Jonathan Band Explains All Things ReDigi

Jonathan Band is an intellectual property law attorney for the Library Copyright Alliance.  His website is www.policybandwidth.com.

Copyright chat is a pod cast dedicated to discussing important copyright matters. Host Sara Benson, the copyright librarian from the University of Illinois, converses with experts from across the globe to engage the public with rights issues relevant their daily lives.

Benson: So welcome to an episode of copyright chat. Today I have Jonathan Band with me from Policy Bandwidth. Welcome Jonathan, thanks for being here.

Band: Thanks for having me.

Benson: I really was intrigued by your recent discussion of the ReDigi case and this is a case that’s been going on for quite some time. I wonder if you can tell me just a little history of the case to begin with.

Band: Sure so the case. Started. Probably you know 7 or 8 years ago. The company ReDigi developed the technology that would allow people who owned iTunes files to sell them. And the thinking in those days was that you’d have users build up over time, huge files of iTunes, you know huge libraries of iTunes files rather, and that as their tastes change they might want to get rid of those files and buy new ones. So just like you could dispose of your used record collection or your used book collection, the thinking was you should be able to dispose of your used audio iTunes files collection. And so the technology worked that you would basically transmit a file from your computer to the ReDigi computer and then the ReDigi computer would transmit the file to a purchaser. And, so, ReDigi developed this technology. They were sued for copyright infringement. ReDigi said, “Oh, but we have the first sale doctrine.” And the first sale doctrine allows us to basically sell a copy. If we own a copy we’re able to sell that copy to someone else. The record labels that sued ReDigi said, “Yes that’s true you can sell that copy, but you’re not selling copy. You’re in essence making a new copy on the ReDigi server and then you’re making another copy when that when it’s transmitted to the purchaser.” And so the first sale doctrine isn’t an exception to the distribution right, it allows you to sell a copy–a specific copy that you own without infringing the distribution rights, but it doesn’t allow you to make new copies. Much of the case sort of centered on the nature of the ReDigi technology and how it worked. And ReDigi technology (or the way they said it worked) is that it didn’t sort of transmit an entire file to ReDigi and then delete it from the first computer. So that you sort of had sort of at least at some point maybe two copies one on the seller’s side and one on the ReDigi’s side and then when ReDigi sold that, sold the file to a purchaser you then again have two copies at any point in time. Instead, ReDigi used this packet technology and sort of broke the file into many, many little pieces and sort of transmitted piece by piece, the file from the seller’s computer to the ReDigi computer. And as soon as one little piece went over to the new computer to the to the ReDigi computer, it was deleted from the seller’s computer and such that ReDigi was arguing that it wasn’t making a new copy, but it was actually moving the original copy. And then that was their argument. And so that because they are not making new copies but simply moving the existing copy that was not a reproduction, but it was a distribution, and but it was a distribution protected under the first sale doctrine. The District Court in 2013 said, “Very interesting, but I don’t agree.” It basically said wait this argument doesn’t make any sense to us—you’re making a new copy! There’s a new copy being made on the ReDigi computer and then when ReDigi sort of forwards the copy to the buyer, another copy is being made. And so the first sale doctrine doesn’t apply. Again, first sale doctrine is an exception to the distribution right, not the reproduction right, but you’re making reproductions. ReDigi also raised the fair use arguments and said, “To the extent we are making a reproduction, that’s a reproduction that’s permitted under the first—under fair use.” And in sort of like a paragraph the district court just dismissed that argument. And so that was where the case was in 2013 the district court found that ReDigi had infringed, it rejected ReDigi’s first sale argument and it rejected ReDigi’s fair use argument.

Benson: And can I interject here for a second?

Band: Sure:

Benson: Because I guess, I wonder—the court and on appeal and I know you’re about to get there—notes that quote, “Other technology may exist or be developed that could lawfully effectuate a digital first sale.” And I always thought that part of the argument that we have for first sale is that things are going to deteriorate over time, you know this particular book isn’t going to be as good in 20 years as it is now, so that’s why you sell it once and then people can resell it but a digital object, potentially, if you have the right technology, could live on forever in as good of condition in, you know, good-as-new condition. Isn’t that one of the justifications for the first right—for sale right to begin with? So where does this digital right belong?

Band: Well that’s a good question. It’s certainly in various discussions of the first sale doctrine. That is an argument that has been made as to well, you know, when it’s not, you know, that there is some deterioration and so selling the used copy does not interfere with the market for the new copy and in theory that’s true but of course the first sale doctrine is not restricted to heavily used goods. Meaning, it applies to a copy—it can apply to a copy that you bought 5 minutes ago. And you’re able to sell it and it could be in—that copy could be as pristine as a copy that’s still in the bookstore right? It doesn’t… that isn’t justification that it’s been used, but it’s certainly the first sale doctrine isn’t restricted to sort of used books or used products and so, the 1st sale doctrine is the basis of the entire distribution chain. Meaning, it allows, you know, a manufacturer sells to the to the wholesaler—the wholesaler turns, sells to the retailer—the retailer sells to the consumer—the consumer conceivably, you know, can go to Costco and buy in bulk and then sell somewhere else, right? I mean all of that is permitted under the first sale doctrine and it doesn’t matter, it doesn’t need to be used and so, even though you’re sort of giving a policy justification, the nature of the right isn’t that limited.

Benson: I agree also. Technology does deteriorate as we all know especially those of us and in preservation and digital preservation not to mention the fact that technology changes but I guess to the key of this first sale issue is it—is the fact of the matter here that they just didn’t do this right? That that they just, that a technology just wasn’t hacking it for first sale purposes?

Band: Well I guess there is a question as to whether, I mean, the court is speculating that someday some technology may exist and this actually came up in the oral argument and to some extent in not only the oral argument, but you know a lot of, you know, the analysis of the case and the oral argument was actually very interesting the oral argument for the second circuit it lasted for two hours the judges were very—and usually they were asked for half an hour OK, but they just let the argument go on and on, asked lots of questions, they were intrigued by this notion that it really wasn’t a copy being made, right, but there was it was just a transfer. And this sort of gets into a—it’s almost a philosophical thing as to when is, you know, when is something the copying, when there’s something just the same thing just moved to a different place and so you know the obvious analogy is Star Trek, right? So when Captain Kirk is beamed up to the enterprise, is it the same Captain Kirk, or is it a copy of Captain Kirk, right? I mean certainly under that technology the assumption is as well no it’s actually, it’s Captain Kirk. So when, you know, he’s beamed down to the surface of a planet, I mean, his body leaves the enterprise and then it’s down on the surface of the planet and when he beams back up, it’s not a copy of Captain Kirk—it is Captain Kirk. And I think to some extent that the court was sort of alluding to that. While the technology may exist at some point of the future where you really are sending. It’s not a copy being made, but it is the original file, but I don’t know if any technology such as that will ever exist at any point. But to some extent, I think the court may be may have been a little tongue in cheek when they were talking about “Oh, a technology may exist. Star Trek, you know, may come to pass.”

Benson: Where they actually bring up examples like, of that type, during the oral argument? I didn’t get a chance to listen to that.

Band: The oral argument was so long ago, I mean it was it was over a year ago, it was last summer—the summer of 2017. And so I admit, I forget whether Star Trek actually came up during the oral argument or in all of the discussion that took place around the oral argument. I forget, but certainly it’s been written about so I wouldn’t be surprised if the clerks, if the Judge’s clerks weren’t aware of this analogy to Star Trek.

Benson: And so all of this sounds very sci-fi at this point and I’m sure the listeners are wondering, “What does this have to do with libraries?” Right? And this is where the controlled digital lending comes in and my understanding of the proposal of controlled digital lending, which was put out by Duke Library and others, is that there was an idea of, “OK we have a book, we are going to create one scan of that book, and we will lend out the scan of that book.” Digital lending—only one copy. So we’re not lending, you know, ten copies of this book. We’re lending out just one copy as we would lend out a physical book, and the justification for that was two-fold: one, under the first sale doctrine, and secondly, under fair use. Does this case put the kibosh on that first sale argument?

Band: Well it might put the kibosh on the 1st sale argument, but I don’t think this control digital lending ever really focused so much on the first sale argument, because the first sale argument was kind of abstract. And I think you’re right, it does get very sci-fi-ish and sort of metaphysical, “Is it a new copy?” “Is it the same copy?” And that’s why I certainly always view this is a fair use case, right? Where it’s like, yeah a copy is being made, you know, we’re not arguing that it’s the same copy, we’re saying, “Yeah, OK, of course a copy is being made in the in the ReDigi computer and then another copy is being made when it’s sent to the transmitted to the end user,” but that copy is OK under the under the fair use doctrine, and I think control digital lending really was focusing on fair use and certainly the Library Copyright Alliance, which I represent, you know, we filed an amicus brief in the Second Circuit saying, “Look, this is really, you know, all the fair use—all the first sale arguments are very interesting, but this is really a fair use case. And we made an argument that it should be permissible under fair use. Now the second circuit, you know, one of the arguments made in our brief was that the district court sort of dismissed the first sale—the fair use argument in a paragraph—a minute, basically, “Fair use doesn’t apply, this is a commercial use, that’s the end of it.” You know, we said, “No, no this is actually a much more complicated issue and it’s worthy of more discussion.” And the Second Circuit did discuss it in much more detail. Now, with respect to CDL (Controlled Digital Lending—with the CDL or the white paper supporting CDL makes a fair use argument, but it relies on a very specific fair use argument (and this is the same fair use argument that we made in our amicus brief) and that specific for use argument is that under the first factor (the first fair use factor which looks at the purpose and character of the use) that courts in the past have and now in the future explicitly should look at other exceptions in the Copyright Act and say OK this use is similar to a use permitted by this specific exception. For whatever reason that specific exception doesn’t apply, but the purpose underlying that exception is the same as sort of the purpose underlying, this use and that that should at least inform the existence of the specific exception that the purpose under with respect to that exception, should inform the first factor analysis—the first fair use analysis—and so in this situation, you have the first sale doctrine. Again, it doesn’t apply, because we’re, you know, we’re making new copies, right? But, because we’re destroying—ReDigi’s technology has sort of destroyed the copy, deleted the copy on the user’s end, the seller’s end, as soon as he transmitted the copy, to ReDigi, it deleted the copy of the file on its computer and its server when it forwarded the file to the purchaser. So, basically, you know, you started with one copy of the file, you end with one copy of the file, and so it was functionally equivalent to the first sale doctrine. And so the argument was that we made in our amicus brief, and I think the same argument that CDL is, since it’s functionally equivalent, it’s the same thing as, whether it’s permitted under the 1st sale doctrine, you know the fair use doctrine should allow you to get there or at least it should be, the analysis should—when you look at the first factor you should consider the fact that there is this other exception out there where Congress has determined or (courts previously have determined) that this is a permissible purpose. And that should influence the first factor analysis. So CDL, relies on the white paper. That’s been written by Dave Hansen and Kyle Courtney—relies very heavily on that argument. Again, you know, I think it’s a great argument, not only is it in the LCA amicus brief, it was actually… I wrote it and I developed it in a law review article about 6 or 7 years ago, so you know I think it’s a great argument. The only problem is that Judge Leval out in the Second Circuit’s decision—he completely ignored that argument. He made no reference to it whatsoever, you know, so even though our amicus brief talked about that, the specific fair use argument, and even though the Association of American Publishers (AAP), they filed an amicus brief that specifically attacked this theory, right? So there was a lot of discussion of this theory—Judge Leval completely ignored it. Not even a reference in a footnote. So, that means, I don’t know. What does that mean? I mean, you have to sort of say you know CDL is premised on this specific fair use argument. Now we know, it was somewhat disrespected at least or disrespected by omission by the Circuit Court. You know maybe now we at least need to go back to see whether—is CDL permissible under sort of a more traditional fair use analysis, or you know, the fair use analysis that Judge Leval articulated in the ReDigi case, because he did devote a fair amount of attention to fair use and he kind of walked through the four factors and so, you know, it seems to me that given his ignoring this specific fair use argument that at the very least you need to sort of say that, “Ok, well let’s assume—let’s pretend that that argument doesn’t exist. Can we still justify, CDL under the more traditional analysis or do we need to adjust our thinking a little bit to fit into fair use under this kind of this more traditional analysis.”

Benson: I agree with that, but I also think it’s important for folks to note that Judge Leval was the judge who first iterated the transformative tasks, so he is definitely a judge who knows about fair use, and so an opinion from him about fair use is pretty persuasive. So that’s one thing to note and two, I draw the attention to footnote 16 in the opinion on the on the appeal. Judge Leval says to the extent a reproduction was made solely for cloud storage of the user’s music on ReDigi’s server and not to facilitate resale, the reproduction would likely be a fair use, just as the copying it issue in Sony was fair use. Is that now a viable option for CDL, saying, for instance, that a library patron now is just facilitating their own storage of the book that they were going to check out and since this is more akin to Sony than ReDigi and its for educational and nonprofit purposes, would that justify CDL lending?

 

Band: Well that’s an interesting idea. I haven’t actually thought of it in that context, I mean, because I certainly in this cloud storage situation you sort of like—it’s the user, you know, the user has a copy in one place and he is sort of space—you know, the user is the one initiating it and shifting it and doing the space shift thing, right? Here, in the library context, you sort of like have this library service that is doing the space-shift thing and it’s the library’s copy that is being moved, whereas I think in the cloud storage situation it’s more it’s the user’s copy that is being moved from point A to point B. In CDL, it’s the library’s copy that is being moved from the library’s server to the user’s computer and then, you know, sort of back again. So I’m not sure that—that footnote is certainly very important for other things, I’m not one hundred percent sure that it is relevant to CDL.

Benson: I wonder though, in this scenario, if we can view the library as more of an agent of the patron. And I’ll kind of walk you through the argument, at least the way I view it, public libraries are funded for the public, they serve no other purpose but to make books available to the public, so in some regards, the books are not really owned by the library they’re owned by the public, and so when the librarian makes that copy and puts it on to the server they’re actually doing so only at the request of the patron and so it really is the patron’s copy under that analysis. You think that’s too much of a stretch!

Band: Um, yeah, I think that would be a little abstract.

Benson: That’s the way I view libraries!

Band: No, no, I agree with that, but I think they’ll still see that that it is, that this specific copy is owned by the library, it is not owned by the general public, and therefore, you know… I hear you, and, look, you might be able to persuade a judge at some point that that’s, you know, that that works. I think the thing to recognize though is that Judge Leval did in his transformative use discussion, he’s sort of—he’s developing a theory that might ultimately be more useful here in the CDL context, and we have to see how it plays out. So he talks a lot about Betamax. So the Betamax—and you mention that it’s sort of a universal case, it’s this, you know, it’s a case where, you know, the 1984 decision where the Betamax Video cassette recorders were unlawful because it enabled this time-shifting—that a user could record a T.V. show, you know, if it aired at 9 o’clock over the air broadcast, you could tape it and watch it at 11 o’clock, right? And that private copying was, you know, seen as a fair use and because it was fair use then the Betamax recorder was not contributorily infringing. Now I’ve always viewed that case as sort of the quintessential non-transformative use case, right? It’s a private copy. I mean you’re making a copy of the whole thing, and you’re doing it for the same per year. You’re not taping it to show in a class, right? I mean, you’re not repurposing it, or re-contextualizing and this is like—it was all about a user who otherwise would watch the broad broadcast at 9 o’clock, now he’s just going to watch it at 11 o’clock. And so how does that, how could that possibly be seen as transformative, right? I mean, there’s no repurposing, no re-contextualization, no using for a different purpose. It is, you know, for whatever purpose he may have watched it at 9 o’clock, he’s going to watch it for the same purpose at 11 o’clock and there’s no difference. So I always, and again I think everyone, or the standard interpretation is that this was to the extent that Laval indicated came up with this transformative use theory and courts had adopted it—Sony has always seemed as like the “big exception,” that the transformative use was that not all use is needed to be transformative. See Sony, right under the Sony case. It wasn’t a transformative use, and so therefore, there are uses that are not transformative that can still be fair under the first factor. Now, in the last year that was the Second Circuit decision in the TVEyes case where they came up with what I thought at the time was kind of this crazy theory they said, “Well, you know, Betamax, you know, that’s how most people refer to the Sony versus universal of the Betamax and this is a better mix decision really is a transformative use case because they found a way to increase the efficiency of access to the work, without harming the rights holder. And so therefore it’s transformative. And I thought at the time, well that’s kind of crazy. But then along comes Judge Leval. Now and he sort of repeats it and he says, “Yeah, OK, I agree.” And so what was before sort of an outlying, oddball decision, well now the Judge Leval. As you said, you know, he’s Mr. transformative use. He’s now saying, “Yeah this is right, that if you make a use that enhances the efficiency of access while not harming the rights holder, then that could be transformative.” Now, I still think that’s kind of a strange theory, but you know, who am I? I’m not Judge Leval. I’m just a copyright pundit, but he’s an article three judge one the second circuit, so I guess it is transformative. So conceivably, if you’re able to sort of fit CDL into that rubric, maybe it qualifies as transformative as in in Judge Leval’s view. Now, you can see why in the ReDigi case it wasn’t transformative, mainly because it increased efficiency, certainly of access—or not or didn’t really increase in efficiency of access, right because, these were iTunes files, right and so you could always have just bought it from iTunes. So the fact that you’re getting it from ReDigi isn’t making it any more efficient than getting it from iTunes. And also it harmed the rights holders here, in the ReDigi case, because the sale was competing directly with the iTunes sale of the same file, which as you indicated, has not deteriorated, and because of that competition, it harmed the rights holder. So you could say, well maybe in the in the library context, if the book is only available in hard copy, but now is available digitally, maybe that is access enhancing. And if the book is of out of print, or somehow something, you know, where it doesn’t really harm the rights holder in any way. But all I’m saying is—one needs to, I mean, the point of my peace was, you need to come up with—CDL should make sure that it fits into this new box rather than this old box and maybe it does. I don’t know, but I at least one needs to do the analysis and think about it. The argument that was used previously—again, even though I think it’s the right are going to agree with it I created it I made it up even though even though I think it’s the right argument, I agree with it, I created it, I made it up—even though that argument I think is still right, at least until The Supreme Court or another circuit court agrees, you need, one would be well advised, to make sure you fit into, the other rubric and it could very well be you could do it but you would need to go through the process of applying this argument. You need to make it fall into this transformative use category at least as defined by Judge Leval.

Benson: Yeah, I think that argument that you raise is a really good one. Obviously you’ve thought it through. I wonder, now going forward do we still have this kind of two-pronged analysis of, you know, plain old fair use—the four factor test versus, you know, transformative fair use? You know, a slightly different cast, or are we now collapsing them into one thing?

Band: Well, I think it’s certainly…to the extent that—even Leval says you have to do all four factors, right? Even though the obviously gives more weight to transformative-ness than anything else, and he does say, “Well you need to look at the other factors and you need to weigh all the factors together to the extent that they serve the purpose of copyright and so forth.” But what I would say is that by suggesting that Betamax is a transformative use case then he is certainly putting a lot of weight on the notion that the use has to be transformative to meet that first fair use factor. Now, again, to some extent you can say, “Well is this throwing the dart on the wall, then drawing the circuit, the target around it, right?” I mean, if you’re going to say that Betamax is transformative—well boy, gee, you know—what isn’t, you know? You can start to sweep in all kinds of things into “transformative” in that vein. So I think that it’s this might be the way to look at this is that’s certainly transformative. Transformative use has been eating up the first factor or swallowing the first factor, and this this sort of like, completes the swallow. If it almost seems that the first factor has been completely subsumed by transformative use notion to the extent that even Betamax is seen as transformative.

Benson: Well then one last question for you, as I recently was talking to Laura Burtle about that Georgia State University case and E-Reserves—does this negatively impact (this focus on transformative use for factor one) negatively impact that case, because in that case it does seem like just pure copying, that kind of non-transformative use, or can we now make it—

Band: –Right, right, that’s the question is can you—how does it apply? How does this revised Betamax interpretation apply? And so is it efficiency enhancing? And I think to some extent one of the things the court did look at is—is a digital license available? And certainly if a digital license is not available, then I guess you can say, “Well it does enhance efficiency,” whereas if a digital license is available, they will really use doesn’t really enhance efficiency of access and then the other part is the harm to the to the rights holder and I think that would sort of the depend on the work. And again, you know, whether a license is available or not. You definitely want to—If you’re in the Eleventh Circuit you’re going to definitely want to fit yourself into both whatever the Eleventh Circuit said, as well as what Judge Leval said, and you might be able to. I mean, it’s entirely possible that you know there would be a set of works where you’d be able to make it work comfortably, but remember in the in the Georgia State case, the Eleventh Circuit said that educational purpose is a purpose that is given weight under the first factor even if it—you know—whether or not it’s transformative and the end of… It certainly seems that the Eleventh Circuit has a narrower definition of transformative, arguably, than the Second Circuit, I mean, but again, the way Leval would look at it is, “Oh! If it’s an educational use, then it is almost inherently transformative.” Unless, you know, you’re dealing with a textbook, or unless, you know, you’re dealing with something that is specifically created for this market. And certainly textbooks are, but then you could even, to the extent with monographs, or you can say, “Well if the chapter from a monograph, is the monograph really created for, you know, undergraduate courses?” and using it in a different way and so forth. At some level, you know, you can—this might get into a bit of a semantic argument or, you know, like, “when is a wall a wall,” right?

Benson: Right. Well in the seventh circuit it seems like they don’t like transformative fair use at all.

Band: Right well, I guess, to some extent it’s also… One of the problems with this notion of transformative use is the word, right? The word, “transformative.” If you’re not transforming the work, then how could it be transformative, right? And so then Leval gets to say, “Oh, well it’s transformative if it has a transformative—that, you know, you’re not transforming the way the work looks, but you’re transforming the work’s purpose.” So it’s… So is there a better word to use than transform/transformative? And so that’s why I was trying to stay away from “transformative,” because people say, “Well, no, that’s not transformative, because, you know, the work looks the same, it’s not, you know or interesting one operator using it in a different way for different purposes or recontextualized.”

Benson: It does seem like the HathiTrust case fits more into the recontextualized scenario than a “transforming the work” as they are simply digitizing the entire work.

 

Band: Right, right. Except, except—

Benson: But I mean obviously not for the same purpose, not for the same thing.

Band: Well, yes, except, right, so, but remember HathiTrust—you have the main purpose of the HathiTrust, the main issue there was digitizing the works for the purposes of search, and so now you say, “Well, that’s clearly transformative, right, because you’re using—you’re recontextualizing it and repurposing it and you’re not serving up—you’re using it in a non-expressive way, you’re not displaying any of the text. But part of HathiTrust, remember, was providing full text access to people with Print Disabilities and that was seen as transformative and it was transformative to some extent, because it’s a different market, and again that seems to me to be sort of an interesting definition of transformative, or a broadening of the notion of transformative. But, you know, my recollection is that in HathiTrust they considered that to be a transformative use.

Benson: Oh yes, and I also think that strengthened the old argument about kind of reading it—reading the first factor along with other exceptions to copyright the CDL was trying to make, but unfortunately, as you noted, it didn’t get addressed in this ReDigi decision.

Band: Well, right, it could very well be, you know, that that that they intentionally—they saw that there was this dispute between the libraries and the publishers and Judge Leval said, “I’m not getting into that.” You know, that’s a story for a different day. I don’t need to get into that, I can decide this case on these grounds, and so, you know, you could always say, “Well ultimately this decision doesn’t tell you one thing, doesn’t tell you anything about CDL.” You know because it’s talking about something totally different, and you know, and it could be that if Judge Leval ever looks at CDL, at that point he might buy into the you know the argument, the sort of like this “first sale using fair use to create a for sale analogy.” For so analog. Maybe? With that case he’ll do it? But he just didn’t want to, you know, so you can certainly interpret it saying, “I just don’t want to touch it and so…” You can’t draw any inference from the fact that he ignored this argument.

Benson: That’s—that’s a possibility, but I like your other argument better.

Band: Yeah.

Benson: Well it’s been it’s been such a pleasure talking to you today! I love geeking out about copyright issues and I learned a lot, so I thank you for joining me today and Happy New Year.

Band: Thank you very much and Happy New Year to year too.

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