Digital Limitations on the First Sale Doctrine and the Nature of Ownership
What can you really do with your downloadable media after you purchase it? Buying a track off of iTunes certainly allows the buyer to enjoy listening to the song as often as they like, dancing to that song, and so on. But will you be able to hold onto that song forever? Can you share it with your friends? It turns out buying a digital music file is a little different than buying a physical CD, DVD, or other forms of tangible medium.
Buying a tangible CD or DVD provides the buyer with that physical copy. While the full copyright would not be included in the purchase, that ownership comes with a set of rights that allows the buyer to lend, sell, or even destroy the copy.1 These rights are largely provided through the First Sale Doctrine2 as codified in 17 U.S.C. § 109(a), which allows someone to re-sell a lawfully obtained copy or phonorecord. The doctrine allowed beloved shops of secondhand records, movies, etc. to flourish in a past age.3 Unfortunately for some, buying a digital file often does not create the same type of “ownership.” Depending on the hosting service, the download may come with restrictions on reselling or lending, and even caveats that allow the service to remove access to the downloaded file altogether.4 These limitations are often included in the fine print of a given download purchase, and most customers tend to be unaware of this variation on “ownership.”5 Beyond the contractual limitations of digital downloads, the Copyright Office has also commented that the very physical nature of traditional media differs from digital media. Physical media are inherently limited due to their natural degradation over time–a problem not faced by digital media–and the detectability of copies.6
While this changing notion of “ownership” can certainly be damaging to consumers, businesses also face some challenges. This issue has gained more attention due to the recent decision by Judge Leval of the Second Circuit Court of Appeals in Capitol Records, LLC v. ReDigi Inc.7 The Second Circuit affirmed the Southern District of New York’s holding that ReDigi’s service for reselling digital music files infringed upon the copyright to the original music files.8 ReDigi’s main argument was as follows: To transfer a lawfully obtained music file via ReDigi’s software, the original buyer must also delete that file from his or her hard drive, thus avoiding the possibility of multiple existing copies of that file.9 No harm, no foul…right? Wrong, says the Second Circuit. While ReDigi was right to be focused on selling only lawful copies through their site, inherent in the transfer process was a form of scanning and copying the originally purchased file.10 This additional layer of copying was not done with the permission of the copyright holder, and thus the first sale doctrine cannot apply.
One way to get around the court’s problem with the unauthorized copying could be software or other technology that somehow avoids any intermediary scanning or copying of the original file.11 However, it is not clear whether this type of software is currently available.12 Blockchain or “decentralized ledger technology” has also been proposed as a method for avoiding the negative consequences of multiple copies.13 While the nuances of blockchain go beyond the scope of this article, the technology inherently involves a form of copying as well, so this does not appear to be a complete solution as of yet.14
ReDigi plans to file a cert petition to settle the issue on whether the first sale doctrine allows the purchaser of a digital file to resell it, as might be done with the purchase of a physical copy.15 If the Supreme Court grants cert, the decision could have wide-reaching effects throughout the publishing, music, and film industries. Services offering e-books, downloadable TV shows and films, as well as digital music files may or may not have to consider additional software or contractual protections depending on the outcome.
See 17 U.S.C. § 109 (2012); see also David Lazarus, When you buy digital content on Amazon or iTunes, you don’t exactly own it, L.A. Times (May 13, 2016, 3:00 AM), https://www.latimes.com/business/lazarus/la-fi-lazarus-digital-content-20160513-snap-story.html. [https://perma.cc/4VFV-HEYS]↩
See Steve Brachmann, Capitol Records v. ReDigi: No Fair Use or Lawful Resale of Music Files Under First Sale Doctrine, IP Watchdog (Dec. 29, 2018), https://www.ipwatchdog.com/2018/12/29/no-fair-use-lawful-resale-music-files-first-sale-doctrine/id=104176/. [https://perma.cc/3SD6-J3LB]↩
See Eriq Gardner, Supreme Court Will Be Asked to Permit Resales of Digital Music Files, The Hollywood Reporter (Mar. 5, 2019, 7:43 AM), https://www.hollywoodreporter.com/thr-esq/supreme-court-will-be-asked-permit-resales-digital-music-files-1192295 [https://perma.cc/U9Z8-G5W9]; Tom Kulik, A Digital Take on the First-Sale Doctrine, Above The Law (Nov. 13, 2017, 5:17 PM), https://abovethelaw.com/2017/11/a-digital-take-on-the-first-sale-doctrine/. [https://perma.cc/6QP5-H4RG]↩
See Lazarus, supra note 1.↩
A 2016 study conducted by researchers at Case Western University School of Law and UC Berkeley found that “about 83% of survey respondents believe that when they purchase digital content, they own it just as they own a physical good.” Id.↩
See generally U.S. Copyright Office, A Report of the Register of Copyrights Pursuant to §104 of the Digital Millennium Copyright Act (Aug. 2001), https://www.copyright.gov/reports/studies/dmca/sec-104-report-vol-1.pdf (discussing additional differences between physical and digital media with respect to the first-sale doctrine) [https://perma.cc/WB6R-2G25]; see also Tom Kulik, Why Blockchain Is No Panacea For The Digital First Sale Doctrine (For Now), Above the Law (Sept. 25, 2018, 11:48 AM), https://abovethelaw.com/2018/09/why-blockchain-is-no-panacea-for-the-digital-first-sale-doctrine-for-now/?rf=1. [https://perma.cc/MG5J-W8VS]↩
910 F.3d 649 (2d Cir. 2018).↩
Id. at 652.↩
See Brachmann, supra note 2.↩
See Kulik, supra note 3.↩
See Kulik, supra note 6 (discussing the basic mechanics of blockchain technology and its potential uses and drawbacks in copyright).↩
Gardner, supra note 3.↩