ReDigiGone are the days when music fans could resell their outdated collection freely without violating the 1976 Copyright Act.  Due to technology, downloading MP3s are the preferred method to purchase music now, and, according to a U.S. District Court in Manhattan, these are not material items that legally may be put on the market under the “first sale doctrine.”  The court granted summary judgment in favor of Capitol Records for its claims against ReDigi, the aspiring creator of a used digitial marketplace, finding it with direct, contributory and vicarious infringement of the recording company’s distribution and reproduction rights.

ReDigi, an online marketplace for “preowned” digital music, had positioned itself as a pioneer, allowing consumers to sell legally acquired digital music files and to buy digital music from others at a fraction of their price, say,  on Apple’s iTunes.  ReDigi’s “Media Manager” must be installed on a user’s computer to determine the eligibility of the music files to be sold on the web service. This verification process involved analyzing the files to verify they were purchased from iTunes or another ReDigi user; vetted files then could be uploaded to a remote server or “cloud locker,” thereby deleting additional copies of the file from owners’ computers.

Columbia argued that a “copy” was made on ReDigi’s server of each upload, thereby infringing on its exclusive right to reproduce its copyrighted works. The court agreed, finding that the unauthorized transfer of a digital file over the Internet, where there is only one file before and after the transfer, constitutes a reproduction under the Copyright Act.  To define a reproduction, the judge turned to London-Sire Records Inc. v. John Doe 1, where a court held that when users download a digital music file to their devices’ hard disks, the file, under the Copyright Act, is “reproduced,” as occurs with “phonorecords.” If this were so, digital files copied on ReDigi’s “cloud Locker” were reproductions infringing on Columbia’s exclusive rights.

While Section 106 of the Copyright Act grants copyright owners exclusive rights to reproduce and distribute protected works as fixed in copies and phonorecords, these are limited by section 109, setting forth the “first sale” doctrine.  That doctrine provides that “the owner of a particular copy or phonorecord, is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord.”

The court rejected ReDigi’s fair-use and first-sale defenses, where it asserted it had a right to resell legally made and acquired digital music, even if there were reproductions. Not only did the court rule that ReDigi’s reproduction and distribution of Columbia’s works fell outside of the fair use defense, it further held that the firm had no first-sale protections because those apply only to “lawfully made” reproductions, which the firm’s were not.  Moreover, the court said ReDigi users sell a new copy of their originals, created by downloading a song onto her hard drive; the Copyright Act only protects distribution by the owner of a particular copy of that copy.

The judge said the courts’ deference to Congress when technology alters markets for copyrighted materials limits interpretation of the Copyright Act; if the first-sale doctrine will be extended to cyberspace, Congress must act to do so, the judge said.