Passing On Our Rights

Last month, a U.S. District Court handed down a decision that’s pretty awful if you care about consumer rights and digital content.

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It all started in 2011, when a company called ReDigi launched a service to let folks resell their unwanted iTunes purchases—the digital equivalent of unloading your old vinyl at a swap meet. This annoyed the legal department at Capitol Records enough that they sued ReDigi in federal court to stop it. Unfortunately for consumers, Capitol Records succeeded. This isn’t just bad news for ReDigi though. What’s really troubling is the court’s take on current copyright protections.

The ReDigi case#section1

When it comes to the CDs, DVDs, and paper books you own, U.S. law is clear. A legal concept called the first-sale doctrine establishes your right to sell them to another person, provided you’re handing over the item you originally bought, and that you didn’t make any copies. That’s the idea behind garage sales, swap meets, and Craigslist. As repeated by the court’s own decision in the ReDigi case, first-sale doctrine states:

“The owner of a particular copy or phonorecord lawfully made…, or any person authorized by such owner, is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord.”

That “owner” is you. The “copyright owner” is the record label, movie studio, or publisher. They make it. You buy it. You can sell it to somebody else if you don’t want it anymore. Simple. But according to this court, you don’t have that right if you send that movie, song, or book over an electronic network when you resell it.

Wait a minute. How’d that happen?

In the district court’s view, any transfer that takes place via the internet creates a reproduction of the work on the receiving machine, a new physical object that is “embodied” on the buyer’s hard drive. And that constitutes an illegal copy. In the judge’s own words:

[W]hen a user downloads a digital music file or “digital sequence” to his “hard disk,” the file is “reproduce[d]” on a new phonorecord within the meaning of the Copyright Act. Id.

This understanding is, of course, confirmed by the laws of physics. It is simply impossible that the same “material object” can be transferred over the Internet. Thus, logically,… the Internet transfer of a file results in a material object being “created elsewhere at its finish.”

Yeah, you read that right. According to this decision, electronic transfers generate a new “material object” on the receiving device. In legal terms, that’s a copy, and a violation of copyright law.

Even when products like ReDigi’s take reasonable measures to remove the file from the seller’s hard drive as it’s transferred, the court says it doesn’t count. Because I can’t physically hand you the original item over an electronic network, they say all bets are off.

The implications#section2

This creates a world where we’re barred from ever transferring digital goods we own to another person if we use an electronic network. Insert internet, lose first-sale rights. The jury is still out on whether this interpretation really works from a legal standpoint. The scope of court decisions on copyright are typically papercut-narrow and excruciatingly literal. But the U.S. District Court for the Southern District of New York isn’t really the one causing all the trouble here. The main culprit is the law itself.

The copyright law at play in Capitol Records v ReDigi predates the digital world by decades, and still talks about usage rights strictly in terms of “material objects.” It doesn’t recognize a difference between photocopying a printed book and reconstructing one from a set of bit-flipping instructions. The letter of the law hasn’t caught up with the reality we live in. Right now it’s Zoolander smashing a tangerine iMac, hoping a bunch of paper files spill out.

That might not seem like a big deal now. But outdated laws aren’t just discordant with the times, they’re minefields filled with unintended consequences. Just think about your web browser. Anyone want to chat with the district court about the “material objects” a typical browser cache leaves on your hard drive? Unless you feel like upending some of the basic mechanics of the internet, I’d rather you didn’t.

And what happens as we shift to a future where the majority of our access to content is digital? Will we see the shuttering of all secondary resale markets? Who gains and who loses from that? If I can’t transfer the digital goods I own over the network, what happens when I die? Will my executor have to ship my hard drive to my next of kin because she couldn’t transmit its contents to them without risking legal action?

Fixing this mess#section3

So far we’ve largely ducked these questions by letting content companies push us toward rental/lease models online, where we constantly pay and repay for content without enjoying full rights of ownership. That’s okay for some things. But by ignoring the bigger picture on ownership, we leave ourselves open to even further reductions in the consumer rights we’ve enjoyed for decades on movies, music, and books. We need to avoid a world where the only right we have left is the right of refusal.

Fixing the language of creaky old laws takes legislators, not courts. But we can do better than just petition Congress to drag copyright into the current century. We can set the standard ourselves. As entrepreneurs, developers, and technologists building products around digital content, we can incorporate progressive terms into our services. We can choose to grant users better rights than current law permits by default. We don’t have to sit around waiting for the next ReDigi case to tell us how to treat our customers. We can, and should, do better than that.

The first-sale doctrine needs to be defended in the digital space. We need acceptable, liveable standards for ownership of digital goods, and we can start building them now.

6 Reader Comments

  1. The video game industry is really horrible when it comes to this stuff. Unlike the music industry, the trade of physical disks is still high and the law clearly states this is OK. Video game publishers are incentivizing buying new games by providing sometimes major gameplay via download to people who buy new games. Extra payments for DLC are often stacked on top of a game to increase the profits from re-sold games as well. None of this extra content can be re-sold when you, the owner, are done with it.

  2. By their understanding (that making a “copy” on your harddrive is illegal) it’s illegal to use digital content *period*, not just to transfer it. That means iTunes is an illegal piracy machine, since it lets you (the license owner) download an apparently illegal copy. So it’s more absurd than you give it credit for, really. By their logic it is completely impossible to legally do anything with your digital goods; merely downloading them to use them personally is a violation.

  3. I know I’ll get mocked for this but. Patriot Act, NDAA, CISPA bill, email bill, Healthcare bill [registration and electronic implant required for some of the services], Gun Control.

    In 10 years our constitution was completely killed. These bills under the idea that we needed “security” now allow us to be taken away and held without due process, our homes/computers/cellphones/cars to be search without a warrant. Our internet traffic and phone conversations to be listened into without a warrant. The last bills require you to actively register and submit yourself to review and report your real location.

    I know i’ll sound like a nut job, but I think there was real plan to remove our rights completely.

    When anyone in government tells you we need new laws, we should always question and assume there is another agenda.

  4. If the ability to recoup a portion of your expense on the secondary market is important to you, you’d best stick to tangible, physical objects you can hold in your hand – cameras, hard drives, etc., rather than virtual goods.

    Since “purchasing” an mp3, doesn’t convert a physical item to one’s possession, it’s merely payment for the right to play a copy repeatedly. Buying an mp3 has more in common with purchasing a movie ticket, than it does buying a vinyl copy of Led Zeppelin IV with a gorgeous gatefold sleeve, which, as you said: “You can sell to somebody else if you don’t want it anymore.” But when you tire of experiencing that latest Ke$ha download, there is no item to sell. Your only option is to stop listening to it.

    I would go ahead and agree you can sell your macbook with a hard drive full of legally-purchased mp3s. You can even use that bonus as a selling point in your auction description; no one should force you to wipe the drive first.

    Instead of believing you “own a copy” of a song, realize you merely paid for the right to download but not redistribute the files. Extending first-sale doctrine to the digital world is outdated thinking.

  5. Libraries have been struggling with this legal position for some years now. Walk into your local library and ask them about eBooks. You’ll get an earful about the harm publishers are doing to libraries by holding the view described above in regards to digital media.

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