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The Impact of the Redigi Case on the U.S. Library and Book Publishing Industry: E-Books and Audio Books

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Abstract

ReDigi, Inc. was argued in the Southern District of New York (SDNY) [Capitol Records, LLC v. ReDigi Inc., No. 1:2012cv00095—Document 109 (S.D.N.Y. 2013)]. ReDigi maintained that their online digital resale market was permissible under the First Sale doctrine of 17 U.S.C. (§109(a) in the Copyright Law of the U.S. because of substantive technological changes. The court rejected their argument; and the court ascertained ReDigi had violated the Copyright Law of the U.S. because of their infringement by creating an internet platform designed to enable the resale of digital products. ReDigi appealed to the 2nd Circuit [Capitol Records, LLC v. ReDigi Inc., No. 16–2321 (2d Cir. 2018)]. The 2nd Circuit determined that ReDigi had infringed on the plaintiff’s exclusive rights under 17 U.S.C. §106(1). ReDigi appealed to the Supreme Court of the United States. The Justices turned down ReDigi’s appeal. Consequently, the resale market of digital e-books and audiobooks is illegal in the U.S.

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Notes

  1. United States District Court Southern District of New York. Capitol Records, LLC v. ReDigi, Inc. No. 12 Civ. 95(RJS). 934 F. Supp. 2nd 640 (2013); https://www.leagle.com/decision/inadvfdco140116000515.

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  4. Ibid. Also see The Association of Resale Professionals. Industry statistics and trends; https://www.narts.org/14a/pages/index.cfm?pageid=3285.

  5. Ibid. Also see Atasoy, O. Morewedge, CK. Digital goods are valued less than physical ones. J of Con Res, 2018, 44(5): 1343–1357. Loeb, W. The resale fashion industry is bigger and more disruptive than you think. Forbes; https://www.forbes.com/sites/walterloeb/2019/05/15/resale-fashion-industry-bigger-and-more-disruptive-than-toy=think/?sh=7b9af0e609bd. Shulman, JD. Coughlin, AT. Used goods, not used bads: Profitable secondary market sales for a durable goods channel. Quant Mark Econ, 2007, 5(2): 191–210. Waldman, M. Durable goods theory for real world markets. J of Econ Perspec, 2003, 17(1): 131–154.

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  14. Rosen, J. ReDigi plans to sell used e-books; Pub Weekly; https://www.publishersweekly.com/pw/by-topic/digital/copyright/article/73674-appea;s-court-orders-expedited-hearing-in-redigi-case.html. Anon. ReDigi gets patent to manage and sell used e-books. Pub Weekly; https://www.publishersweekly.com/pw/by-topic/digital/retailing/article/60837-redigi-gets-patent-to-manage-and-sell-used-e-books.html.

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  17. Schiermeier, Q. U.S. court grants Elsevier millions in damages from Sci-Hub; Nature; https://www.nature.com/articles/nature.2017.22196. Also see Raustiala, K. Springman, C. The piracy paradox revisited, Stan Law Rev, 2009, 61(5): 6–11.

  18. United States District Court Southern District of New York. Capitol Records, LLV v. ReDigi, Inc. No. 1–12-cv-00095; 25(S.D.N.Y. February 6, 2012; https://www.courtlistener.com/docket/4350067/25/capitol-records-llc-v-redigi-inc. SDNY is The United States District Court for the Southern District of New York; it encompasses the counties of New York, Bronx, Westchester, Rockland, Putnam, Orange, Dutchess, and Sullivan; and SDNY draws jurors from those counties. The Court hears cases in Manhattan, White Plains, and Poughkeepsie, New York; https://www.nysd.uscourts.gov/about. Also see Villasenor, J. Is it legal to resell ‘used’ digital music? https://www.brooksings.edu/opinions/is-it-legal-to-resell-used-digital-music.

  19. United States District Court Southern District of New York. Capitol Records, LLC v. ReDigi, Inc. No. 12 Civ. 95(RJS). 934 F. Supp. 2nd 640 (2013).

  20. Ibid. Also see Reis, S. Toward a ‘digital transfer doctrine’? The First Sale doctrine in the digital era, Northwestern Univ Law Rev, 2014, 109(1): 173–208. Katz, A. The First Sale doctrine and the economics of post-sale restraints, Brigham Young Law Rev, 2014, 2014(1): 1–89. Samuelson, P. Possible futures of Fair Use, Washington Law Rev, 2015, 90(2): 815–868.

  21. U.S. Government. Copyright Law of the United States and Related Laws Contained in Tıtle 17 of the United States Code; https://www.copyright.gov/title17/title17.pdf.

  22. Ibid. Also see Afori, O.F. The evolution of Copyright law and inductive speculations as to its future,” J of Intell Prop Law, 2012, 19(2): 253–259. Strong, W.S. The copyright book: A practical guide, 6th ed. Cambridge: MIT Press, 2014, p. 56–77. Landes, W.M Posner, R.A. The economic structure of intellectual property law. Cambridge: Harvard University Press, 2003, p. 21–42, 145–213. Marks, B.F. Copyright protection, privacy rights, and the fair use doctrine: The post-Salinger decade reconsidered, New York U Law Rev, www.nyulawreview.org/wp-content/uploads/2018/08/NYULawReview-72-6-Marks.pdf. Asokan, S. Demystifying the honest infringer: Reorienting our approach to online copyright infringement using behavioral economics, J of Intellectual Prop & Prac, 2018, 13(9): 729–743. Boldrin, M. Levine, D. The case against intellectual property, Am Econ Rev, 2002 92(2): 209–212. Klein, B. Lerner, A.V. Murphy, K. The economics of copyright ‘fair use’ in a networked world, Am Econ Rev, 2002, 92(2): 205–208.

  23. United States District Court Southern District of New York. Capitol Records, LLC v. ReDigi, Inc. No. 12 Civ. 95(RJS). 934 F. Supp. 2nd 640 (2013).

  24. Ibid. Also see Rosenblatt, B. Capitol Records prevails in ReDigi case; Copyright and Technology; https://copyrightandtechnology.com/2013/04/01/capitol-records-prevails-in-redigi-case. Shiller, B.R. Digital distribution and the prohibition of resale markets for information goods, Quan Mark and Econ, 2013, 11(4): 403–435.

  25. B. Sisario, “A Setback for resellers of digital products,” www.nytimes.com/2013/04/02/business/media/redigi-loses-suit-over-reselling-of-digital-music.html.

  26. M. Minow, “Selling used digital files: A setback, but not the end of the story,” www.libraryjournal.com/?detailStory/selling-used-digital-files-a-setback-but-not-the-end-of -the-story. Also see Shulman, J.D. Coughlan, A.T. “Used goods, not used bads: Profitable secondary market sales for a durable goods channel,” Quant Market and Econ, 2007, 5(2): 191–210.

  27. United States Court of Appeals for the Second Circuit, “16–2321-cv. Capitol Records, LLC, Capitol Christian Music Group, Inc., Virgin Records IR Holdings, Inc. Plaintiffs-Appellees v. ReDigi Inc., John Ossenmacher, Larry Rudolf, aba Lawrence Rogel, Defendents-Appellants. On Appeal from the United States District Court for the Southern District of New York. Brief of Amicus Curiae Association of American Publishers, Inc. in Support of Plaintiffs-Appellees,” publishers.org/wp-content/uploads/2019/12/briefofamicuscuriaeassociationofamericanpublishers.pdf?10,000. The 2nd Circuit The Second Circuit Court of Appeals sits in New York City at the Thurgood Marshall U.S. Courthouse in lower Manhattan. Three appellate court judges sit on each case panel, except for en banc appeals on which the full court sits. The appellate court hears appeals from the district courts within the circuit. The United States District Courts for the Second Circuit exercise federal jurisdiction in six districts within the states of Connecticut, New York, and Vermont. These are the trial courts for the circuit. Each district has multiple seats of court: District of Connecticut (New Haven, Hartford, Bridgeport); Eastern District of New York (Brooklyn, Central Islip); Northern District of New York (Albany, Binghamton, Plattsburgh, Syracuse, Utica); Southern District of New York (Manhattan, White Plains); Western District of New York (Buffalo, Rochester); and the District of Vermont (Burlington, Rutland, Brattleboro); https://www.ca2.uscourts.gov/about_the_court.html.

  28. Capitol Records, LLC v. ReDigi Inc. No. 16–2321 (2nd Cir. Dec. 2018. Summary; https://www.copyright.gov/fair-use/summaries/capiton=records=llc-redigi-inc-no/16-2321-2nd=cir-cir-dec.12.2018.pdf. Also see U.S. Government. Copyright Law of the United States and Related Laws Contained in Tıtle 17 of the United States Code; https://www.copyright.gov/title17/title17.pdf.

  29. Association of American Publishers. Brief of amicus curiae Association of American Publishers, Inc. in support of plaintiffs-appelles: 16–2321-cv. United States Court of Appeals for the Second Circuit; p. 2; https://presspage-production-content.s3.amazonaws.com/uploads/1508/briefamicuscuriaeassociationofamericanpublishers.pdf?10000.

  30. Ibid.; p. 2–3.

  31. Ibid.; p. 20–21, 29.

  32. American Library Association. Brief of amicus curiae American Library Association, Association of College and Research Libraries, Association of Research Libraries, and Internet Archive in Support of Reversal: 16–2321-cv. In the United States Court of Appeals for the Second Circuit. Capitol Records, LLC, et al.; https://lca.x0x8kvd0-liquidwebsites.com/wp-content/uploads/2018/04/ReDigiFairUse_2017feb14-rs.pdf. Also available at https://archive.org/details/ReDigiFairUse2017feb14Rs.

  33. Ibid., p. 3.

  34. Ibid. p. 4.

  35. Ibid., p. 5.

  36. Copyright Law Scholars. Brief of Copyright Law Scholars as amicus curiae in Support of Defendants-Appellants and Reversal: 16–2321-cv. In the United States Court of Appeals for the Second Circuit. Capitol Records, LLC, et. al.; p. 1; https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2921890.

  37. Ibid. p. 2.

  38. Ibid. p. 2–3.

  39. Greco, A.N. “The Kirtsaeng and SCI-HUB cases: The major U.S. Copyright cases in the Twenty-First Century,” Pub R Quar, 2017, 33(3): 238–253. Also see Supreme Court of The United States, “Syllabus Kirtsaeng, dba Bluechristine99 v. John Wiley & Sons, Inc. certiorari to the United States Court of Appeals for the Second Circuit No. 11–697. Argued October 29, 2012—Decided March 19, 2013,” www.supremecourt.gov/opinions/12pdf/11-697_4g15.pdf. Litman, J.D. “Copyright, compromise, and legislative history,” Cornell Law Rev, 1987, 72 (5): 857-904. N. Elkin-Koren, N. “The changing nature of books and the uneasy case for copyright,” papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=2783962.

  40. United States Court of Appeals for the Second Circuit. Docket No. 16–2321. Capitol records, LLC v. ReDigi. 910 F.3d 649 (2nd Cir. 2018) Decided Dec 12, 2018; file://C:/Users/angre/Downloads/Capitol%20Records,%20LLC%20ReDigi%20Inc.pdf.

  41. Ibid., p. 5.

  42. Ibid., p. 5–6.

  43. Ibid., p. 6.

  44. Ibid., p. 6.

  45. Ibid., p. 9.

  46. Ibid., p. 9.

  47. Ibid., p. 10–12.

  48. Ibid., p. 14. Also see U. S. Department of Justice. Copyright infringement—First Sale Doctrine, www.justice.gov/archives/jm/criminal-resource-manual-1954-copyright-infringement-first-sale-doctribe. Stanford University Libraries. Measuring Fair Use: The four factors; https://fairuse.stanford.edu/overview/fair-use/four-factors.

  49. ReDigi. Petition for a Writ of Certiorari. In the Supreme Court of the United States; p. 1; https://www.supremecourt.gov/DocketPDF/18-18-1430/99242/20190510113929702_ReDigi%20inc%20v%20Capitol%20Records%20Petition%20for%20a%20Writ%20of%20Certiorari.pdf

  50. Ibid., p. 3–4.

  51. K. Jahner, K. Justices let stand record companies’ win over digital resales, news.bloomberglaw.com/ip-law/justices-let-stand-record-companies-win-over-digital-resales.

  52. E. Rosati, E. U.S. Supreme Court holds first sale doctrine applicable to works lawfully made abroad,” J of Intell Prop Law & Prac, 2013, 8(8): 590–591. Also see Reimers, I. Can private copyright protection be effective? Evidence from book publishing, J of Law and Econ, 2016, 59(2): 411–440. Asay, C.D. Kirtsaeng and the First Sale Doctrine’s digital problem, www.stanfordlawreview.org/online/kirtsaeng-and-the-first-sale-doctrines-digital-problem/#footnote_1

  53. Association of American Publishers. Publishers welcome the Second Circuit’s ruling in Capitol Records v. ReDigi; https://publishers.org/news/publishers-welcome-the-second-circuits-ruling-in-capitol-records-v-redigi.

  54. Association of Research Libraries and Brand, J. The implications of the ReDigi decision for libraries; https://policynotes.arl.org/?p=1763. Also see Smith, K. Kevin Smith on lessons from the ReDigi decision; https://www.authorsalliance.org/2019/01/18/kevin-smith-on-lessons-fron-the-redigi-decision. Benson, S. Jonathan Brand explains all things ReDigi; https://www.library.illinois.edu/scp/podcast/jonathan-brand-explains-all-things-redigi.

  55. Donahue, E. The chilling effects of the ReDigi decision on consumer rights in their digital property. Washington J of Law, Tech, and the Arts; https://wjita.com/2020/20/20/the-chilling-effects-of-the-redigi-decision-on-consumer-rights-in-their-digital-property. Also see Guterman, J. Does current copyright law hinder innovation? MIT Sloan Manage Rev, 2009, 50(2): 14–15.

  56. Costanza, N. Digital music garage sale: An analysis of Capitol Records, LLC v. ReDigi, Inc. and a proposal for legislative reform in copyright enabling a secondary market for digital music. Hastings Comm and Enter Law J; https:////repository.uhastings.edu/cgi/viewcontent.cgi?article = 1733&context = hastings_comm_ent_law_journal. Also see Schultz, J. Redefining ownership: As technology infiltrates practically everything we buy, Jason Schultz assesses personal property rights in the digital age; https://www.law.nyu.edu/news/ideas/jason-schultz-end-of-ownership-digital-economy. Carey, T.C. Digital resale: where new technology stumbles over old law; https://www.sunsteinlaw.com/publications/digital-resale-where-new-technology-stumbles-over-old-law.

  57. InfoCuria Case Law. Case C-263/18. Netherlands Uitgeversverbond and Groep Algemene v. Tom Kabinet Internet BC and Others; http://curia.europa.eu/juris/document/document.jsf?text=&docid=221829&pageindex=0&doclang=EN&mode=req&dir=&occ=first&part=1&cid=8937491.

  58. Ibid., p. 1.

  59. Ibid., p. 2.

  60. Morgan, A. Abbott, P. Strothers, C. ECJ rules that the sale of second-hand e-books infringes copyright, J of Intell Prop Law & Pract, 2020, 15(4): 236–238. Also see Association Litteraire et Artistique Internationale. Opinion on case C-263/18 (NUV/GAU v. Tom Kabinet; www.alai.org/files/resolutions/181012-opinion-tom-kainet-case-en.pdf. Kaiser, A. Exhaustion, distribution, and communication to the public—the CJEU’s decision C-263/18—Tom Kabinet on e-books and beyond, GRUR Inter, 2020, 69(5): 489–495. Also see Anon., “Tom Kabinet,” IIC—Inter R of Intell Prop and Comp Law, 2020, 51(6): 772. Meyer, D. Why the second-hand e-book market may never take off, www.fortune.com/2019/12/19/used-ebooks-resell-market-eu-court. Clee, N. Resale of e-books rules illegal in EU, https://www.publishersweekly.com/pw/by-topic/international/international-book=news/article/81151-second-hand-e-book-retailers-ruled-unlawful-by-eu.html.

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  1. Gabelli School of Business, Fordham University, 441 East Fordham Road, Hughes Hall 516, Bronx, NY, 10458, USA

    Emily Dunbar, Isabella Pichigian & Alexandra Thomas

  2. Fordham University, FCRH, 441 East Fordham Road, Keating Hall 302, Bronx, NY, 10458, USA

    Albert N. Greco

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Dunbar, E., Pichigian, I., Thomas, A. et al. The Impact of the Redigi Case on the U.S. Library and Book Publishing Industry: E-Books and Audio Books. Pub Res Q 38, 53–70 (2022). https://doi.org/10.1007/s12109-021-09857-y

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