In the third of a rapid-fire trio of opinions
distinguishing between sales and licenses, the Ninth Circuit in UMG Recordings, Inc. v. Augusto, 2011 U.S. App.
LEXIS 52 (9th Cir. Cal. Jan. 4, 2011) [enhanced version available to lexis.com subscribers / unenhanced version available from lexisONE Free Case Law] rebuffed a copyright owner's attempt to impose a licensing agreement
unilaterally on the recipients of phonorecords that were shipped to them,
unsolicited, as part of a promotional distribution. In this Analysis, Mary
LaFrance examines the implications of this opinion. She writes:
Plaintiff UMG Recordings sent
free promotional music CDs, unsolicited, to music critics and radio disc
jockeys. However, UMG made no prior arrangements with these recipients prior to
shipping. The CDs were not numbered, and UMG made no attempt to keep track of
them after sending them out.
. . . .
Although UMG did not send any
of these promotional CDs to defendant Augusto, he acquired a number of them
from various third parties. When he sold them on eBay, UMG filed suit for
copyright infringement, alleging that Augusto had violated UMG's exclusive
right of public distribution, 17 U.S.C. § 106(3). Augusto argued that his sale of the CDs
was not infringing, because, as the owner, he was permitted to resell them under
the "first sale" rule, 17 U.S.C. § 109(a). The district court agreed, granting
summary judgment to Augusto, and the Ninth Circuit affirmed.
. . . .
In the court's view, the
language on the CD labels did not give rise to a license. The short phrase
"Promotional Use Only - Not for Sale," which appeared on some of the
CDs, "does not even purport to create a license." Even the more
detailed statement that appeared on some of the other CDs failed to create a
license; the assertion that acceptance of the CD "shall constitute an
agreement to comply with the terms of the license" was ineffective because
"acceptance" cannot be assumed "where the recipient makes no
response at all." . . . Because no license existed, "UMG's transfer
of possession to the recipients, without meaningful control or even knowledge
of the status of the CDs after shipment, accomplished a transfer of
Access the full version of LaFrance on the First Sale Rule and
Ownership versus Licensing of Music CDs with your lexis.com ID. Additional fees
may be incurred. (approx. 8 pages)
If you do not have a
lexis.com ID, you can purchase this commentary on LexisNexis Store, or
you can access this commentary and additional Emerging Issues Analysis content
through lexisONE Research Packages.
For more information about LexisNexis products and
solutions connect with us through our corporate