ReDigi's technology for selling used digital music files was found to be in violation of copyright law. The company claims a newer version of its technology will pass muster. Either way, the resale of digital goods may be here to stay.

Court Rules Against ReDigi Efforts to Resell Digital Music

In determining if ReDigi had infringed Capitol's exclusive right of reproduction, Judge Richard Sullivan found guidance in London-Sire Records, Inc v. John Doe 1. To make a long story short, the court in London-Sire determined that recreating a digital file on a hard disc is a reproduction within the meaning of the Copyright Act. In the context of ReDigi, the reproduction right is implicated whenever a file is reproduced, "regardless of whether the sound recording remains fixed in the original object."
 
ReDigi argued its technology allows it to "migrate" a copy of a file from the customer's hard drive to its server without making a copy. Put another way, as James Grimmelmann explained at Publisher's Weekly, ReDigi acts like a transporter that beams a file from one place to another. (The metaphor actually came up during oral arguments.) A transporter doesn't make a copy -- the Captain Kirk that beams down to the alien planet is the same Captain Kirk that started out on the Enterprise.
 
The judge and Capitol ended up seeing ReDigi's "transporter" the same way: it starts with an original and ends with a copy. Thus, ReDigi had made a copy of Capitol's work without authorization.
 
This story is already in its second phase. ReDigi, which has already said it will appeal the decision, says its 2.0 technology uses a "direct to cloud" and "atom transfer" technologies to transfer digital files in a different way and are not affected by the judge's ruling. And regardless of what happens with the appeal, many people expect there to be some kind of market for used digital goods in the future. 
 
The ruling in the ReDigi case won't eliminate the resale of digital goods, writes Bill Rosenblatt at the Copyright and Technology blog. Rosenblatt believes that in the event the ruling stands, digital resale will be limited to permissions content owners allow for their titles. "This will complicate the lives of resellers, but it will ensure that digital resale doesn’t harm copyright holders. In other words, ReDigi has let the digital resale genie out of the lamp. It’s bound to happen, one way or another."
 
There is much more at stake than the resale of digital music files. As ReDigi CEO Joel Ossenmacher noted to Fast Company, there's $40 to $45 billion a year being spent in the U.S. each year on games, books and movies. "If we add software, the number gets even bigger." The potential has lured Amazon, which was granted a patent for a secondary marketplace for digital objects in February (the patent was originally filed in 2009). The sheer size of the opportunity means others will attempt to create a secondary marketplace within the rule of the law.
 
"Right now, there is no future for reselling digital music, but I don't think this is the last word," Christopher Jon Sprigman, a law professor and co-author of the Knockoff Economy, told the Guardian. Indeed, Judge Sullivan practically invited this issue to become part of the copyright reform debate when he wrote the "narrow, technical and purely legal" issues in his decision came from "a court of law and not a congressional subcommittee or technology blog[.]"

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