On March 30, the U.S. District Court for the Southern District of New York decided in Capitol Records v. ReDigi, 12-cv-95, that the online resale of lawfully made and purchased digital media is excluded from the first sale doctrine and is not protected by fair use.
Background and Technology
Plaintiff Capitol Records LLC owns copyrights in the sound recordings of many prominent artists, such as Frank Sinatra and the Beatles. Defendant ReDigi Inc. provides an online marketplace that allows users to upload legally purchased music files from iTunes or other ReDigi users to a "Cloud Locker" on ReDigi's servers, and to sell those "used" music files to others. ReDigi claims its software "migrates" the files packet by packet so that the data does not exist in two places at the same time. The seller does not retain a copy of the file, and the purchaser can stream the file, sell it or download it to her computer or other devices. ReDigi earns a transaction fee of 60 percent on each sale.
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