Judge Denies Injunction Against MP3 Reseller Due To Lack Of Irreparable Harm... But Says EMI's Arguments Compelling

from the first-sale-is-dead dept

Wed, Feb 8th 2012 3:59pm — Mike Masnick

I've said before that I'm skeptical of the idea behind ReDigi -- a seller of "used" mp3s. The company claims it has a system to make sure that if you sell a music file you own, that they then make sure it's deleted from your computer. This just seems dumb for a variety of reasons -- some economic, some technological and some legal. But, most of all, I just don't see people caring enough to make this a valid business. Either way, whether it's dumb or not, the RIAA couldn't let the company actually try something new... so, of course it sued, with EMI subsidiary Capitol Records taking the lead on the case.

Somewhat surprisingly, the judge refused to issue the injunction, calling the case "fascinating" and noting that there were some serious issues to be dealt with concerning first sale rights around copyright (whether or not you can sell a product you bought that is covered by copyright). However, the judge also made it clear that he thinks that the record labels are likely to win in the end, saying that their arguments "look to be compelling." He just didn't issue the injunction because there was no evidence of irreparable harm if the site stayed up, as detailed in the transcript embedded below.

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Filed Under: copyright, first sale, markets, mp3s, resale
Companies: capitol records, emi, redigi, riaa

48 Comments

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fb39ca4, 8 Feb 2012 @ 4:02pm

Exactly how does ReDigi work?
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Anonymous Coward, 8 Feb 2012 @ 4:13pm

redigi.com gets seized in 5...4...3...2...1...
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Anonymous Coward, 8 Feb 2012 @ 4:20pm

Re:
Exactly how does ReDigi work?

David Kravets has a story up at Ars Technica (and Wired): �Judge denies record label's request to shutter "used" MP3 store� (yesterday, Feb 7, 2012).

ReDigi explained to Sullivan in court papers (PDF) that its undisclosed number of account holders have a right to upload their purchased iTunes files into ReDigi�s cloud. And when a file is sold to another ReDigi account holder, no copy is made. What�s more, because of ReDigi�s technology, the original uploaded file that is sold cannot be accessed by the seller any more through ReDigi or via the seller�s iTunes account.

I haven't found time yet to read through the papers. Someone want to summarize? Beyond �iTunes account�.
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The Moondoggie, 8 Feb 2012 @ 4:23pm

Huh?
Facinating... simply facinating....
/sarc
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hmm (profile), 8 Feb 2012 @ 4:24pm

how it works
step 1. "sell" used mp3

step 2. send ticket for a US holiday to the seller (or a holiday that forces you to cross the border into mexico/canada)

step 3. confiscate laptop and "search for terrorist stuff"

step 4. delete the appropriate mp3

step 5. allow the custom officials kids to use the laptop for 3 or 4 months until you confiscate something better

step 6. return laptop
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Anonymous Coward, 8 Feb 2012 @ 4:25pm

Re:
You upload a "file" to them, they then search for that file on your computer and delete any instances. It then sells your used one to a customer then deletes it from its server. Or at least on paper that is how it works.

Real life dictates is would be easier to only copy to the server new files and just keep a count of how many times this has happened/vs how many times it was sold. Then if they noticed a large interest in a song they could buy a bulk of licences from the artist.

Else you would have a terribly inefficient index and a poor likely hood that the service would be usable.

Lets compare and Contrast Netlfix and Amazon Prime on the roku as a point of this.

Netflix organizes things in my chosen tittles, Ones it things I will be interested in, then sorts the rest by genre, with some helpful descriptors like "Witty Dramas with a Strong Female Lead"

Amazon on the other hand sorts by TV or Movie
then type, Then scroll through alphabetically.

Both have an index, but one is better for my habits. Which is what ReDigi is trying to do. I am more likely to by a used mp3 for cheap then a brand new one.

The point is ReDigi is just doing the next obvious step. To quote the Grave-robber in "Repo, The Genetic Opera", ' For every market, a sub market grows'. Part of basic economics. You can either embrace the submarket or try to squash it. History points out that trying to squash it is a mark of insanity as no one has successfully killed a sub market with the Market from which spawned.
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Anonymous Coward, 8 Feb 2012 @ 5:02pm

If I buy a CD and it breaks, they won't freely replace it because "I bought a product and it broke". but if I want to sell the CD or the song they don't want me to sell it because "I bought a license".

They need to decide. If it's a license then I should get free data replacements when the data becomes corrupt. If it's a product then I should be able to re-sell it.
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Anonymous Coward, 8 Feb 2012 @ 5:05pm

Re:
http://www.techdirt.com/articles/20111214/14365117087/if-you-dislike-sopa-youll-dislike-this-case-to o.shtml#c54
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Nathan F (profile), 8 Feb 2012 @ 5:07pm

What I want to know is did the Judge allow Google to file their Friend of the Court thing?

Google basically says

If the mp3 is not a physical good, then it would not fall under the phonocopy clause. If it is a physical good then it falls under First Sale.
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Anonymous Coward, 8 Feb 2012 @ 5:08pm

If it's a license then I should get free data replacements when the data becomes corrupt.

And free upgrades whenever they release a new service pack for bugfixes and security!
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Anonymous Coward, 8 Feb 2012 @ 5:10pm

Re:
...did the Judge allow Google to file their Friend of the Court thing?

No. Judge Sullivan doesn't have friends. (Or at least he doesn't take amicus briefs.)
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MrWilson, 8 Feb 2012 @ 5:31pm

Re:
They want it both ways by saying that you are purchasing a product (a disc) and you are licensing the "intellectual property" content on that disc. You can resell the disc and thus transfer the license to another person.

As you have pointed out, this is bullshit.
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Anonymous Coward, 8 Feb 2012 @ 5:34pm

Re:
and if it's a product then maybe I should be able to make copies and freely re-distribute them :)
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Anonymous Coward, 8 Feb 2012 @ 5:39pm

This is one of those cases where the Techdirt crowd can't have it both ways.

As you cheer on the artists who win lawsuits against the labels that state that online sales are "license" sales rather than other types of sales, you have in effect set the standards by which the rest of the sale must be interpreted.

Specifically, a license can be non-transferable, non-resellable.

That pretty much solves the issue.
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al, 8 Feb 2012 @ 5:47pm

This whole story just shows the judge was in over his head. Let's get some judges elected that understand what the trials are about.
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Pixelation, 8 Feb 2012 @ 6:02pm

At this point, and for a while now, it is pretty clear that the record labels add little to no value for the customer.
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The Groove Tiger (profile), 8 Feb 2012 @ 6:11pm

Reminds me of that chain letter I got years ago claiming to be a Galician virus, but that since they didn't know how to program politely asked me to send it to everyone in my contact list and delete everything in my hard drive.
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John Thacker, 8 Feb 2012 @ 6:16pm

Re:
You're allowed to sell a CD that you own, regardless of what the RIAA thinks. That's the "first sale doctrine" alluded to in the post. In the US, when you buy a physical good that is copyrighted, you can transfer your copyrighted copy to someone else. (This is actually not generally true in Europe, there is a legal concept of droit de suite whereby artists can actually claim money when artworks are resold.)

However, it generally relies upon the concept that once you sell the item, you no longer have it. That's somewhat dubious in the case of MP3s, for understandable reasons it's difficult to verify.
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Anonymous Coward, 8 Feb 2012 @ 6:28pm

Transcript as PDF
Transcript as PDF: Motion Hearing, Feb 6, 2012, 3:30 p.m., Capitol Records v Redigi, Judge Sullivan (S.D.N.Y.),
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G Thompson (profile), 8 Feb 2012 @ 7:31pm

Re:
I agree that if at the instance of purchase of said license/goods that if the buyer is fully cognizant that what they are purchasing is in fact actually a license and they have NO ability to onsell that license EVER then yes the issue is resolved.

However, these alleged licenses are hidden in fine print in non plain english terms and Conditions that any reasonable lay-person cannot understand let alone be aware of their existence. Therefore to call them licenses after contract of sale has been finalised is not only a false and misleading trade practice but also could result in pure forfeiture of contract meaning that both parties need to be placed in the same position as they were before contract entered into (equity) therefore the buyer would hand back licensed product and the seller would hand back monies given (plus other expenses for causing the forfeiture).

In other words if you are going to sell a product that is non-transferable, non-resellable explain this upfront in a manner that is unmistakingly clear or be prepared for any reasonable person to make the logical assumption that they can transfer and resell it.
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anonymous, 8 Feb 2012 @ 7:38pm

used data?
you've got to be fucking kidding. this is real? what kind of moron pays for mp3s in the first place?
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Anonymous Coward, 8 Feb 2012 @ 7:43pm

Re:
There is no absolutely contradiction in thinking products are being sold, not licenses, but simultaneously thinking that *IF* the labels are going to insist they are selling licenses, they should be paying the artists accordingly.
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Anonymous Coward, 8 Feb 2012 @ 7:52pm

Re:
I think it was MSN or Yahoo that tried 'renting' digital files (and some other) when Hollywood rejected mp3's for sale. They wanted to charge people 1) computer 2) mp3 player and 3) charge for physical cd for home use.

The service died fairly quickly, but enough people signed up for it and they lost all their music they had 'rented'.

Up until this last year, if you lost your purchased iTunes music (hard drive crash anyone?) iTunes would NOT replace it. They expected you to rebuy everything (sometimes a discount could be negotiated). They have since changed that policy and will let people redownload their purchase (the iCloud?).

One other thing - Apple's DRM will only play on AUTHORIZED computers or accounts. Very recently iTunes has started selling non-DRM files - but that is not what ReDigi is doing. They only allowed iTunes AAC files which are DRM'd and require authorization on that computer to play.

So it is quite possible to de-authorize the original computer - even if the file remained there - and authorize it for another computer. But all that to save $0.015 / track?

But if you have to replace 1tb of music files for some reason ...
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Anonymous Coward, 8 Feb 2012 @ 8:00pm

Re: Re:
I think this is VERY important because when RIAA talks about their product it's as if it's a tangible item, "would you allow someone in your store to steal ..."

Yet when they talk about consumer's mp3's they are disposable, rented, licensed, yadda-yadda and don't follow the same rules they use for their "products" (like returning confinsgated legitimate product or files).

The game changes as they change which foot they are standing on. I'd like to get clear on which it is.
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Anonymous Coward, 8 Feb 2012 @ 8:03pm

Re:
Or there needs to be a special court to deal with these types of cases. I don't want to hear how "hard it is to understand" one more time from folks who are deciding, changing, or making the rules over these things.

It's not "cute" anymore. No giggles.
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Anonymous Coward, 8 Feb 2012 @ 10:19pm

FTA: "However, the judge also made it clear that he thinks that the record labels are likely to win."

Actually, on page 4 of the document the judge states specifically that he does not think that.

Either way, thank you for the article, and for posting the document, especially... it really was very interesting.
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PaulT (profile), 9 Feb 2012 @ 12:44am

Re:
"This is one of those cases where the Techdirt crowd can't have it both ways."

No, this is one of those cases where the LABELS can't have it both ways. They have to decide what they're selling. If it's the music, then the first sale doctrine and all other usage rights apply. If it's a licence, there must be a clear-cut licence that customers are explicitly agreeing to upon purchase, and they have to pay the artists the higher going rate for a licence sale.

I'm fine whichever way they decide, and I'm sure most other here are as well. They just have to decide one way or the other - they can't keep on applying whichever standard happens to be the most profitable for them at the time.
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Anonymous Coward, 9 Feb 2012 @ 2:37am

ReDigi does NOT use mp3's
ReDigi works with iTunes files only - AAC and there is sort of a watermark, DRM that allows them to play only on computers that are 'authorized' to play them. It is very easy to authorize one computer and de-authorize another computer from playing them.

ttp://support.apple.com/kb/HT1325?viewlocale=en_US&locale=en_US

But I suspect that is why ReDigi is only working with Apple's ACC files from iTunes store and not amy oter files like m3's wmv. avi. FLAC, OGG .....
.
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Anonymous Coward, 9 Feb 2012 @ 2:37am

ReDigi does NOT use mp3's
ReDigi works with iTunes files only - AAC and there is sort of a watermark, DRM that allows them to play only on computers that are 'authorized' to play them. It is very easy to authorize one computer and de-authorize another computer from playing them.

ttp://support.apple.com/kb/HT1325?viewlocale=en_US&locale=en_US

But I suspect that is why ReDigi is only working with Apple's ACC files from iTunes store and not amy oter files like m3's wmv. avi. FLAC, OGG .....
.
[ link to this | view in thread ]
Anonymous Coward, 9 Feb 2012 @ 2:37am

ReDigi does NOT use mp3's
ReDigi works with iTunes files only - AAC and there is sort of a watermark, DRM that allows them to play only on computers that are 'authorized' to play them. It is very easy to authorize one computer and de-authorize another computer from playing them.

ttp://support.apple.com/kb/HT1325?viewlocale=en_US&locale=en_US

But I suspect that is why ReDigi is only working with Apple's ACC files from iTunes store and not amy oter files like m3's wmv. avi. FLAC, OGG .....
.
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Anonymous Coward, 9 Feb 2012 @ 2:46am

Re: ReDigi does NOT use mp3's
sorry for the dup post.

Another note is that Apple changed their policy to where people can redownload their entire purchased content in case something happened to it (hard drive crash?). Before there was no way you could redownload what a person had already paid for.

I thought that change was due to thir icloud service .
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Violated (profile), 9 Feb 2012 @ 3:04am

Preplexing
Maybe I don't understand this article but in all previous years you can certainly resell your used CDs, tapes, computer games, DVDs and now the latest BluRays. Hell even NetFlix would not exist if it could not buy on broadcasting agreements from others. So the resale of lawfully purchased MP3s does make a good point when from all known history it should be lawful.

I find it very interesting that EMI's Capitol Records want to make digital files an exception from the default resale concept when maybe here they are admitting that the whole file-sharing market is a very different beast.

With that said then yes the resale of MP3s is a deeply flawed concept from the technical point of view. All their IP rights come from how they physically package it, secure & encrypt it, brand & logo it. So any unapproved copies are usually easy for the eye to spot and those near prefect copies are what counterfeiting is all about.

Their digital problem is that they can't physically secure a file when any encryption and content control systems simply await the day they are hacked. And once hacked both decrypted and encrypted can be done as the hacker or skiddie likes.

I would say ReDigi is one brave company to take this on if not insanely foolish. Simple market demand has stripped away all content control concepts meaning that the whole scheme depends on user honesty. While many people would aim to be honest there are of course big exceptions.

Well the only solution is some kind of ownership scheme. An online database stands to be hacked and some physical card is both inappropriate to the digital world and right back to counterfeiting. So pick your poison.

This is a problem that does need to be solved if they want us to deal with only lawful media when we do indeed have the right to resell.
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Violated (profile), 9 Feb 2012 @ 3:07am

Re: used data?
One that supports the band that they are a fan of... That is unless you want poor starving artists to quit music and to do other jobs instead.
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Anonymous Coward, 9 Feb 2012 @ 4:07am

MP3's? How do they fucking work?
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Anonymous Coward, 9 Feb 2012 @ 4:20am

Court Documents
Ray Beckerman (attorney for ReDigi) has placed the court documents on his site.

Capitol v ReDigi: Documents
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Loki, 9 Feb 2012 @ 4:53am

Re: Re: ReDigi does NOT use mp3's
It could also have been influenced by market competition. eMusic, for example, has been doing this for years. There was no real impetus for Apple to follow suit, because eMusic sold only independent artists and labels. Now that the major have their music on eMusic as well, there is pressure for a service to follow suit (especially since eMusic doesn't use DRM and is cheaper than iTunes).
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Loki, 9 Feb 2012 @ 4:59am

Re: Re:
It's also why they are getting in fights with some of their artists, because older contracts had differing royalty rates (I'm told newer contracts no longer do so) and the artists are saying "well if it's just a license you owe us a LOT more money".
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Jeremy Lyman (profile), 9 Feb 2012 @ 6:15am

Re: Re:
Right, that's why it sounds like this service only works with DRMed music purchases. The copy protection accesses servers to make sure you're authorized to play the music, and if you sold your authorization to someone else the song doesn't play any more.

This of course wouldn't prevent a consumer from burning and ripping a CD so they can play it on a device that doesn't support that DRM scheme; and then selling the DRM auth.
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Jeremy Lyman (profile), 9 Feb 2012 @ 6:25am

Re:
But they decide what to tell you what you like to listen to!

Surely that's worth... something?
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Jeremy Lyman (profile), 9 Feb 2012 @ 6:26am

Re: used data?
I pay for mp3s.
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Anonymous Coward, 9 Feb 2012 @ 8:25am

Mother's teach us it is a good thing to share. Courts charge us insane fines when we do so. What's wrong with this picture?
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John Thacker, 9 Feb 2012 @ 9:25am

Re: Re: Re:
Right, but neither does existing law prevent you from backing up a pressed CD to a CD-R and then selling your original (or photocopying or scanning a book for that matter) music or games.

Rather, in the same way, it's illegal to do that, but it's really hard to catch. It would be easier to prevent it from happening by banning used sales. Hence the rights holders complain about this, but the courts have held firm on the first sale doctrine.

I'm not a friend of piracy, but that doesn't mean that all actions to stop piracy are a good idea. Sometimes even if they would prevent piracy, the drawbacks aren't worth the penalties. There are tradeoffs.
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MrWilson, 9 Feb 2012 @ 11:01am

Re: Re: Re:
Yeah, notably, Eminem's lawsuit.
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Khaim (profile), 9 Feb 2012 @ 11:27am

Re:
I don't think that's the case at all. You can't expect every judge to be an expert on technology. He explained fairly well that there weren't enough "undisputed facts" to immediately decide the case, denied the injunction, and asked the lawyers to get back to him via email with more detailed plans. That's about as tech-savvy as you could expect.
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Khaim (profile), 9 Feb 2012 @ 11:28am

Judging via Email
I particularly loved the bit at the end where the judge says, "oh, two weeks is on a holiday, so just email me".
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Anonymous Coward, 9 Feb 2012 @ 1:24pm

1) download mp3
2) Copy mp3 to a jump drive.
3) Upload
4) Sell
5) They delete any copies on my PC, but don't find the one on my jump drive.

Rinse and repeat

This will never fly as there is way to many ways to abuse it.
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That Anonymous Coward (profile), 10 Feb 2012 @ 1:31am

Re:
Except for that whole using Apples DRM'd format and deauthorizing it from your machine.

And every technology has the possibility of being abused, does this mean we should give up and move back into caves? The system ReDigi is using is setup to be as secure as possible, the complaint is the same as game makers about the used game market... where is our cut!!!
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doughless (profile), 10 Feb 2012 @ 10:01am

Re: how it works
This is a totally win-win situation. After their kids are done with it, your laptop will be returned with even more free music and movies than before your vacation.
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