Capitol Records Could Learn Identities Of ReDigi's Customers

Capitol Records may soon learn the names of everyone who has used the start-up ReDigi to sell digital tracks, court records show.

The record label, which is suing ReDigi for copyright infringement, recently sought a court order requiring the Web start-up to disclose information to identify users. Capitol presumably wants that data in order to develop evidence by questioning users.

Last month U.S. District Court Judge Richard Sullivan in New York ordered ReDigi to identify its users to Capitol, but the start-up recently filed papers asking him to reconsider.

ReDigi, which stands for recycled digital media, says its platform enables consumers to resell digital music they purchased. The company says it scans users' hard drives for proof that the music was acquired legally, and then allows users to upload their tracks. ReDigi deletes the original from the users' hard drives, and then offers to sell the "used" version to other buyers. ReDigi also allows people to store music in the cloud.

The start-up contends that consumers can resell digital tracks the same way they can resell physical CDs or vinyl records. In general, courts have ruled that consumers can resell products they have lawfully acquired.

But Capitol says that ReDigi isn't allowing consumers to sell the same products they bought, but digital copies of those products. Therefore, sales made through ReDigi infringe copyright, Capitol argues.

In February, Sullivan denied Capitol's request to shut down Redigi immediately, but he also said Capitol probably would be able to prove copyright infringement. At the time, Sullivan ordered both sides to file motions for summary judgment.

In the course of preparing its legal arguments, Capitol asked ReDigi to provide a host of information -- including names of shareholders, investors and customers. ReDigi opposed some of those requests.

On June 13, Sullivan denied Capitol's request for names of shareholders or investors, but ordered ReDigi to turn over information about its users. (The court records for that date state that Sullivan ordered ReDigi to "comply with Capitol's Request No. 13," but subsequent court filings make clear the request was to identify users.)

ReDigi then filed a motion for reconsideration. The company argues that turning over the names of users will expose them to potential intimidation and harassment. "Capitol has clearly stated its position that ReDigi's customers are 'infringers,'" ReDigi says in its court papers. ReDigi adds that Capitol "will inevitably cause embarrassment to users of the ReDigi service" if it accuses them of copyright infringement.

The start-up adds that Capitol could "implicitly threaten" to sue users, which would not only have an impact on those users but would also "have a chilling effect on the development of new technologies."

Capitol counters that ReDigi lacks a basis for its "inflammatory speculation" about whether the label will harass or intimidate users.

But Capitol's court papers leave open the possibility that it will bring litigation against users. In a filing earlier this month, Capitol says it would be "premature" to make any determination about suing individual users, given that the company "has no information regarding the number of different users that have sold or offered Capitol recordings for sale, the number of recordings any particular users have sold or offered for sale, and the extent to which users may have abused the ReDigi system by retaining copies of Capitol recordings they are selling or offering for sale."

Sullivan ordered Capitol and ReDigi to participate in a telephone conference with him on July 26. He hasn't yet indicated whether he will revise his earlier order.

But Corynne McSherry, a lawyer with the digital liberties group Electronic Frontier Foundation, says that at least one other federal judge ruled in a similar matter that users' identities need not be disclosed. In that case, U.S. District Court Judge Richard Seeborg in the Northern District of California ruled that EchoStar wasn't entitled to learn names of people who purchased controversial satellite receivers from Freetech. (Those receivers could be programmed to enable people to receive DISH programs for free.)

McSherry adds that Capitol's request in this case appears "highly over-broad."

"This is really quite concerning," she says. "It's not clear to me why Capitol actually needs all this information."

She adds that she agrees with ReDigi that disclosing data about customers could result in harassment. "Presumably they're going to go and interview these folks, depose them, look at their computers and see if they've deleted their songs," she says. "To me, that's going to move very quickly into harassment."

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