A US District Court has ruled against ReDigi in the case testing whether it has the right to resell people’s digital music files.

Former EMI subsidiary Capitol Records had sued the company over its plans for a secondhand tracks store, with ReDigi arguing that US first-sale legislation made its service legal. District Judge Richard Sullivan has now disagreed in a ruling that will make waves beyond the music industry.

“The first sale defense is limited to material items, like records, that the copyright owner put into the stream of commerce,” explained the ruling.

“Here, ReDigi is not distributing such material items; rather, it is distributing reproductions of the copyrighted code embedded in new material objects, namely, the ReDigi server in Arizona and its users’ hard drives. The first sale defense does not cover this any more than it covered the sale of cassette recordings of vinyl records in a bygone era.”

It’s very bad news for ReDigi, with the summary judgement finding the company guilty of copyright infringement, but also of encouraging its users to infringe copyright, which will jack up any damages bill. There are likely to be more twists in store for this case though, if ReDigi is able to fund an appeal.

Meanwhile, the likes of Amazon and Apple are hovering in the background with recently-filed patents on their own secondhand digital-content marketplace technologies. At this point, any plans on their part to launch ReDigi-style features within their respective digital stores may need to go back to the drawing board – or at least go to the licence-negotiation table.

It’s quite possible that in 10 years, if streaming has become the dominant digital music model, that we’ll look back on arguments over ownership and resale of digital files as a historical quirk from the ownership era (see also: the ‘Bruce Willis iTunes library legacy’ debate).

Even so, for now many rightsholders (not just music labels and publishers, but movie studios, e-book publishers and games firms) will be cheering the ReDigi ruling, while many internet campaigners will be criticising it.

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