910 F.3d 649
2d Cir.2018Background
- Plaintiffs are record companies that sell sound recordings digitally (e.g., via iTunes); ReDigi operated an online marketplace to enable resale of purchasers' digital music files.
- ReDigi v.1.0 required users to install Music Manager, which verified an iTunes purchase, split files into packets, uploaded packets to ReDigi's server while deleting the corresponding packet on the user device ("data migration"), and reassembled the file on ReDigi's server.
- After migration, users could resell the file via ReDigi; the buyer could download (with ReDigi deleting its server copy) or stream from a cloud locker. ReDigi attempted duplicate-detection/deletion but could not guarantee elimination of copies stored off the monitored device.
- Plaintiffs sued for copyright infringement (unauthorized reproduction and distribution). District court granted summary judgment for Plaintiffs; final judgment awarded damages and enjoined ReDigi. Defendants appealed liability ruling as to reproduction and distribution.
- The Second Circuit affirmed, holding ReDigi's process makes unauthorized reproductions (new phonorecords) in violation of §106(1); it declined to decide distribution under §106(3) and rejected ReDigi's invocation of the first-sale doctrine (§109(a)) and fair use (§107).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether ReDigi's transfers are protected by the first-sale doctrine (§109(a)) | §109 protects lawful resale of a particular lawfully-made phonorecord; ReDigi's resales are unauthorized reproductions and therefore not entitled to §109 protection | ReDigi: transfer merely moves the purchaser's lawfully-made phonorecord (no new copy); data-migration never results in the file existing in two places at once, so no reproduction | Held: ReDigi's process creates new phonorecords (fixed on ReDigi's server and/or purchaser's device) and thus makes unauthorized reproductions not covered by §109(a) |
| Whether ReDigi's packet-by-packet "data migration" avoids reproduction | Plaintiffs: even if packets are transient, storing/reassembling on ReDigi's server (and later on buyer's device) fixes a new phonorecord | ReDigi: packets are transient and immediately deleted from the seller's device so no simultaneous copies or reproductions occur | Held: Transitory buffering does not prevent creation of new fixed phonorecords on ReDigi's server/new purchaser's device; reproduction occurred |
| Whether the copies are excused as fair use (§107) | Plaintiffs: ReDigi's activity is commercial, non-transformative, copies entire works and competes with Plaintiffs' market; therefore not fair use | ReDigi: asserted fair use (technology enables resale akin to physical first sale) but did not meaningfully argue statutory factors initially | Held: Fair use rejected — commercial/non‑transformative, entire works copied, and substantial market harm, so fair use does not excuse reproduction |
| Whether courts should extend first-sale protection to digital resales on policy/technology-neutrality grounds | Plaintiffs: statutory text and precedent limit §109 to lawful distribution of particular physical copies; changes should come from Congress | ReDigi: urged technological neutrality and economic benefits of digital resale | Held: Court declines to rewrite statute; any expansion should be by Congress; policy arguments insufficient to override statutory reproduction right |
Key Cases Cited
- Kirtsaeng v. John Wiley & Sons, Inc., 568 U.S. 519 (recognizing broad application of first-sale doctrine to lawful physical copies)
- Quality King Distribs. v. L'Anza Research Int'l, Inc., 523 U.S. 135 (first-sale doctrine limits distribution right as to particular lawful copies)
- Bobbs-Merrill Co. v. Straus, 210 U.S. 339 (historical common-law grounding of first-sale principle)
- Cartoon Network LP v. CSC Holdings, Inc., 536 F.3d 121 (2d Cir.) (phonorecord requires fixation for more than transitory duration)
- Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417 (time‑shifting technology can be fair use in limited contexts)
- Harper & Row Publishers, Inc. v. Nation Enters., 471 U.S. 539 (market harm is central to fair-use analysis)
- Authors Guild v. Google, Inc., 804 F.3d 202 (2d Cir.) (transformative uses and full-text copying analysis)
- Fox News Network, LLC v. TVEyes, Inc., 883 F.3d 169 (2d Cir.) (commercial, searchable copying that competes with rights-holder market not fair use)
- ABKCO Music, Inc. v. Stellar Records, Inc., 96 F.3d 60 (2d Cir.) (construing scope of licenses; does not preclude recognizing a phonorecord fixed on devices)
- Recording Indus. Ass'n of Am. v. Diamond Multimedia Sys., Inc., 180 F.3d 1072 (9th Cir.) (AHRA construction; noted but distinguished for Copyright Act phonorecord definition)