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United States District Court for the Southern District of New York Judge Richard Sullivan's 19-page decision in Capitol Records LLC v. ReDigi, Inc. (Case No. 12-civ.-95(RJS)) rejected the defendant's fair use and first sale doctrine defenses to the plaintiff's copyright infringement claim and said the defendant also is responsible for secondary copyright infringement.
As reported by the Arstechnica.com blog, Judge Sullivan said using the Internet to transfer digital music files without the copyright holder's permission is a reproduction under federal copyright law. The so-called first sale doctrine [17 U.S.C. sec. 109(a)] protects "lawfully made" copies, but Judge Sullivan said the doctrine applies only to sales "by the owner of a particular copy...of that copy." In contrast to the copyright owner who places an existing material item, such as a phonograph record, into the stream of commerce, the defendant, according to the court, is merely distributing reproductions of copyrighted code implanted into new material items in users' hard drives and the defendant's server. The digital file transfer necessarily involves making a copy of an original file.