EFF Wins Landmark Ruling Freeing Promo CDs for Resale

So no, you're not allowed to make copies of the disks and sell them, but if you buy a stack of 50 promo disks second-hand, you can resell all 50 of them. I'm not sure how it works with purely digital goods, but presumably (IANAL) you'd be in the clear if you deleted "your" copy when you passed it on to someone else.

However, the first sale doctrine essentially says that once any copies leave the control of the copyright holder (ie they are sold or given away), then ownership -of those copies- becomes a legally protected property right that can be further transferred without consulting with the copyright holder (by transferring the physical object holding the data).

What makes a given copy of the CD legitimate is that it was made with permission of the copyright holder. Any future owners can buy, sell or give away that CD as they desire, but they can't make further copies without express permission.

This is, in part, why the EFF and others get so worked up over EULA's, because they are an attempt by content creators to keep all of their rights under copyright while not being subject to first sale.

To legally enforce this condition, they need to have a contract signed. No contract, no free copy.

Making copies would imply further use of the mechanical right mentioned above, and is then illegal due to non-payment of further royalties based on the number of further copies made. The mechanical right is compulsory with a rate set by law, and so in exchange for the other powers of copyright going to the owner(s), any of us little people are allowed to pay money to start our own K-Tel empire. Currently this is ~US$0.02/min (~$1.50 per CD).

"We have recognized, however, that not every transfer of possession of a copy transfers title. Particularly with regard to computer software, we have recognized that copyright owners may create licensing arrangements so that users acquire only a license to use the particular copy of software and do not acquire title that permits further transfer or sale of that copy without the permission of the copyright owner."

Essentially, the judges argue that, because these CD's are mailed to DJ's and music critics without any reasonable attempt to establish a contract, then the recipients are free to do whatever they want with the copies. They explicitly contrast that with software licensing, where the consumer obtained the license through a voluntary transaction.