A company which allowed customers to resell their
digital music "second hand" breached copyright, a US judge has ruled.
ReDigi billed
itself as the first legal way to resell music bought online - but soon provoked
the ire of record labels.
It was sued by
Capitol Records in January 2012, and on Monday a New York judge said ReDigi was
making unauthorised copies of music.
The ruling
could have broad implications for digital reselling.
Unlike physical
music CDs, Judge Richard Sullivan ruled that the "first sale
doctrine" did not apply.
The doctrine is
a long-established rule which allows the reselling of goods to a new owner. In
other words, selling a CD once you no longer want it.
But in the
digital world, where duplication is much easier, the first sale doctrine was
not appropriate, the judge said.
"It is
simply impossible that the same 'material object' can be transferred over the
internet," he wrote in his ruling.
"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."
ReDigi argues
that their system means the original download is removed from the seller's
computer.
The company
asks users to download proprietary software, which verifies if a file was
bought legally. If the song checks out, it is then erased from the seller's
hard drive and uploaded to ReDigi's computer servers.
ReDigi's
software is designed to prevent sellers from reinstalling a sold song to their
computer, and offers users the chance to check their libraries for illegal
music.
But the judge
said: "It is beside the point that the original phonorecord no longer
exists. It matters only that a new phonorecord has been created."
Wider impact
The notion of
being able to sell on your unwanted digital goods is a concept that has caught
the eyes of, among others, Amazon and Apple.
Both companies
have been granted patents relating to the selling or transferring of digital
goods - but while both offer cloud storage services for music, neither has yet
set up a reselling function.
"Both
Amazon and Apple have been working on patents, which are insurance policies for
both of them in my view," said Joe Wikert from O'Reilly Media, speaking to
Reuters.
"They have
been sitting on the sidelines watching the ReDigi case."
Mr Wickert
added that the ruling was "not a good first step" for the digital
reselling industry.
Capitol
Records, whose catalogue includes Frank Sinatra's Come Fly With Me and The
Beatles' Yellow Submarine, sought $150,000 (£99,000) for each infringement.
The judge did
not set an amount for damages, instead inviting both firms to submit statements
regarding the next steps in the case.
Source: BBC
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