{"id":6137,"date":"2019-02-17T13:50:42","date_gmt":"2019-02-17T17:50:42","guid":{"rendered":"http:\/\/ncjolt.org\/?p=6137"},"modified":"2020-06-04T20:52:27","modified_gmt":"2020-06-04T20:52:27","slug":"derailing-the-packet-train-capitol-records-v-redigi-inc","status":"publish","type":"post","link":"https:\/\/journals.law.unc.edu\/ncjolt\/blogs\/derailing-the-packet-train-capitol-records-v-redigi-inc\/","title":{"rendered":"Derailing the Packet Train: Capitol Records v. ReDigi, Inc."},"content":{"rendered":"\n

As the \u201cMalaco\nSoul Brother\u201d Chuck Brooks once sang, \u201cyou can\u2019t be in two places\nat the same time.<\/a>\u201d This is the underlying logic behind ReDigi Inc.\u2019s\nargument to the Second Circuit that their \u201cpacket train\u201d file transfer system does\nnot violate the Copyright Act. ReDigi, Inc. was conceived as an online\nmarketplace for digital music files, allowing owners of any \u201cused\u201d digital\nmusic files to buy or sell them. ReDigi\u2019s novel technology, originally introduced\nin late 2011, was designed to allow individuals to sell their music files\nthrough a file transfer process that deletes the original files from the\nseller\u2019s hard drive, with the stated purpose of ensuring that only one copy of\nthe particular music file exists at any point<\/a>.\n<\/p>\n\n\n

The marketplace\nfunctioned through \u201cCloud Lockers\u201d provided to each ReDigi user for digital\nmusic file storage, similarly to other cloud storage platforms like Google\u2019s\n\u201cMy Drive\u201d. A key\ndifference<\/a> from traditional cloud locker services is a proprietary\ntechnology that searches for and removes the music file from the seller\u2019s hard\ndrive after being purchased and transferred to its new owner. This requires the\n\u201cpacket train\u201d system, in which the music files are transferred from the hard\ndrive to the Cloud Locker block-by-block (or to extend the train metaphor,\n\u201ccar-by-car\u201d), and each block is subsequently deleted after upload. The same\nprocedure follows with the purchaser after buying the music file.<\/p>\n\n\n

While the\nservice was a welcome sign for nascent used-digital-music, it quickly became\nthe subject of a copyright infringement lawsuit by Capitol Records. Despite\nReDigi\u2019s arguments that their technology ensured a permissible \u201cfirst sale\u201d of\na lawfully produced copyrighted work, both the Southern District of New York\nand the Second Circuit disagreed<\/a>.\n<\/p>\n\n\n

The main\nquestion in the ReDigi case was whether a digital music file is a \u201cmaterial\nobject,\u201d and therefore within the first sale doctrine protections of the\nCopyright Act. The Copyright Act protects rights of reproduction and\ndistribution for copyrighted works. These protections extend to copyrighted\n\u201cphonorecords,\u201d which are defined<\/a> in\nSection 101 as \u201cmaterial objects in which sounds, other than those accompanying\na motion picture or other audiovisual work, are fixed by any method now known\nor later developed, and from which sounds can be perceived, reproduced, or\notherwise communicated, either directly or with the aid of a machine or\ndevice.\u201d Section 106 establishes a wide range of exclusive rights for copyright\nowners, but there is a key exception in Section 109(a), commonly known as the\nfirst sale doctrine. <\/p>\n\n\n

The first sale\ndoctrine originates in common law, and as early as the 17th century commentators\nremarked on the common law\u2019s refusal to permit restraints on the alienation of\nchattels. In modern\ncopyright law<\/a>, the first sale doctrine provides that once a\ncopyright owner consents to the sale of certain types of copyrighted works,\nthey are no longer able to exercise distribution rights over copies of those\nworks. One of the unique challenges for a digital first sale doctrine is the\nambiguity of the \u201cmaterial object\u201d requirement \u2013 while the phrase \u201cmaterial\nobject\u201d appears seven times in the definitions of the Copyright Act, it is not\nspecifically defined itself. This uncertainty has allowed for a wide range of\ninterpretation over what is in fact a material object; indeed, it is the\nprimary issue in the ReDigi case.<\/p>\n\n\n

In its opinion, the Second Circuit noted that \u201c[i]t is undisputed that one who owns a digital file from iTunes of music that is fixed in a material object qualifies as \u2018the owner of a particular . . . phonorecord lawfully made,\u2019\u201d and is therefore entitled \u201cto sell or otherwise dispose of the possession of that<\/em> . . . phonorecord,\u201d without violating \u00a7 106(3). But, \u201con the other hand, \u00a7 109(a) says nothing about the rights holder\u2019s control under \u00a7 106(1) over reproduction<\/em> of a copy or phonorecord.\u201d This essentially means that while digital music files fixed in material objects are subject to the first sale doctrine and may be resold without violating copyrights, trouble arises when there are any reproductions of the copyrighted work.<\/p>\n\n\n

One of the unique challenges for a digital first sale doctrine is the ambiguity of the \u201cmaterial object\u201d requirement \u2013 while the phrase \u201cmaterial object\u201d appears seven times in the definitions of the Copyright Act, it is not specifically defined itself. <\/p><\/blockquote>\n\n\n

In assessing\nReDigi\u2019s arguments, the court did not decide whether a transferred digital file\nis a phonorecord because ReDigi\u2019s transfer process \u201ceffectuates an unlawful\nreproduction even if the digital file itself qualifies as a phonorecord.\u201d The\ncourt cites the embodiment and transitory duration requirements from Cartoon\nNetwork LP v. CSC Holdings, Inc<\/a><\/em>., and found that the transfer of\na digital music file from one hard drive to another (or Cloud Locker) creates a\nnew phonorecord because \u201c[a]t each of these steps, the digital file is fixed in\na new material object\u201d. It then noted that the only legal way to reproduce a\ncopyrighted work is to receive protection under fair use \u2013 ReDigi did not\nqualify for such protection.<\/p>\n\n\n

By refusing to decide the issue of whether a digital file is a phonorecord (and therefore a material object), the Second Circuit missed an opportunity to more properly align the definitions of phonorecord and material object with modern technology. While the court currently recognizes<\/a> that \u201cthe segment of a hard disc on which an electronic music file is encoded is a \u2018phonorecord\u2019 under the Copyright Act,\u201d this definition neglects the fact that hard drives are not quite as \u201chard\u201d as their name suggests; while some files may remain in relatively constant locations within a hard drive over time, hard drives are too fluid for this definition to make common sense. Under the Second Circuit\u2019s interpretation, it would be possible for a digital music file owner to unlawfully reproduce their digital music file simply by moving it from one hard drive location to another, as long as the transitory time frame suggested in Cartoon Network LP <\/em>is satisfied. If the court had instead recognized that the digital music file is itself a phonorecord, a digital first sale doctrine may have been realized. But instead, we will have to wait for a sea change in first sale doctrine interpretation, or settle for selling our used music on physical copies.<\/p>\n\n\n

Sam Spalding, 11 February 2019<\/p>\n","protected":false},"excerpt":{"rendered":"

As the \u201cMalaco Soul Brother\u201d Chuck Brooks once sang, \u201cyou can\u2019t be in two places at the same time.\u201d This is the underlying logic behind ReDigi Inc.\u2019s argument to the Second Circuit that their \u201cpacket train\u201d file transfer system does not violate the Copyright Act. ReDigi, Inc. was conceived as an online marketplace for digital …<\/a><\/p>\n","protected":false},"author":1,"featured_media":6138,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[51],"tags":[],"_links":{"self":[{"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/posts\/6137"}],"collection":[{"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/comments?post=6137"}],"version-history":[{"count":1,"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/posts\/6137\/revisions"}],"predecessor-version":[{"id":6850,"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/posts\/6137\/revisions\/6850"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/media\/6138"}],"wp:attachment":[{"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/media?parent=6137"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/categories?post=6137"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/tags?post=6137"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}