ReDigi, a company that sought to create a marketplace for "used" iTunes tracks, is asking the Supreme Court to decide whether consumers can re-sell digital music files.
“In essence, ReDigi’s software operates as a used record store for digital music files,” the company writes in a petition filed with the Supreme Court late last week.
The company says its platform enables consumers to re-sell music they've purchased. Consumers have long had the so-called “first sale” right to re-sell lawfully acquired record albums and CDs. ReDigi contends that it enables consumers to extend that right to digital files.
“ReDigi’s certiorari petition presents a pivotal copyright issue that has emerged with the growth of the digital economy,” the company writes. “That issue is whether owners of copyrighted digital music files lawfully purchased from an authorized licensee are entitled to reasonable first sale protections.”
The company's petition is the latest move in its long-running dispute with Capitol Records, which sued ReDigi for alleged copyright infringement in 2012. The suit came soon after ReDigi launched a platform that enabled iTunes users to re-sell unwanted tracks.
ReDigi, which declared bankruptcy in 2016, said its platform scanned users' hard drives for proof that the files were acquired legally, then transferred tracks to the cloud while simultaneously deleting them from the original users' hard drives.
Capitol argued that consumers weren't selling the same works that they purchased, but copies they uploaded to the cloud. That model is illegal, Capitol said, because only the copyright owner has the right to make copies.
Late last year, the 2nd Circuit Court of Appeals in New York sided against ReDigi, ruling that its platform operated by illegally making copies of digital files. The appellate judges wrote that ReDigi's system “inevitably involves the creation of new phonorecords by reproduction.”
The appellate judges also said ReDigi couldn't guarantee that users didn't retain duplicates of the same music they sought to re-sell.
ReDigi had argued to the 2nd Circuit that a ruling against its service would leave consumers without the ability to re-sell digital music, short of selling their hard drives or other physical equipment. But the appellate judges seemed to suggest that users could still potentially re-sell digital music by transferring it to a physical thumb drive.
“A secondary market can readily be imagined for first purchasers who cost effectively place 50 or 100 (or more) songs on an inexpensive device such as a thumb drive and sell it,” Circuit Judge Pierre Leval wrote for the court. “Furthermore, other technology may exist or be developed that could lawfully effectuate a digital first sale.”
ReDigi criticizes that reasoning in its new court papers. “Unlike the situation with CDs or DVDs, the only way a purchaser can 'place 50 to 100 (or more) songs on an inexpensive device, such as a thumb drive' is by the creating what the Court of Appeals considers 'new' copies and hence infringing reproductions,” ReDigi writes.