Weil Gotshal & Manges LLP -
Samuel J. Zeitlin and Bruce Rich, Lexology; The Second Circuit Shuts Down Resale of Digital Music Files in Capitol Records, LLC v. ReDigi, Inc.
"If you purchase a copy of music in physical form--like a CD or vinyl
record-- you own your copy even though you do not own the underlying
songs. Although the law reserves to the copyright owner the right to
make more copies, she cannot stop you from selling your copy or giving
it away. This rule is called the right of first sale, and it enables all
secondhand sales of copyrighted material, from the smallest used
bookstore to eBay and Amazon Marketplace. The right of first sale began
as judge-made law in the early 20th century, and today is part of the
copyright statute at 17 U.S.C. 109(a). In technical terms, Section
109(a) creates an exception for the owners of legal copies to the
copyright owner's exclusive right to distribute her work, although not
to her exclusive right to reproduce her work.
But what happens if you purchase a digital music file? Digital
copying unravels the balance between the rights of copyright owners and
customers set by the first sale doctrine. Section 109(a) only allows the
owner of a copy to distribute it, not to make more copies. In a digital
environment, however, distributing a file is done by making a copy of
that file in a new location. When the distinction between copying and
distributing collapses, is it still possible to exercise the right of
first sale?
The Second Circuit has just confronted this issue in its December 12,
2018 ruling on the legality of ReDigi, an online marketplace designed
to let people resell digital music files purchased from iTunes. In a
unanimous decision in Capitol Records, LLC v. ReDigi, Inc. penned by the
Second Circuit's preeminent copyright expert, Judge Pierre Leval, the
court upheld the conclusion of the district court that ReDigi's business
model violated the law."
