UMG Recordings, Inc. v. Augusto
628 F.3d 1175
| 9th Cir. | 2011Background
- UMG alleged copyright infringement against Augusto for selling eight promotional CDs it distributed.
- CDs were specially-produced, shipped unsolicited to critics; Augusto obtained them from various sources and auctioned them.
- UMG claimed the promotional labeling created a license; Augusto argued the distribution transferred ownership via first sale.
- Unordered Merchandise Statute (39 U.S.C. § 3009) was invoked to argue recipients could treat CDs as gifts and dispose of them.
- District court granted summary judgment for Augusto; Ninth Circuit reviewed de novo the first sale issue and related defenses.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| First sale does the CD distribution transfer title? | UMG asserts no title transfer; it licensed copies and kept control. | Augusto contends distribution transferred ownership, invoking first sale. | Yes, distribution transferred title; first sale defense applicable. |
| Does Unordered Merchandise Statute apply to recipients? | UMG argues statute not applicable to unordered promotional CDs. | Augusto relies on recipients' right to treat unordered merch as gifts. | Statute supports recipients' ownership, consistent with transfer of copies. |
| Do the promotional statements create a license? | Statements attempted to impose a license on recipients. | Labels do not establish a binding license absent recipient assent. | No effective license; transfers ownership despite labeling. |
Key Cases Cited
- Bobbs-Merrill Co. v. Straus, 210 U.S. 339 (U.S. 1908) (first sale exhausts rights after transfer of title)
- Quality King Distribs., Inc. v. L'anza Research Int'l, Inc., 523 U.S. 135 (U.S. 1998) (owner must pass title for first sale defense; licenses complicate)
- Vernor v. Autodesk, Inc., 621 F.3d 1102 (9th Cir. 2010) (software licenses vs. ownership; licensing indicators not dispositive)
- United States v. Wise, 550 F.2d 1180 (9th Cir. 1977) (contract labeling as license; three-factor test for licenses)
- Wall Data Inc. v. Los Angeles Cnty. Sheriff's Dept., 447 F.3d 769 (9th Cir. 2006) (licensing defenses narrow rights under Copyright Act)
- Krause v. Titleserv, Inc., 402 F.3d 119 (2d Cir. 2005) (ownership and control considerations in transfers)