• by Wendy Davis , Staff Writer @wendyndavis, April 1, 2013

Two weeks ago, the U.S. Supreme Court made clear that consumers have the right to resell the copyrighted merchandise they purchase.

But a federal judge in New York just ruled that the right to resell copyrighted products only applies to physical goods, and not digital media. In a ruling made public today, U.S. District Court Judge Richard Sullivan granted summary judgment to Capitol Records in its lawsuit against ReDigi, a company that offers a platform for users to resell MP3s purchased from iTunes.

ReDigi contends its technology enables consumers to resell digital tracks -- the same way they can resell CDs or vinyl records. The company bases its argument on the concept that consumers have a "first sale" right to resell products that they legally purchased. ReDigi said its platform scans users' hard drives for proof that the music was acquired legally and then  allows users to “transfer” their tracks while simultaneously deleting them from the original users' hard drives. 

But Capitol says consumers aren't selling the same works that they purchased, but copies that they uploaded to the cloud. That model is illegal, Capitol argues, because only the content owner has the right to make copies. Capitol also says that even if the tracks are removed from users' hard drives, ReDigi has no way of knowing whether users have the tracks on other devices.

Sullivan agreed with Capitol on all points. He specifically ruled that only a content owner can authorize the transfer of a digital music file online -- regardless of whether the  original file is destroyed. “Courts have not previously addressed whether the unauthorized transfer of a digital music file over the Internet -- where only one file exists before and after the transfer -- constitutes reproduction within the meaning of the Copyright Act. The court holds that it does,” Sullivan wrote in an opinion dated Saturday.

A hearing in October focused largely on the nature of ReDigi's technology, and whether the company "copies" tracks -- which implicates copyright law -- or merely "migrates" them. But Sullivan's opinion makes clear that he views ReDigi's argument about using “migration” technology as nothing more than semantics. “It is simply impossible that the same 'material object' can be transferred over the Internet,” he wrote.

Sullivan's ruling isn't all that surprising, given that he said last year that he thought  ReDigi's service probably infringed copyright.

But the decision still highlights one of the ways that the law hasn't kept pace with technology: Consumers are increasingly purchasing digital media, but don't have the same rights to resell digital media as they do with physical CDs, books or DVDs. The result is that content owners can shut down secondary markets for MP3s, ebooks or other digital-only media.

Sullivan himself obviously is aware of that prospect, but declined to decide the case based on the larger policy issues. “Because this is a court of law and not a congressional subcommittee or technology blog, the issues are narrow, technical, and purely legal,” he wrote.