Is selling your pre-loaded iPod on E-bay illegal?

March 2006

Internet, technology, record labels, music publishing

There is a major market in second hand vinyl and I would be personally very upset if I was to be stopped from selling either my vinyl or CD collection (not that I want to). But the Recording Industry Association of America seems to be adamant that selling pre-loaded iPods is illegal. A number of members of the public in America have sought to sell their iPods on Ebay loaded with content – no doubt for numerous valid reasons – they don’t want the device anymore or they got a better iPod for Christmas or Valentines day. But the new practice has stirred up a fierce debate about the legality of reselling the music content. Ebay lawyer Andrew Bridges has said that “It really depends on the individual circumstances … I’m not sure the law is settled. If I’m a college student and I want to supplement my income by buying 100 iPods and taking my CD collection and putting it on those iPods and selling them at a significant premium, that’s probably not going to fly. But if I’ve had my iPod Shuffle for two years and I’m tired of it and I go out and buy a 60 gig video iPod and want to sell my old Shuffle, but don’t want to purge the music first, that’s probably legal.” Not exactly, says RIAA President Cary Sherman. “Both cases Andrew cites are different types of infringement, it’s just that the damages are higher for someone engaged in it for commercial benefit versus someone who isn’t,” he said. “Unlawful reproduction or distribution is infringement. There is no fair use when someone is getting a complete copy of a work, especially a creative work and especially when it could have an adverse impact on the marketplace for selling or licensing that work …. when you buy a CD, you have it for personal use on your computer or iPod, but you can’t give it away and keep it for yourself. That’s having your cake and eating it too. If everyone did that, [record labels] would only sell one CD,” Sherman said. Well Music Law Updates does think that Mr Bridges is being a bit over optimistic in his approach and when looking at the position in the UK, certainly pre-loading numerous iPods from a single source and the re-selling them at a premium would be an infringement under UK law. The Copyright Designs and Patents Act1988provides that making a copy and more importantly issuing copies to the public without permission or licence is an infringement of copyright (S16). But what about selling an iPod you have legally loaded up yourself from iTunes? You have paid for the songs – and you now want to sell these within the device they are loaded into. Is this an infringement? The first copy was made legally (as permission was given to make the copy) and provided no other [illegal] copies have been made from the legal download source [eg you sell this one copy – you don’t keep the copy and sell a copy of the copy] then from a common sense point of view surely the answer must be ‘of course not’. And moreover you are not ‘issuing copies to the public’. Surely this scenario it is just like selling your vinyl or CD collection to another fan. It is not issuing copies to the public any more than a second hand record shop is ‘issuing copies to the public’. The act of sale also cannot be secondary infringement by way of possession or dealing in infringing copies as there is no ‘infringing copy’ in the first place. In fact the Copyright Designs & Patents Act 1988 S18.3(a) provides that any re-distribution of a copy previously (legally) issued to the public is not, in UK law, an infringement of copyright. In effect the original rights have been ‘exhausted’ – and the original owner has already been paid. That said it would be interesting to see a judgment on where the parameters of the law are drawn on this issue both in the UK and particularly in the USA where the industry friendly provisions of the DCMA (Digital MillenniumCopyright Act) may produce a different reading of the re-seller’s position with regard to digital audio files. But what perhaps might be just as useful would be a clear statement from the RIAA, the BPI and/or the IFPI on the matter. A statement pointing out that re-selling a MP3 player loaded with legally acquired downloads is NOT an offence on its own would at least limit the damage from yet another round of bad press about the consumer unfriendly actions by the majors and their trade bodies. (February archive)

David Moser adds this comment on the US position:

Although to my knowledge, there are no court decisions that have addressed this issue, I think the result under U.S. copyright law would likely be the same as under UK law. If you sell an iPod you have legally loaded with copyrighted music from iTunes or elsewhere, I believe this would be legal. Similar to the UK Copyright Designs & Patents Act S18.3(a), the first sale doctrine under U.S. copyright law provides that “the owner of a particular copy or phonorecord lawfully made . . . is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord.” 17 U.S.C. §109(a). If you legally download music, you have acquired a lawfully made phonorecord and the fact that the phonorecord is made in a digital format should not make any difference. You have the right to distribute that phonorecord (e.g., MP3 file) under the first sale doctrine just as you have the right to sell a lawfully acquired CD to a used record store. However, pre-loading iPods from a single source and then re-selling them with the loaded copyrighted content would likely be infringement. This would involve making multiple unauthorized reproductions (copies) as well as distributions of the copyrighted songs and sound recordings. The first sale doctrine only applies to the distribution right, not to the reproduction right so making copies of music files to distribute to others would violate the copyright owners’ reproduction rights under section 106 of the U.S. Copyright Act.

 And Five Eight magazine adds comment with a further twist:The RIAA (Record Industry Association of America) is looking to ‘create’ a new and more populous prey. The association has filed for an amendment to the DCMA which would stop consumers legally copying their CDs onto their digital music players. Whilst most iPods can hold thousands of tracks, it is estimated that, on average, owners have bought just 10-25 tracks form the iTunes Music Store. If a change in the law is pushed through, millions of Americans would be criminalised overnight. The Electronic Frontier Foundation (EFF) has criticised the trade group for attempting to push back the parameters of fair use. Meanwhile, in a statement to Digital Music News, the RIAA has downplayed the move saying it supports flexible personal use copying by fans: see also ‘is ripping from CDs fair use’ – from the IP Kitten in February (see link above)

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