NEWS US judge strikes down ReDigi’s first-sale defence


An online digital music re-seller has failed to convince a US judge that its business should be protected by the first-sale doctrine.


ReDigi was sued by music label Capitol Records in January 2012 for copyright infringement. Te marketplace relied mainly on the first-sale defence, which traditionally allows music owners to re-sell goods including CDs without seeking authorisation.


But on March 30, Judge Richard Sullivan, sitting at the US District Court for the Southern District of New York, found the online marketplace guilty of direct copyright infringement, aſter ruling that the first sale defence applies only to material goods.


ReDigi, which was launched in October 2011 and claims to the first company of its kind, allows sellers to upload music files on to its servers. Te sellers instantly lose access to the file when it’s sold on the site, at which point ReDigi earns a 60 percent fee.


Capitol Records owns some of the music sold on the marketplace and sued ReDigi last year, seeking $150,000 for each infringement on the marketplace.


Te dispute focused mainly on whether the first sale doctrine applies to digital files, and is believed to be the first time the US courts have considered the question.


Te first sale defence applies only when distribution rights have been infringed, but Judge Sullivan said Capitol’s reproduction rights had been violated when ReDigi reproduced two copies of a file, so the defence could not apply.


“Here, ReDigi is not distributing material items; rather, it is distributing reproductions of


the


copyrighted code embedded in new material objects,” he said.


ReDigi argued that only one copy of a file ever existed, as the same file rotated between users’ computers and the cloud, and was never reproduced. Te arguments were the first to address whether the transfer of


digital files


online—where only one file exists before and aſter—represents copyright infringement.


But the judge said: “Simply put, it is the creation of a new material object and not an additional material object that defines the reproduction right … It is beside the point that the original phonorecord no longer exists. It matters only that a new phonorecord has been created.”


Aſter swatting aside ReDigi’s fair use defence, mainly because of the commercial nature of its operation, the judge concluded that the court “cannot, of its own accord, condone the wholesale application of


Twitter founders patent site’s core service


Twitter founders Jack Dorsey and Christopher Stone have been granted a US patent covering the site’s core service.


Dorsey and Stone filed an application for a “device- independent multipoint communication” platform in 2008. Teir patent was granted by the US Patent and Trademark Office (USPTO) in March.


Te broadly-worded claim covers a system


“configured to receive a message addressed to one or more destination users, the message type being, for example, short message service, instant messaging, email, web form input, or application program interface function call”.


It protects Twitter’s core service—in particular, the ability to ‘follow’ other users and send and receive messages that are broadcast, rather than sent to a specific recipient, using a range of media.


“Te system is also configured to determine information about the destination users, the information comprising preferred devices and interfaces for receiving messages,” states Dorsey and Stone’s application.


www.worldipreview.com


Te patent could potentially enable Twitter to litigate against other social media sites that offer similar services.


But Twitter has promised it will engage only in defensive litigation: in April 2012, the company published an innovator’s patent agreement which it claims will keep control of Twitter’s patents “in the hands of engineers and designers”.


“It is a commitment from Twitter to our employees that patents can only be used for defensive purposes … We will not use patents from employees’ inventions in offensive litigation without their permission,” said Adam Messinger, Twitter’s vice president of engineering, in a blog post announcing the agreement.


Siddhartha Venkatesan, partner at Orrick,


Herrington & Sutcliffe LLP in Silicon Valley, said the patent appears to be the first issued to Twitter in the US. “It looks like Twitter has other patent applications pending, so this probably not be the last patent on the matter,” he said.


Whether other social media sites should be Trademarks Brands and the Internet Volume 2, Issue 2 7


concerned depends on Twitter’s appetite for patent litigation, the nature of accused services and the availability of prior art, he added.


“Tat being said, I would suspect that at present Twitter is focused on continuing its remarkable growth and dealing with the current privacy, patent and other litigation matters on its docket.


“Twitter has had a remarkable run in generating attention and revenues ... if it were to sue another technology company, it would be risking the validity of the patent as well as potentially placing its revenues at stake as a result of a potential counterclaim. It would not surprise me if this is a defensive play,” he said. 


“Te digital world is very different from the world in which the law was written. Yes, the laws need to address what is happening in the digital arena, as there is no question that the online world is where the sharing of ideas is moving. But Congress will need to address this issue.”


She added: “Tis decision means other companies with similar business models to ReDigi’s will need to note that statutes won’t necessarily apply to the digital world.”


Apple and Amazon are two companies believed to be interested in selling used digital goods, and have been granted patents for these services. Neither company has yet set up a system for re-selling music.


Judge Sullivan said because there were some


undecided issues in the case, including the validity of Capitol’s performance and display rights, the parties should submit a joint letter to the court by April 12, 2013 detailing the suggested next steps. 


the first sale defence to the digital sphere, particularly when Congress itself has declined to take that step”.


Susan Kayser, partner at Jones Day, said the


ruling was very good for copyright owners and was a “plain language interpretation of the copyright statute”.


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