1. Copyright Holders Eat ReDigi’s Cake and Have it, Too

    But is the Cake a Lie?

    As many of you know, the trial court in Capitol Records v. ReDigi ruled over the weekend that ReDigi’s business model of re-selling digital music files infringed the copyright. Here’s the opinion. I’ve written about ReDigi quite a lot because (1) ReDigi’s business model poses lots of unresolved legal problems and (2) I had to create a new set of posts once I (along with the rights holders) learned how ReDigi really worked. My previous ReDigi posts are collected here. I only have time for a quick post before I have to go somewhere*, so here’s my quick analysis.

    * I’ll be moderating a panel on gTLDs at the ABA Intellectual Property Meeting in Crystal City. You should totally come, if you can, because my panelists are awesome and the topic is timely, important and fascinating, which will more than make up for my bumbling attempts to ask incisive questions.


    I couldn’t find a free image of a Portal Cake, but this cake looks pretty good.

    Background: Is ReDigi’s Cake Just Mostly Frosting?

    Here’s how ReDigi works, in a very tiny nutshell. You sign up. You upload songs you want … Read More»

  2. DMCA Circuit Split Averted: New Rule but the Holding Remains the Same

    Also, UMG’s Home-Run Stroke Still Need Work


    Last year* there were two much-anticipated, important decisions about the scope of the major DMCA safe-harbor defenses: the Ninth Circuit in UMG Recordings v. Shelter Capital (better known as the “Veoh case”), which was issued first, and then the Second Circuit in Viacom v. YouTube. They mostly agreed with each other, but diverged on a major point and on a minor point.** I blogged at length about both of them: Veoh here, here and here; and YouTube here and here.

    * If by “last year” you mean “2012 plus the tail end of 2011.”

    ** A quick recap of the the basic mechanics of the two major DMCA safe-harbors are set out here. Remember: there are four requirements that you have to meet in order to take advantage of the safe harbors, simplified somewhat: (1) you implement a reasonable repeat-infringer policy; (2) you are genuinely unaware that content in question is infringing, whether through actual knowledge or indirect “red flag” knowledge”; (3) you don’t both benefit financially and directly from the infringement and have the right and ability to control the infringing activity; and (4) you expeditiously Read More»

  3. Music Industry v. ReDigi: The Problem with Phonorecords: Copyright

    When Is a Phonorecord Not a Phonorecord?

    Last time, we finally figured out how ReDigi operates and how it plans to get around the fact that it must make at least one (and often two) intermediate copies of a song file in order to complete the sale of the song file. ReDigi’s solution is to structure itself as an Amazon-style music locker and rely on space/format shifting for those intermediate copies.

    But this doesn’t get around the other concern I raised (way back here), which we might call the “phonorecord problem.” Recall that the nub of the RIAA’s argument is that the First-Sale Doctrine is limited the distribution right. The RIAA’s point was that the intermediate copies exercised the reproduction right and, therefore, fell outside the scope of the First-Sale Doctrine. While I thought there might be a different way of looking at that issue, it turns out ReDigi is fine with the RIAA’s argument, since it thinks it has an alternate (and better) legal theory regarding those intermediate copies.

    The “phonorecord problem” is more fundamental. Under a strict and plain reading of the Copyright Act, the distribution right is limited to the distribution of physical embodiments … Read More»

  4. Music Industry v. ReDigi: Cute or Clever?

    Is ReDigi a Marketplace or a Music Locker?

    I am compelled to blog about ReDigi one more time because, at long last, we actually know how ReDigi operates. And it’s not *quite* how ReDigi says it works on its FAQ. It’s actually far more clever and elegant–at least, legally speaking. This means, among other things, that parts of my previous posts about ReDigi are no longer completely accurate* (because they were based on the ReDigi FAQ and some other public statements by ReDigi). At a minimum, I need to clear that up. But also, ReDigi’s legal theory is worth an additional blog post.

    *Among other things, the whole “Do Star Trek replicators infringe copyright” thing was unnecessary, as it turns out. As you’ll see, ReDigi does not destroy the original at the same time it creates the copy–a technological feat that would be remarkable but not impossible. Still, it’s an interesting thought experiment into the nature of the reproduction right, no?

    ReDigi ReCap

    To recap a bit about ReDigi: it provides an online marketplace for the re-sale of used audio files. It has one very important limitation: only songs you purchased online were eligible–thus, you can’t sell songs … Read More»

  5. Burning Down the Dance-Hall: UMG v. Veoh Clarifies the DMCA

    One of the Great Unanswered Questions Is Answered!

    This is the third post on the recent and important Ninth Circuit opinion in the “Veoh case” (actually styled, UMG Recordings v. Shelter Capital, but we’ll call it “Veoh”). In the first post, we marveled at Universal’s surprising leading argument and worried about the fate of user-created videos of cute kittens. In the last post, we analyzed Universal’s surprisingly weak argument that Veoh had “red flag” knowledge of infringing activity and wondered if Universal hadn’t made things worse for rights holders on that issue.

    Universal’s third and final argument fares rather better*, although it, too, ultimately fails. It targeted the financial benefit requirement (which, remember, is really a “no financial benefit” requirement). Recall that there are two prongs to this requirement: (1) the provider not receive a “financial benefit directly attributable to the infringing activity”; and (2) the provider have “the right and ability to control” the infringing activity.

    * I still think that Universal would have been better off targeting Veoh’s repeat infringer policy. There’s so much we just don’t know about this requirement. Universal would have had a much better shot at reshaping Read More»

  6. Universal Copyright Knowledge: No Red Flags for Veoh

    Think the DMCA Is Outmoded? Complain to Congress, Not to the Courts

    This is the second post on the recent Ninth Circuit opinion in the “Veoh case” (actually styled, UMG Recordings v. Shelter Capital). Last time, we focused on (marveled at, really) Universal’s surprising leading argument: that pretty much any website that makes user-uploaded content publicly accessible (with a probable exception for pure displayed text) is not covered by the DMCA safe harbor on grounds that the safe harbor covers only passive storage, not display, performance or internal copying. We also worried about the fate of user-created videos of cute kittens.

    In this post, we’ll look at one of Universal’s two remaining arguments, which are much more conventional.

    Recall that, to be eligible for the DMCA safe harbor governing user-provided content, the website must meet three general requirements: (1) a knowledge requirement (or, more accurately, an ignorance requirement); (2) a financial-benefit requirement (or, more accurately, a financial-non-benefit requirement); and (3) a notice-and-takedown requirement (which is intertwined with the first requirement*). Universal attacked both the knowledge and financial-benefit requirements.

    * As we’ll see next time, it turns out all three requirements are intertwined with each other.


    Read More»
  7. UMG Swings for the Copyright Fences … And Misses Everything

    Ninth Circuit: It’s OK to Let the Public Access User-Uploaded Content

    I think by now you’ve read a few headlines about Ninth Circuit’s decision in UMG Recordings v. Shelter Capital, which is better known as the “Veoh case,” just before Christmas. Mostly, the headlines say something like: Veoh Dodges Universal Music’s Copyright Claims, or Universal Loses DMCA Lawsuit Against Veoh.

    But when you read the opinion, you should be struck by two things that have nothing to do with Veoh. First, Universal Music wasn’t just trying to get some compensation from a specific video site–it was trying to put video sites out of business. There’s no other way to explain the strategic choices Universal Music made. Second, as a result, in part, of Universal Music’s choices, the Ninth Circuit has just made Viacom’s life a lot harder for its case against YouTube.

    Understanding Universal’s Peculiar Legal Strategy

    If you’ve been reading my blogs on the DMCA defense (mostly in connection with the Nashville lawsuit against Grooveshark), you know that, even after 12 years, there are several very basic unanswered questions about DMCA safe-harbor protection. Off the top of my head, the most significant are:

    1. What does it
    Read More»
  8. ReDigi Finale: Comparing Apples to Amazons (Part 20 in Our Online Music Services Series)

    And Other Loose Ends.

    This is going to be (I hope) the last post about the ReDigi situation, at least for a while. I’ll admit I got distracted by the RIAA’s little missive to ReDigi. I want to sum up and wrap up. First, the summing:

    The Three Legal Obstacles to a Digital First-Sale Right

    Looking over the five (!) previous posts about ReDigi, we see three obstacles to its legality:

    1. Do the consumers who wish to sell their digital singles actually own, or merely license, the music files? That’s what Vernor helps us answer, as discussed here.
    2. Is the First-Sale Doctrine limited to the same physical item that was the subject of the “first sale”? I discuss this question here and here.
    3. By what right can ReDigi make the temporary, intermediate copies necessary to transfer the song file? I discuss this issue here and here.

    So. There. Now, let’s tie up a few loose ends.

    What About Amazon?

    When I first discussed whether ReDigi’s system could comply with Vernor (to answer the question of whether the potential sellers “own” the digital downloads), I focused exclusively on the iTunes Store license agreement. I did so … Read More»

  9. ReDigi Redux: Essentials of the Essential Step Defense (Part 16 of our Online Music Services Series)

    Digital Content: Dumb Data or Clever Instructor?

    I received so many comments on my ReDigi post that I need to write a couple of follow-up posts to address the good questions. This post and the next will focus on questions raised about the fact that ReDigi needs to make an intermediate copy of the song files, and the one after that will clean up some lingering issues about the first sale doctrine itself.

    The Intermediate Copy

    My last post was focused on the first-sale doctrine and the Vernor decision, but several people pointed out that, in order to transfer a music file from the seller to the buyer, ReDigi has to make at least one intermediate copy. It doesn’t matter ReDigi erases the seller’s copy of the file at the same time it makes a copy of the file on its own server–it’s still making a copy, and making a copy requires exercise of the reproduction right. See Sega Enterprises Ltd. v. Accolade, Inc., 977 F.2d 1510 (9th Cir. 1992). So, assuming ReDigi isn’t licensed* and assuming ReDigi may avail itself of the first-sale doctrine**, what defense might it have against a claim that this intermediate copy is … Read More»

  10. ReDigi RIAA ReDux: New Wine, Old Skins (Part 19 of Our Online Music Services Series)

    What Old Cases Don’t Teach us About New Tricks

    In my last post, we started to look at the legal claims made by the RIAA in the demand letter it sent to ReDigi. We focused on the plain language and legislative history of the first-sale statute–banged our heads against it, really. I concluded that the statute is simply not equipped to resolve a situation in which a digital download is sold by its owner (under Vernor) by sending it to the buyer over the internet while simultaneously removing the song file from the seller’s storage.

    The RIAA will argue that the statute’s failure means victory for it: if the first-sale statute does not specifically provide for digital transfers, then they must fall outside the statute’s scope. ReDigi will argue that the statute shouldn’t be so rigidly and technically applied. Its purpose is to facilitate re-sale (and re-transfer) of copies that had previously been sold. The only reason the statute seems so limited is that it was only codifying old case law, and the case law, by its very nature, couldn’t predict how the technology for re-transferring digital content would evolve.

    In its demand letter, the RIAA … Read More»

Rick and Tara are experienced lawyers who have set out to serve clients in a new way. Rick's roots reach back to his Silicon Valley home, where he first developed his litigation-oriented practice before moving to Nashville in 2004. Tara got her start in the music publishing business in Nashville in 1998 and has used that experience to form the basis of her transactional law practice since graduating from law school in 2004.
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