ReDigi case heads to court: Are we allowed to resell digital purchases or not?

A few months back we covered the launch of ReDigi, a digital music store based on a business model of selling “used” digital tracks. The site in question claims that its software is capable of identifying music files legally purchased from iTunes and can remove a user’s access to said music once the song has been sold through the company’s online marketplace.

Capitol Records isn’t buying it; the company sued ReDigi last month alleging that “ReDigi makes and assists its users in making systemic, repeated, and unauthorized reproductions and distributions of Plaintiff’s copyrighted sound recordings… ReDigi is a clearinghouse for copyright infringement and a business model built on widespread, unauthorized copying of sound recordings owned by Plaintiff and others.” In its filing, Capitol asked for a preliminary injunction against ReDigi and damages of $150,000 per track distributed.

The judge hearing the case, Richard Sullivan, refused to take the bait and has denied the request. There’s no information on what Sullivan’s opinions are on the situation, but the ReDigi suit could set important precedents for years to come. The Copyright Act of 1976 explicitly guarantees what’s known as “first sale doctrine” — the idea that having purchased a good, the owner of said product has the legal right to resell it. The question of how first sale doctrine should be applied to digital products is very much a legal gray area.

Capitol’s initial filing focuses heavily on the idea that ReDigi’s service creates copies rather than attempting to claim that ReDigi is unable to guarantee that files have been properly identified and removed from the original owner’s computer. The problem with this approach is that it’s a legal loophole that the DMCA ironically closed. 17 U.S.C. 117(a) reads “it is not an infringement for the owner of a copy of a computer program to make or authorize the making of another copy or adaptation of that computer program provided (1) that such a new copy or adaptation is created as an essential step in the utilization of the computer program in conjunction with a machine.” It’s known as the Essential Step defense, and it was added to existing copyright law specifically to address the claim that loading a program into RAM was equivalent to creating an illegal copy of the software.

Whether ReDigi’s concept of a “used” digital music market is sustainable or not, the legal issues it raises could have ramifications for a huge range of products, including games, movies, and software. Expect multiple heavyweights to weigh in if this case goes to trial — game publishers are rabid to kill the used games market, and a victory here would be a strategic move towards that goal.

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Universal Music Group claims right to block or remove any video on YouTube

Over the past week, a weird little tale has been unfolding between Universal Music Group (UMG) and Megaupload, a popular digital file locker. The basic gist of it is that Megaupload published a promotional music video — which UMG took exception to, because some of the artists in the video were signed to UMG. Through some kind of digital hokus pokus, UMG had YouTube take down the video — and nonplussed, Megaupload re-uploaded the video (embedded below) and then sued UMG to prevent them from further interference.

Here’s where things get messy: Everyone assumed that Universal had used some arcane clause of the maligned Digital Millennium Copyright Act (DMCA) to take down the video — but that wasn’t the case. Shockingly, it has been uncovered that an existing agreement between YouTube and UMG allows UMG to remove any video, irrespective of whether copyright or some other conflict of interest is present. Universal simply logged into its YouTube control panel and removed Megaupload’s video — no questions asked, no due process. Better yet, it seems like YouTube’s own legal team isn’t aware of the overarching powers that have been granted to UMG. Here’s a snippet from UMG’s letter to YouTube [PDF]:

… As you know, UMG’s rights in this regard are not limited to copyright infringement, as set forth more completely in the March 31, 2009 Video License Agreement for UGC Video Service Providers, including without limitation Paragraphs 1(b) and 1(g) thereof.

It seems this agreement stems back to when Google collaborated with a bunch of music publishers to launch the Vevo music video site — but why UMG’s powers extend beyond the Vevo subsection of YouTube is beyond us. Furthermore, what kind of severe ocular degeneration must YouTube’s lawyers be suffering to grant UMG such sovereignty over content that it doesn’t own? YouTube/Google was either in the mother of all rushes to get Vevo off the ground, or perhaps UMG has some dirt on Google — who knows.

Unfortunately, these underhanded, behind-closed-door deals are very common throughout the industry — but because they’re private, commercial deals, you simply don’t hear about them until they bubble to the surface like a gloopy fart in a swamp. But them’s the breaks: when you agree to use someone else’s service — Facebook, Twitter, YouTube — you agree to abide by their rules. They don’t have to tell you about all of their third-party agreements, unless it directly involves personally identifiable data — and anyway, for the most part we don’t stop to question the rules and regulations that govern a free service, anyway.

I want to say that this is a problem with a hyperprivatized world where almost every service we use is privately owned and operated, where privilege (literally, private law) and backhanders rule supreme — but Thor knows that governments are founded on cronyism, too. Really, if anything, this UMG-YouTube deal simply shines a light on one of the dirtier, endemic aspects of society — and now that you know about it, maybe you’ll begin to spot similar situations elsewhere, too.

Of course, this also comes at a time when the Stop Online Piracy Act (SOPA) is on the cusp of being railroaded through Congress, too. In light of Universal’s baboonesque behavior, is it really wise to give copyright holders even more power when it comes to moderating and censoring the internet?

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