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In a major music download lawsuit, Capitol Records has won a ruling against ReDigi Inc. claiming ReDigi violated the company's digital music copyrights.
A federal judge in New York found that ReDigi was not allowed to let users buy and sell "used" digital music files on its website, reports Reuters. These songs had originally been purchased through Apple's iTunes.
The lawsuit is significant, as several companies have been making headway in creating a marketplace for used and unwanted digital works like music and ebooks. This is similar to how second-hand record and book stores resell used physical copies of records and books, but with one critical difference.
ReDigi was formed in 2011 and branded itself as "the world's first pre-owned digital marketplace." On its website, users could trade used music tracks at a fraction of the cost after buying them legitimately through Apple's iTunes, reports Reuters. ReDigi made money by charging a commission on each sale.
In its lawsuit, Capitol complained that ReDigi violated its copyrights by operating its online store and allowing the unauthorized reproduction and distribution of its music. The federal judge ruled for Capitol, and found that ReDigi infringed on Capitol's rights by reproducing the songs in its sales.
To conduct a transaction, ReDigi reportedly had to create a "new phonorecord" to give to the buyer. At the same time, ReDigi destroyed the old phonorecord.
The court held that ReDigi's creation of a new phonorecord distinguished it from physical resale marketplaces like used bookstores. ReDigi could not simply pass on the exact same digital recording to the buyer, and by making the reproduction, it violated Capitol's reproduction rights.
The effect of the ruling may be that operators of digital re-sale marketplaces will have to obtain the approval of copyright holders before they can conduct business. So if ReDigi wants to allow the sale of a Katy Perry single, it would have to get Capitol's permission first, according to the court's ruling.
Lawyers for ReDigi, however, say they plan to appeal.