San Francisco - A federal judge has shot down bogus copyright infringement allegations from Universal Music Group (UMG), affirming an eBay seller's right to resell promotional CDs that he buys from secondhand stores.

Troy Augusto, represented by the Electronic Frontier Foundation (EFF) and law firm Keker & Van Nest, was sued by UMG last year in the United States District Court for the Central District of California for 26 auction listings involving promo CDs. At issue was whether the "promotional use only, not for sale" labels on those CDs could trump Augusto's right to resell materials that he owns, guaranteed by copyright law's "first sale" doctrine.

In dismissing UMG's lawsuit late Tuesday, U.S. District Court Judge S. James Otero ruled that the promo CDs are gifts distributed by UMG, as they are mailed free and unsolicited to thousands of people without any expectation or intention of their return. The first sale doctrine says that once the copyright owner sells or gives away a copy of a CD, DVD, or book, the recipient is entitled to resell that copy without further permission.

"This is a very important ruling for consumers, and not just those who buy or sell used CDs," said EFF Staff Attorney Corynne McSherry. "The right of first sale also protects libraries, used bookstores, and businesses that rent movies and videogames. This ruling affirms and protects the traditional balance between the rights of copyright owners and the rights of the public."

"It was clear to the court that these CDs were the property of Mr. Augusto, and therefore he had the right to resell them," said Joseph C. Gratz, attorney with Keker & Van Nest. "Copyright holders can't strip consumers of their first sale rights just by sticking a 'Not for Sale' label on a CD."

Mr. Augusto's victory comes almost one hundred years to the day after the United States Supreme Court's June 1, 1908 decision in Bobbs-Merrill Co. v. Straus, 210 U.S. 339 (1908), established the first sale doctrine as a central part of American copyright law.

EFF has long fought efforts to override the first sale doctrine, arguing in 2004 that Lexmark should not be permitted to use a "label license" to prohibit the resale of laser printer toner cartridges.

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Corynne McSherry
Staff Attorney
Electronic Frontier Foundation

Joseph C. Gratz
Keker & Van Nest, LLP

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