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ReDigi's Loss Fuels IP Fight Over Digital Resales

A significant copyright decision this week has lawyers, bloggers and commentators speculating about the future of the first sale doctrine in the digital age. U.S. District Court Judge Richard Sullivan has granted summary judgment in favor of Capitol Records in its infringement suit against online digital music reseller ReDigi, which bills itself as "The World's First Pre-Owned Digital Marketplace." Sullivan rejected ReDigi's first sale defense, holding that the defense "is limited to material items, like records, that the copyright owner put into the stream of commerce" and finding that, in reselling digital music, ReDigi is "distributing reproductions of the copyrighted code embedded in new material objects, namely, the ReDigi server in Arizona and its users' hard drives." Sullivan wrote that the first sale defense "does not cover this any more than it covered the sale of cassette recordings of vinyl records in a bygone era."

On the Electronic Frontier Foundation's Deeplinks Blog, EFF's Corynne McSherry writes that what is "particularly frustrating" about the ruling is that "the court reached that decision despite the fact that Redigi went out of its way to prevent actual harm to any copyright owner." The method by which ReDigi transfers ownership of the digital music files was a point of contention in the suit, with ReDigi at one point comparing the process to a train, bringing a file from one destination to another, and the judge himself during oral argument likening it to a Star Trek "transporter." In an article about the ruling on the Publishers Weekly website, James Grimmelmann explores the issue, writing that "the Internet is both a transporter and a cloning machine. Unfortunately, copyright law is firmly, thoroughly convinced that technologies can only be one or the other."

TIME Tech correspondent Matt Peckham, in an opinion piece on that site, discusses another challenge to the resale of digital content: the fact that it is "perma-new" and doesn't deteriorate over time in the manner of most used goods offered for resale. But Peckham argues that "'Newness,' 'sameness' and 'valued' aren't always the same things, and even where they are, it's surely not incumbent on consumers who buy a digital object to protect the copyright owner's market by sacrificing a time-honored practice like being able to resell it, is it?"

At the start of his order, Judge Sullivan noted that the court was not taking on such policy questions. "Because this is a court of law and not a congressional subcommittee or technology blog, the issues are narrow, technical, and purely legal," he wrote. Sullivan concluded that ReDigi was asking for "judicial amendment of the Copyright Act to reach its desired policy outcome," and declined to provide it, writing that "here, the Court cannot of its own accord condone the wholesale application of the first sale defense to the digital sphere, particularly when Congress itself has declined to take that step."

Attorney Aaron Sanders, who has written extensively about the case on his blog, offers a counter to that position in a post today analyzing the decision. "Isn't it just as fair to say that, in ruling against ReDigi, the court has significantly expanded copyright, and only Congress should be allowed to do that?" Sanders writes. "In any case pitting two sets of entrenched interests, like this one, there is going to be a policy winner and a policy loser -- the landscape of copyright law will be altered one way or the other."

ReDigi is still facing damages and is likely to appeal. Sullivan's order gives the parties until April 12 to present their position on the next steps in the case. Of course, the varied and complex issues involved in the resale of digital goods will not soon be resolved. Much of the coverage of the ruling draws connections to the high-profile patents issued to Amazon and, most recently, to Apple, that involve methods for resale and transfer of digital content. As Chris Morran writes at the Consumerist blog, "It's inevitable that widespread digital reselling will someday be allowed, though we only have the murkiest picture of what it may look like."

Posted by Product Team on April 3, 2013 at 04:14 PM | Permalink | Comments (1)


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