A "New Copy" Why Selling CDs Second Hand Is Legal But Selling MP3s Secondhand is Not

Capitol Records,  LLC v ReDigi Inc

A 'fundamental clash over culture, policy and copyright law'

Background

 The recent case of Capitol Records v ReDigi Inc is a significant ruling on just what a consumer can do with legally purchased digital music files.  Ultimately the result is that while CDs (etc) can be sold secondhand, legitimate mp3s cannot.

Although this decision doesn't bind New Zealand, it is highly persuasive and logically applicable to New Zealand copyright law.  Additionally, it also illustrates the inherent incompatibility of using 'copying' to trigger illegality in the realm of digital music.

The Parties/Facts

 Launched in October 2011, ReDigi provides an online market place for digital used music.  Allowing "users to recoup value on their unwanted music."  Effectively updating the sacred salvaging exercise of the CD age; the sacred act of going to Cash Converters and trying to convince the clerk at the counter to buy 'Kickin' 10' and 'The Ego Has Landed'.

Being digital or involving "computers" as Kenny Powers would say, the process is a bit more complex. ReDigi make users download a program called 'Media Manager.'  This program creates a list of digital music files eligible for sale.  This files must be purchased from iTunes or another ReDigi user (e.g. not from a CD/illegally downloaded).  The program also checks whether any other copies have been retained either on the computer, or any other devices.  If such copies are found the program prompts the user to delete the file.  There is also a company policy to suspend user's accounts who fail to do so.

Eligible files can be uploaded onto the user's "Cloud Locker."  On this locker a user can stream the file, and also offer it for sale.  The structure ensures that the file cannot be playable on both the computer or the cloud locker.  Once a file is 'sold' it is removed from the Locker.  ReDigi takes a percentage fee of any sale.

Capital Records, own the copyright in the sound recordings of these file which could (and have) been sold via this process.  Capital Records applied for summary judgment which meant the case was not heard in full and the Court had to be satisfied that there was no genuine dispute as to any material facts and that Capital were entitled to judgment as a matter of law.

Did Copyright Infringement take place?

The Court examined three exclusive rights of Capital which could be infringed.

1. Reproduction Rights

The Court held that Capitals exclusive right to "reproduce" copies of the sound recording has been infringed. A new 'copy' had been made once the file was transferred to the Cloud Locker and accordingly, reproduction rights where infringed.

2. Distribution Rights

Under statue Capital had the exclusive right to "distribute copies or phonorecords..." of their recordings to the public.  These would be infringed.

3. Performance Rights

The Court refused to rule on this matter (where ReDigi linked to third parties such as YouTube, so users could sample music before buying a second hand file)  as they considered that material disputes existed.

Therefore - Capital's reproduction and distribution rights as copyright owners of sound recordings were breached.

Did any Defences Apply to ReDigi?

1. Fair Use

ReDigi raised everyone's favourite copyright defence - fair use.  This was swiftly rejected by the Court at page 9.  Briefly, the use was not trans-formative, used an entire sound recording and significantly undercut the copyright work by providing an indistinguishable product at a lower price (isn't this exactly what a second hand CD does?!).

2. The First Sale Doctrine

Of more robust argument was the first sale doctrine.  This is the idea that 'once the copyright owner places a copyright item in the stream of commerce, by selling it, he has exhausted his exclusive statutory right to control its distribution.'  This is the principle which allows you to sell secondhand CDS, DVDs, and LPs.  Once you have legitimately purchased such items, you can re-sell them without restriction.  If you want to recover two to three dollars from the twenty plus you layed out for 'The Ego Has Landed' you are free to do so.

ReDigi argued that effectively they were allowing consumers to do the same thing, with legitimately purchased iTunes files. 

3. The First Sale Fails

The Court noted that the first sale doctrine only applied to distribution rights.  Prima facie, a CD can be redistributed, but the redistributing taking place in the context of digital files, involved reproducing another copy of the file, which isn't protected by the defence.  

Furthermore, any distribution was not sourced from a "lawfully made" copy.  This meant that the defence was not applicable to either the infringement of Capitals reproduction or distribution rights. 

As a result Capitals claims of infringement under these two heads succeeded. (See page 17)

The Real Issue - Is 'Copy' The Correct Trigger Point for IP Infringement

Logically the court is correct.  Under the existing law, a new copy had been created, and the consequences outlined above logically flowed.  ReDigi's only real limb to stand on was to argue that:

"technological change has rendered its literal terms ambiguous, and the Copyright Act must be construed in light of [its] basic purpose" (at p12).

Put simply, that the definition of 'copy' is outdated and incompatible in the context of digital media.  It creates an unrealistic and unjustified divide in this context, between consumers being able to re-sell CDs but not mp3s.  However the Court refused to engage in such "judicial amendment:"

"However, here, the Court cannot of its own accord condone the wholesale application of the first sale defense to the digital sphere, particularly when Congress itself has declined to take that step"

(at page 17).

Conclusion

Once again the fundamental trigger point mechanism of equating 'copying' as the point of infringing a content owner's right of economic exploitation raises its ugly head; only to be conservatively considered by the Judiciary and hospital-passed to an uninterested Legislature.

Alaister J Moghan

A Good Keen Man: An Argument on the Roots of Anti-Intellectualism in New Zealand

A Good Keen Man: An Argument on the Roots of Anti-Intellectualism in New Zealand

My mate Max wrote this.  As he occasionally does, he got me thinking.  Anti-intellectualism is a topic me and Max often talked about, especially during the numerous times he encouraged me through my law degree, as well as the frequent occasions I lambasted him about his lack of sporting prowess. 

 

(Especially after getting the Rhodes scholarship where my direct (and only analogy) of comparing David Kirk’s sporting achievements of being a world cup winning All Black Captain to Max’s “sporting” achievements on the Debating ‘field’ were consistently raised, usually in jest.)

Without really knowing it, intellectualism was something I often thought  growing up.  Like most small town boys, at an early age, I loved rugby.  However, I can often recall my Dad telling me about his favourite book, especially after a few beers, which directly discouraged my passion.

Dad went to school in St Johns in Hastings.  Like most schools at the time, rugby was a huge component.  Dad, like me was not athletically built to be a rugby player and had no interest or time for rugby.  He would tell me about his favourite book at High School; Gordon Slatter’s ‘The Pagan Game’, a remarkable work which Dad construed as a big “fuck you” to the rugby heads.

 

Recently I’ve also finished reading Gordon (the favourite name of the time?) McLauchlan’s original version ‘The Passionless People’ published in 1976.  In ‘The Passionless People’ McLauchlan famously christened New Zealanders as a country of ‘smiling zombies’, forwarding this thesis through provocatively titled chapters; The Sterile Society, The Passionless Pretence; The Passionless Sexes and Passionless Piss-Ups.  More specifically McLauchlan directly  addressed New Zealander’s typical anti-intellectualism and lack of respect of academics.

Both of these works, explore the roots of modern day anti-intellectualism in New Zealand which Max discusses.  More powerful in their heyday, none the less, the commentary they provide on this matter is useful, as these anti-intellectual influences, through the generation remain hanging over. 

As John Kirwan bravely suggested All Blacks Don’t Cry;it could also be proposed that ‘All Blacks’ aren’t intellectual or should be especially academic (e.g. unless in a practical or keen/inventive no.8 wire way).    In this sense I’m using ‘All Blacks’ as the mythical New Zealand male, the ‘god’ if you will.  Obviously we aren’t all All Blacks.  However, as ‘The Pagan Game’ illustrates, back in the 1960’s rugby WAS a huge deal having “the mystique of a religion.”  As the jacket to the book says this novel “tell how many people are influenced by the high priest of the cult.  ” 

This influence is important in establishing the backdrop to the 1970’s ‘Good Keen Man’ ideal of anti-intellectualism, which form the foundations of McLaughlin’s more explicit anti-intellectual ideals.    

‘The Pagan Game’ is a simple tale.  It tells the tale of seven days leading up to a school derby rugby game between the locals, Ruamahanga College and Wellington Grammar.  The match is seen by the headmaster critical in enhancing the school’s reputation: - (which is currently dwindling;  “There was passive resentment, there was active obstruction.  One boy told to say sir had replied when were you knighted? – pg 74).

Slatter uses this simple plot to explore the mystic of the game, the thoughts and motives of its participants, observers and supporters and ultimately provides, using Coach Punch Southam as the vessel, provide a sharp, bitter and insightful reflection on our nation’s then obsession. 

Punch Southam, first appears a good keen man, and a lover of rugby.  Punch explains how he gets the best out of his team, and his tactics at length.  He also often tells stories (as do others) about the regions, and more importantly the school’s only ever All Black; Tank Tarrent.  Tank is the local hero:

“We could do with a few like Tank Tarrant at the College today, said the Coach.  He could play anywhere.  Lock, prop, back row, on the side.  I played with him you know.

I know, said the Captain who had heard it all before.

He was properly the best at number eight…A dominating influence on the game.

The Captain knew that this was the highest praise that Punch Southam could ever bestow.  There was no greater honour than to be a dominating influence on the game.”

p.g. 56

 

 

The myth of Tank Tarrant continues, until the bitter ending.  At the end Raamahunga lose the match, and every narrator is disappointed.  But none more so than Punch, who reveals a sharp and painful truth to the mystique of rugby through his famous old teammate Tank.

“Football made him”

“Football made me what I am too”

A man frightened by the processional agony of time

Pg 231

“I know exactly what will happen, I have been dreading it all through the week.  The Wellington Coach, proud of his victory, will call me by my original nickname, the one that he game me at primary school.  Hammered you again, Punchbag, he will say.  I was always called Punchbag then, the little joker, the hanger-on who was never really in the gang but was just tolerated as somebody for the real members to bash about like a punchbag.  Hammered you again, Punchbag, he will say.  And I’ll have to shake him by the hand, look him in those mocking green eyes and say congratulations, Tank.”

Pg238

In a painful twist, the enforcer of the agony, the loss of the game is none other than former oldboy, loyal old Tank Tarrant!

“Yet I did all that I could.  It is the game that has failed me.  We make the game our life and it can be as disappointed as life itself.”

Pg239.

With my father in mind, Punch’s story is a cultural one for me.  It’s a man trying to live through the New Zealand  ‘Good Keen Man’  ideal; pursuing the mystic of rugby and a religion only to be let down.  Perhaps even, a tale of a figure trapped within a very repressed mind-set of what a man should be; tough, practical, keen; not expressive, thoughtful or *shudder* intellectual.  

 

 

In a brief sense, it is these period ideas of a New Zealand man which underpin McLauchlan’s original thoughts on anti-intellectualism in New Zealand.  

“What we specially don’t produce is the deeply, broadly educated man.  On the one hand history has the Renaisssance Man, on the other the New Zealand agricultural engineering Ph.D.  And what saddens me is that our society is so strongly anti-intellectual and particularly anti-academic that no progress is being made towards excellence, quality.”

Pg 139

“Intellectual in New Zealand are generally equated with academics, and the most common condemnation of academics is that they are aloof, too unworldly, lacking in commonsense.

pg 143-144

“This is where the New Zealander is caught off balance.  I think we’ve been resting on our laurels a bit too much, relying on our sturdy commonsense and pragmatism… A nuclear power station is not a hole in the fence.  A Taranaki gate won’t do”

Pg 146

McLauchlan’s criticisms seem more legitimate in their time.  A tighter fit  than 'The Pagan Game' would be to compare his views with other New Zealand male stereotypes influenced through our colonial past, such as Barry Crump's good keen bushmen, who might be gruff, lonely and rough figures, but intently pragmatic.  Faced with any problem his know-how will make sure “She’ll be right’ faced with an academic debate, a gentle “How’s your father” should suffice. 

 As a young nation, these primitive view of the ideal New Zealander (strongly male focused) are relatively recent – from the 1960-70s.  In discussing anti-intellectual, it’s relevant also to discuss these.  Even as largely historical backdrops, they have varying influence on how we view intellectualisms.  Especially as a young male from a smallish, semi-rural background I can admit they been formative on views on academia.  

Our pre-occupation with rugby, the outdoors and being rugged is not a curse.  It’s a historical reality.  Being pragmatic, tough and gruff is not a weakness.  However, I think it’s a relevant considerations and maybe a part explanation of the Wikipedia entry Max talks about.  As Max optimistically suggests, New Zealand does have plenty of academics that we can be, and I think are proud of.  Shit some are even former All Blacks.......

 

Alaister J Moghan