Facts

Plaintiff UMG Recordings Inc. provides promotional CDs to individuals who review music as well as other industry insiders. Troy Augusto sells music collectibles, including promotional CDs, on eBay, an auction website online. He buys the CDs at secondhand stores and on eBay. UMG notified eBay that Augusto was in violation of copyright law. eBay froze Augusto's account, which was later reinstated. UMG brought a claim against Augusto, asserting that his sales violated their copyright interest in sound recordings.

PLAINTIFF'S CONTENTION'S: UMG claimed it owns the license to disseminate the CDs and that this license prevents resale by others, as titled is retained by UMG only.

DEFENDANT'S CONTENTIONS:
Augusto claimed that his conduct fell within the protection of the "first sale doctrine", which provides that if a holder is involved in a lawful disposition of copyrighted property, other dispositions need not be authorized by the copyright owner.

Damages

UMG requested damages pursuant to the Copyright Act for Augusto's allegedly illegal conduct. Augusto's counterclaim contended that the suspension of his eBay account harmed his business and demanded damages, costs, plus attorney fees pursuant to DMCA 512(f).

Result

Summary judgment was granted in favor of Augusto regarding the infringement claim because title to the CDs transferred to recipients and the first sale doctrine applied. UMG was granted summary judgment on Augusto's counter-claim because UMG acted in good faith and never made knowing misrepresentations.