MP3 resale violates copyright law, court rules

A judge sides with Capitol Records in the lawsuit between the record company and ReDigi -- ruling that MP3s can only be resold if granted permission by copyright owners.

Dara Kerr Former senior reporter
Dara Kerr was a senior reporter for CNET covering the on-demand economy and tech culture. She grew up in Colorado, went to school in New York City and can never remember how to pronounce gif.
Dara Kerr
2 min read
Capitol Records building in Hollywood. Greg Sandoval/CNET

A court ruling has put the kibosh on reselling digital media.

In a lawsuit between Universal Music Group's Capitol Records and MP3 reseller ReDigi, U.S. District Judge Richard Sullivan has sided with the record label and said that reselling songs bought on iTunes, Amazon, or other digital music venues is akin to copyright infringement.

"The court grants Capitol's motion for summary judgment on its claims for ReDigi's direct, contributory, and vicarious infringement of its distribution and reproduction rights," Judge Sullivan wrote in a summary judgment filed Saturday. "The court also denies ReDigi's motion in its entirety."

ReDigi calls itself "the world's first online marketplace for used digital music." The company argued that it was operating under the "first sale doctrine," which says that people can resell or rent goods. This legal doctrine is what Netflix uses for its business model. ReDigi also noted that it's legal for people to sell used CDs and DVDs.

However, Judge Sullivan ultimately concluded that digital media can only be resold if permission is granted by the copyright owner.

"Courts have consistently held that the unauthorized duplication of digital music files over the Internet infringes a copyright owner's exclusive right to reproduce," Judge Sullivan wrote. "However, courts have not previously addressed whether the unauthorized transfer of a digital music file over the Internet -- where only one file exists before and after the transfer -- constitutes reproduction within the meaning of the Copyright Act. The court holds that it does."

A ReDigi spokesperson told CNET that the judge's ruling mainly affects the service's 1.0 technology. Further iterations of its service, including 2.0, 3.0, and 4.0, were not considered by Judge Sullivan in his summary judgment and could ultimately be deemed to comply with copyright law.

"The case has wide ranging, disturbing implications that affect how we as a society will be able to use digital goods," the ReDigi spokesperson told CNET. "The Order is surprising in light of last month's United States Supreme Court decision in Kirtsaeng v. Wiley & Sons, which reaffirmed the importance and applicability of the First Sale Doctrine in the United States of America."

Capitol Records first filed its copyright complaint against ReDigi in January 2012. At first, Judge Sullivan denied the record company's motion to shutdown ReDigi. However, after putting more thought into the matter, he seems to have changed his mind.

"ReDigi will continue to keep its ReDigi 2.0 service running and will appeal the ReDigi 1.0 decision, while supporting the fundamental rights of lawful digital consumers," the ReDigi spokesperson told CNET.

Both Capitol Records and ReDigi are to file a joint letter to the court by April 12 on what they expect the next steps in the case to be.