An appeals court upheld on Tuesday (January 4) a ruling that said consumers have the right to re-sell promotional CDs.

A panel of judges from the U.S. Court of Appeals for the 9th Circuit  determined that Los Angeles music re-seller Troy Augusto was within his rights by buying and re-selling music, including promo CDs that are often issued by record labels. Universal Music Group sued Augusto and his company back in 2007, arguing that the distribution of the CDs without its permition was a violation of copyright.

The U.S. District Court, in its 2008 ruling, disagreed with Universal’s stance, indicating that, legally, UMG’s distribution of the promo CDs constituted a gift in that the label never required anything in exchange for the CDs.

According to, UMG’s options include asking for a re-hearing of the 9th Circuit, or to appeal to the Supreme Court, though neither option seems likely.

“The Ninth Circuit recognized an important principle: that you can’t eliminate consumers’ rights just by claiming there’s a ‘license agreement,’” Explained Joe Gratz of the Durie Tangri law firm, which represented Augusto. “Once a copyrighted work is freely given, the copyright holder isn’t in charge anymore.  The copyright owner can’t stop you from selling it or lending it to a friend.”

The ruling in this case is significant in that it could have implications for consumers’ rights regarding the resale of other copyrighted items.

Universal Music Group, home to artists such as Lil Wayne, Eminem, Kid Cudi, Kanye, Young Jeezy and many more, has yet to comment on the matter.