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Digital Products May Not Be Re-Sold Online under “Right of First Sale” Doctrine

Just days after the Supreme Court’s decision allowing a purchaser of books abroad to re-sell them in bulk in the U.S., thereby exercising the purchaser’s “right of first sale” of a copyrighted work, which expressly provides such a sale is not a violation of the copyright law, on March 30, 2013, a New York federal judge has ruled that digital products may not be re-sold on the web under the same doctrine.  Specifically, the Court ruled that ReDigi, a web based platform allowing Internet users to upload and re-sell songs they had bought from online retailers like Apple’s iTunes,  had infringed the copyright of a record label, Capitol Records.  The decision is expected to impact the secondary market for sale of all digital products, not only music, but also e-books.  Amazon, among others, has filed for a patent for such a marketplace. However, the decision will impact anyone in the market for digital products, whether buyer or seller.

Even if you are not interested in re-selling digital products, if you purchase digital products, you will continue to deal with a market in which there is not much competition and prices will remain set by a relatively few big players such as Apple and Amazon.

A copy of the Court’s ruling can be found here.  For more information and how this decision may affect your business, please contact Internet Law Group Chair Jeanne Hamburg at jhamburg@nmmlaw.com.