You can resell your old CDs, tapes, and records. That’s a no-brainer for music lovers who have sifted through piles of records to find old-school gems. But, according to a federal court in New York’s Southern District, the same right does not apply to the resale of digital files. So much for keeping that tradition alive in the mp3 era.

Capitol Records Building

In its March 29, 2013 decision, the court effectively held that the “first-sale” doctrine does not apply to the resale of digital music files. Under this classic copyright doctrine, consumers can resell physical goods after their initial purchase without infringing on the author’s copyright. In early 2012, Capitol Records filed suit against ReDigi, Inc., a company that allows its users to sell legally acquired digital music files through its website, for copyright infringement. The company’s technology deletes the music track from the seller’s iTunes and stores a copy on its server to resell to another user later. Even though the original track is deleted, U.S. District Judge Richard Sullivan found that the unauthorized transfer of digital music files over the Internet violates the copyright owner’s reproduction right under the Copyright Act. Judge Sullivan was unconvinced by ReDigi’s argument that the system does not copy but rather “migrates” the file from one of its users to its servers.

The court’s opinion touched on the fact that it did not want to extend the first-sale doctrine to digital files when Congress has declined to do so. This issue, among others, has prompted calls for reevaluation of the Copyright Act of 1976. Advocates for reevaluation argue that the Copyright Act should be updated to reflect technology’s impact on copyrighted materials. Just last month, the U.S. Register of Copyrights, Maria Pallante, testified before Congress, pushing for extensive revisions of the law.

In the meantime, ReDigi is said to likely appeal the decision. Do you agree with the court in this case? Should there be a distinction between digital files and hard copies? Even if you believe that there should be no distinction, is this an area where courts should get involved?

Veronica Gordon

 

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9 Responses to No Country for Old Mp3s

  1. Jacob Marshall says:

    I think the big issue will be the requirement of the First Sale Doctrine that you have to actually purchase the item to qualify for the defense. Most digital content is never actually sold to the end user – you are given a license to use the product. This prevents any attempt at resale on a secondary market. What’s particularly scary is that there is almost no incentive for companies to break rank and offer consumers a choice of actually owning what they’re paying for: companies have generally been able to keep prices the same even though their consumers no longer own the product and they make more money by stopping secondhand markets (sorry, Gamestop, but that’s why you’re one of the most shorted company on the NYSE).

    Consumer rights advocates in the EU recently had a small victory in fighting this licensing creep with the creation of a “first download doctrine.” Check out UsedSoft v. Oracle to see how it works.

  2. John says:

    Interesting post, Veronica. I have to agree with Tim’s point on this issue. Even though the transferability of digital copies makes it seem more difficult to apply the first-sale doctrine, many hard copies are just as easily duplicated and used in ways that the Copyright Act was meant to prevent. It is just as easy for me to burn a copy of a CD before I sell it as it is for me to retain an MP3 file on a separate device before I sell it to ReDigi.

  3. Emma says:

    Great post, Veronica. Though I can understand why we want Congress to update the Copyright Act itself to deal with changing technologies, I agree with Tim’s analysis regarding the relationship between illegal acts and the first sale doctrine. Danielle’s idea seems like an interesting way to go while we wait for action, if any, from Congress. I also thought Caitlin’s comparison to the use of DVR was interesting, though maybe we can draw a line between the situations relating to whether it’s for resale or personal use.

  4. Caitlin Buckstaff says:

    When I first read this post, my mind went immediately to a case I read last semester about whether the copying that occurs when you DVR a television show constitutes unlawful copying. The case I am referring to is Cartoon Network, LP v. CSC Holdings, Inc. (2d Cir. 2008). Although the case deals with the streaming of television shows using DVR and not the first sale doctrine, I thought it was applicable to this discussion. The Second Circuit found that copying the streaming content for the purposes of buffering did not constitute unlawful copying. Conceptually, I do not see how what ReDigi did by copying and storing for later the MP3 files is much different than the lawful copying that occurs when you use a DVR. Unfortunately, I am not well versed in how file transferring or streaming content works, so I may be missing something. Nonetheless, I think both the Cartoon Network and ReDigi cases illustrate the need for Congress to revamp the Copyright Act of 1976 by making it more up-to-date with modern technology, especially since we are evolving into a technology-dependent society.

  5. Tim Van Hal says:

    Interesting topic, Veronika. I have to say that I agree with Dahni on this. I also would assert that the First Sale Doctrine should apply here, or at least digital file resale should not be excluded from the Doctrine for simply being more distributable. Although it is true that digital files are more easily transferrable than physical ones, the fact that some people (illegally) retain a digital copy after selling the digital version is no more of a problem to First Sale Doctrine than is the fact that some people (illegally) purchase physical copies and rip them into digital format. We did not respond to the phenomenon of ripping music by outlawing the sale or resale of physical copies. I am not saying that it would be wrong to exclude the resale of a digital files from the protection of the First Sale Doctrine; however, it is little worse than other activity we do allow.

    And while maybe it would be best to extend the First Sale Doctrine to digital file resale, I applaud the court for choosing not to do so. Congress created the sinkhole that is the Copyright Act of 1976, and Congress is the one that should fix it.

  6. Danielle Barav says:

    I wonder if we can get around this problem if the companies that broker these transactions require that a certain amount of the resale price return to the first seller. This way, the artists still get paid and consumers may be more inclined to purchase Mp3s. Especially if someone’s music tastes change quickly, this could be a great way to discourage illegal downloading.

  7. Matt Ginther says:

    Thanks for the article, Veronica. I have to agree with Erin here. There is something very different about digital files as compared to other items to which the first-sale doctrine applies.

    The Court is on fairly solid footing when it determined that the service quite literally infringes on the copyright holder’s rights by creating a reproduction. But perhaps the court should have allowed type of reproduction because it was still within the spirit of the first-sale doctrine. My main problem with that is that the first-sale doctrine never conceived of digital files and so it is incredibly hard, if not impossible, to apply the general principle. Further evidence of this is our common experience that when we purchased these music files, very few went in with the expectation that they were purchasing something for which they had the right, or even the ability, to resell. It’s notable that ReDigi is a new technology that recently came onto the scene as opposed to traditional second-hand markets that have been around for as long as commerce.

    As long as it is unclear how digital files fit within the realm of first-sale, it seems that the court was playing it smart and safe by applying the letter of the copyright act as it concerns the holder’s reproduction rights.

  8. Erin Reimer says:

    Interesting article, Veronica. I’m not sure I agree with Andrew on this one. Digital files are different from books, for example, because they are so easily transferable for the user. When we are licensed a song on iTunes, we can then put it on our iPod or even burn it onto a CD (do people still burn CDs?). Thus, even if ReDigi deletes the file in your library once it’s “transferred” to the new buyer, it seems to me that the original buyer still may have access to the song on another device where it was previously stored. That possibility doesn’t seem to jive with how the First Sale Doctrine traditionally works.

  9. Andrew Bauer says:

    The first sale defense should absolutely apply to digital as well as physical copyrighted items. If the service performs as it claims, the distinction between selling a used CD and the transfer/deletion of the file that occurs in ReDigi doesn’t seem important to me. Since it is technically making a copy, it probably violates the letter of copyright law (as the court held), but the software, as I understand it, seems to comply with the spirit of the law.