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Capitol Records Wins Lawsuit Against ReDigi

We recently reported on a new startup company, ReDigi, which intended to buy “used” iTunes files and resell them, in similar fashion to used book and record stores. Now a U.S. District Judge has ruled against ReDigi in a lawsuit brought by Capitol Records.

Capitol contended that ReDigi was violating copyright laws by allowing unauthorized reproduction and distribution, both from streaming 30-second samples of each song and from the sale of “used” files. The same judge had previously denied an injunction to shut down ReDigi. His new decision stated that:

“The novel question presented in this action is whether a digital music file, lawfully made and purchased, may be resold by its owner through ReDigi under the first sale doctrine. The Court determines that it cannot.”

“…the Court concludes that ReDigi’s service infringes Capitol’s reproduction rights under any description of the technology. ReDigi stresses that it ‘migrates’ a file from a user’s computer to its Cloud Locker, so that the same file is transferred to the ReDigi server and no copying occurs. However, even if that were the case, the fact that a file has moved from one material object — the user’s computer — to another — the ReDigi server — means that a reproduction has occurred. Similarly, when a ReDigi user downloads a new purchase from the ReDigi website to her computer, yet another reproduction is created. It is beside the point that the original phonorecord no longer exists. It matters only that a new phonorecord has been created.”

ReDigi has stated it will continue operating and will appeal the ruling, stating:

“The case has wide ranging, disturbing implications that affect how we as a society will be able to use digital goods. The Order is surprising in light of last month’s United States Supreme Courts decision in Kirtsaeng v. Wiley & Sons, which reaffirmed the importance and applicability of the First Sale Doctrine in the United States of America. Also, within the past year the European Court of Justice has also favorably underscored the importance of the “first sale” or the “copyright exhaustion” doctrine and its direct application to digital transactions.”

Read more on this story at Reuters and NPR.

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