EMI sues MP3 reseller ReDigi

Music buyers may be able to sell their used CDs and vinyl albums, but they're not allowed to sell or distribute used digital tracks and albums in the same way, EMI said in a copyright complaint filed today in New York.

EMI, one of the four largest recorded-music companies, is accusing ReDigi, the startup that enables music owners to sell their unwanted and used MP3s, of numerous counts of copyright infringement, CNET has learned. The suit doesn't come as a surprise.

ReDigi calls itself "the world's first online marketplace for used digital music," and the idea of selling "used" digital files had people in tech scratching their heads soon after a test version of the service was launched in October. The notion of selling a digital file, which can be so simply reproduced, sounded strange. A month later, CNET reported that lawyers from the Recording Industry Association of America, the trade group representing the four major labels, had sent the company a cease-and-desist letter.

ReDigi did not respond to an interview request.

In its 18-page complaint, filed in a New York federal court, EMI alleged that to operate its business, ReDigi must make numerous unauthorized copies of songs and that that violates copyright law. ReDigi says it scans a user's computer hard drive to obtain a copy of the song the person wants to sell and then deletes the copy on the seller's hard drive. But there's no way ReDigi can guarantee that users haven't made copies of their music libraries and stored them elsewhere.

ReDigi CEO Ossenmacher seemed to acknowledge this in an interview with The New York Times in October. "If someone willfully wants to violate copyright law," he said, "then there may be ways that they can ultimately beat the system."

Nonetheless, he and his company assert that the sale of digital music is protected under the same "First Sale" doctrine that protects the sale of CDs, vinyl records, DVDs, and other physical goods. The company also works to protect against selling pirated music through a verification system.

In the complaint, EMI asserted that the First Sale doctrine enables owners of lawfully obtained CDs and records to sell these items but claims that ReDigi isn't distributing lawfully obtained music.

"Rather ReDigi and its users are making and distributing unauthorized copies of that original file," EMI said in the complaint. "The Copyright Act defines 'copy' and 'phonorecord' as material objects in which a work or sounds are fixed respectively...Neither ReDigi nor its users resell the original material object that resided on the original user's computer. Rather... [ReDigi and users] duplicate digital files both in uploading and downloading discrete copies distinct from the original file that originally resided on a user's computer."

EMI is saying that ReDigi is not selling the same bits and bytes that a user/seller downloads from--say , iTunes or Amazon. According to EMI's lawsuit, the law requires it to do just that.

The area of selling used MP3s is largely untested in the courts, and I couldn't find any instance in which a party tried to claim that digital songs were covered by the First Sale doctrine. On the other hand, the issue of making unauthorized copies of music has been addressed a number of times.

In the late 1990s, MP3.com, one of the trailblazers in cloud music, decided to augment its service with a feature that would enable users to access song files from the company's servers from anywhere they could connect to the Web. The company would scan a user's hard drive, see what music was there, and then give the user access to copies of the same music. Federal Judge Jed Rakoff found that copies could not be made for commercial use without the copyright owner's permission.

Then there was BlueBeat, a company that was charging 25 cents to stream remastered Beatles songs and later argued that it owned the copyright to the music it offered because they were "psycho-acoustic simulations."

BlueBeat argued that because it rerecorded the Beatles songs and ran them through filtering software, they were original works. The plaintiff in the case argued that the tracks people heard were, but for a few tiny changes, the original Beatles recordings. The judge ruled that BlueBeat needed a copyright owner's permission before distributing music commercially.