I can’t resell my “used” digital music?!

The reselling of used materials such as CDs, books, video games, etc. is a practice that is very common in current society.  Digital music like CDs can be sold when you’re done too, right?  Wrong! According to a New York court, this can be a violation of the copyrights of the creator. This post is the follow-up to a previous post “Do You Own Your Digital Media?”.
No music logo
No music logo (Photo credit: Wikipedia)

 

ReDigi, Inc. (ReDigi) sought to resell “used” digital music via a marketplace on the internet at a reduced cost.  To resell digital music, users download software that determines if their music is eligible to sell. Users who signed up to ReDigi’s marketplace allowed ReDigi’s to search their computer and upload all “eligible” digital music files stored on it onto ReDigi’s cloud. Eligible files were obtained from recognized sources (such as iTunes) and excluded music ripped from a CD or music obtained from an illegal music sharing site. The software continues to run scans on the user’s computer, to make sure users do not keep digital music files they have sold; people caught violating this rule have their accounts suspended.

 

ReDigi deals in credits, users can use credits to buy new music and receive credits for music files sold through the reseller  Most tracks sold were priced between 59 to 79 cents, however, unlike an original sale of music, no proceeds were paid to the rights owners directly but split between the seller (20%), an escrow account for the recording artist (20%) and ReDigi (60%).
Capitol Records, LLC (Capitol), a former EMI subsidiary (now within Universal’s label portfolio), owns catalogues for artists including Katy Perry, Coldplay and Norah Jones. Capitol brought action against ReDigi in January 2012 for copyright infringement and inducement for copyright infringement under the US Copyright Act as a result of its activities.
 
ReDigi argued that the “first sale doctrine” under US copyright law applied. The “first sale doctrine” entitles you to “sell, display or otherwise dispose of that particular copy, notwithstanding the interests of the copyright owner” and therefore ReDigi argued that consumers had the right to resell digital copies of music without infringement.
 

The Court upheld Capitol’s motion for summary judgment on 30 March 2013.

It found that where a copy of a music file is transferred over the internet it infringes Capitol’s reproduction and distribution rights in that copyright. It concluded that the “first sale doctrine” did not apply to digital media. The court determined that ReDigi is not protected by first sale because to resell music on ReDigi, the file must be transferred to the company’s servers in Arizona – which requires a technical, unauthorized recreation of the file. Guradian cited  Christopher Jon Sprigman, a law professor who is a co-author of the Knockoff Economy saying: “Yes, it’s making a copy, but only in the driest, most formal sense of making a copy.”
 

Sprigman said ReDigi’s process was “fairly reliable” and offered a way to transact digital goods without resulting in the proliferation of copies of a product. “From an economic basis that’s no different from taking the book that’s sitting on your bookshelf and putting it in a used bookstore,” he said.

Dismissing ReDigi’s defence, the Court said, “Thus the plain text of the Copyright Act makes clear that reproduction occurs when a copyrighted work is fixed in a new material object.” See Matther Bender & Co., Inc. v. W. Pub. Co., 158 F.3d 693, 703 (2d Cir. 1998). “The court in London-Sire noted that the Internet transfer of a file results in a material object being ‘created elsewhere at its finish…the Court determines that the embodiment of a digital music file on a new hard disk is a reproduction within the meaning of the Copyright Act.'”

This court has determined that the “moving” of a digital music file from one computer to another is a reproduction under the Copyright Act because he file has moved from one material object (the user’s computer) to another (ReDigi’s server). 

As a result, ReDigi were liable for direct, contributory and vicarious copyright infringement.

What does this mean??

Hopefully ReDigi will appeal because this case brings into question not only the resale of digital music, but the resale of other digital works protected by copyright including e-books.

It seems that we don’t really own the digital music we purchase, it is merely on loan. The freedom to resell and use it as we see fit is fundamental part of ownership. The Copyright Act might need to be updated to account for this new method of gaining access to music. I understand that a lot of the case law that has developed on the point has been in an effort to protect copyright owners from Peer to Peer file sharing. But as technology evolves and consumers purchase more digital media the law will need to evolve to protect their rights in these materials. Digital media becomes somewhat less valuable without the autonomy to do with it what you want. 

The scope of its application will become clearer in time especially because online giants such as Apple and Amazon have been granted patents for the transfer of digital goods. Neither has launched their platform and are no doubt keenly watching this case.

 

 

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