LegalZoom Blog

Legal news and small business tips.

9th Circuit: OK to Sell Promotional “Not for Resale” CDs

no comments yet

You’ve probably seen “Promotional Use Only – Not for Resale” stamped on items like books, CDs, DVDs, and other similar goods given out as review copies and the like. But does that stamp really prohibit you from legally selling those items?

Photo by Plinkk on Flickr

Photo by Plinkk on Flickr

Nope, said the 9th Circuit in a recent decision, finding that the reselling of promotional items does not violate the copyright owner’s rights.

The case arose when Universal Music Group (UMG) discovered that Troy Augusto dba Roast Beast Music Collectibles was selling their CDs, which had been given away as promotional items, on eBay. UMG sued, claiming that the sale of the CDs violated its copyrights and exclusive distribution rights.

The 9th Circuit upheld the district court’s decision that Augusto did nothing legally wrong when he got his hands on a collection of such promotional items and tried to sell them on eBay. In doing so, the court rejected UMG’s argument that the stamp on the CDs granted licenses as opposed to ownership:

“UMG dispatched the CDs in a manner that permitted their receipt and retention by the recipients without the recipients accepting the terms of the promotional statements,” wrote Judge William Canby for the unanimous three-judge panel. “UMG’s transfer of unlimited possession in the circumstances present here effected a gift or sale within the meaning of the first-sale doctrine, as the district court held.”

Moreover, the court found that since the promotional items were neither numbered nor tracked by the company, they also fell under the Unordered Merchandise Statute, which weighed against UMG’s argument that they were given only via license.

One thing to continue to remember about promotional items, though, is that if you are a blogger and receive a product for review or otherwise for free and then you write about it, you must disclose your relationship with the advertiser per the FTC Endorsement Guidelines.

ShareShare on FacebookTweet about this on TwitterShare on Google+Share on LinkedInEmail this to someone

Sign up for the LegalZoom newsletter!

Written by

January 5th, 2011 at 9:22 am