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AAP Files Amicus Brief in Important Copyright Case

13 May 2017

From the Association of American Publishers:

The Association of American Publishers (AAP)  today filed an amicus curiae brief in Capitol Records, LLC v. Redigi, Inc., an important copyright case concerning whether “used” creative digital content can be resold in the online environment. AAP has urged the U.S. Court of Appeals for the Second Circuit to affirm the district court’s decision, which found no plausible legal interpretation under the Copyright Act that would permit a company to reproduce and resell digital music files without a license. In addition to rejecting application of the “first sale” doctrine under Section 109 of the Act, the district court found that all four factors of fair use under Section 107 weighed against the defendant ReDigi which has appealed the decision.

In its brief, the AAP notes that the rapid growth of digital publications (including eBooks, professional and scholarly publications, and adaptive educational content) make the threat of Redigi’s business activities to publishers and their markets “not hypothetical.” AAP explains the critical interest of publishers in ensuring that federal courts apply the first sale doctrine as a defense against infringement pursuant to the plain meaning of the statute, which limits application of the defense to situations where the owner of a lawful copy of the copyrighted work embodied in a tangible “material object” chooses to distribute that particular copy. The owner of the lawful copy cannot assert the defense if distribution of the work is achieved by reproducing the copy.

AAP cites to the clear reports of both the U.S. Copyright Office and the U.S. Commerce Department, in 2001 and 2016 respectively, which concluded that the ability of a consumer to resell a purchased copy or lend it without restriction applies only to tangible property, and that extending the first sale doctrine to digital transmissions would carry risks to copyright owners’ primary markets.

Link to the rest at the Association of American Publishers

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15 Comments to “AAP Files Amicus Brief in Important Copyright Case”

  1. I would think they wouldn’t want to point out ebooks in their brief, one look at some ebooks costing the buyers ‘more’ than paper and some hardbacks – which are resellable – might turn things against them.

  2. Given that copyright applies to anything “fixed in a tangible form”, the argument does not apply. Nobody copyrights a file in transmission any more than a paper book being sent through the mail is a different format. The file has to be “fixed” somewhere to be used–either saved on a hard drive or a reader. If the original (legal) owner transfers that ownership, and it ends and begins as something “fixed in tangible form”, why wouldn’t such an ebook sale be legal under first sale doctrine?

    • Dean Wesley Smith

      Sabrina, if you sell your hard drive with the story on it, that is fine. The problem is with selling an electronic copy (besides violating the license you purchased it under) is that you must copy it to move it to another material device. Can’t do that. And trust me, you do not want first sale doctrine to apply. It would put most of us artists who make part of our living on electronic sales out of business.

      • (Waves at Dean 😀 )

        When I was selling books directly from my own online store, I did not license them. It’s been a while, but I recall including explicit language that as long as the file was completely deleted from the original owner’s storage, it could be resold. It is true electronic copying is much, much easier than copying a print book and making a complete facsimile, but that is where the law should be pointed–not the concept that people don’t own the books they have purchased. (Or software programs.)

        It would be nice to have the *option* to license or to buy outright for such things.

        Anyway, I was addressing the specific minutiae of the law and the flaw I perceived in the argument. Actual implementation of a process that protects the rights of the creator and the consumer depends more on developing technology at this point.

        • It’s not just that copying a physical medium is harder. Moving an electronic anywhere (other than to different locations on the same computer, and I’m not sure about that) *requires* copying. The file must be copied to the new location, and then it’s a matter of the honor system as to whether anyone then deletes the original version. I seriously doubt very many people would do so. And that’s not even addressing the issues about how an electronic version can be sold and resold an infinite number of times and still be as good as new, whereas a physical copy has a limited life especially when changing hands just because books break down under use.

          In order to make electronic books comparable to physical books in terms of reselling, entirely new technology would need to be developed–technology which, like DRM, would inherently cripple the ebook in some way. Simply passing a law to treat electronic files the same as physical books wouldn’t work. It seems to me that the best way to approach it at this point, with the current laws and technology, would be for the providers of content to A) provide it DRM-free, and B) make sure that the electronic version costs less than the physical version to somewhat mitigate the lack of resale opportunity.

          • I have three copies of my Kindle books – one on the Fire, one on the desktop, and one on the main backup drive. Oh, four – I haven’t yet wiped nonessential files from the laptop that got fluky a while ago. That doesn’t even count the “virtual copy” that I can download again any time from my Amazon account.

  3. Why is this case continuing?

    Redigi is apparently dead: http://www.redigi.com

    From what I can see in the Wayback machine, the site shut down late last summer.

    • What better way to get a ‘law/interpretation’ passed than against a company that won’t be able to fight it?

    • Bloomberg lists Redigi as a subsidiary of Intelligisys Group, LLC, in Cambridge, MA. Redigi has a granted patent that may still be of value, depending on how the appeal goes. So, it could still be a business entity on life support.

      From the description in the press release it reminds me of Dr. McCoy’s criticism of the transporter. If a file is erased bit by by bit as it is copied, is it copied or is it moved?

      “CAMBRIDGE, Mass., Jan. 29, 2014 /PRNewswire/ — ReDigi, Inc. (www.redigi.com), the world’s leading marketplace for pre-owned digital goods, announced today that it has been awarded a patent by the United States Patent and Trademark Office (USPTO). The US patent No. 8,627,500 B2 recognizes ReDigi’s groundbreaking system for the management and resale of digital content. This patent signals a new era of “copy-less” digital transactions between consumers and forms the backbone of a burgeoning marketplace for buyers and sellers of MP3s and eBooks. The patented technology took almost five years of research and testing before the USPTO granted this significant patent to ReDigi and represents only some of the advances in technology made by the ReDigi team, which is committed to providing unsurpassed protections for consumers, copyright holders, and those who create content.

      ReDigi’s patented technology provides significant opportunities to unlock the full value of digital content by creating a system and method for the resale of that content without actually having to make a copy. ReDigi’s patent includes the following methods and apparatuses:

      Verification Engine – A mechanism that analyzes each digital media file that enters the ReDigi system to ensure that it is legally eligible for resale.

      Atomic Transaction – A cloud-based mechanism that instantaneously transfers an “original” good from one owner to the next, without making a copy.

      Removal and Monitoring Mechanism – A digital management application that helps sellers identify and ensure personal-use copies of the sold media are removed.

      In contrast to ReDigi’s patented technology, other media companies employ significantly different, more traditional “copy and delete” mechanisms and technology. ReDigi believes that its “copy-less” digital technology is far superior to these systems as it addresses the concerns raised by copyright holders that the resale of digital content via a reproduction violates copyright law.

      The inevitability of the digital secondary market is no longer a question. Unlike the physical world where copyright holders and creators of content do not share in the resale value chain, the digital marketplace presents unique opportunities that industry insiders acknowledge are too lucrative to pass up. ReDigi is at the forefront of this major frontier.

      “ReDigi’s technology is significant and readily corrects early industry issues that have plagued digital retailing, including piracy, and opens new opportunities that allow consumers to use their digital media as currency for funding new purchases, in some ways transforming digital media analogous to digital bit coins,” said ReDigi Founder and CEO, John Ossenmacher. “We are committed to ongoing innovation and ensuring that all parties, including consumers, copyright holders, and those who create the content have the opportunity to benefit greatly from the multi-billion dollar market in digital media that is owned by the consumer.”

      This significant patent award signals an expected ongoing flow of additional patent awards coming from numerous applications that have been filed by the company over the past five years, including ReDigi’s “Active Digital Security” platform, a game-changing security technology so advanced it is becoming the new baseline for the industry globally. For more information please contact media@redigi.com. “

      • If the company is no longer in operation because they lacked revenue then that patent doesn’t really matter.

        Coincidentally, that patent documents the exact method that the district court said was the legal way to resell digital content.

        “The inevitability of the digital secondary market is no longer a question.”

        Not if there’s no money in said market. The used digital music market failed because it wasn’t really worth anyone’s time to resell a song that only cost a buck to begin with.

        Now, if iTunes let you resell your license, that is another matter.

        • Felix J. Torres

          There may never be a viable used digital content market as long as creators are to be fairly compensated for the transfer.

          For used print books the sale price is set by supply and demand and book condition. For resold ebooks the price will unavoidably be set by regulation. Almost certainly pegged to the list price.

          Let’s run some math: a typical ebook brings the publisher, Indie or BPH, 70% of list so any compensation that is significantly less is literally taking money out of their pocket togive it to the reseller. Say they grudgingly agree to a 25% cut and agree to a 53% compensation.
          Next the platform holder/mediator will want a commission. Say they settle for half the normal commission and you’re up to 68% of list.
          So what’s the sale price of a used ebook? 10% off list? 20%? Not much margin left for the reseller is there?
          Logically one would expect used books to come without resale rights so the buyer isn’ t getting much of a deal on Indie or APub titles that sell for $3-5.
          Even on an overpriced BPH $12.99 ebook the savings don’t even get you to the old $9.99 point. (Plus we all know how those boys will respond to the resale cut: raise list prices. Hello $14.99!)

          Used pbook sales work because the source gets zero say and zero payout. That will not happen with digital media. Indies don’t deserve to be ripped-off and the BPHs own too many politicians for zero payout to fly. All that resale can lead to is higher pricess for all in service of illlusory “principle” most don’t care about.

          Plus, let’s be realistic: properly priced ebooks are already selling at prices that compare well to used print. Print is an expensive delivery system but digital isn’t. Proper pricing factors that into the license price. The only real world rationale for ebook resale is BPH pricing and the better solution to that is to just say no. It won’t kill you to do without those until they let go of their reader spend obsession.

          The ebook world is developing nicely without resale. There is no more clamor for it than there is against DRM and that one is a real, if minor, annoyance.

          • Redigi as a legal entity may being funded solely to keep the lawsuit live and as a patent holder. Or its being kept alive by allies in the library business and cloud computing:

            https://www.law360.com/articles/892239/copyright-law-profs-blast-redigi-music-ruling-at-2nd-circ

            “Because of the implications for other cloud-based platforms, the case quickly drew high-profile support, including an unsuccessful bid toi join the case by Google, which had asked for permission to file an amicus brief opposing a preliminary injunction against ReDigi.

            The American Library Association, the Association of College and Research Libraries, the Association of Research Libraries and the nonprofit organization Internet Archive filed a separate amicus brief Tuesday that also urged the Second Circuit to reverse the decision, saying the district court should have recognized that the purpose behind the first sale right tilted the first fair use factor in favor of ReDigi.

            They also argued that a positive fair use determination in the case would encourage libraries to provide innovative services to their users.”

          • Al the Great and Powerful

            I have to agree with FJT here, PROPERLY priced ebooks cost more like used paper. Its the same answer that paper model sellers arrived at; the actual paying customers find that cheap products (ebooks, models) are easier to buy than to hunt down pirated copies of (hard to find compared to amazon or bookstores, sources are sketchy and possibly dangerous).

            And really, its what the music and media industry settled towards eventually as well, dropping the price from what they wanted originally, to make it so easy/cheap to buy/rent/borrow that the vast numbers don’t pirate like they did in the old Napster/Kazaa/EMule/whatever-pirate-or-sharing-tool-you-like days.

            That is to say, there is a sweet spot for ebook (and model) sales, and it ISN’T the full paper retail price as the BPHs want you to believe.

            The question is whether that sweet spot generates enough sales to sustain the producers. And that’s where indie authors have a better chance than the qig5, because indies get more of each sale than tradpub authors, they are more likely to make enough to survive even if their sale prices are lower than BPH pricing.

  4. Er, no, it looks like I goofed. The footer for Skoobe.com (where Redigi.com redirects to) says it is owned by Redigi.

    So i guess they shut down one and redirected the domain to the other website.

  5. An earlier post brings up an interesting issue that I hadn’t thought about (or heard mentioned before). To take it a step further…

    True, the purchaser of an ebook apparently can’t legally transfer ownership of it, even if he/she swears that he/she (shall we say it?) deleted the original. However, under Kindle rules, it can lend the book, and there can be unlimited lending within a tight-knit family/group of friends who are willing to swap ereaders.

    But! (This is the new part, to me, anyway) The owner otherwise known as “it” can legally obtain or make multiple copies of the book for its own devices, which was not possible with old, fixed media. If I buy a print book, I have one and only one copy. With an ebook, I can have one copy on my ereader (which my husband might be eagerly perusing) and another on my phone to take with me to doctors’ appointments, etc.

    So there IS extra value to an ebook, possibly enough to compensate for the inability to walk into a used bookstore and swap it.

    Something to think about, anyway.

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