U.S. District Judge issues ruling: No, you cannot resell your iTunes Store songs

“In a major lawsuit testing the legitimacy of music downloads, Capitol Records LLC has won a court ruling that the start-up ReDigi Inc has infringed its music copyrights,” Jonathan Stempel and Alistair Barr report for Reuters. “U.S. District Judge Richard Sullivan in Manhattan said ReDigi was not authorized to allow listeners to use its platform to buy and sell “used” digital music tracks originally bought from Apple Inc’s iTunes website.”

“The decision made public on Monday is a blow to early efforts to create online marketplaces for used digital goods, akin to how used books, for example, might be sold in stores,” Stempel and Barr report. “‘This will profoundly affect the economics of any digital re-sale marketplace,’ by limiting what can be sold as ‘used’ or forcing sellers to obtain copyright holders’ approval before transacting business, said Bill Rosenblatt, president of consulting firm GiantSteps Media Technology Strategies.”

Stempel and Barr report, “Sullivan said ReDigi’s service ‘infringes Capitol’s reproduction rights under any description of the technology,’ and does not deserve protection under the theory of fair use. ‘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,’ Sullivan wrote. ‘It is beside the point that the original phonorecord no longer exists. It matters only that a new phonorecord has been created.’ …To sell music bought from iTunes on ReDigi, a user ‘must produce a new phonorecord on the ReDigi server,’ Sullivan wrote. ‘Because it is therefore impossible for the user to sell her ‘particular’ phonorecord on ReDigi, the first sale statute cannot provide a defence.'”

“E-books, MP3 songs and digital videos bought from iTunes or Amazon.com Inc are effectively rentals, which means they cannot be re-sold once used. Earlier this year, Amazon was awarded a patent for an online mechanism to allow customers to sell or transfer digital goods. Apple has applied for a patent covering a similar system,” Stempel and Barr report. “Joe Wikert, general manager and publisher at O’Reilly Media, Inc. [said], ‘Both Amazon and Apple have been working on patents, which are insurance policies for both of them in my view. They have been sitting on the sidelines watching the ReDigi case.'”

Read more in the full article here.

MacDailyNews Take: ReDigi really picked a bad name for their company.

[Thanks to MacDailyNews Readers “Fred Mertz” and “Lynn Weiler” for the heads up.]

30 Comments

    1. Yes, they’re probably referring to First Sale doctrine. Read up on it. It does NOT cover everything.

      (BTW, as others said, since it’s IMPOSSIBLE to make sure the original “seller” or this company has deleted their copy, there’s obviously another copy being made.. thus infringement.)

    2. There is a BIG difference in selling a book, CD, copyright, etc. when you no longer retain the product to use yourself. If you retain the product to use, you’re copying it, not reselling it and thus depriving yourself of the potential to use it. It would be like photocopying a Harry Potter book, selling it, and keeping the original.

      There will have to be some tracking or activation process under which if you sell your music (for example), your digital copy is deactivated and you can no longer access it. I can hear the property rights nuts right now crying “the government is taking my right to sell my stuff”, when in actuality, all that would be happening is making sure you actually sold your stuff and didn’t just copy it to deprive the true rights holder from selling it.

  1. I’m certainly no friend of Capitol Records but this is a ruling in favour of common sense.

    Reselling music tracks from the iTunes store that have no copy protection?! Yeah, right… There’d be absolutely nothing to stop everyone from buying music, selling it again, but keeping a copy.

  2. It’s shocking that more people are not aware of this. Hopefully, there will be growing consumer anger/outrage that a consumer is paying the same price for an items as it would appear on a store’s shelf, yet, because it is digital, it is considered a “rental” and is not legally owned by that user. I don’t mind if that is the restriction, but the price should reflect it.

    1. AFAIK it’s to do with ownership/renting of the music itself versus ownership/renting of the bit of plastic it’s loaded onto. I don’t think you ever own the music itself no matter what (CD, tape, record or whatever) it’s loaded onto. I suppose because a digital download isn’t on a bit of plastic you’ve only got the music itself, not the bit of plastic, so you can’t resell it.

      (Someone please correct me if that’s wrong.)

    2. Copyright law is very tricky, and not well defined or understood but yes, I think that’s basically correct, Des Gusting. Also, iTunes is certainly NOT selling music for the same price as on a store shelf. From a store shelf, you have to buy an entire album at a time, you cannot purchase one track. Also, up until Steve made the iTunes Store deals with record companies, they were stupidly trying to sell CD’s for $18 when common wisdom was that people were willing to pay $10-$12. Thanks, Steve, for saving the music industry.

    3. You misunderstand purchasing a copyrighted product. You purchase the right to have the item, to read/listen/watch it, but you do not purchase the right to copy it and sell it. The material is not yours (the song, movie, etc.), the physical media is yours. If you want to sell it later, you can sell the physical media, which then deprives you of the right to use the material.

      In this case, the digital file is yours to use but not yours to copy and sell. It’s really not that different from buying a paperback book — you didn’t purchase the right to photocopy the book, sell it, and retain the original. You bought the right to read the book and sell it later on if you choose.

  3. The CD copy is yours, is higher quality and can be sold. The iTunes copy is not yours, is lower quality and cannot be legally sold. The price is roughly the same.

    You make the call.

  4. And they say you can’t take it with you when you die. At least your legally purchased iTunes music actually dies with you. I’m also guessing you can’t put that music in your will. If you can’t sell it, can you give it away to someone else?

  5. In the future, I can see the RAIA wanting to withhold a death certificate until they have scrubbed all hard drives and stolen user generated CD from the deceased. Just how far are we going to tolerate these intrusions on our privacy? Of course, your digital media in whatever form can be inherited and in fact protected by offsite storage at a relatives home prior to your demise.

    1. “Just how far are we going to tolerate these intrusions on our privacy?”

      I imagine these intrusions wouldn’t be happening if illegal downloads and copying of CDs with absolutely no regard for copyright or musicians’ rights weren’t so rampant. Dunno what the solution is, but as it is many musicians are getting completely f*cked over by people (not necessarily you, Jack) who want their privacy.

      1. Sorry, but study after study has shown absolutely no correlation between illegal downloads and lost sales. None. The most recent study came out less than a month ago (and was reported here, in fact). There’s actually some evidence to support the opposite view.

        So I don’t know who you think is getting screwed over by illegal downloads, it’s certainly not the musicians or the music companies, neither of whom is losing money because of that practice.

        1. There’s a absolutely massive amount of music on people’s hard drives and in their CD collections that has been obtained without payment, no matter what you or any studies say.

          1. “There’s a absolutely massive amount of music on SOME people’s hard drives and in their CD collections that has been obtained without payment, no matter what you or any studies say.”
            There, FTFY.
            I’ve got a fair bit, in among the 155Gb on my HDD, but some has been ripped from CD’s I’ve borrowed, the rest has been obtained via free downloads given away by the artists on their sites or Bandcamp, or Soundcloud, from iTunes, or sampler CD’s given away with magazines.
            It has been determined that ripping CD’s into iTunes or similar is NO illegal, so mine are all legit, as are those of practically everyone I know who has music collections.

            1. Thanks for fixing my statement, but you forgot to change the “a” to an “an”.

              And sorry to disappoint you, but it’s not legal to rip your friends’ CDs into your iTunes library. It’s only legal to rip your own CDs.

              So no, your music collection is not completely legit, and probably most of (all of?) your friends’ collections aren’t completely legit either.

  6. I’m kind of miffed that the language being used in this judgement, as quoted in the article, is significantly computer, business and contract law illiterate. So, I decided to have a bletherfest about it here at MDN. Please join in with contrasting points of view.

    Here is one quote I liked from the article, useful for pointing out what I believe is a sensible approach to this situation:

    Because it is therefore impossible for the user to sell her ‘particular’ phonorecord on ReDigi, the first sale statute cannot provide a defence.

    This is pointing out the difference, IMHO, between material and software. Material can be wholly transferred and therefore sold, as long as you ‘own’ it. You can buy a couch and sell it. You can buy a vinyl record and sell it. You can buy a CD or DVD of media and sell it. It is wholly transferred as owned property from one person to another. Obviously if you only ‘rent’ or ‘borrow’ any of the above, you have zero rights to sell it or give it away to anyone else, despite it being material.

    Software, meanwhile, is only symbolic in and of itself. It is instruction code in all cases. It contains no matter. It has no solidity. It is only a representation of what the code creates as a service to the ‘owner’ or ‘licenser’. As mere code, a license or ownership agreement would have to be included that specifies specifically your right to sell or give away the software in exchange for losing your right to use that software.

    Meanwhile, you can inherently sell or give away any material you purchased that contained code, as long as you own the physical property and relinquish the right to use it upon transfer of the material. Typically there is an ‘ownership’ or ‘license’ agreement specifically stating that is the case. This is reflected in the the sale of DVDs and CDs as well as any boxed computer software.

    What I find entirely incoherent in the judgement, as quoted in the article, is the concept of ‘renting’ software. This is NOT the case in this situation. Instead, we are clearly discussing what can only be interpreted as actual OWNERSHIP within the terms of the software’s license. There is no time limit on an ownership license. There is no periodic payment made to anyone. You buy the software, in this case music media, and it is yours forever within the confines of its license agreement. Therefore, I consider this line from the judgement to be thoroughly idiotic and dead wrong:

    E-books, MP3 songs and digital videos bought from iTunes or Amazon.com Inc are effectively rentals, which means they cannot be re-sold once used.

    Bullshit. ‘Rental’ is an entirely inappropriate concept and term for this situation. Using the term ‘rental’ comes off as plain old technology and license law illiteracy. I hope the legal community points this out to the court.

    My short term conclusion:
    If this somewhat incoherent judgement ticks you off, buy your media on tangible material. Buy vinyl, video discs, CDs, DVDs, tapes, etc. Then sell or give them away as you wish. No court, TechTardy or not, is going to be able to stop you. The software and the material on which it resides are one object. You own the object. You do what you like with the object.

    Meanwhile, once you have sold or given away the object, you clearly have sold or given away your rights to use the software it contained. You have no rights to keep a copy of the material or software. That’s simple ownership and transfer of ownership.

    The future?
    Will this discrepant legal attitude between software and physical matter containing software change in the future? Possibly. But it would require a system whereby an owner verifiably has lost use of the software upon selling it or giving it away along with a system of verifying transfer of ownership.

    Such systems exist. For example, Ambrosia Software uses an Internet enabled ownership verification system. The software will not run if it cannot verify ownership with Ambrosia’s servers. If/when you want to sell or give away your Ambrosia licensed software, you are required to contact the company and provide them with the new owner’s information in order for the transfer to be complete and legal. At that point you lose access to the software’s functions on your hardware. Functionality is only available to the person to whom you transferred the software as per your agreement with Ambrosia.

    I see no reason software in the form of music, books, videos etc., cannot be treated in the same way. It would mean placing ownership verification code into each piece of media, but it is entirely possible. (I recall chatting about this concept with David Pogue a few years back when he was considering selling has books as ebook software).

    Would the oligarchic RIAA and MPAA consider changing their media formats to allow for and include ownership verification code? I don’t believe so. Not at this point. The concept probably flies over the technology illiterate heads of both organizations. But the, IMHO, mean old hateful, self-destructive geezers currently running the media show are going to die off, at some point, thankfully. Modern, technology literate people will inevitably replace them. Then we shall see.

    Please chime in and blast away at my brainstorm above. I believe this is an important issue for the future of technology. 😀

    1. Derek, you’re incorrect about your primary assumption — that you purchased the actual song, movie, or other digital material you downloaded. It is very much like software: You purchased the right to use it.

      The problem most people have with this idea is they think they “own” the song. They do not. They purchased the right to use the song within the license right of that purchase. They did not purchase a license to copy, resell, or otherwise actually become the owner of the song.

      At issue primarily is copyright law and who actually owns the product. Recall all the copyright warnings at the beginning of every DVD you have purchased: It is a crime for you to duplicate, resell, or otherwise distribute the movie except for your own use and enjoyment. That applies to books, songs, etc. etc.

      You can’t photocopy a book, sell it, and retain the original. That’s theft, that’s copyright violation. You did not purchase the right to sell the item and make money off of it.

      The problem with digital files is that there is no way for the copyright holder (the actual owner of the material) or the distributor (who licensed the right to duplicate and sell the material from the copyright holder) to know that you do not have the song on your iPhone after you sold it to ReDigi. In fact, I would bet most people retained their copy.

      If you sell a book, CD, DVD, the theory was you no longer had the physical media, and therefore could not continue to use the product. That obviously has changed with computer technology and CDs/DVDs, but the law states that you own the physical media and can sell that, which includes the license to view the material.

      Others have complained that the price “doesn’t reflect” a rental situation, but actually it does. Remember that you have the right to use a digital file on multiple devices, for multiple users. I believe iTunes is 10 devices and 5 users. In the past, you would have had to buy 5 CDs for your entire family to each listen to the same music at the same time. That is mostly a demand from consumers and a reflection of reality, but it is an expansion of licensing rights.

      1. “You purchased the right to use it.” <–That makes sense, as long as that is specified in the user license. It's code!

        What's interesting is that the exact same code could well be on a purchased CD. You never 'license' a media disk. You outright OWN the media disk and have the right to sell it or give it away. Kind of strange.

        "It is a crime for you to duplicate, resell…" <–And yet reselling of any kind of solid media is entirely accepted. My local music/video shop has hundreds of USED media disks of all sorts on its shelves. The law never questions anyone selling that media to the store OR my buying it secondhand.

        Yes, with the current formats for media code, how is one to know if the original was sold, or a copy of the original. It's a mess and I see the problem. I can't disagree with the court judgement in that respect.

        As for any 'rental situation', there isn't any. It does not apply. Good luck trying to make that concept stick. It won't. The correct term is 'license situation'. That fits, IMHO.

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