Capitol Records, LLC v. ReDigi Inc.
934 F. Supp. 2d 640
S.D.N.Y.2013Background
- Capitol sued ReDigi alleging direct and secondary copyright infringement (reproduction, distribution, and planned performance/display) through ReDigi’s digital marketplace for pre-owned music.
- ReDigi marketed as a “world’s first online marketplace for digital used music,” enabling users to upload and sell digital files from a Cloud Locker.
- Users install Media Manager to identify eligible files purchased on iTunes or from other ReDigi users; Media Manager verifies eligibility and ensures no retained copies remain after sale.
- Uploads move digital files to the Cloud Locker; Media Manager deletes local copies, but copies are nonetheless embodied in a new phonorecord on the server and user devices.
- Transactions involve credits and a 60% share to ReDigi from sale prices; no money changes hands, and duplication or redistribution occurs via transfers to new owners.
- Court denied ReDigi’s 2.0 version and held that, on prevailing record, sales on ReDigi infringe Capitol’s rights; remanded for remaining issues such as performance/display and damages.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether ReDigi’s sale of digital music infringes Capitol’s reproduction rights | Capitol; reproduction occurs when new material object created | ReDigi; no duplication, migrates file | Reproduction rights infringed |
| Whether ReDigi’s sale infringes Capitol’s distribution rights | Capitol; distribution via electronic sale violates §106(3) | ReDigi; defenses of fair use/first sale may apply | Distribution rights infringed |
| Whether fair use shields ReDigi’s uploads/downloads from infringement | Capitol; use not transformative and is commercial | ReDigi; argues fair use applies for storage/transfer | Fair use does not apply |
| Whether first sale doctrine shields ReDigi’s digital resale | Capitol; §109(a) does not cover digital copies | ReDigi; first sale should extend to digital; policy reasons | First sale doctrine does not apply to digital resale |
Key Cases Cited
- London-Sire Records, Inc. v. John Doe 1, 542 F.Supp.2d 153 (D. Mass. 2008) (embodiment and transfer create a phonorecord; reproduction in new material object)
- Napster, Inc. v. Napster, 239 F.3d 1004 (9th Cir. 2001) (reproduction and distribution via file-sharing infringing rights)
- Arista Records LLC v. Doe 3, 604 F.3d 110 (2d Cir.) (2d Cir. 2010) (contributory infringement; knowledge standard and site/facilitation)
- Grokster, Ltd. v. Sony Corp., 545 U.S. 913 (U.S. 2005) (inducement; broad ruling on liability for encouraging infringement)
- US v. Am. Soc. of Composers, Authors, & Publishers, 627 F.3d 64 (2d Cir. 2010) (streaming as public performance)