Capitol wins digital records lawsuit vs ReDigi start-up

Mon Apr 1, 2013 2:31pm EDT
 
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By Jonathan Stempel and Alistair Barr

(Reuters) - In a major lawsuit testing the legitimacy of music downloads, Capitol Records LLC has won a court ruling that the start-up ReDigi Inc has infringed its music copyrights.

U.S. District Judge Richard Sullivan in Manhattan said ReDigi was not authorized to allow listeners to use its platform to buy and sell "used" digital music tracks originally bought from Apple Inc's iTunes website.

The decision made public on Monday is a blow to early efforts to create online marketplaces for used digital goods, akin to how used books, for example, might be sold in stores.

It is also a victory for Capitol, a Vivendi SA unit that had sued ReDigi in January 2012 to protect its copyrights on works by artists like Beastie Boys, Coldplay, Norah Jones, Lady Antebellum and Katy Perry.

"This will profoundly affect the economics of any digital re-sale marketplace," by limiting what can be sold as "used" or forcing sellers to obtain copyright holders' approval before transacting business, said Bill Rosenblatt, president of consulting firm GiantSteps Media Technology Strategies.

According to Nielsen SoundScan, which tracks sales of recorded music, digital music sales accounted for 55.9 percent of U.S. music sales in 2012, after surpassing physical purchases for the first time in the prior year.

ReDigi did not immediately respond to a request for comment. Lawyers for both companies did not immediately respond to similar requests.

Sullivan said some open issues remain over Capitol's performance and display rights, as well as damages and injunctive relief that could result in ReDigi being shut down. He directed both companies to advise in writing by April 12 on the next steps in the case.   Continued...

 
The Capitol Records building is pictured in Hollywood, California in this file photo taken June 11, 2008. In a major lawsuit testing the legitimacy of music downloads, Capitol Records LLC has won a court ruling that the start-up ReDigi Inc has infringed its music copyrights. REUTERS/Fred Prouser/Files