Appeals Court Hands ReDigi Another Loss; Says Reselling Mp3s Violates Copyright Law

from the copies-of-copies dept

Things were never going to turn out well for mp3 remarketer ReDigi. Its business model — facilitating third party sales of digital files — worked better as a rhetorical device. It attempted — perhaps inadvertently — to obtain an answer to the eternal question: do you own the stuff you buy? When it comes to digital goods, the answer is almost always “no.” Platforms shut down. Rightsholders dissolve contracts. File formats lose support. And DRM is all over everything, frequently making pirated goods superior to those people pay for.

ReDigi claimed it could harness this untapped market, somehow providing a sales platform for infinite goods that wouldn’t allow sellers to sell the same goods infinitely. It claimed it could verify the destruction of the “original” files — something that could be easily circumvented by storing additional copies where ReDigi couldn’t “see” them.

Obviously, ReDigi was sued almost immediately. Records labels sought — but didn’t get — a permanent injunction blocking ReDigi from getting into the used mp3 business. But they did get a win in court roughly a year later. Five years ago, a federal court ruled in favor of record labels, finding that ReDigi’s business resulted in the production of new copies of files — something not allowed under copyright law. If ReDigi just allowed for the swap of physical media (hard drives, thumb drives with mp3s on them), perhaps it might be lawful. But even then, the court seemed unwilling to entertain the hardware option as anything but rhetorical

ReDigi appealed. Five years later, it finally has a decision in hand, but not the one it wanted. Eriq Gardner of The Hollywood Reporter has more details.

Writing for the panel of Second Circuit judges, Pierre Leval doesn’t buy ReDigi’s defense that there is no unauthorized reproduction at play when consumers use ReDigi to resell their digital files.

ReDigi argued that from a technical standpoint, its process of transfer shouldn’t be seen as making a reproduction because its system simultaneously causes packets of data to be removed from a consumer’s computer as those packets are transferred.

Leval responds, though, that during the transfer, a new copy of the digital file is “fixed…for a period of more than transitory duration,” and as such, the fixing creates a new phonorecord, i.e., a reproduction.

So much for the Right of First Sale, at least in this context. Copyright law is a “patchwork” (as Judge Leval calls It), a polite, appellate-level way of calling it a twisted mess of pre-digital-era artifacts that have resisted modernization thanks to legacy industry interference. There may be a path towards something more coherent, but those who can do something about it aren’t really doing anything about it. From the decision [PDF]:

The copyright statute is a patchwork, sometimes varying from clause to clause, as between provisions for which Congress has taken control, dictating both policy and the details of its execution, and provisions in which Congress approximately summarized common law developments, implicitly leaving further such development to the courts.

[…]

Notwithstanding the purported breadth of the first sale doctrine as originally articulated by the courts, see Bobbs?Merrill Co., 210 U.S. at 350 (“[T]he copyright statutes, while protecting the owner of the copyright in his right to multiply and sell his production, do not create the right to impose . . . a limitation at which the book shall be sold at retail by future purchasers . . . .”); Bureau of Nat’l Literature v. Sells, 211 F. 379, 381?82 (W.D. Wash. 1914) (finding no infringement, in light of first sale doctrine, where reseller re?bound used books and held them out as new books),

Congress, in promulgating § 109(a), adopted a narrower conception, which negates a claim of unauthorized distribution in violation of the author’s exclusive right under § 106(3), but not a claim of unauthorized reproduction in violation of the exclusive right provided by § 106(1). If ReDigi and its champions have persuasive arguments in support of the change of law they advocate, it is Congress they should persuade. We reject the invitation to substitute our judgment for that of Congress.

This is about as unhelpful as the laws being discussed. Congress left it to the courts “for further development.” The court is saying, “Take it up with Congress.” That leaves the Right of First Sale ripe for further development but both Congress and the courts feel the other party should handle it.

ReDigi’s case was never going to be the standard bearer for First Sale rights in the digital age. But it could have paved a path forward for better protections for consumers, allowing them to at least recoup some of what they’ve spent should a third party or rightsholder decide the stuff you paid for is no longer yours. Until that happens, digital media is worth less than the hardware storing it in terms of resale value.

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Companies: redigi

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Comments on “Appeals Court Hands ReDigi Another Loss; Says Reselling Mp3s Violates Copyright Law”

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19 Comments
John Mitchell (profile) says:

Re: Re: Re:2 Re:

I don’t think it is helpful to say “you take possession of a music file under a license.” First of all, you cannot “take possession of a music file” without it being fixed in some material object. There are no “music files” floating around in a disembodied state waiting to be plucked out of thin air. So the focus is properly on the material object, not the file.

Second, and I blame the 9th Circuit for adding to the confusion, the first sale doctrine is triggered by any owner of a lawfully made copy. It makes no difference at all whether the copy was lawfully made in a factory, shipped by truck, placed on a retail shelf and then bought by a consumer, or instead simply made by downloading. A copy made when an individual, with the consent of the copyright owner, downloads (reproduces) the work into a copy or phonorecord is just as lawful as one made by the copyright owner in a factory.

Scary Devil Monastery (profile) says:

Re: Re: Re:3 Re:

…all of which means that copyright simply can not be interpreted unambiguously outside of platonic theory. And that is a terrible state for legislation to be in.

Somewhere down the road "copyright" will go the way of the Red Flag Act or prohibition. I’m just very much afraid that by the time it does society as a whole will have become so sick of it even attribution will be deep-sixed.

Thad (profile) says:

Re: Re: Re:

"Rip it to MP3 if you want"

Which is also illegal….

No it isn’t.

Ripping a DVD or Blu-Ray is (typically) illegal because it requires circumventing its copy protection. Music CDs have no copy protection mechanism. Format-shifting them to play on other hardware is not illegal. Giving away additional copies of those MP3s to other people is.

Anonymous Coward says:

Re: Re:

"If you want to "own" your music buy it on wax or disc. "

Not even then. Copyright law today means that in theory a copyright holder is free to reclaim the media pattern from wax, vinyl or disc as well. Just not the actual material components. Material reality in general does not support this, and you probably didn’t sign an exculpatory EULA when you bought a physical storage medium.

Paradoxically, then, the only way not to be the victim of dishonest practice is – piracy.

It’s hard to muster much sympathy for copyright holders when their basic business model starts with fraud.

Space5000 (profile) says:

Re: Re: Re:

“Not even then. Copyright law today means that in theory a copyright holder is free to reclaim the media pattern from wax, vinyl or disc as well.”

Not saying I 100% know the law, but I don’t think a copyright owner can actually take back the “digital” thing inside the physical material around it by copyright law itself. Nothing is in any of the sections stating that <b>possession</b> of copyrighted content itself is an exclusive right.

Yet, it could be fair use to use it assuming “use” is a form of copying. Plus if there is a “no sale, it’s a license” style claim, then the first sale doctrine might likely apply to the copy.

Anonymous Coward says:

Cognitive Dissonance?

In the Aereo case, the Supreme Court ruled that the “behind-the-scenes” technical structure of the service was legally meaningless and all that mattered was the outward appearance and end result. In the ReDigi case, the court rejects that principle.

But which is it overall? Do internal technicalities or outward appearances count more in the eyes of the law? Or is it just a roll of the dice every time?

Peter (profile) says:

If the copying process is problematic ...

… why not operate a cloud storage where people can (legally) store their own music on redigi’s hardware – pretty much like Google, Apple and Amazon music used to work.

The sale of the music then becomes a simple transfer of ownership, with no files being copied. Just access rights change.

Anonymous Coward says:

Re: If the copying process is problematic ...

MP3.com thought it would be legal to allow people to store MP3s on their cloud server for their own use (and required that they prove ownership) but the record industry disagreed, and sued, winning over a hundred million dollars and shutting down MP3.com.

Anyway, in the current age of music streaming, the market for selling individual MP3s – whether new or “used” – is in a downward spiral.

Rekrul says:

If they’re going to declare that you can’t resell digital files, they should make it illegal to claim that you’re “buying” the digital files in the first place.

Amazon claims that you can “buy” episodes of TV shows. You can’t. You can pay for a perpetual license to stream them (for as long as they’re available online), but you can’t “buy” them in any meaningful sense of the word.

Gee, maybe I could “sell” a car, and the new owner could use it, but could never sell it to anyone else and I could still retain full control over what they could do with it, even take it back if I felt like it. I’m sure the courts would go along with that…

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