Published Jan 05, 2011If you've ever gone into a used record store, you will have likely noticed CDs stamped with warnings that say "not for resale" and "for promotional use only." The good news for anyone interested in purchasing/selling these discs is that those warning messages hold no legal weight.
Back in 2007, Universal Music Group sued Los Angeles native Troy Augusto, who ran a business reselling CDs on eBay. UMG tried to claim that it retained ownership of the promotional CDs that it distributed, which were "licensed" to consumers rather than given.
In 2008, a district court in Los Angeles ruled that UMG didn't own the promotional CDs it distributed. As consumers weren't expected to return the albums, and there were no conditions with distribution, the label didn't hold any licensing rights over the products.
UMG appealed the decision, but yesterday (January 4) it lost once again. The U.S. Court of Appeals for the 9th Circuit upheld the earlier ruling, deciding that just because a CD was stamped with a warning message, that did not constitute a legal agreement on behalf of the consumer. As the recipients of the promotional CDs made no response to the label and were not expected to return the discs, there was no way to confirm that they had ever agreed to the terms stamped on the CD.
So next time you go into a store and see the words "for promotional use only" written on a disc, remember: according to U.S. law, this isn't a legal contract, so feel free to buy it and resell it as you please.
Thanks to Techdirt for the heads-up.