When you purchase a lawfully produced music CD, you are entitled under U.S. copyright law "to sell or otherwise dispose" of it without seeking permission from the copyright holders. Without the protection of this "first-sale" doctrine, simple acts such as donating a used book to a library or selling old music CDs on eBay would constitute copyright infringement. But what happens if you purchase a song through an online store such as iTunes? Does the first sale doctrine protect the right to resell digitally purchased works as well?
According to a March 30 ruling from a federal judge in New York, the answer is no. Back in October 2011, a startup company called ReDigi launched an online digital marketplace enabling users to "sell their legally acquired digital music files, and buy used digital music from others at a fraction of the price currently available on iTunes." ReDigi created a website to facilitate resales, plus a downloadable "Media Manager" designed to ensure that users would not retain copies of songs they had sold.
In January 2012, Capitol Records filed a complaint in a New York federal court alleging that "ReDigi is actually a clearinghouse for copyright infringement and a business model built on widespread unauthorized sound recordings owned by" Capitol and others. In this week's ruling, Judge Richard J. Sullivan agreed. ReDigi's service, he wrote, "infringes Capitol's exclusive right of reproduction" as well as its "exclusive right of distribution." And Judge Sullivan went further, concluding that "the Court cannot of its own accord condone the wholesale application of the first sale defense to the digital sphere, particularly when Congress itself has declined to take that step."
The ruling doesn't address a key question implicated in digital resales: When are people who "purchase" a song for download from a retailer owners of a copy of the song, and when are they simply licensees? After all, the first-sale doctrine applies to sales. For music provided using license-based delivery models in which buyers don't own the downloaded content, there's a reasonable argument that the first-sale doctrine doesn't apply.