Earlier this month, US District Judge Richard Sullivan ruled against EMI’s Capitol Records’ request for a preliminary injunction against the digital-music reseller ReDigi. Capitol had wanted the service closed down but Judge Sullivan denied the record company’s demand and insisted that the service should stay online and the case go to trial. The judge’s action has been widely reported as a victory for ReDigi and to some extent it is. Not every day can a start-up company say it has fended off one of the world’s biggest record companies. But in the longer term, having the case go to a full trial can only be a good thing for the music industry. Should Judge Sullivan have ruled without a trial that ReDigi was infringing copyright then the issue of legality would rumble on and proponents of digital resale would simply claim they have been trodden on by a big corporation wanting to protect its business.
When Capitol and ReDigi take to the courtroom a number of issues will be settled. Most important, however, is the need for clarity on whether a digital track can ever be resold under US copyright law. The reselling of recorded music in hard format is a well established practice and one that has followed the wider developments in music retail. The dominant format for new and secondhand music is the CD, with vinyl something of a collector’s item. However, the transition away from hard formats and toward digital downloads is where the secondhand process of resale, according to Capitol Records, effectively ends.
Capitol says ReDigi cannot claim that its conduct is protected by US copyright law under the “first sale doctrine” as the owner of a particular copy or phonorecord has not given permission to make another copy. Most download retailers have pretty clear terms for their customers. Amazon, for example, says a buyer “may copy, store, transfer and burn the digital content only for your personal, non-commercial [and] entertainment use.” Amazon also says that it grants the buyer a “non-transferable right to use the digital content for your personal, non-commercial [and] entertainment use.” This is pretty clear. But is it legal? Can a digital-music reseller control whether a buyer can resell digital content after the first sale is made? ReDigi says no.
According to ReDigi, the technology used in the resale process facilitates the “verification” and “handoff” of a digital-music file from the seller to the buyer, ensuring that the file is from a legitimate source and eligible for resale and that any additional copies of a sold file that might have been made by the seller are deleted. ReDigi says the “first sale doctrine” allows the purchaser to transfer a lawfully made copy of the copyrighted work without permission once the music file has been obtained. This, according to ReDigi, means that the rights holder has no control over the change of ownership once the copy has passed to someone else, as long as the copy itself is not an infringing copy. ReDigi adds that the service it provides differs from file sharing because there is no sharing of music files, because the technology used in the resale process does not allow its users to sell music files if it discovers that copies of those music files are already offered for sale by another user.
There are further accusations made against ReDigi regarding the provision of a 30-second sample, which is offered by most digital-music retailers to give prospective buyers an opportunity to listen to a short section of any available track before buying it. Capitol claims that providing a 30-second sample stream without permission constitutes willful copyright infringement.
The case, when it comes to court, will center on how ReDigi overcomes the nontransferable right granted by the original digital-music retailer at the time the original track is bought. It would certainly seem at this stage that the weight of evidence is against ReDigi. But Judge Sullivan believes that the issue of digital resale should have its day in court and he is right in his belief that legal proceedings should determine whether digital resale has a place in the modern-day music industry. Although this might mean a nervous few months wait for the music industry, the technology sector is forever accusing the music industry of predetermining the legality digital-music initiatives. For the music industry, having a court nip digital resale in the bud is the only way of ending the argument once and for all.
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