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Ninth Circuit Hears Critical First Sale Doctrine Case

By Christopher Harbin

Once again the record industry is attempting to prop up their failing business model by redefining consumer rights in heinous fashion. This week, the Ninth Circuit heard arguments in a crucial case that may substantially alter first sale rights.  For those that aren’t up on their copyright law, the “first sale” doctrine dictates that once a copyright owner sells or gives away a work, the owner of the work may dispose of it as she sees fit.   When you buy a book at a store, you may resell the book to another without restriction.  If you buy it, you own it.

In this case, Universal Music Group is suing Roast Beef Music for copyright infringement for auctioning  on Ebay promotional CDs that it bought at a used record store.  UMG sends these CDs out to radio stations and music retailers.  Each promo CD bears a marking that prohibits their resale. Courts have generally held that where physical possession of a copyrighted work is transferred to another without an expectation of return, the transfer is a “sale” and first sale rights attach.  UMG’s argument, made time and time again by copyright owners to no avail, is that these CDs are merely licensed and thereforeno first-sale rights attach. Should UMG win, copyright holders would be able to restrict secondary sales and uses completely.   Bottom line:  no more Netflix, no more selling used books on Amazon, no more used-record stores.

Let’s be clear here.  UMG is not concerned about promo copies of The Killers “Sam’s Town” being sold on Ebay.  Their actual plan is to use a favorable decision in this case as a forward position to erode consumer rights and use copyright infringement lawsuits, or threat of suit, to prop up a dying business.  Let’s hope Koz and his cohorts on the Ninth put the final nail in the music business’s coffin.

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