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ReDigi takes out loans as EMI legal battle continues

By | Published on Friday 20 July 2012


As controversial MP3 resale service ReDigi continues to battle a lawsuit launched by EMI, Digital Music News has noted that the tech start up has recently secured an extra $760,000 in funding.

However, the money has come from loans rather than equity-based investment, meaning it will have to paid back with interest down the line. Presumably that means that the company needs new monies to develop its product while paying ongoing legal fees relating to the EMI case, but that, given the uncertainty the litigation creates, few investors would be willing to put money into the firm in the traditional way.

As previously reported, the legalities of a website that enables people to resell used MP3s are somewhat ambiguous, which prevented EMI from securing a summary judgement in its favour, but which could make any full court hearing time-consuming and expensive. ReDigi insists its service complies with US copyright law, mainly by relying on the so called ‘first sale doctrine’, while EMI argues that ReDigi just helps others to commit copyright infringement.

While ReDigi won round one of the legal battle – when EMI failed to get its summary judgement – at the time various commentators wondered whether the start-up had the funds available to fight such a complicated lawsuit, even if ultimately the courts ruled in its favour. Such speculation grew when the firm’s lawyer quit the case, implying some bills remained unpaid. But the tech firm insisted it could see the case to its conclusion, adding that it had switched lawyers to bring in representatives particularly experienced in this area of law.

The new loans will help with that plan presumably, though whether it will be enough to allow ReDigi to weather this storm and grow its business remains to be seen.