November 24, 2014

Selling Used Digital Files: A Setback, But Not the End of the Story

130405 maryminow1 Selling Used Digital Files: A Setback, But Not the End of the Story

Mary Minow

Libraries and Friends groups interested in reselling or giving away used ebooks or other digital content files (or purchasing them) may be a little more cautious after the March 30 court decision, Capitol Records v. ReDigi Inc., issued by District Judge Richard J. Sullivan of the U.S. District Court of the Southern District of New York.

ReDigi, a virtual marketplace for “pre-owned” digital music, was sued by Capitol Records in what the court characterized as “a fundamental clash over culture, policy, and copyright law.” [See the full opinion on INFOdocket.com.]

The case was decided on the specific language in Copyright Law, known as the First Sale Doctrine, codified at 17 U.S.C. Sect. 109. This section of the law is important to libraries and used booksellers, as it gives them the right to lend and resell CDs, DVDs, print books and more, so long as the items are lawfully made copies.

However, the doctrine does not give the right to make copies. That’s where First Sale and digital files clash. In order to move a file from one user to another (even when using a cloud), one necessarily makes a copy.

ReDigi argued that this narrow reading of the law effectively excludes digital works from the law’s purpose. The ReDigi method uses a “Media Manager” that installs on a user’s computer and then scans it to ensure that no copies of the file remain on the user’s hard drive or attached devices. It cannot, however, detect copies stored in other locations.

The court stated that a user may still resell a digital file by selling it with the hardware onto which it was originally downloaded, such as a hard disk, iPod, or other memory device. While recognizing that this is more onerous than reselling CDs and cassettes, the court stated that these limits were nonetheless desirable. Used digital copies are as desirable as new copies, thereby harming the publishers’ market. Moreover, the court said that it is up to Congress, not the Court, to revise an outmoded law.

ReDigi plans to appeal the decision, according to Jaclyn Inglis, Director, Public Relations. Moreover, ReDigi has a new platform called ReDigi 2.0 that may make the no-copying rationale moot: it directs a user’s new iTunes purchases to upload directly to the Cloud Locker. Accordingly, while access may transfer from user to user upon resale, the file is never moved from its initial location.

ReDigi is currently on schedule to launch its eBook marketplace, set up under the 2.0 platform. According to Inglis, the March 30 ruling is specific to Capitol Records’ mp3 files.

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Mary Minow is the Follett Chair at Dominican University’s Graduate School of Library and Information Science. In addition, she is a library law consultant and coauthor of The Library’s Legal Answer Book, with Tomas Lipinski. Minow worked in public libraries for ten years before going to law school, and has served as a library trustee. She received an A.M.L.S. from the University of Michigan, Ann Arbor, and a J.D. from Stanford University.

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Comments

  1. This piece fails to mention the threat posed to public libraries by this decision, which one finds odd given where it is appearing. If the First Sale Doctrine cannot ultimately be applied to digital media, a robust system–or possibly any system–of eBook lending by public libraries is in jeopardy.

    See The End of Libraries, at http://alltogthernow.org/showtag.php?currid=85

  2. The threat to libraries from legalizing the resale of first copy digital files is greater than the threat posed by it being illegal. The resale market for digital objects would cannibalize the market for library lending–why wait for the library loan of an e-book when you get a resold copy for a good discount off the original price? With no cost of shipping and minimal transactional costs the resale cost of an e-book can drop relatively close to zero or at least to the point of whatever minimum the facilitator of the market (like ReDigi) imposes. There is an e-book price point at which libraries simply become irrelevant to e-book distribution, digital object resale would find that price. How relevant are libraries to the distribution of music mp3s? Libraries could become just as irrelevant to the distribution of e-book files.

    The current system of library e-book lending is NOT in jeopardy by this decision, since the current system proceeds by agreement with publishers and creators.