Things were never going to turn out well for mp3 remarketer ReDigi. Its business model -- facilitating third party sales of digital files -- worked better as a rhetorical device. It attempted -- perhaps inadvertently -- to obtain an answer to the eternal question: do you own the stuff you buy? When it comes to digital goods, the answer is almost always "no." Platforms shut down. Rightsholders dissolve contracts. File formats lose support. And DRM is all over everything, frequently making pirated goods superior to those people pay for.
ReDigi claimed it could harness this untapped market, somehow providing a sales platform for infinite goods that wouldn't allow sellers to sell the same goods infinitely. It claimed it could verify the destruction of the "original" files -- something that could be easily circumvented by storing additional copies where ReDigi couldn't "see" them.
Obviously, ReDigi was sued almost immediately. Records labels sought -- but didn't get -- a permanent injunction blocking ReDigi from getting into the used mp3 business. But they did get a win in court roughly a year later. Five years ago, a federal court ruled in favor of record labels, finding that ReDigi's business resulted in the production of new copies of files -- something not allowed under copyright law. If ReDigi just allowed for the swap of physical media (hard drives, thumb drives with mp3s on them), perhaps it might be lawful. But even then, the court seemed unwilling to entertain the hardware option as anything but rhetorical
ReDigi appealed. Five years later, it finally has a decision in hand, but not the one it wanted. Eriq Gardner of The Hollywood Reporter has more details.
Writing for the panel of Second Circuit judges, Pierre Leval doesn't buy ReDigi's defense that there is no unauthorized reproduction at play when consumers use ReDigi to resell their digital files.
ReDigi argued that from a technical standpoint, its process of transfer shouldn't be seen as making a reproduction because its system simultaneously causes packets of data to be removed from a consumer's computer as those packets are transferred.
Leval responds, though, that during the transfer, a new copy of the digital file is "fixed...for a period of more than transitory duration," and as such, the fixing creates a new phonorecord, i.e., a reproduction.
So much for the Right of First Sale, at least in this context. Copyright law is a "patchwork" (as Judge Leval calls It), a polite, appellate-level way of calling it a twisted mess of pre-digital-era artifacts that have resisted modernization thanks to legacy industry interference. There may be a path towards something more coherent, but those who can do something about it aren't really doing anything about it. From the decision [PDF]:
The copyright statute is a patchwork, sometimes varying from clause to clause, as between provisions for which Congress has taken control, dictating both policy and the details of its execution, and provisions in which Congress approximately summarized common law developments, implicitly leaving further such development to the courts.
Notwithstanding the purported breadth of the first sale doctrine as originally articulated by the courts, see Bobbs‐Merrill Co., 210 U.S. at 350 (“[T]he copyright statutes, while protecting the owner of the copyright in his right to multiply and sell his production, do not create the right to impose . . . a limitation at which the book shall be sold at retail by future purchasers . . . .”); Bureau of Nat’l Literature v. Sells, 211 F. 379, 381‐82 (W.D. Wash. 1914) (finding no infringement, in light of first sale doctrine, where reseller re‐bound used books and held them out as new books),
Congress, in promulgating § 109(a), adopted a narrower conception, which negates a claim of unauthorized distribution in violation of the author’s exclusive right under § 106(3), but not a claim of unauthorized reproduction in violation of the exclusive right provided by § 106(1). If ReDigi and its champions have persuasive arguments in support of the change of law they advocate, it is Congress they should persuade. We reject the invitation to substitute our judgment for that of Congress.
This is about as unhelpful as the laws being discussed. Congress left it to the courts "for further development." The court is saying, "Take it up with Congress." That leaves the Right of First Sale ripe for further development but both Congress and the courts feel the other party should handle it.
ReDigi's case was never going to be the standard bearer for First Sale rights in the digital age. But it could have paved a path forward for better protections for consumers, allowing them to at least recoup some of what they've spent should a third party or rightsholder decide the stuff you paid for is no longer yours. Until that happens, digital media is worth less than the hardware storing it in terms of resale value.