When is a resale not a resale? That's the question being mulled over by US lawmakers this evening, as EMI's lawsuit against digital music site ReDigi heads towards a crucial conclusion.
The decision could set a precedent for whether sites are allowed to sell 'second-hand' digital music files in future - and cut labels out of the value chain.
Launched in October 2011, ReDigi claims it is the first legal site that lets users can buy second-hand music files - and argues that its software does not break any existing US copyright laws.
The site sells music files for around 79 cents each - 20 cents cheaper than iTunes - but does not pay labels any royalties. According to EMI's lawsuit, ReDigi takes 5 to 15% of the sale price.
EMI/Capitol, backed by new owner Universal Music Group, claims that the first sale doctrine - which protects the peer-to-peer resale of physical content in the US - does not apply to digital music files. The firm claims that as these files can be easily copied, they cannot qualify as 'second hand' resales.
The label is claiming statutory damages of around $150,000 for each track infringed.
EMI/Capitol said in its lawsuit - filed in January - that ReDigiallows users to upload tracks to its site, where buyers can download them for about 79 cents each.
US district Judge Richard Sullivan will rule later - but he denied EMI/Capitol an injunction in February that would have halted ReDigi's operation.
“It is a reproduction and it is a violation of the reproduction right of the Copyright Act,” Capitol lawyer Richard Mandel told a judge at Manhattan federal court. EMI/Capitol has requesting a judgment without a trial.
“There is no copy involved,” ReDigi’s lawyer Gary Adelman argued in court. “The actual file is being transported. That’s how the technology works.”
Google has written a letter to the judge stating that the search giant had a "specific and vital interest" in the outcome.