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ReDigi case reaches court

By | Published on Monday 8 October 2012


EMI’s main US label Capitol Records may now be a division of Universal Music, but its lawsuit against MP3 resale website ReDigi continues, and on Friday the whole palaver reached court.

As much previously reported, ReDigi is a US-based service which allows users to sell on their MP3 collections, in much the same way they might sell on used CDs via eBay or the Amazon Marketplace. The start-up says that the principle in US copyright law that allows the resale of CDs – the so called first sale doctrine – also applies to digital music.

But the big music companies do not agree. They argue that the first-sale doctrine only applies to physical music products, mainly because when a CD changes hands no actual mechanical copy is made of the songs or recordings contained on the disk, whereas when an MP3 is transferred from one PC to another a copy does take place.

And while only one person can possess the original CD at any one time, in the digital domain the seller could keep a perfect copy of a recording while also providing another perfect copy to the buyer. That, the majors argue, is copyright infringement, and by providing the platform ReDigi is liable for contributory infringement.

But ReDigi has argued that its technology tackles that issue, by ensuring the buyer’s copy of a track is deleted, and therefore, in essence, the track is transferred from PC to PC rather than copied. Therefore, the digital company reckons, its service is valid, under American copyright law at least.

Pursuing this one on behalf of the American record industry, EMI’s Capitol Records initially pushed for a summary judgement in its favour, a ruling that would have basically killed ReDigi’s business before it had even got off the ground. But in February Judge Richard Sullivan refused, saying that this case posed some big questions about the intricacies of American copyright law in the digital domain, and that a full hearing should be had so those intricacies could be fully discussed.

With opening remarks given to the court on Friday, lawyers for the two sides summarised their arguments to date. Addressing ReDigi, Capitol’s rep Richard Mandel said: “You are selling and distributing recordings. In order to do that, you have to make a copy and that is a violation of the reproduction right of the Copyright Act”. But Gary Adelman, representing ReDigi, countered: “There is no copy involved. The actual file is being transported. That’s how the technology works”.

This time both sides are calling for summary judgements in their favour, something Sullivan said he would consider in due course, though given his statements back in February you’d assume the judge is still in a mood to hear the full arguments from both sides in the courtroom before making a ruling that could set a precedent that blocks or launches a new strand of the digital music market, one that excludes the rights owners. According to Bloomberg, Sullivan said on Friday: “We’re not making policy. Ultimately, what this is about is interpreting and applying an existing statute”.

As previously reported, some have wondered whether a start-up the size of ReDigi has the funds to fight a complicated legal case of this kind if a full hearing is required, though the digital firm insists that it does. In July the company, which also has ambitions to work directly with artists, secured an extra $760,000 in loans.