U.S. Court Says No Garage Sales for Digital Content

U.S. District Court Judge Richard Sullivan delivered a ruling that favored Capitol Records in a case against MP3 digital music re-seller ReDigi. The case may be used as precedent in the future for other digital contents, including e-books, digital magazines, digital movies, digital TV shows, and apps. In his ruling Judge Sullivan says that it is illegal to re-sell digital MP3s–as the case pertains–and that in doing so, ReDigi is violating current copyright laws.

ReDigi is a startup service that had attempted to create a second-hand marketplace for unwanted digital MP3s that users may have purchased through services like iTunes, Google Play, Amazon, Rhapsody, and others. The idea is that if the license owner bought the song or digital album and no longer wants it, those tracks can be re-sold to another party and the original MP3 copy must be deleted.

Citing the ‘first sale doctrine,’ ReDigi says that it is entirely within its legal rights for people to re-sell what they don’t want, use, or need. It’s the same principle that Netflix uses to stream and rent content, and it’s the same doctrine that allows people to buy and re-sale physical albums and songs in the forms of records, cassettes, CDs, and DVDs.

However, the court disagreed. “The court grants Capitol’s motion for summary judgment on its claims for ReDigi’s direct, contributory, and vicarious infringement of its distribution and reproduction rights,” Sullivan wrote in his decision. “The court also denies ReDigi’s motion in its entirety.”

The problem with ReDigi’s business model is that there is no way to tell that the original MP3 track or album was deleted from the original purchaser’s computer or storage drive after that same song has been re-sold on ReDigi’s marketplace. According to the company, the ruling affects mostly the ReDigi 1.0 business model and the company intends on keeping ReDigi 2.0 going.

Various other players are beginning to broach the idea of the second-hand digital marketplace. Most recently, Amazon and Apple, both with large digital storefronts, have explored the idea through various patent filings with the United States Patent and Trademark Office, that attaches a type of DRM to help control and thwart unauthorized access to the content by the original purchaser once it has been re-sold to a secondary buyer.

And aside from the secondary market, there are other implications to the legal precedent set in this case. As our needs and use for technology has shifted to the cloud, there have been questions on how to bequeath one’s digital possessions to a surviving relative or friend after death. With a physical DVD or CD, that’s easy, but laws surrounding digital licenses and ownership are often more complex.