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As Apple announce the billionth tune sold legally on iTunes the debate about resale of digital rights moves on. Below is a link to a very good article from Playlist magazine which includes analysis from Fred von Lohmann, attorney with the Electronic Frontiers Foundation (EFF), who suggests that even selling iPods loaded with legally downloaded material as a “grey area.” Though the practice would be perfectly legal were we dealing in traditional media, says von Lohmann, digital copies are different and the rules that apply to them remain to be settled. Making a copy of purchased songs and going back and deleting the original doesn’t necessarily fix the problem, von Lohmann tells Playlist. The more interesting question, von Lohmann notes, is does this violate Apple’s terms of service for the iTunes Music Store? Those terms state that customers “shall be authorized to use the Products only for personal, noncommercial use.” The article also looks at pre-loaded films and television programmes on a video iPod. Here von Lohmann says the Digital Millennium Copyright Act (DMCA) comes into play. The DMCA makes it illegal to circumvent encryption, such as the copy protection on a DVD, even for material which you own yourself. In order to digitally rip a DVD directly to your hard drive, one must decrypt it, and in doing so, violate the DMCA. So in theory a third party re-seller doing this prior to sale must be committing a DMCA violation when it copies a DVD for you.

http://playlistmag.com/features/2006/02/preloadipods/index.php

and see Music Law Updates archive March 2006 (lead article Is selling your pre-loaded iPod on E-bay illegal? )