×
You will be redirected back to your article in seconds

Court Rules Against Digital Music Resale Site

A federal judge ruled in favor of the record industry’s contention that a reseller of digital music infringed on copyright, rejecting startup ReDigi’s contention that such virtual transactions were protected by the “first-sale” doctrine.

The unusually lively ruling  was handed down in New York’s Southern District Court on Monday, backing Capitol Records’ contention that the sale of “pre-owned” digital music was different from the resale of physical CDs in a used record store.

Consumers have the right to resell physical goods after the initial purchase without the permission of the copyright owner. But ReDigi, launched in 2011, is challenging whether it applies to virtual goods, as a first-of-its-kind retailer of “pre-owned” digital music. Per the company, a user can sell a legally acquired digital music file through its site, with ReDigi’s technology deleting the track from the seller’s iTunes and storing a copy in its cloud locker to resell to another user.

Even though the process necessarily involves making a reproduction of a copyrighted work, the company claimed that its policies were protected by the “first sale” doctrine because the original track is deleted, and the site would not be creating a cumulative increase in the number of copies of that track. Capitol Records filed suit for copyright infringement nonetheless, arguing that the transfer involved an unauthorized reproduction of copyrighted material.

Calling the case a “fundamental clash over culture, policy and copyright law,” U.S. District Judge Richard J. Sullivan acknowledged the case’s novelty. He wrote that “courts have not previously addressed whether the unauthorized transfer of a digital music file over the Internet – where only one file exists before and after transfer – constitutes reproduction within the meaning of the Copyright Act.  The Court holds that it does.”

RiDigi is expected to appeal.

If pursued far enough, the implications of the case start to plumb metaphysical quandaries whose complexity seems almost disproportionate considering the uncertainty over whether ReDigi’s service even constitutes a functional business model. Nonetheless, Sullivan cited an earlier case involving P2P sharing which held that the transfer of a copyrighted digital sequence onto physical disc space entails a “material object” in which the information would be embodied following a transfer, making that transfer subject to Copyright Act parameters, as “confirmed by the laws of physics.”

In conclusion, however, Sullivan somewhat punted the larger issues at play toward Congress, noting that “the Court cannot of its own accord condone the wholesale application of the first sale defense to the digital sphere, particularly when Congress has declined to take that step.”

Earlier this month, U.S. Register of Copyrights Maria Pallante called for a reevaluation of the Copyright Act, and suggested that such issues are ripe for consideration.

More Biz

  • Here’s How Much Money 10 Artists

    Here’s How Much Money 10 Artists Are Owed by PledgeMusic

    For eight years, PledgeMusic was a success story: A direct-to-fan platform where artists worked directly with their audiences to fund their albums, tours and all stripes of merchandise, with fans able to purchase everything from custom guitar picks to private concerts. Yet last June, Variety broke the news that the company is struggling to pay [...]

  • Korea's CJ CGV Switches Turkey CEOs

    Korea's CJ CGV Switches Turkey CEOs as It Battles With Local Industry

    Yeun Seung-ro has been appointed as CEO of CGV Mars Entertainment, the Korean-owned company that operates Turkey’s largest cinema chain. He replaces Kwak Dong Won, another veteran of the CJ-CGV group. The change of personnel may reflect two ongoing battles within the Turkish film industry. CJ-CGV, which bought Mars for some $650 million in 2016. [...]

  • China Video Streaming Giant iQIYI Loses

    Chinese Video Giant iQIYI Loses $1.3 Billion in 2018

    Chinese video streaming firm iQIYI lost over $1.3 billion in 2018, as revenues and subscriber numbers ballooned. The deepening losses reflected ever higher spending on original content production. Announcing its first full-year financials since a March IPO that launched it onto the NASDAQ, iQIYI said that it lost $1.3 billion (RMB9.1 billion) last compared with [...]

  • Lisa Borders Time's Up

    Time's Up CEO Resigned After Son Was Accused of Sexual Assault

    Time’s Up has announced in a statement posted to Instagram that its former president and CEO Lisa Borders, who resigned Feb. 18, did so after her son was accused of sexual assault in a “private forum.” “Within 24 hours, Lisa made the decision to resign as President and CEO of Time’s Up and we agreed [...]

  • Louis Tomlinson Signs With Arista (EXCLUSIVE)

    Louis Tomlinson Signs With Arista (EXCLUSIVE)

    One Direction’s Louis Tomlinson has signed with Arista, sources tell Variety. While the singer was formerly linked with Epic Records in 2017, he is signed directly to Simon Cowell’s Syco label and will move within the Sony Music family to Arista. Tomlinson teased a new single on Feb. 2, posting on Twitter, “Just heard the [...]

  • Jussie Smollett

    Jussie Smollett's Bail Set at $100,000, Must Surrender Passport

    UPDATED: A Chicago judge set a $100,000 bond for Jussie Smollett on Thursday, as the “Empire” actor made his first court appearance. Smollett faces one felony count of filing a false police report. Police allege that Smollett staged a Jan. 29 attack, telling detectives that he was accosted by two men who used racial and [...]

More From Our Brands

Access exclusive content