On Monday, a federal court of appeals in Seattle will consider whether it is legal to resell "promo CDs." You've seen them, the CDs mailed out for free by record labels to industry insiders, reviewers, and radio stations, each bearing the label "promotional use only, not for resale." Do those labels stand up in court? And why should you care?
The case pits the largest record label in the world, Universal Music Group, against an eBay seller called "Roast Beast Music". Roast Beast Music buys promo CDs at used record stores around Los Angeles and resells them on eBay. In 2007, the Electronic Frontier Foundation (EFF) took up the case, and in 2008, Roast Beat Music prevailed. UMG has now appealed the decision.
A Green Light To Erode Consumer Rights
Why should you care? Because if UMG wins, then copyright owners will have the green light to put "label licenses" that erode a consumer's rights on not only CDs, but also books, DVDs, and video games.
At the heart of the case is the "first sale" doctrine. The idea, set out in Section 109 of the Copyright Act, is simple: once you've acquired a lawfully-made CD or book or DVD, you can lend, sell, or give it away without having to get permission from the copyright owner. In simpler terms, "you bought it, you own it" (and because first sale also applies to gifts, "they gave it to you, you own it" is also true).
But the copyright industries have never liked first sale, since it creates competition for their titles (you could borrow it from a friend, pick it up at a library, or buy it used from a seller on Amazon or eBay).
More importantly, however, the first sale doctrine also reduces a copyright owner's ability to impose restrictions on how you use the work after it is sold. For example, at the turn of the 20th century, book publishers tried to impose a minimum resale price on books by putting a notice in every copy. In the 1930s, record labels put "private use only, not for broadcast" notices on records in an attempt to block radio stations from playing their records without additional payment. In the 1980s, movie studios tried the same thing with video cassettes, trying to control the video rental business.
Fortunately, Congress, the courts, and free markets have consistently rejected these efforts to undermine the first sale principle. Now another court will have the opportunity to remind record labels that there are limits to their power over those shiny silver discs. - Fred von Lohmann, EFF
More on the case here.