Legal Issues

by Mike Masnick


Filed Under:
promotional cds

Companies:
ebay, eff, universal music



Who Really Owns Promotional CDs?

from the and-who-can-sell-them? dept

In my collection of CDs (and, yes, I still buy CDs), there's a relatively large number of "promotional" CDs -- many of which were purchased at independent record shops or online. It's not uncommon at all to find such CDs for sale, despite warning labels that say that cannot be sold. I've often wondered how enforceable that claim is, and we may soon find out. Universal Music claimed copyright infringement against a guy who was selling promotional CDs on eBay and eBay took down the auctions. The EFF is now suing Universal Music, claiming that it's a misuse of copyright law under the first sale doctrine (which says, like with any traditional good, you have the right to resell a digital good). Universal Music's response is that the CDs are actually still the property of the record label, and merely licensed to whoever received it. Of course, that could open up a ton of legal questions about ownership of certain goods -- especially if the receiving party never agreed to the deal. In the meantime, though, it's yet another case that highlights the blurring lines of ownership over tangible goods as makers of such goods try to make them more like digital goods.

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  1. identicon
    Andrew D. Todd, 10 Aug 2007 @ 9:38pm

    Federal Laws Pertaining to Unordered Merchandise.

    Here's what Uncle Sam says, the United States Post Office, the guys in blue uniforms:

    > A company sends you a gift in the mail--a ball point pen, a key chain, a tie. But you didn't order it. What do you do? If you are the type of person this company is looking for, you may feel guilty about accepting the item without paying for it. Don't feel guilty! It's yours, and you are under no obligation to pay anything.

    http://www.usps.com/postalinspectors/fraud/merch.htm
    --------------------------------- -------------
    The Federal Trade Commission says ("A Business Guide to the Federal Trade Commission’s MAIL OR TELEPHONE ORDER MERCHANDISE RULE"):

    > Unordered Merchandise
    >
    > Whether or not the Rule is involved, in any approval or other sale you must obtain the customer’s prior express agreement to receive the merchandise. Otherwise the merchandise may be treated as unordered merchandise. It is unlawful to:
    >
    > 1. Send any merchandise by any means without the express request of the recipient (unless the merchandise is clearly identified as a gift, free sample, or the like); or,
    > 2. Try to obtain payment for or the return of the unordered merchandise.
    >
    > Merchants who ship unordered merchandise with knowledge that it is unlawful to do so can be subject to civil penalties of up to $11,000 per violation. Moreover, customers who receive unordered merchandise are legally entitled to treat the merchandise as a gift. Using the U.S. mails to ship unordered merchandise also violates the Postal laws.

    http://blogs.mercurynews.com/consumeractionline/2006/07/unsolicited_mer.html
    http://www.ft c.gov/bcp/conline/pubs/buspubs/mailorder.shtm
    ----------------------------------------------------

    How many multiples of $11,000 do you reckon Universal Music owes Uncle Sam? And that's just the civil penalties. Those CD's had better have been free gifts, or else some record company executives are looking at serious jail time.

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