ReDigi Loses Copyright Battle in Court

Digital technology has transformed a huge number of industries, changing the way people interact with goods and services, and creating all sorts of complications involving ownership and copyright infringement. The battles over these rights in the entertainment world have been furious, and don’t seem to be going away. While digital film, TV, book and music sales are now completely commonplace, the way these virtual assets are bought, sold and transferred is still frequently contested. One company on the cutting edge of these issues is ReDigi, an online marketplace that launched towards the end of 2011 to give private citizens a way to resell digital music they had purchased online. In what may end up considered a landmark case, a New York federal judge ruled that ReDigi’s platform infringes on the record label’s copyright ownership.

ReDigi’s argument is that their claim is covered under a defense known as “the first sale”. This is a legal principle that suggests that once someone purchases any sort of copyrighted item, be it an album of music, a book or a painting, they should be allowed to resell that item as they see fit. ReDigi felt that this same argument should also hold true for digital items that are copyrighted. But Judge Richard J. Sullivan was having none of it. He declared ReDigi will be held liable for infringing on the copyright held by Capitol Records, the other party in the suit.

In fact, Judge Sullivan discounted the first sale doctrine entirely. In his remarks, he mentioned vinyl records and cassette tapes as a comparison, suggesting that those were not covered under the same defense either. That would be news for the hundreds of used record stores across the country populated with copyrighted works resold by private citizens.

ReDigi released a statement declaring their disappointment with Judge Sullivan’s ruling. They will be appealing the decision, but also very quickly pointed out that the copyright infringement findings only apply to ReDigi 1.0, and cannot be held against their recent update to version 2.0. The judge didn’t like this suggestion either, and underlined that future updates won’t be considered unless they are brought up in a suit. Regardless, the ruling on ReDigi 1.0 is firm and clear. Damages will be awarded to Capitol Records, but the exact amount has yet to be determined.

ReDigi is fairly small potatoes in the digital marketplace, but prominent players like Amazon and Apple have been closely monitoring this case. Both online giants are attempting to patent their own secondary marketplace offerings, neither of which have launched yet. It’s clear that record companies aren’t willing to play ball with this approach, regardless of how it may help the band or music promoter trying to sell concert tickets. ReDigi promised that once a secondary sale is completed the original file would be deleted from the previous owner’s hard drive. But that didn’t seem to impact the ruling, which was clear and seriously one-sided. Things may escalate all the way up to the Supreme Court, which has ruled in favor of the first sale doctrine in the past.