By Kaitlyn Stone

 

Most of us have sold or bought something on Ebay or a similar consumer resale website. It’s not a very controversial topic: If you have no use for something or would like to make a little extra cash by selling something you have laying around the house, why not allow someone else to buy it off of you for a discounted rate. You get the money, and the buyer doesn’t have to pay as much for what they would buy new from the store. It’s a win-win. However, this topic becomes very controversial when what you are selling is digital music files. Suddenly, we become concerned that the sellers of music through online platforms are breaking the law, that they are somehow “cheating” the system and costing the record companies money. But is this true?

This was the subject of a court case in the Southern District of New York in 2013. In Capitol Records, LLC v. RiDigi, Inc., the court was presented with the issue of whether the resale of a lawfully purchased digital music file on an online platform is permissible under the first sale doctrine. RiDigi, Inc. operates an online marketplace in which users can resell legally purchased music to buyers at a fraction of the cost on other platforms such as iTunes or Amazon Music. In order to sell music on RiDigi, the seller must download a program onto their computer that sifts through their music library to find music files that are “eligible” for resale. Eligible files include only those that were purchased on music sites like iTunes, and files that are downloaded from a CD or other file-sharing websites are not eligible to be resold. The user may then choose any of the eligible files to upload to the online market place to be resold. RiDigi claims that they are very careful in the way that the files are uploaded in order to prevent two copies of the music existing or the seller being able to save a copy for himself. Additionally, no money is exchanged in the process. When users chose to sell a song, they are given credits that they can use to purchase other songs on the marketplace.

Capitol Records owned the copyright to many of the songs being sold on RiDigi’s website and filed the original suit claiming copyright infringement, particularly the reproduction right under 17 U.S.C. §106(1). RiDigi asserted that because they were only “migrating” a music file from one user to another there was no actual copying and therefore, no violation of the reproduction right. They also asserted defenses under both fair use and the first sale doctrine. The court ultimately granted Capitol Record’s motion for partial summary judgment because the court was unconvinced that a single file was transferred from one computer to another. Rather, the court determined that copying had to have taken place in order to provide the buyer with his own music file. Because of this copying, the court found that RiDigi violated Capitol Records reproduction rights. RiDigi then appealed this decision.

The appeal has been on going but a recent development in the case last month has shed light on what exactly the stakes are in this appeal. In February, two dozen copyright law professors filed an amicus brief urging the 2nd Circuit Court to overturn the decision of the District Court for the Southern District of New York, claiming that to allow the decision to stand would do serious damage to the balance of rights between the copyright owners and the purchasers of copyrighted works.  The professors also claimed that the decision would undermine the first sale doctrine. The first sale doctrine supports the idea that the purchaser of a copyrighted work may “sell or dispose” of the work, subject to certain conditions. This is why when you buy a textbook from a schoolbook store; you are then permitted to resell that book on Amazon without any legal repercussions. The doctrine developed as a response to the inability for people to transfer ownership of copyrighted works that were produced in tangible mediums, such as books. However, with the increase in technology over the last few decades, there has been a huge push by major players in the copyright industry, such as recording companies, for restricting the use of the first sale doctrine. However, this doctrine is very important for organizations such as libraries and individual users. Regardless of the push to restrict this defense, the public policy of concern of wanting to encourage people to be able to engage in a free market and free alienability of their personal, lawfully purchased property, weighs heavily in favor of upholding the first sale doctrine.

These concerns are articulated in the briefs from the copyright professors. By failing to recognize the first sale doctrine, they assert that the expectations of consumers that engage in the resale of all types of copyright protected material may be affected causing confusion and uncertainty in many other areas. Additionally, an additional brief filed by The American Library Association, the Association of College and Research Libraries, the Association of Research Libraries, and the Internet Archive organization provides an additional fear: that the decision in this case could result in a restricted ability for libraries and other organizations to provide access to copyrighted works. Considering that one of the major policies behind copyright law to begin with is to provide a robust and accessible public domain, this should be a huge concern for the court.

Ultimately, what started out as a dispute over the business practices and the ability to transfer music files between two consumers on an online platform, has turned in to a high profile case that has lasted multiple years and the outcome may have major implications beyond that parties in this case. The 2nd Circuit has a huge decision in front of them and there are many people in the copyright community that will be holding their breath waiting to hear the outcome. Who knew that just trying to sell your old junk could cause such uproar?

 

Student Bio: Kaitlyn Stone is a 2L at Suffolk University School of Law. She is a member of the Journal of High Technology Law and is studying Intellectual Property.

Disclaimer: The views expressed in this blog are the views of the author alone and do not represent the views of JHTL or Suffolk University Law School.

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