Patrick Munson's List: OAA - Legal Case

• ReDigi, based in Boston, has been running a resale market for digital goods since 2011. After downloading an app, users can buy a song on ReDigi for as little as 49 cents that would costs 99 cents new on iTunes.
• When users want to sell an item, they upload it to ReDigi's servers via a mechanism that ensures no copy is made during the transfer. Software checks that the seller does not retain a copy. Once transferred, the item can be bought and downloaded by another customer. ReDigi is set to launch in Europe in a few months.
• That is the trade-off that makes a second-hand digital market work: the risk justifies the price. The idea has ruffled a few feathers –; last year EMI sued ReDigi for infringement of copyright. A judge denied the claim, but the case continues.
• ReDigi tracks the history of the items traded so when you buy something, you can see who has owned it and when. ReDigi's second-hand marketplace has grown into a social network. According to ReDigi founder John Ossenmacher, customers like seeing who has previously listened to a song. "It's got soul like an old guitar," he says. "We've introduced this whole feeling of connectedness."

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• The company, ReDigi, said its technology deleted the original file once a copy was put up for sale, but major record labels were skeptical.
• A U.S. judge in New York has dealt a blow to the nascent business of reselling digital goods like music and e-books, ruling that a small company's secondary market for digital music infringes on copyrights controlled by record companies.
• The company, ReDigi, opened an online platform in late 2011 that allowed people to upload and resell songs they had bought from online retailers like Apple's iTunes. ReDigi said its technology deleted the original file once a copy had been put up for sale but the major record labels were skeptical and Capitol Records sued in early 2012.
• the legal principle that someone who owns a copy of a copyrighted work, like a book or album, is free to resell it - can be applied to digital goods.
• Judge Richard J. Sullivan of U.S. District Court in New York ruled that ReDigi was liable for copyright infringement.
• - Judge Sullivan ruled that ReDigi's system infringed on Capitol's reproduction rights because it transmitted unauthorized copies of files over the Internet.
• one footnote mentions that ReDigi compared its system with the ''Star Trek'' transporter and ''Willy Wonka's teleportation device, Wonkavision''
• 'it is clear that ReDigi 1.0 does not.''
• Apple and Amazon, which have applied for patents for secondary digital markets but have not put those platforms in place.
• the presence of a ''used'' but perfect digital copy of a book would cause prices to crash.
• The decision came less than two weeks after the U.S. Supreme Court upheld the first sale doctrine in the case of Kirtsaeng v. John Wiley & Sons, about a student who was importing and selling textbooks bought at a lower price overseas
• ''The decision was very one-sided,'' said Jason M. Schultz, an assistant clinical professor of law at the University of California, Berkeley. ''There needs to be some way to resell if we believe the Supreme Court that first sale is important.''

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• 
  What is sold can be new all over again
• At the beginning of the month a New York judge ruled that reselling used digital music is not the same as selling an old CD or book. The case involved ReDigi, a company established in 2011 with the purpose of allowing people to resell their digital music at a lower price.
• In January last year, Capitol Records filed against ReDigi, claiming the company had infringed its rights to reproduce music. The judge agreed, ruling the practice of reselling digital music broke US copyright laws.
• ReDigi was not an open market; to use the service, customers had to download software that determined whether their music was eligible for resale (that is, not copied from CD or downloaded from a file- sharing site) and prevented them from keeping a digital copy once they had sold it. All well and good so far, but the catch according to this judge was that to resell on ReDigi, the files had to be uploaded to its servers, requiring an illegal recreation of the file.
• it seems that reselling your iTunes library may not be legal, at least in the US.
• The ownership of music libraries has also been debated fiercely lately after it emerged that an iTunes library probably cant be inherited when its owner dies.
• ReDigi is far from the first company to see digital reselling as an opportunity. In 2009, Amazon filed a patent for a secondary market for digital objects, a patent the company won on January 29 this year.
• Publishers and authors rightly fear Amazon will be the only one getting a cut: there seems to be no provision to pass on any part of the sale to the creators of the content.

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• The retailer's button might say ''buy now,'' but you are, in effect, only renting an e-book or an iTunes song, and your rights are severely limited. That has been the bedrock distinction between physical and electronic works since digital goods became widely available a decade ago.
• In late January, Amazon received a patent to set up an exchange for all sorts of digital material. The retailer would presumably earn a commission on each transaction, and consumers would surely see lower prices.
• But a shudder went through publishers and media companies. Those who produce content might see their work devalued, just as they did when Amazon began selling secondhand books 13 years ago. The price on the Internet for many used books these days is a penny.
• On Thursday, the U.S. Patent and Trademark Office published Apple's Enhanced Coverage LinkingApple's  -Search using:Company ProfileNews, Most Recent 60 DaysCompany Dossierapplication for its own patent for a digital marketplace. Apple's Enhanced Coverage LinkingApple's  -Search using:Company ProfileNews, Most Recent 60 DaysCompany Dossierapplication outlines a system for allowing users to sell or give e-books, music, movies and software to each other by transferring files rather than reproducing them. Such a system would permit only one user to have a copy at any one time.
• A victory for the company would mean that consumers would not need either Apple's Enhanced Coverage LinkingApple's  -Search using:Company ProfileNews, Most Recent 60 DaysCompany Dossieror Amazon's exchange to resell their digital items.
• ''The technology to allow the resale of digital goods is now in place, and it will cause a dramatic upheaval,'' said Bill Rosenblatt, president of GiantSteps, a technology consulting firm. ''In the short term, it's great for consumers. Over the long term, however, it could seriously reduce creators' incentive to create.''
• ''The resale of e-books would send the price of new books crashing,'' he said. ''Who would want to be the sucker who buys the book at full price when a week later everyone else can buy it for a penny?''
• He acknowledged it would be good for consumers - ''until there were no more authors anymore.''
• Association of Research Libraries
• He said that 60 percent of what the association's 125 members buy was electronic, which meant sharp restrictions on use. Libraries cannot buy from Apple's Enhanced Coverage LinkingApple's  -Search using:Company ProfileNews, Most Recent 60 DaysCompany DossieriTunes
• ''If these things can't be owned, who is going to make sure they exist going forward?''

• 'Without substantial changes, we can't do what libraries have always done, which is lend and preserve.''

• The crucial 1908 case involved a publisher that had issued a novel with a warning that no one was allowed to sell it for less than $1. When Macy's offered the book for 89 cents, the publisher sued.

  That led to a landmark Supreme Court ruling limiting the copyright owner's control to the first sale. After that, it was a free market.
• Sales of digital material are considered licenses, which give U.S. consumers little or no ability to lend the item
• worry is that without such constraints digital goods could be infinitely reproduced while still in the possession of the original owner.
• Amazon's patent envisions the keeping of a book or movie or song in a customer's personalized ''data store.'' When an item is no longer wanted, the user could sell or trade it to another user, automatically deleting it from the first user's store.
• ReDigi, a Massachusetts start-up that allows for the reselling of iTunes songs.
• ReDigi took some pains to make its approach as friendly to the music companies as possible. For instance, any money gained from selling songs must be spent on new songs. And ReDigi says its system, like both Amazon's and Apple's, Enhanced Coverage LinkingApple's,  -Search using:Company ProfileNews, Most Recent 60 DaysCompany Dossierallows for the existence of only one copy of an electronic product at any time.
• Capitol Records nonetheless sued ReDigi for copyright infringement in a New York court and asked the judge to shut the service through a preliminary injunction. The judge declined and is expected to rule in the case shortly.
• 'Amazon is pretty fearless, which bodes well for the consumers of digital goods.'' And, he added, for Amazon itself: ''What better value to give an Amazon customer than to say, 'Buy your book here and then later you can resell it'? You can't do that with Barnes & Noble's Nook.''
• Before the Internet, he pointed out, there was little controversy over secondhand stores for books and music. ''It never threatened the broader market because it simply wasn't that efficient,'' he said. ''You couldn't always find the book or CD you were looking for.''

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