ReDigi Redux: A Decision in Two Dialogues

The World’s First Online Marketplace For Used Digital Media, www.ReDigi.com. (PRNewsFoto/ReDigi)

On December 12, the United States Court of Appeals for the Second Circuit handed down an opinion in Capitol Records, LLC et. al. v. ReDigi Inc., et. al. that I have not been able to stop thinking about since reading it that morning. It has stuck in my craw—in my mind, at least.

There’s something about the opinion that keeps tickling the back of my brain. Two things. There are two things about the opinion that keep tickling the back of my brain. And accordingly I’ve been imagining two different dialogues that contributed to the two halves of the outcome. Those dialogues follow below.


Blogmaster’s note: A news summary of the decision is here. In short, the Second Circuit confirmed that reselling digital music files via a system that confirms lawful purchase of the file and deletes the original file from the seller’s device is copyright infringement, because there is no way for the ReDigi system to prevent the original purchaser retaining a copy of the file on another device. In affirming, the Circuit rejected three defenses — two technological or conceptual, and the third — fair use — arguably constitutional.

The first ReDigi defense was that rather than a sound recording, or what the Copyright Act calls a “phonorecord,” ReDigi’s technological approach of breaking the file into packet-like chunks of data and reassembling them on the other end qualified the what was being sold as a material object subject to the leniency of the First Sale Doctrine. The second rejected defense was that because these packets are not on the same computer at the same time until the transfer is complete, the process does not qualify as a “reproduction.”  As to the fair use defense, ReDigi argued that its process amounted to a transformation of the original work. 

I blogged in 2014, not nearly creatively as Matthew David Brozik does here, about the amazing mentality giving rise to such schemes in an earlier post about the legally-induced demise of Aereo.– RDC]


ACT ONE: “The Hook to Hang Our Hopes On”

SCENE: Offices of the trial lawyers representing the plaintiffs.

TIME: Before the lower court proceedings.

LAWYER 1

We’re dead. We can’t stop ReDigi from letting its users resell music files. This is squarely a first sale doctrine scenario, and the court is going to realize that and dismiss our case with prejudice.

LAWYER 2

Let’s go over the facts one more time. Maybe we’ve missed something.

LAWYER 1

Okay: Our clients are record companies. They own copyrights or licenses in sound recordings of musical performances. Songs. And they distribute these songs in various ways, in various places—most important right now as digital files via Apple iTunes. iTunes customers purchase the files and download them onto their personal computers. Your turn.

LAWYER 2

ReDigi created an online platform to enable its users to resell legally-purchased music files to other users. And, unfortunately, ReDigi took great pains to design its system in good faith and with obvious specific intent to operate in compliance with copyright laws, something the court will no doubt note.

LAWYER 1

The jerks.

LAWYER 2

Indeed. So the ReDigi system, essentially, allows a prospective seller to list a music file for sale, and at that point the software determines whether the file to be sold was originally purchased legitimately. If it was, then and only then ReDigi moves the file from the seller-user’s computer to ReDigi’s own cloud server—

LAWYER 1

Wait. Wouldn’t that—

LAWYER 2

Nope. ReDigi doesn’t simply copy the file. It actually breaks apart the user’s file, transfers the information in smaller packets of data, then reassembled the packets into a single file once they’ve all arrived in the cloud. Worse, the system deletes the packets from the source computer as they’re uploaded. So not only is the file never in two places at once, there’s a brief period when it exists in neither place.

LAWYER 1

Damn those geniuses!

LAWYER 2

Oh, there’s more, though: The ReDigi system continuously monitors the seller’s computer, looking for duplicates of the file to be sold. If it finds, for instance, another copy of “Oops!… I Did It Again,” it will not allow the seller to upload it… and if a duplicate appears after a sale, then the system will prompt the seller to delete it. If he or she doesn’t comply, then ReDigi will suspend his or her account.

LAWYER 1

Oh, my God.

LAWYER 2

Right? The lengths to which they’ve gone to keep this on the level are disgusting.

LAWYER 1

But… but what if a user… keeps a duplicate file on a separate hard drive? Or deletes the ReDigi software after the sale?

LAWYER 2

A user could do either or both of those things, but ReDigi isn’t responsible for the bad behavior of its users.

LAWYER 1

Could we make it responsible? Like Napster was responsible for all that illegal file sharing?

LAWYER 2

Napster was built specifically for illegal file sharing, though. Napster had not a single protocol to prevent or dissuade copyright infringement. ReDigi is the anti-Napster. ReDigi simply wants to make it possible for a person to do with a music file what she could do with a CD. Or a DVD. Or a book.

LAWYER 1

But there are plenty of people who would still by a new book, even if they can get a secondhand copy for less.

LAWYER 2

Sure, because a secondhand book can be damaged, and a second hand DVD or CD will almost certainly be damaged. A reproduced song file can not be, if the system works properly. It’s identical to the original.

LAWYER 1

Wait a minute. That’s it. You’re a genius.

LAWYER 2

What? Why?

LAWYER 1

The first sale doctrine allows a person to resell a copy of a protected work lawfully purchased. But it’s the same copy. It’s the same book, CD, or DVD. A digital file is not the same copy. It’s an identical copy, but it’s a new copy, even if the old copy is destroyed. And that’s the difference. It’s a reproduction.

LAWYER 2

No, it’s not.

LAWYER 1

We’ll argue it is. We’ll argue it’s an unlawful reproduction rather that a permitted redistribution.

LAWYER 2

That is so painfully contrived it will never work.

LAWYER 1

It might!

NARRATOR

It did.

[INTERMISSION]


Matthew David Brozik
Would you let this man teach your children?

In the summer of 2014, I had the privilege of teach a weeklong course focusing on fair use in copyright and trademark contexts. My students would have been pleased to learn just what would qualify as a slam-dunk fair use scenario. I taught them that there is no such thing, that every fair use defense must be evaluated on its own merits, in its own context. Any fair use defense could fail to persuade a court. That, perhaps, is the unfairness of fair use.

To the contrary, there is a case so plainly inappropriate for a fair use defense, and this is that case. If ever I teach again, I will have my students read this opinion. I will have them read it twice.


ACT TWO: “The Worst Defense”

SCENE: Offices of the lawyers representing ReDigi on appeal.

TIME: Before the appellate proceedings.

PARTNER

There’s a chance we won’t prevail on the infringement argument. The appellate panel should overturn the lower court, but… well, you know.

SENIOR ASSOCIATE

I know, sir.

PARTNER

So we’ll need a solid affirmative defense.

SENIOR ASSOCIATE

All the usual defenses have already been thrown out. Waiver, laches, estoppel… none of them held any water.

PARTNER

No surprise there. They’re all pro forma anyway. We need something substantial. Let’s assert fair use.

SENIOR ASSOCIATE

Sir? You… you want us to claim fair use?

PARTNER

That’s right.

SENIOR ASSOCIATE

But… sir, there is no possible way fair use applies to this case. I’ve already written a memo to the file. It’s very short. The statute provides a four-factor test, and not one of the four factors is in our client’s favor. And each one is not just slightly more in the other side’s favor. Each one is completely not good for us. The first factor, for instance, asks whether the infringing use is transformative. And the more transformative the use, the better… as far as a fair use defense goes.

PARTNER

And?

SENIOR ASSOCIATE

And our client’s use is not transformative. At all. In fact, the entire purpose of our client’s business is to remove from one computer, and then recreate on another computer, an exact replica of a music file. The purchaser wouldn’t want anything other than a perfect copy. So any transformation would be counterproductive.

PARTNER

But there are three other factors.

SENIOR ASSOCIATE

There are. None of them help, sir. The second factor is generally not useful, but the third and fourth are. The third factor considers how much of the copyrighted work is used and the substantiality of that portion. Our client uses—such as it is—the entirety of a copyrighted work. So, to that extent, the substantiality is… well, it’s as substantial as can be.

And the fourth statutory factor is the affect of the infringer’s use on the potential market for the original work. The Supreme Court described this as the single most important element of fair use, in fact.

PARTNER

The single most important element?

SENIOR ASSOCIATE

Undoubtedly, sir.

PARTNER

Then why isn’t it the first factor?

SENIOR ASSOCIATE

I… I couldn’t say, sir. But I do know that, once more, we come out on the wrong end of the spectrum. Every resale of a music file via ReDigi is a lost sale of a new file of the same song. The target consumers are the very same people, and only one party is going to make the sale.

PARTNER

No one would choose to buy the new music file?

SENIOR ASSOCIATE

No, sir. There would be no reason to. Remember that the files are identical. The consumer can either pay full price or… less. So—and I know you don’t want to hear this—there is no way—none—that we’d successfully mount a fair use defense.

PARTNER

Brief it anyway.

SENIOR ASSOCIATE

Sir?

PARTNER

At least assert it. Don’t go into any detail. Maybe the court won’t think about it too much.

NARRATOR

The Second Circuit spent nine pages of its opinion comprehensively eviscerating the bald assertion of fair use.

[CURTAIN]

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