ReDigi bills itself as "The World's First Online Marketplace For Used Digital Music," but the RIAA is not impressed. Categorically rejecting the "first sale" doctrine as a safe harbor, the Recording Industry Association of America has sent the ReDigi digital music resale site a letter (PDF, hat tip: Cnet) that effectively demands that the company abandon its business and open its sales records to RIAA's lawyers. Cease and desist your "infringing activities," the missive warns. But that's the least of it.

ReDigi must "quarantine any copies on its servers of our Member's sound recordings so that those recordings are not exploited in any manner," the RIAA's Jennifer L. Pariser insists. On top of that, ReDigi must erase from its website "all references to the names and likenessess of artists signed to RIAA members" and break any ongoing connections between the operation's current downloaders and its servers.

Next, RIAA wants ReDigi to fork over "an accounting of all sales achieved and revenue generated" from RIAA member sound recordings through the ReDigi service, "so that we can discuss a resolution of our Members' claims."

"In this record, I note that the statutory damages for willful copyright infringement can be as high as $150,000 per work infringed," Pariser adds.

Finally comes this kicker: "After our Members' claims are resolved, we expect that you will destroy the quarantined sound recordings."

At a fraction of the price

What does ReDigi do to merit this little love note? The company's full beta release came on October 11, allowing users to sell "legally acquired digital music files" and buy them from others "at a fraction of the price currently available on iTunes."

ReDigi says that it does this via its "forensic Verification Engine," which the service says analyzes each upload to make sure it is a legally acquired track—songs ripped from CDs are excluded. Once a tune is classified as legit, it is deleted from the uploader's computer or synced devices.

"It is a bit like CSI: ReDigi," boasted ReDigi CTO Larry Rudolph in the company's press release. "In addition to the obvious, there are many subtle clues that determine resale eligibility of each track. We are extremely cautious and our technology is incredibly thorough in determining the eligibility of a music file."

In addition, ReDigi says that the software's "genius" can be found in "its ability to facilitate the transfer of a digital music file from one user to another without copying or file sharing."

But the RIAA insists that that is not the case:

As we understand it, ReDigi's proprietary software allows a user to select a sound recording he or she possesses and to designate that recording for "sale." The software then duplicates the user's copy of the track, places a watermark on that copy, stores it on ReDigi's servers and purportedly deletes the original file from the user's hard drive or mobile device. Then ReDigi offers for sale the copy it has made to other users of its service.

This claim is the core of RIAA's attack on ReDigi. With it, the trade association insists that the first sale doctrine's right to resell provision is irrelevant. It's worth pulling out the full relevant section of the Copyright Act, Section 109(a).

(a) 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.

Section 109(a) refers to "the owner of a particular copy," not the "copy of an owner's particular copy."

As RIAA puts it: "That provision... does not permit the owner to make another copy, sell the second copy and destroy the original. Thus, even if ReDigi's software and system works as described by ReDigi (i.e. that it deletes the original copy before it makes the sale), ReDigi would still be liable for copyright infringement."

Fairly solid ground?

Does RIAA have a case here? About a week after ReDigi released its beta service, the company tweeted with enthusiasm a review of its service by intellectual property attorney Rick Sanders. The discussion in Sanders' post focused mostly on the first sale prospects for ReDigi in light of Ninth Circuit Court of Appeals' Vernor decision. In that case involving AutoCad software, the Ninth put a damper on first sale privileges when the copyright holder agreement says the buyer has been granted a license and restricts the user's right to transfer the software.

Sanders perused the Apple iTune Store's, noted the absence of the term "licensing" in the End User License Agreement (EULA), and tentatively pronounced ReDigi on "fairly solid legal ground."

But a reader quickly piped in with this concern. "What about the fact that ReDigi must create a new copy of the file to sell it to a new person?" he asked. "Even if it deletes it from the seller's computer, it still needs a license to reproduce it for the buyer."

Good point, Sanders replied. "No matter how ReDigi does it, it has to make a couple of copies (or have its customers do so): once to its server and once again to the buyer. The fact that the 'old' copy is deleted simultaneously as the 'new' copy doesn't make it any less of an infringement, at least technically. I have to think that ReDigi is counting on a fair use argument."

We contacted ReDigi to learn first hand what kind of arguments it is counting on. The company's response statement summarizes how its Verification engine works. "ReDigi is a strong ally to RIAA and copyright holder, anti-piracy initiatives by providing an elective tool for people to remove previously pirated music from their devices, thereby helping significantly reduce the number of pirated tracks in the music ecosphere," the firm notes.

But, ReDigi "does not currently intend to make further comments to the press regarding the RIAA position pending resolution of the issues posed by the RIAA letter."

As for the RIAA, the group even takes exception to ReDigi's sound sample service, which allows buyers to sample a tune for 30 seconds over the ReDigi website. "ReDigi does not have a license from any of our Members to stream over the Internet." Thus does the content rightsholder group demand that ReDigi effectively suspend its operations and quarantine its music files.

"However, you should not destroy those sound recordings until there is a final resolution as that data will be relevant evidence in the event litigation becomes necessary," Pariser's letter concludes.