The Ninth Circuit recently expanded the reach of the first-sale doctrine by protecting sales of free, unsolicited compact discs in Universal Music Group Recordings, Inc. v. Augusto, 2011 U.S. App. LEXIS 52 (9th Cir. Cal. Jan. 4, 2011).
Universal Music Group filed a complaint against an individual alleging infringement of its copyrights when its promotional CDs went up for sale at online auctions. The appellate court ruled that recipients of free CDs, sent out by Universal for promotional purposes, had acquired ownership of such materials and were entitled to use or dispose of the freebies as they saw fit.
The court rejected the company’s arguments that promotional statements on the CDs had given rise to a mere license and not ownership because (1) the discs were dispatched without any prior arrangement as to those particular copies; (2) the CDs were not numbered and no attempt was made to track their location and use; and (3) no license agreement existed.