Copyright

On December 12, 2018, the Second Circuit Court of Appeals rejected all of the arguments put forth by "digital reseller" ReDigi.[ref]Capitol Records LLC et al v. ReDigi 2018 WL 6518076 2^nd Circuit Court of Appeals 2018. All citations are to the original pagination.[/ref] The Court ruled ReDigi's business violated both the right of reproduction of the copyright owners and was not "transformative" or fair use. It is the second part of the ruling which seems rather significant. The author of the opinion is Judge Pierre Leval, the original proponent of the "transformative use"[ref]Toward a Fair Use Standard[/ref] test and the author of some of the most extreme decisions in this regard.[ref]Marching Bravely Into the Quagmire: The Complete Mess that the "Transformative" Test Has Made of Fair Use, Three More Reasons Why the Supreme Court Needs to Clean Up the Mess of Transformative Use[/ref] The facts of the case are straight forward. ReDigi claims to be in the business of "reselling" digital music files. To accomplish this:

• Install ReDigi's "Music Manager" software
• Music Manager then analyzes the digital file intended for resale, verifies that the file was originally lawfully purchased from iTunes. If the file was lawfully purchased, Music Manager deems it an "Eligible File" that may be resold.
• Copy file to ReDigi's "Cloud Locker"
• Music Manager deletes the file on the original computer
• The uploader can continue to stream the file until resold
• When resold, the new owner can either stream the file from ReDigi's server or download it [ref]ReDigi at 4-9[/ref]

ReDigi claims that this activity is protected by the "first sale" doctrine,[ref]17 USC 109[/ref] which provides in part: "Notwithstanding the provisions of section 106(3), the owner of a particular copy or phonorecord lawfully made under this title, or any person authorized by such owner, is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord."[ref]Id.[/ref] The obvious problem with ReDigi's position is that when you sell a "particular copy or phonorecord" you no longer have a copy. When you "sell" your digital music file to ReDigi, you still have a copy. This is because the ReDigi software only deletes the file from your iTunes library on your computer. It does not delete the file from your iPod or iPhone. As the Court states: "Plaintiffs point out, and ReDigi does not dispute, that these precautions do not prevent the retention of duplicates after resale through ReDigi. Suspension of the original purchaser's ReDigi account does not negate the fact that the original purchaser has both sold and retained the digital music file after she sold it. So long as the user retains previously-made duplicates on devices not linked to the computer that hosts Music Manager, Music Manager will not detect them. This means that a user could, prior to resale through ReDigi, store a duplicate on a compact disc, thumb drive, or third-party cloud service unconnected to the computer that hosts Music Manager and access that duplicate post-resale. While ReDigi's suspension of the original purchaser's ReDigi account may be a disincentive to the retention of sold files, it does not prevent the user from retaining sold files."[ref]ReDigi at 9[/ref] Further: "Defendants do not dispute that, under Apple iCloud's present arrangements, a user could sell her digital music files on ReDigi, delete Music Manager, and then redownload the same files to her computer for free from the Apple iCloud. Apple's iCloud service allows one who has purchased a file from iTunes to re-download it without making a new purchase."[ref]Id. at footnote 6[/ref] And as someone who has used iTunes for quite some time, I can also tell you that if you connect your iPhone to the computer and iTunes detects there are songs present on the device that are not present in the iTunes library, it will ask you whether you want to add those songs to the library. And "poof," back comes the copy you just "sold." And as someone who has a brother with a Bachelor's degree is computer programming, I can tell you that "deleting" a file from your computer does NOT get rid of it. All the "delete" function does is removes the pointer that shows the computer where to find it. The file remains on your computer until it is written over with new data. So when ReDigi claims it is buying a "used" digital file under the first sale doctrine, what it is really doing is making a copy of a file on someone else's computer for resale. This, as both the District Court and the Court of Appeals held, violates the reproduction right of a copyright owner under Section 106(1) and the distribution right under 106(3). The Court holds: "The fixing of the digital file in ReDigi's server, as well as in the new purchaser's device, creates a new phonorecord, which is a reproduction. ReDigi version 1.0's process for enabling the resale of digital files thus inevitably involves the creation of new phonorecords by reproduction, even if the standalone digital file is deemed to be a phonorecord."[ref]Id. at 16[/ref] In an interesting sideline to all of this in the early days of MP3 files, the anti-copyright crowd claimed that MP3 files were not phonorecords because they were not "tangible objects" and thus copyright laws did not apply to them. Now we have ReDigi desperately trying to make MP3 files phonorecords in order to make the first sale doctrine apply to them. But back to our case. The fair use defense fairs no better. Despite the fact that all ReDigi does is make an exact copy of a digital file, ReDigi claims that this is somehow "transformative" and fair use. This argument goes down in flames. "ReDigi makes no change in the copyrighted work. It provides neither criticism, commentary, nor information about it. Nor does it deliver the content in more convenient and usable form to one who has acquired an entitlement to receive the content. What ReDigi does is essentially to provide a market for the resale of digital music files, which resales compete with sales of the same recorded music by the rights holder. These characteristics of ReDigi's use favor Plaintiffs under Factor One."[ref]Id. at 27[/ref] And: "As noted in Campbell, the less a use provides transformative value, the more its commercialism will weigh against a finding of fair use. [Citation omitted] Here, ReDigi hosts a remunerative marketplace that enables resale by purchasers of digital music files, which is a commercial purpose. Especially in view of the total absence (or at least very low degree) of transformative purpose, the commercial motivation here argues against ReDigi with respect to Factor One."[ref]Id. at 28[/ref] But it is factor four, the market effect, that really sinks ReDigi's ship: "…ReDigi made reproductions of Plaintiffs' works for the purpose of resale in competition with the Plaintiffs' market for the sale of their sound recordings. ReDigi's replicas were sold to the same consumers whose objective in purchasing was to acquire Plaintiffs' music. It is also of possible relevance that there is a distinction between ReDigi's resales and resales of physical books and records. The digital files resold by ReDigi, although used, do not deteriorate the way printed books and physical records deteriorate. As the district court observed, the principal difference between the "product sold in ReDigi's secondary market" and that sold by Plaintiffs or their licensees in the primary market was its lower price."[ref]Id. at 30-31 emphasis added[/ref] The impact of the case as we move forward is questionable. As the consumption of music moves away from physical product and downloads to streaming, it seems that a business such as ReDigi does not seem as exciting a prospect. ReDigi is currently in bankruptcy proceedings.[ref]Id. at 11[/ref] For one, Apple itself has been dogged by rumors that it will terminate the iTunes store, rumors which Apple has consistently denied.[ref]Apple Denies Report It's Shutting Down iTunes Music Downloads in 2019[/ref] And to put a real stake through the heart of physical product, my car, for the first time in 20 years, does not have a CD player. But remember one thing. Streaming, while hugely popular remains highly unprofitable.[ref]Why Are Record Companies Dumping Their Spotify Stock?, More Money, No Profit: Is the "Free For All" Ethos of the Internet Killing Streaming?[/ref] The digital download, while down, must not be counted out.

An old legal argument, for many thought settled a long time ago, is starting to raise its head again in the Federal Courts. On November 16, 2018, in the case of Strike 3 Holdings LLC v. Doe,[ref]2018 WL 6027046; District Court for the District of Columbia 2018[/ref] a Federal Judge dismissed a Federal Copyright infringement lawsuit without any Motion to Dismiss being filed, based in large part because of the Court's own determination that the Plaintiff's films were "pornography" and not "even run-of the mill porn" plus finding the content contained an "aberrantly salacious nature."[ref]Id. at 3[/ref] Further in a footnote, the Court claims that "it is unsettled in many Circuits -including this one- whether pornography is in fact entitled to protection against copyright infringement."[ref]Id. at footnote 5[/ref] This is not the only aspect of the D.C. District Court's ruling that should raise some eyebrows. First off, the Court's ruling is not based on a Motion to Dismiss but on an ex parte application by the Plaintiff for the issuance of a 3^rd party subpoena so that the Doe defendant could be served. The Defendant, having never been served, seemingly did not appear and made no arguments. The Court itself, sua sponte raised the issue of obscenity, and apparently conducted its own ex parte investigation to view the films at issue in the case. I say "apparently" since if the Judge did not know the content of the films, how could he make the determination that the films' content was "aberrantly salacious."[ref]2018 WL 6027046 at 3[/ref]  One could also question the breadth and extent of the Judge's knowledge into the current state of pornography available on the internet. I mean, how often does the Judge view pornography? What sort of porn sites does he visit? How often does he visit them? How else would he know that the "porn" in questions was not "even run of the mill porn?"[ref]Id.at 3[/ref] But, I digress. The above, along with a long diatribe against the Plaintiff as "copyright troll" leads to the refusal to issue the subpoena. Since it was now impossible for the Plaintiff to serve the subpoena and gain knowledge of the Defendant's identity, the Defendant cannot be served, and the case cannot proceed. Since this stops the case dead in its tracks, the Judge dismisses the entire proceeding, again sua sponte, but without prejudice.[ref]Id. at 4[/ref] This has the effect of allowing Plaintiff to refile the case (a likely futile exercise), but probably also renders this order not a "final" order that can be appealed. But is the Judge right? Is pornography not protected by copyright? The manifest weight of the existing case law says the contrary, the copyright laws do protect pornography. At the outset, it is worth noting that this Judge, as many others conflate the terms "pornography" with "obscenity," which do not necessarily mean the same thing. "Pornography is the depiction of sexual behavior that is intended to arouse sexual excitement in its audience…Pornography has been regulated by the legal standards that govern the concept of Obscenity, which refers to things society may consider disgusting, foul, or immoral, and may include material that is blasphemous. Pornography is limited to depictions of sexual behavior and may not be obscene."[ref]Pornography - The Free Dictionary[/ref] "Obscenity is a category of speech unprotected by the First Amendment. Obscenity laws are concerned with prohibiting lewd, filthy, or disgusting words or pictures. Indecent materials or depictions, normally speech or artistic expressions, may be restricted in terms of time, place, and manner, but are still protected by the First Amendment."[ref]Obscenity - Legal Information Institute[/ref] The first, and most widely cited case on the subject is Mitchell Brothers Film Group v. Cinema Adult Theater.[ref]604 F.2d 852 5th Circuit Court of Appeals 1979[/ref] At issue was that the Defendants were exhibiting at their theaters pirated copies of the Plaintiff's film Behind the Green Door. The Defendants claimed that the films were obscene and not protected by copyright. The judge viewed the movie, pronounced it obscene and issued a verdict for the Defendants.[ref]Id. at 854[/ref] Not surprising. This is Texas… in 1979, after all. The Fifth Circuit Court of Appeals reversed. In a very thorough and well-reasoned opinion, found that there was nothing in the Copyright Act to suggest that copyright protection was dependent upon the content of the writing rather than whether it qualified as a writing.[ref]Id. at 858-859[/ref] But the more important reasoning was this: Copyright is a Federal right. Obscenity is governed by community standards under the Supreme Court's ruling in Miller v. California.[ref]413 U.S. 15 (1973)[/ref] To rule that obscenity trumped copyright would "fragment the uniform national standards of the copyright system and venturing into the uncharted waters of a national obscenity standard."[ref]604 F.2d 852 at 858[/ref] Four years later, this was followed by the 9^th Circuit's opinion in Jartech, Inc. v. Clancy.[ref]666 F.2d 403 Ninth Circuit Court of Appeals 1982[/ref] Interestingly enough, the Plaintiff corporations were basically the same Plaintiffs as before: the Mitchell Brothers. The 9^th Circuit reached back to their decision in Belcher v. Tarbox[ref]486 F.2d 1087 Ninth Circuit Court of Appeals 1973[/ref] for the holding that "There is nothing in the Copyright Act to suggest that the courts are to pass upon the truth or falsity, the soundness or unsoundness of the views embodied in the copyright work."[ref]Id. at 1088[/ref] It also adopted the view of the Fifth Circuit that: "Acceptance of an obscenity defense would fragment copyright enforcement, protecting registered materials in a certain community while in effect, authorizing pirating in another locale."[ref]666 F.2d at 406[/ref] Even further down the line, as recently as 2012, the Seventh Circuit Court of Appeals ruled: "[Plainitff] specializes in the production and distribution of videos of black men engaged in homosexual acts. Although some people would disapprove of such a service there is no suggestion that it is illegal; and anyway the prevailing view is that even illegality is not a bar to copyrightability."[ref]Flava Works, Inc. v. Gunther 689 F.3d 754 Seventh Circuit Court of Appeals 2012[/ref] In light of the opinion of three different Courts of Appeal that pornography is entitled to copyright protection, what are we to make of the opinion of the Judge in the District of Columbia? Of course this Judge is not bound by these other opinions. But what of his assertion that "it is unsettled in many Circuits -including this one- whether pornography is in fact entitled to protection against copyright infringement."[ref]Id. at footnote 5[/ref] The first case the Judge cites is Liberty Media Holdings v. Swarm Sharing Hash File.[ref]821 F.Supp. 444 District Court  for the District of Massachusetts 2011[/ref] The Court here does discuss this issue, citing to the above cases of Mitchell Brothers and Jartech, but all of this is contained in a footnote, and is pure dicta. Even the Court states "[t]his issue, however is not presently before the Court and the Court expresses no opinion on it here."[ref]Id. at 447 footnote 2[/ref] Next up is the case of Next Phase Distribution, Inc. v. Doe.[ref]284 F.R.D. 165 District Court for the Southern District of New York 2012[/ref] It mostly cites back to Liberty Media, which, as we have already seen, does not really stand for the proposition it is cited for, and in fact reaches no conclusion on the issue. So does this case, stating: "Although the Court recognizes that the law is unsettled regarding whether pornography may legitimately be copyrighted…the fact that Next Phase is the registered copyright owner…satisfies the requirement of a prima facie showing of copyright infringement."[ref]Id. at 171 footnote 3[/ref] Also frequently cited is the case of Devils Film, Inc. v. Nectar Video.[ref]29 F. Supp.2d 174[/ref] Here, the Court, in declining the Plaintiffs request for seizure of the Defendant's infringing copies of such titles as "Straight Anal" "Lesbian" and "Transsexual," the Court, on its own volition, and viewing three out of the 200 total titles, declares them all to be obscene.[ref]Id. at 175[/ref] Yet the Court states this: "Since this is only an application for preliminary relief, the Court need not decide if obscenity is a defense to a claim of copyright infringement."[ref]Id. at 176[/ref] So what we have here is a bit of circuitous reasoning, in which three cases cite to each other for a proposition that is never actually ruled upon. This is sort of like media reports that a topic in the news is "controversial" merely because lots of people are talking about it. Indeed, the ruling of the DC District Court gives off the feeling of a cranky "get off my lawn" diatribe by a 75 year old Judge.[ref]Lamberth, Royce C. - Federal Judicial Center[/ref] His opinion that a normal BitTorrent Plaintiff would be entitled to the requested 3^rd party subpoena but one who trafficked in pornography was not,[ref]2018 WL 6027046 at 3[/ref] is a rather curious interpretation of the constitutional guarantee of equal protection under the law.