A federal judge in New York has denied a preliminary injunction request by Capitol Records in its suit against digital music resale firm ReDigi.

Ruling late Tuesday by U.S. District Court Judge Richard J. Sullivan could open the door to a protracted and complex legal battle about the legitimacy of cloud-based “reselling” of digital products.

In ruling against Capitol late Monday, Sullivan said, “This is a fascinating issue. It raises a lot of technological and statutory issues.”

In January, EMI Music’s flagship label filed its action against ReDigi, alleging that the company’s marketplace for “used” digital music files is “a clearinghouse for copyright infringement and a business model built on widespread, unauthorized copying of sound recordings” (Daily Variety, Jan 10).

Suit contended that ReDigi is not in fact an “owner” of a lawfully made copy, but is creating and distributing unauthorized copies of an original file.

In briefs to the court, ReDigi officers, including chief technical officer and co-founder of the company, countered that only legally purchased and downloaded music files were eligible for resale.