US Court To Decide Whether Sale Of Pre-Owned Digital Music Infringes Copyright

Since the rise and fall of Napster, courts have struggled to adapt existing copyright law principles to protect rights holders from unauthorized file sharing. The recent case of Capitol Records v ReDigi Inc presents a novel twist to this saga that will likely test the limits of such protections: Can a person lawfully sell a single copy of a digital music file to a buyer if the seller forfeits possession of the file? ReDigi Inc (ReDigi) operates an online music store that allows users to buy and sell pre-owned digital music files at prices lower than conventional online music stores, including the iTunes Store and Amazon.com. By contrast with file-sharing sites, ReDigi transfers a single, licenced music file from a seller to a buyer and ensures that only one single copy survives the sale, thus preserving the number of licenced copies. In effect, ReDigi is similar to a bricks-and-mortar re-seller of used CDs. Capitol Records filed suit against ReDigi and brought a motion for a preliminary injunction to shut down ReDigi’s web site. Capitol claimed that ReDigi infringed its copyright by reproducing and distributing Capitol’s works without consent. On February 6, 2012, the US District Court for the Southern District of New York denied the motion on the basis that the balance of harm in granting the injunction favoured the interests of consumers in keeping ReDigi’s site functioning. In arguing the motion, Capitol asserted that ReDigi is not protected by the ‘First Sale’ exemption to copyright infringement, 17 USC § 109, which is available to re-sellers of used CDs. That exemption, asserted Capitol, only protects the copy made from a ‘particular copy’ and does not permit users to make a second copy, sell the second copy and then delete the ‘particular copy’. ReDigi argued that its act of making intermediate copies of the music file is protected by the ‘Essential Step’ exemption to copyright infringement, 17 USC § 117(a), which states that it is not infringement to copy a computer program if making the copy is an essential step in the utilization of the computer program. If the case proceeds to trial, the Court may have an opportunity to adapt copyright law in a manner that strikes an appropriate balance between the rights of creators and users of digital content, in an ever-changing technological landscape. For a link to an article reporting the case, visit: http://tinyurl.com/88lxxnx For a copy of Capitol Records’ complaint, see: http://tinyurl.com/72antvm And for a link to the transcript of oral arguments for the motion hearing, visit: http://tinyurl.com/7t9locm Summary by: Darren Hall