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The copyright status of MP3 resale back in court via the ReDigi appeal

By | Published on Wednesday 23 August 2017

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The debate over whether or not it is possible to move a digital file from one device to another without that transfer constituting a copy – and therefore being controlled by copyright – was back in the American courts yesterday as the long-running dispute between Capitol Records and tech firm ReDigi reached the Second Circuit court of appeal.

As previously reported, ReDigi ran a marketplace where people could resell digital music files they had legitimately acquired to third parties. It was a digital version of the second hand record shop, with ReDigi arguing that the principle in copyright law that says that consumers can resell physical records without the copyright owner’s permission – what is called the first sale doctrine in the US – should apply to digital music files too.

The record industry disagreed. The labels pointed out that when you resell a CD no copying is involved. Whereas when an MP3 moves from one device to another, by definition, a copy takes place. And even if you can ensure that the original copy of the file is then deleted from the first device, the ‘reproduction control’ of the copyright has still been exploited, and that requires a licence from the copyright owner.

When Capitol – then still an EMI subsidiary – sued the tech start-up for copyright infringement in 2012, ReDigi – which always insisted that its technology ensured that there was only ever one version of a resold digital file in existence at any one time – presented various arguments to counter the label’s claims. In particular, it got technical about why its file transfer system didn’t constitute copying, while also continuing to insist that the aforementioned first sale doctrine should apply to digital.

In 2013, a judge ruled in favour of Capitol – by then a Universal label – stating that: “ReDigi facilitates and profits from the sale of copyrighted commercial recordings, transferred in their entirety, with a likely detrimental impact on the primary market for these goods. It is beside the point that the original phonorecord no longer exists. It matters only that a new phonorecord has been created”.

ReDigi appealed and, despite the company filing for bankruptcy last year, that appeal process continues, hence the hearing in the Second Circuit this week.

According to Law 360, yesterday Robert C Welsh, speaking for ReDigi, re-presented his client’s core arguments, while citing a little case law that he reckoned backed up his interpretation of American copyright. He then argued that the lower court never really determined how ReDigi’s technology actually worked, and therefore wasn’t in a position to rule on whether or not a reproduction took place when files were transferred via the platform.

Welsh: “The real issue in this case is does ReDigi’s technology cause a reproduction of Capitol’s copyrighted work to be created even for a fraction of an instant of a second. And the answer, based on the uncontroverted evidence presented by ReDigi, is that ReDigi’s technology does not – it never does – cause the creation of second instance a second copy of the copyrighted sound recording”.

Speaking for Capitol, Richard S Mandel insisted that transferring a digital file from one device to another had to involve some copying. “If you embody a copyrighted work in a new material object”, he told the appeal judges, “by definition you have reproduced the copyrighted work and violated the reproduction right”.

The judges asked an assortment of technical as well as legal questions during the session, and we now await their ruling on the appeal. Given ReDigi’s bankruptcy – not to mention the shift of the digital music market away from downloads over to streaming – it’s not clear quite what a ruling in the tech firm’s favour would mean in terms of its business model. Though either way the judgement should set an important precedent in US copyright law.



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