Tuesday 18 October 2011

Rumble in the (Digital) Jungle

For some time now there have been articles and comments about the legality of ‘re-selling’ legally acquired MP3s and other digital download music and video files by consumers. Now a new platform called ReDigi has been launched with exactly this activity as its core business model, offering a new model where consumers can legally buy and sell ‘second hand’ downloads.

TechCrunch offers this opinion, accepting that there are a number of legal points to be considered (not least when bearing in mind the "tumultuous" and lawsuit-heavy history of the sale and distribution of music on the internet):

“With the rise in the digital distribution of music, movies, software, and more, there has come surfeit legal confusion over whether or not the so-called “first sale doctrine” applies to digital transactions. Basically, under the first-sale doctrine, once the person who owns the rights to, say, a CD sells a copy of that work, the owner relinquishes control of that individual copy. Once that copy is in a new user’s hands, they own it and can do with it as they please, including reselling, lending, or giving it away.

However, Some have claimed that the first-sale doctrine does not apply to digital downloads, for instance, when that digital property has been licensed to the buyer, rather than explicitly sold. In the case of Vernor vs. Autodesk, the software corporation sued Timothy Vernor (an online software reseller) for reselling its software on eBay, saying that, under the terms of use, the software had been licensed to him, not sold; thus, they claimed that he did not own the right to the software and could not lawfully resell their product.

In 2008, the Washington District Court sided with Vernor, ruling that the software was in fact sold, upholding Vernor’s right to resale. However, that decision was subsequently overturned in September 2010 by the 9th U.S. Circuit Court of Appeals, which was followed on October 4th of this year by the Supreme Court’s decision to decline hearing the case, allowing the Court of Appeals’ verdict to stand”

Surely this is bad news for ReDigi? Well, ReDigi says it has done its homework and has taken legal advice – and actively supports the music industry. They say that this is a new business model where ReDigi will check to make sure the item on sale is a legal download and also that the service ensures that the vendor deletes their existing copy when transferring a copy file to the purchaser. ReDigi say that their technology enables a music file to transfer from one user to another without allowing multiple copies to exist at the same time. The service requires customers use its ReDigi Music Manager client, a platform that according to the company first verifies that the digital song was legally purchased and then removes the music file from the original owner’s computer and synced devices. Previously owned songs are stored by ReDigi until they are resold, at which point the track and license are transferred to its new owner. In ReDigi’s own words (from a Facebook post):

ReDigi is launching a “Recycled Digital Media” or used music marketplace (ReDigi.com) where owners of digital music can sell and purchase digital music files. We have done extensive research and have spent many hours with well respected law firms in Boston, NYC and LA. We strongly believe that this marketplace will provide and protect the rights of consumers as they were provided for under [the] US Copyright Act and the first sale doctrine. Just because things have gone digital doesn’t mean that people have given up their hard fought for rights, each individual has the right to sell their legally purchased digital goods. The ReDigi marketplace is NOT about file sharing, it is a method of facilitating the legal transfer of music between two parties. The ReDigi approach is novel, it verifies that the track was properly acquired, manages items selected for sale within the sellers music libraries to prevent multiple copies (protecting the seller from copyright infringement), and facilitates an even greater level of copyright protection than the previous CD market. Even just a few years ago technology did not support a readily viable solution. ReDigi has made it a reality for the millions of music users and the billions of legally downloaded tracks that exist in the world today.

One blogger noted this: “There definitely needs to be a way of transferring ownership of music. 10 years ago, if I died, somebody would inherit my CD collection. Today, if I have a $20k iTunes music collection, how can I pass that onto somebody when I die? what exactly happens to it?”. Well, ReDigi CEO John Ossenmacher said “By allowing consumers to sell their used digital music, we are giving digital goods a resale value for the first time ever and opening a new realm of what is possible in the digital age.” But is it legal, even when Ossenmacher states “We are excited about the innovative programs that we have created to support artists and labels ..... As we move forward, social responsibility will remain one of our highest priorities” ?

The impact of “Terms of Sale” is certainly one of the factors that need careful consideration, but I wonder what 1709 readers think? Its not a new debate – but it is suddenly in the news in the news again with a new twist. Back in February 2006 Macworld ran an article titled Make Mine With Music which looked at the legality of selling pre-loaded iPods. Fred von Lohmann, an attorney with the Electronic Frontier Foundation, described the process as a “gray area” saying that though the practice would be perfectly legal were dealing in traditional media, digital copies were different and the rules that apply to them then remained to be settled. Making a copy of purchased songs and going back and deleting the original didn’t necessarily fix the problem said von Lohmann, adding “I don’t see why the copyright owner is hurt by that, but technically if they wanted to they probably could come up with a legal theory to go after [the vendor].

At the time the Recording Industry Association of America (RIAA) said this

“This is, in our judgment, a very clear legal issue ... selling an iPod pre-loaded with music is no different than selling a DVD onto which you have burned your entire music collection. Either act is a clear violation of U.S. copyright law.”

If there any US lawyers out there with a view here, or content owners who would like to chip in, please do make a comment.

http://www.apple.com/legal/itunes/us/terms.html (terms of sale)






Julian hh said...

Perhaps you could comment on how it (whether possible or not) applies
in Europe?



Anonymous said...

I think the music industry will get around this by saying that you purchase a license to use the mp3, not ownership of the mp3.

Anyone know what iTunes Plus Products are? According to the iTunes Terms of Use, they are not subject to such limitatiosn of use.

Anonymous said...

At least in the United States, there's considerable doubt wehther the first sale doctrine applies, regardless of any licensing terms, to the reproduction right, which is necessarily implicated when one sells digitallyh downloaded music (unless the music is sold along with the device onto which it was downloaded). The U.S. Copyright Office came to this conclusion 10 years ago in its Section 104 Report -- http://www.copyright.gov/reports/studies/dmca/dmca_study.html. See p. 80: "Section 109 [the codification of the first sale doctrine] provides no defense to infringements of the reproduction right. Therefore,
when the owner of a lawful copy of a copyrighted work digitally transmits that work in a way
that exercises the reproduction right without authorization, section 109 does not provide a
defense to infringement."

That conclusion appears to be just as valid today as it was in 2001.

Ben said...

Hi Julian, back in March 2006 I had a brief stab at the position as I saw it in the UK - see http://www.musiclawupdates.com/06Marchlawupdates.htm but it would be great to get some other European perspectives - and indeed from other jurisdictions outside of the US which seems to be where the 'debate' is taking place now.


Ben Challis said...

UPDATE: The Recording Industry Association of America have now confirmed that they have sent Re-Digi a cease and desist letter demanding among other things that "it cease operations, hand over copies of its sales records, and "quarantine" all of its digital music so that it can't be accessed for any purpose except calculating how much ReDigi might owe the record labels".

The letter reportedly contains specific assertions regarding why the RIAA believes ReDigi is acting illegally. One is that it displays photos and cover art for commercial gain without permission; Another is that the service makes a copy of each song as it moves through the ReDigi servers, which violates copyright law and the anti-circumvention provision of the Digital Millennium Copyright Act. And a third is that ReDigi enables users to hear a 30-second sample of each available track, but it does not have any streaming music licenses in place to do so.