fair use. There are a few cases in the commercial context that come close, however. Those cases are primarily negative, though as we explain below we believe they are distinguishable from CDL applications, and one case is currently on appeal. First, Capitol Records, LLC v. ReDigi Inc., a district court decision currently on appeal. Capitol sued for copyright infringement over ReDigi’s online service that facilitated resale of used digital music files. ReDigi’s MediaManager software would allow an owner of a music file to upload their files to a “Cloud Locker,” deleting the copy from the user’s device and saving a copy to the cloud. Upon sale through the ReDigi marketplace, the file would be downloaded to the purchaser and simultaneously deleted from the Cloud Locker.[1] The district court in that case assessed both ReDigi’s fair use defense and a defense based on Section 109. It did not, however, assess the two provisions together. On Section 109’s direct applicability, the court noted that the provision “by its own terms [is] limited to assertions of the public distribution right … ReDigi’s service violates Capitol’s reproduction right [and so] the first sale doctrine does not apply. …”[2]
For fair use, the ReDigi court was fairly dismissive of the purpose factor, focusing almost exclusive on the commerciality of the program. The analysis was brief and considered almost none of the arguments laid out above. In honing in on the commerciality of the use, the court found that the purpose and character of the use weighed against a fair use finding.[3] The court found the use to be “an essential component of ReDigi’s commercial enterprise,” and that the use was not “transformative.”[4] Overall, the court concluded that fair use did not apply. While ReDigi is in some ways factually analogous to CDL, the district court’s fair use analysis was so cursory and the future of that case so uncertain (the case is currently on appeal and awaiting a decision from the Second Circuit Court of Appeals) that its direct application for CDL remains far from clear.[5]
In a few other cases, defendants have tried unsuccessfully to employ an analogous “format shifting” defense, wherein physical copies were purchased, and digital access metered to users based on the number of copies purchased. For instance, in Wall Data Inc. v. Los Angeles County Sheriff's Dept, the L.A. Sheriff’s Department purchased licenses for 3,663 copies of Wall Data’s software. To make
- ↑ Capitol Records, LLC v. ReDigi Inc., 934 F. Supp. 2d 640, 645–46 (S.D.N.Y 2013) (The court rejected ReDigi’s argument that “technological change has rendered its literal terms ambiguous” and so the court should construe the statute under Section 109 in favor of its use.).
- ↑ Id. at 655.
- ↑ Id.
- ↑ Id.
- ↑ Capitol Records, LLC v. ReDigi Inc., Case No. 16-2321-cv (2d Cir. 2016).
