Reselling digital items is not like reselling physical goods, so says a federal court in New York. The case involves ReDigi, a company that was attempting to build a business around the selling of used digital music. ReDigi’s technology makes a copy of the validated digital file, and then deletes the original before re-sale. ReDigi contends that this practice is no different than someone reselling a book or CD, which is legal under the First Sale Doctrine. The First Sale Doctrine, which originated in 1908, deemed that a publisher could dictate the “first sale” of a product, but after the initial sale they no longer possessed “the authority to control all future retail sales”.

But this week, the federal court in New York ruled that ReDigi can no longer continue to resell legally purchased music. The reasoning behind the decision was that ReDigi, even though they delete the original copy, are still reproducing the files, which violates a much more modern law, the Digital Millennium Copyright Act (DMCA). The DMCA prohibits the unlicensed reproduction of protected works. The ruling was a major victory for the plaintiff, Capitol Records, and, by extension, the other major record labels. ReDigi, however, maintains that they are currently not breaking any copyright laws and will continue to operate using ReDigi 2.0 (ReDigi 1.0, which was found to be illegal, has been shut down). They released a reaction to the ruling stating that “their updated service (ReDigi 2.0) incorporates patent pending “Direct to Cloud Technology” and “Atomic Transfer Technology” that, the court stated, are not affected by its recent ruling”.

The ReDigi case is the latest example of the conflict between laws based on physical items and the new reality of digital goods. Technically, reselling digital music is not illegal…as long as one can find a way to do it without copying the original file. This case may very well set the precedent for digital resale, and it will no doubt be referenced by those looking to protect profits from the resale of other digital goods like e-books and movies (purchased via a service like iTunes). It’s understandable that Capitol Records would want to shut down ReDigi. But in the end, the content owners are likely fighting a losing battle. Major corporations like Amazon and Apple have already filed for patents on marketplaces for the resale of digital files. Meanwhile, a rewrite of the copyright laws to accommodate digital seems inevitable. For the sake of consumers, content owners and technology developers, let’s hope it’s sooner rather than later.