If you purchase a music CD, can you later sell it to someone else? Yes. If you purchase the same songs in digital form, can you later sell those songs to someone else? No.
On December 12, 2018, the 2nd Circuit Court of Appeals decided the case of Capitol Records, LLC, v. ReDigi, Inc.[1] That case turned on the interesting question of whether digital music can be resold; and the court decided that doing so creates an unlawful reproduction or copy of the copyrighted work.
In copyright law, the holder of the copyright has the right to control the reproduction, distribution, and sale of a copyrighted work. The “First Sale Doctrine,” on the other hand, permits the purchaser of a copyrighted work to sell that individual copy of the work to another person without violating copyright law. In other words, this is what allows you to sell a painting, DVD, book, CD, etc. at a garage sale without getting sued for copyright infringement.
However, you are still not allowed to make a copy of the book (for example), and you can definitely not sell such a copy. That point is what the appeals court focused on in analyzing ReDigi’s arguments.
ReDigi is a company that has developed technology which allows a user to upload a digital music file and then sell that digital music file to another. If it simply made a new copy of the digital music file on the ReDigi server, that would be a clear case of copyright infringement because you cannot make a copy. To try and avoid that copyright issue, ReDigi’s technology simultaneously deletes the copy of the music file on the seller’s computer. However, the court said that a copy is still made, which violates copyright law.
The “First Sale Doctrine” applies to what is defined as a “phonorecord,” which has been interpreted by the court in this case to mean the physical device which embodies the digital music file. In other words, the court found that the hard drive (or the portion of it where the music is stored) constitutes the “phonorecord” that could be resold. When the music file is transferred to another hard drive (even if it is deleted from the first one), that has still created a new phonorecord.
There are often many cases where the law is slow to keep up with changing technology, and it is possible that this is one of those areas. I anticipate that we may either see changes in technology which will (eventually) allow the re-sale of digital music, or we may see changes in the law to more clearly encompass such a sale.
If you have a question regarding copyright infringement or other intellectual property rights, contact the experienced attorneys at Goosmann Law Firm, PLC, in our Omaha, Sioux City, and Sioux Falls offices.
[1] Capitol Records, LLC, v. ReDigi, Inc., 2018 WL 6518076, __ F.3d __ (2nd Cir 2018).
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