NPR’s Planet Money teams’s recent podcast discussed copyright law as it relates to digital music (21:18 minutes).
Secondary markets exists for most products. For instance, one can sell an old CD on eBay or Amazon. “But what about songs from your iTunes library you no longer want?”
This question came to a head in a recent case, Capitol Records, LLC v. Redigi Inc. After ReDigi developed a business model that created a secondary market for mp3s, the recording industry sued ReDigi for copyright infringement. ReDigi contended that their business plan conformed with the “first sale doctrine,” which says that once a work is sold, it is the purchaser (not the copyright owner) who owns the material object in which the work is contained.
The United States District Court for the Southern District of New York, which also quoted Star Trek along the way, wrote:
The novel question presented in this action is whether a digital music file, lawfully made and purchased, may be resold by its owner through ReDigi under the first sale doctrine. The Court determines that it cannot.
…the Court concludes that ReDigi’s service infringes Capitol’s reproduction rights under any description of the technology. ReDigi stresses that it “migrates” a file from a user’s computer to its Cloud Locker, so that the same file is transferred to the ReDigi server and no copying occurs. However, even if that were the case, the fact that a file has moved from one material object – the user’s computer – to another – the ReDigi server – means that a reproduction has occurred. Similarly, when a ReDigi user downloads a new purchase from the ReDigi website to her computer, yet another reproduction is created. It is beside the point that the original phonorecord no longer exists. It matters only that a new phonorecord has been created.