The RIAA Strikes Back

So it turns out that the RIAA isn’t cool with ReDigi. So much for the maybe-they’re-secretly-licensed theory. You can read the RIAA’s demand letter to ReDigi here. It raises an issue I hadn’t considered before, so wrapped up was I in applying Vernor and the first-sale doctrine. RIAA questions whether the first-sale doctrine even applies in the first instance. If the RIAA is right, then my previous analyses about ReDigi’s right to the first-sale doctrine are cut off at the knees.

Warning: this is an unusually long post (even for me), but there was no way to split it up without ending with a misleading conclusion. In light of the controversy that ReDigi (and by extension your blogger) has gotten into, I thought it best to keep this as one long post rather than split it up.

The RIAA’s Legal Position

The RIAA’s logic goes like this. When you sell a music file over the internet, you aren’t selling the copy that’s actually resident on your computer (or wherever). You’re selling a copy that ReDigi made of your song. According to the RIAA, the first-sale doctrine applies only to the exact copy of a work that you lawfully acquired. Since ReDigi’s copy of your song file isn’t lawfully acquired, that copy of the song file isn’t covered by the first-sale doctrine.

By contrast, the way I had been looking at the problem was to ask whether the first-sale doctrine applies to the original copy, then wonder how you can legally make intermediate copies to transfer the song file to the buyer. The RIAA is basically saying I have it backward–those intermediate copies (and most particularly the permanent copy that ends up with the buyer) are what’s being sold, and it is to them you should apply the first-sale doctrine.

I know this sounds like a distinction without a difference. After all, we buy things, like software, online without a second thought, and it feels like we bought it at a store. Who cares if you need to make a few intermediate copies to transfer a file from point A to point B? Why should it make a difference that you sold 10 songs on a single CD by handing the CD to the buyer, or that you sold the same 10 songs from your hard-drive (erasing the songs as you did so) by transferring the files over the internet?

But, as I’ve mentioned before, just because the result is crazy, that doesn’t mean it isn’t copyright infringement. Copyright law doesn’t always recognize crazy. So, let’s get into the existential question of when a distribution is a reproduction, and when a reproduction is a distribution, and when they might exist simultaneously. Honestly, it might be easier to try to understand Kerner’s brilliant discussion quantum mechanics from Hapgood*.

* I love this play. I used to teach it in my science and literature course.

First, a confession and an assumption. I’m a little confused about exactly how ReDigi’s technology works. According to ReDigi, its technology ensures that two copies of the same song file are never in existence at the same time. But it also says that the user must upload a file for verification (to make sure it was legally purchased), and only then is the file “accepted” and the original file deleted. Both of these statements can’t be true because, while the file is being “verified,” a second copy must exist. Previously, I had assumed that the verification occurred at the level of the user’s computer. I’m not really sure which to believe. For purposes of this discussion, I’m going to give ReDigi the benefit of the doubt and assume that at no point does two copies of the same song file exist at the same time.* (I’m also going to assume that the verification engine never mistakes an illegal song file for a legal one.)

* This sounds impossible, but perhaps it’s not. There is, after all, a delay as the file transfers over the internet. All of the packets could be in transit as the original file is wiped. In theory, ReDigi could even delay slightly the recomposition of the packets into the new copy until all packets are accounted for and there is confirmation that the original was wiped. I’m not sure if ReDigi goes to all of this trouble–but it might be worth it.

Where to start? Well, the RIAA helpfully cites its legal authority for its position in a  footnote from its demand letter to ReDigi. It may be summarized as follows: (1) the actual language of the first-sale statute, (2) three court decisions, and (3) a report by the U.S. Copyright Office.

The Actual Language of Section 109(a)

Section 109(a) of the Copyright Act codifies the first-sale doctrine in pertinent part as follows:

Notwithstanding the provisions of section 106(3) [the distribution right], the owner of a particular copy or phonorecord lawfully made under this title … is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord.

(Emphasis added.) The way this statute has been traditionally understood is: if you sell a copy that you own of a copyrighted work, the copyright owner can’t assert the distribution right against you. In the context of digital content,Vernor tells us whether you really “own” it or not.

The RIAA appears to have two different effective arguments based on the actual language of the fair-use statute: (1) that it works only against assertions of the distribution right, and (2) that it applies only to transfers of the exact same material object (e.g., hard drive) to which the song file was originally downloaded.

Is the First-Sale Doctrine Limited to Distributions?

The RIAA’s first argument is that the first-sale right only works against assertions of the distribution right. We’ve always assumed that the first-sale doctrine is limited to the distribution right. The statute actually references the distribution right with its initial notwithstanding clause. Numerous court cases say so. Nimmer (the leading authority on copyright) says so.

Working on this assumption, the RIAA is saying: Go ahead and sell your digital downloads. We won’t try to stop you from distributing the copy you bought.* But if you try to make a copy of that copy, we’ll come after you, because the first-sale doctrine covers distributions, not reproductions. The argument is a lot like Portia’s (winning) pound-of-flesh-but-not-a-drop-of-blood argument in The Merchant of Venice: go ahead, distribute you want, but just don’t make even a tiny copy along the way.

* Well, maybe they will anyway, if they think the sales were really licenses under Vernor.

If the RIAA were responding to my last post on this subject, in which I suggest a fair-use defense for the necessary copying of the original song file, they’d respond: you’re confusing the right to (re-)sell with the right to distribute. You assume that once you come under Vernor, you have the right to take steps necessary to effect the re-sale, but the first-sale doctrine is strictly limited to distribution.

The main response to this argument is: Regardless of how we’ve always looked at the first-sale doctrine, it is, at heart, a right to re-sell (or give away or lend or whatever) a legally-acquired copy of a work. Until now, we’ve never needed to look beyond the distribution right. But today, a very common type of commerce requires making temporary copies of things in order to sell them, and copyright law can accommodate new ways of doing old things.

The obvious objection to this line of thinking is the notwithstanding clause at the beginning of the statute. It actually specifically references the distribution right and no other right. Doesn’t that mean that the first-sale doctrine works only against the distribution right?

What’s more, the notwithstanding clause is relatively new. In the 1909 version of the Copyright Act, the statute describing the first-sale doctrine made no reference to the distribution right (or any exclusive right) but merely protected the right to “transfer … any copy of a copyrighted work, the possession of which has been lawfully obtained.” In the current version of the first-sale doctrine (in 1976), Congress added the reference to the distribution right. Surely that means Congress intended to limit the doctrine to the distribution right.

These objections are themselves not air-tight. First of all, although Congress added the notwithstanding clause, it also announced that, in enacting the current version of the first-sale doctrine, it intended to “restate[] and confirm[] the principle … established by” the old version of the first-sale doctrine. H. Rep. at 79. The reference to the distribution right may not be as meaningful as it first appears.

Perhaps more important, notwithstanding clauses are often just emphatic in nature, not substantive. They usually mean, “despite what you may have read.”* In this case, it might mean nothing more than, “We’re focusing on the distribution right, but we’re not necessarily limiting to the distribution right; it’s just that the distribution right is the right most clearly implicated.”

* Not always. Sometimes you have a situation in which two competing rights appear to apply, and you’re not sure if Congress meant one to trump the other. In that case, a notwithstanding clause can be substantive (or at least clarifying) in nature. But even then, the clause acts to empower its statute, not to limit its application.

Further, the use of entitled strongly implies the grant of a right, in this case, the right to “sell or otherwise dispose of” the copy that the putative seller owns. When it’s already clear what the scope of this right is, do we really need to read into it another restriction?

In the end, the RIAA’s argument boils down to: the first-sale doctrine has always been limited to the distribution right; everyone says so. It’s up to Congress to fix that. ReDigi’s argument is: yes, but, that’s only because the courts and the commentators didn’t know better because they’ve never before been confronted with this situation.

Is the First-Sale Doctrine Limited to the Original Phonorecord?

The RIAA has a more powerful and fundamental argument. The first-sale doctrine is limited to whatever medium is embodied the song file at the moment it was purchased. Thus, if you downloaded the song file onto the hard-drive of your 1.7 GHz P4 Dell in 2001, your right to re-sell the song is limited to selling the entire hard-drive. (In theory, if your song library migrated to a better computer, probably legal under fair use, then maybe you could sell the newer hard drive.)

The RIAA’s argument focuses on the term phonorecord*, which is defined in the Copyright Act as a “material object[] … in which sounds, other than those accompanying … [an]  audiovisual work, [are] fixed … and from which the work may be perceived, reproduced or otherwise communicated, either directly or with the aid of a machine or device.” The first-sale doctrine is limited to re-sale (or whatever) of “that … phonorecord” that you lawfully own. In your case, that means your hard drive.

* Actually, copy or phonorecord, but I don’t think copy operates any differently from phonorecord in this context. 

Can it really be that simple? Outside the context of digital downloads, the distinction between a “sound recording” (the song in an idealized form) and a “phonorecord” (the actual thing you put into your CD player) makes sense. But in the context of digital downloads, the distinction gets weird.

For example, you “own” your hard drive. You “own” the song file (under Vernor). You can sell your whole hard-drive*, but you can’t sell the song you “own” by itself because, to do so, you must make a new phonorecord, and that phonorecord isn’t “lawfully made” because it violates the reproduction right.

* Assuming you remove all of the copyrighted material thereon that you don’t “own” under Vernor.

Or weirder still, what if you “own” a song file (again, under Vernor) but you’ve always stored it on someone else’s hard drive (e.g., in the cloud)? You don’t even have the option of re-selling the phonorecord since you don’t own it, even though you own the song file.

But wait, is really the case that the new phonorecord wasn’t “lawfully made”? A while back, we discussed how it might be a fair use for consumers to store copies of their songs “in the cloud” under a theory of “space shifting.” (Admittedly, I threw a bit of cold water on that theory, but it’s still a viable one.) If you can store an additional copy of a song file in a remote location via the internet for personal use, could you not also temporarily store a copy of a song file so you can complete a sales transaction involving that song file, especially if you wipe the original song file immediately upon uploading.

The situation isn’t precisely analogous. In the case of the Amazon Cloud Drive, you are storing the music for personal use, but you are doing so more or less permanently. In ReDigi’s case, you’re storing it temporarily, but so you can sell it.

Does a Star Trek Transporter Violate Copyright?

Actually, do we even need fair use? Is this even a “reproduction”? Going back to the big assumption I made earlier, if ReDigi wipes the original file at the same time as it reconstructs the copy of that file, is it really reproducing the original file?

We have no pre-digital analogue to fall back on in this case. This isn’t like making a sculpture out of a copyright-protected mold because that would positively increase the number of copies in the marketplace. It isn’t quite like photocopying a book, selling the photocopy while destroying the original book, because (1) why would anyone do that? and (2) the photocopy is still a separate physical item. It’s a bit more like unwinding someone’s sweater, then knitting the exact same sweater from the same wool, only the “wool” isn’t exactly the same.

If anything, it’s most like a Star Trek transporter: does it physically move the atoms that make up its travelers, or does it destroy the travelers then makes a perfect copy somewhere else*, or does it matter?

* I suppose it converts the travelers into “energy” then reconverts that “energy” back to matter, but isn’t that exactly the same thing as “destroying” then “reproducing.”

As a starting point, we all have to agree that if you arrange the 0’s and 1’s that comprise a song file on a different medium, while keeping the original set of 0’s and 1’s on the original medium, you’ve reproduced the song file. If you don’t believe that, then copyright law doesn’t apply to digital content at all.

OK, let’s say you copy the contents of your hard-drive, including the song file in question, onto a new hard drive (maybe as part of a migration), using a USB cable and a protocol that overwrites data blocks on the old hard drive as soon as the new data blocks are written and confirmed. Is that a reproduction of the song file?

OK, same thing, but you’ve moved across country at the same time you’ve upgraded to a new computer. Because you’re just that sort of person, instead of physically hauling your old computer across the country to where your shiny new computer is waiting, you do the migration over the internet, using the same protocol. Is that a reproduction of the song file?

The question is whether reproduce, as used in the Copyright Act, has as a requirement the simultaneous (even if temporary) existence of two copies of the work. In other words, does it mean “duplication” or just “production.” The Copyright Act doesn’t define reproduce, and even if it did, it’s unlikely that it would have had the foresight to address this problem. Even Professor Nimmer isn’t sure of the answer.

Next time, we’ll take a look at the three court decisions cited by the RIAA. But be warned: one of them is completely bonkers.

Thanks for reading!

Rick Sanders

Rick is an intellectual-property litigator. He handles lawsuits, arbitrations, emergency injunctions and temporary restraining orders, opposition and cancellation proceedings, uniform dispute resolution proceedings (UDRPs), pre-litigation counseling, litigation avoidance, and other disputes, relating to copyrights, trademarks, trade secrets, domain names, technology and intellectual-property licenses, and various privacy rights. He has taught Copyright Law at Vanderbilt University Law School. He co-founded Aaron | Sanders with Tara Aaron-Stelluto in 2011.