Bloomberg News

Vivendi Label Asks Judge to Close Music Service ReDigi

October 05, 2012

Vivendi SA (VIV)’s Capitol Records told a federal judge that a new online music service that allows people to buy and sell used digital songs should be shut down.

The music label argued today in Manhattan federal court that the service, ReDigi Inc., infringed Capitol’s copyrights by allowing unauthorized copying of digital music files.

“You are selling and distributing that recording,” Richard Mandel, a lawyer for Capitol, said of ReDigi to the judge, “In order to do that, you have to make a copy and that is a violation of the reproduction right of the Copyright Act.” Mandel requested a judgment without a trial.

U.S. District Judge Richard Sullivan said he would rule later on legal motions from Capitol and ReDigi, which asked him to dismiss the case. Sullivan denied Capitol an injunction in February that would have put ReDigi out of business.

“I know this is an important issue,” Sullivan said. “We’re not making policy. Ultimately, what this is about is interpreting and applying an existing statute.”

ReDigi, based in Cambridge, Massachusetts, said it makes no unauthorized copies of songs. In court filings, it said it provides digital music storage and a marketplace for tracks legitimately bought from Apple Inc.’s iTunes.

‘No Copy’

“There is no copy involved,” ReDigi’s lawyer, Gary Adelman, told Sullivan. “The actual file is being transported. That’s how the technology works.”

Mandel argued that songs at issue are not original tracks acquired on iTunes but digital copies of them. Adelman said that instead of being copied, songs “migrate” from users’ computer hard drives to ReDigi’s server.

Sullivan said the argument reminded him of the television show “Star Trek,” noting a distinction between a character’s being transported and being cloned.

Capitol said in its suit, filed in January, that ReDigi allows users to upload tracks to its site, where buyers can download them for about 79 cents each.

ITunes charges 99 cents for many tracks, and the music companies take about 70 cents from each transaction.

The labels receive no revenue from a ReDigi sale. ReDigi takes a fee of 5 percent to 15 percent of each download, according to the complaint.

First-Sale

ReDigi said in court papers that it is protected from liability by the first-sale doctrine, which allows an individual who has lawfully purchased music to sell it to whomever he wishes without being liable for copyright infringement.

Mandel argued that the first-sale doctrine doesn’t apply “if the work distributed is not the one you started with.”

Capitol is seeking statutory damages of as much as $150,000 for each track said to be infringed.

The recordings sold by ReDigi include Coldplay’s “Clocks,” Lady Antebellum’s “Need You Now” and Nat King Cole’s “The Christmas Song,” according to the complaint.

Vivendi is the owner of Universal Music Group, the world’s largest recording company. The Paris-based company last month received regulatory approval in the U.S. and Europe to buy Capitol’s parent, EMI Recorded Music.

Vivendi acquired London-based EMI from Citigroup Inc. (C:US) for 1.2 billion pounds ($1.94 billion). Citigroup took control after EMI’s former owner, Terra Firma Capital Partners Ltd., defaulted on bank-issued debt.

The case is Capitol Records v. ReDigi, 1:12-cv-00095, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Don Jeffrey in New York at djeffrey1@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at ‘ mhytha @bloomberg.net


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