 says you can do what you want to it (this is first sale) so long as you meet some requirements:
* Copy must have been made lawfully
* Seller must be an owner

The first of these doesn't seem to be a problem. The second is the issue. If these aren't gifts, and they didn't accept the contract, then they aren't owners--they are tortfeasors who have converted--and don't get protection from 109. That's how this would play out.

There's a lot of FUD going on out there. Feel free to correct me, but let's keep the analytical structure in mind here. (Note: I'm going off of the brief snippet; I haven't read the extensive briefs/filings)

Re:This is about CONTRACTS not COPYRIGHT (1)

Teran9 (1163643) | more than 6 years ago | (#23033686)

There was no preexisting contract. Clearly.

Re:This is about CONTRACTS not COPYRIGHT (1)

pimpin apollo (664314) | more than 6 years ago | (#23033728)

I don't know if there was or wasn't, but let's assume you're right and there's not a preexisting contract.

That doesn't change the fact that the recipient's use of the CD might constitute an acceptance of a contract with the sender.

Now, I'll grant that the fact this was sent through the mail complicates the issue (and probably makes this a gift), but let's say it was delivered by personal courier. In that case, I think it's very hard to say that there was no contract. Under traditional notions of contract law, use of the CD after acceptance by a courier, preexisting contract or not, would be an offer-acceptance and, a contract.

Point is, there's nothing in first sale to stop copyright holders from implying additional terms through contract law. If you want to get into that debate (which is definitely one worth having) it happens with the copyright preemption statute.

Re:This is about CONTRACTS not COPYRIGHT (4, Informative)

Teran9 (1163643) | more than 6 years ago | (#23033774)

Read the documents. You are advancing hypotheticals that do not apply to the facts of the case. The CDs were delivered primarily through the mail and UPS. That makes them gifts. It does not matter if there was a preexisting relationship. Even if you discount that they were gifts, it was abandoned property. Even if you get past that... Read the article and filings...

The most chilling thing about this... (2, Funny)

Kryptikmo (1256514) | more than 6 years ago | (#23033698)

...if it succeeds, then you can surely be held responsible for all those AOL CDs!
I hope you kept them in a safe place ;)

cool... (1)

joe 155 (937621) | more than 6 years ago | (#23033744)

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 would be to return them at their own massive cost.

They might even have to listen to them if they often get CDs through for business - according to the that's certainly enough to have accepted a contract

Storage Location (1)

Arancaytar (966377) | more than 6 years ago | (#23033764)

Where would they be contractually required to stick said CD, then? ...

On-selling is doing UMG's work for them... (1)

GumphMaster (772693) | more than 6 years ago | (#23033812)

Surely the raison d'être for a promo CD is to promote the freakin' content: i.e. the more people hear the CD the better. On-selling the CD is extending its reach further than UMG's original gift of it did. UMG should realise this, STFU, and let someone else promote their product at no cost.

just a thought (1)

TRRosen (720617) | more than 6 years ago | (#23033824)

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.

Not just that... (1)

CrazyBusError (530694) | more than 6 years ago | (#23034466)

If the record companies still own the CDs and have been sending them out unsolicited, then I recommend that everyone they've sent them to starts billing them for storage charges.

Let's see if they decide that they still own them then.

cant have it both ways (3, Interesting)

TRRosen (720617) | more than 6 years ago | (#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! (1, Insightful)

trawg (308495) | more than 6 years ago | (#23033960)

Support the EFF [eff.org] so they can keep stomping stuff like this!

couldn't agree more with tags (2, Funny)

Anomalyst (742352) | more than 6 years ago | (#23034468)

eff universal

Trash? (0)

Anonymous Coward | more than 6 years ago | (#23034502)

So if they still own it isn't this littering?
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