The letter lays out a somewhat complicated case against ReDigi's service which involves two separate claims. They make two different claims against ReDigi. First they claim the fact ReDigi's sales are for copies of the original song, which is not allowed by law.
They also argue offering 30 second previews of songs offered for sale constitutes a violation of the copyright holder's performance right. This claim is significantly weaker. In fact, it's so weak as to be laughable. While royalty collection groups have made a similar claim for years, lawsuits have never been filed because of how weak it is.
Copy or Derivative Work?
Let's look at the first, more serious, claim first. The RIAA letter states (via Ars Technica):
As you are no doubt aware, the United States Copyright Act reserves to the owner of the copyright the exclusive right to reproduce the copyrighted work, prepare derivative works from the original, and distribute copies of the work and derivative works from the original, and distribute copies of the work and derivative works. 17 U.S.C § 106(1)-(3). If ReDigi wants to engage in any of those acts, it must first get a license to do so, which it has not done.
Moreover, ReDigi cannot claim that its conduct is protected by § 109(a) of the Copyright Act under the "first sale doctrine." That provision permits the owner of "a particular copy or phonorecord lawfully made under this title" to sell that particular copy. It does not permit the owner to make another copy, sell the second copy and destroy the original. Thus, even if ReDigi's software and system works as described by ReDigi (i.e. that it deletes the original copy before it makes the sale), ReDigi would still be liable for copyright infringement.
The RIAA cites caselaw they claim to be relevant, but which actually involves a case where an artist was using original artwork as a decoration for ceramic tiles. The court found the tiles to be derivative works. Without any doubt, there's nothing derivative about an exact copy. Which doesn't necessarily mean there isn't a copyright violation.
That's where this gets more interesting. The RIAA is well aware that there is caselaw which clearly identifies music downloads as licenses rather than sales. That, by itself, would likely be enough to put ReDigi out of business since there is no first sale right for licenses.
However, that also hurts the labels' position in lawsuits artists like Chuck D have filed regarding royalty payments. For artists with contracts pre-dating iTunes it's an important distinction. Under these contracts, the restrictions placed on downloads, which include a ban on re-selling, count as licenses.
Since license royalties are paid under a completely different set of rules than sales, artists make significantly more money from them. What the RIAA is attempting to do is follow a long held label position that even if downloads are sales, copyright law restricts them from being re-sold since that requires making a copy.
All Digital Content Is A Copy
The larger problem is the notion of strict control over coyping. Current copyright law is generally incompatible with purely digital content. When you buy a song from iTunes, the only legal way to sell it, barring a specific exemption granted by the copyright holder, would be to sell the media that initial download is stored on.
In other words, when you download a song to your hard drive, the only way you could sell that downloaded content would be to sell the hard drive itself. Essentially, the right of first sale vanishes in a puff of legal smoke and mirrors.
Application of this principle is even more problematic in some countries, such as the UK, where fair use exceptions to copyright are more restrictive. In the US, per the Supreme Court in the Betamax case, non-profit, non-commercial copying is assumed to be fair use unless the copyright holder can make a case that it costs them money.
If you copy a song to a new hard drive or to your phone or media player, that ruling means you are protected from copyright claims. It is also covered by another portion of the Betamax ruling which defends taping of broadcasts because they are used to facilitate use of the content for the purpose intended by the broadcaster.
In the UK there is no such consideration. Copying music, even for simple backup or format shifting purposes, is illegal. While the movement to change that has gained significant momentum, the entertainment industry has so far managed to block it. It is not a definite thing until it becomes official.
And more importantly, not just for the US and UK, but anywhere copyright is recognized, it's ludicrous to think we must wait years for exceptions to be recognized simply to align the law with reality.
Written by: Rich Fiscus @ 15 Nov 2011 11:44