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Amazon Gains Patent on Market for 'Used' Digital Movies, Songs, Books

The RIAA has said ReDigi is the only company to claim digital files could be peddled in a secondary market. It turns out that assessment was wrong. Will Hollywood erupt?

Amazon.com Logo - H 2011
Amazon.com

Is there about to be a big legal war between Hollywood and Amazon.com?

Last week, the online retailing giant was granted by the U.S. Patent & Trademark Office a big, broad patent that covers a "secondary market for digital objects."

According to the text of the patent, which Amazon first applied for in May 2009, digital objects not only include e-books, but also "audio, video, computer applications, etc." that are purchased from an original vendor.

The patent goes on to say, "When the user no longer desires to retain the right to access the now-used digital content, the user may move the used digital content to another user's personalized data store when permissible and the used digital content is deleted from the originating user's personalized data store."

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If the method sounds familiar, it's pretty much the same model that's now under a legal cloud in an ongoing lawsuit between ReDigi and the record labels.

ReDigi touted its upstart service in late 2011 as allowing its users the ability to buy and sell "used" digital music files bought on iTunes. The company said it has systems in place to forensically analyze song files to make sure they came from iTunes, to transfer files from devices and to control access. (ReDigi is insisting there is a distinction between its method and Amazon's.)

The record industry didn't buy the arguments and sued.

"Even if ReDigi's software and system works as described by ReDigi," said the RIAA. "ReDigi would still be liable for copyright infringement."

Advocates of a second-hand digital goods marketplace believe the "first sale doctrine" protects the enterprise. This part of copyright law has generally been understood to allow those who have purchased copies of movies, songs and other creative works to re-sell these goods without the authority of the original copyright owner -- although it's an area of the law that will soon be addressed by the U.S. Supreme Court as well as in the pending ReDigi case.

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In the latter dispute, the record companies have urged the judge to be careful in analyzing a system for "used" digital works.

"Digital music files have been around for nearly two decades," says the plaintiff. "Unlike ReDigi, no party has been brazen enough to recast them as 'used' or to peddle them in an imaginary 'secondary market' -- notions ReDigi invented -- because it has always been plainly understood that unauthorized digital transfers involve reproduction and distribution in violation of the Copyright Act."

Upon news first reported by Geekwire that Amazon has patented a "secondary market for digital objects," it turns out ReDigi may not have invented these notions after all. A patent battle between Amazon and ReDigi might be in store -- that is, if ReDigi is able to prevail on a pending summary judgment motion in its first case -- but the newest question of what Amazon intends to do with its newfound patent suddenly casts a big shadow.

A representative of Amazon hasn't yet responded to our request for clarification.

It's possible that Amazon doesn't take ReDigi's view of how the first sale doctrine applies to digital goods and is only reserving its ability to negotiate for consumer flexibility -- the same way that Apple's iTunes has gained more abilities over the years through dealmaking.

Amazon's patent, for example, speaks of possible thresholds which "may limit how many times a used digital object may be permissibly moved to another personalized data store, how many downloads (if any) may occur before transfer is restricted, etc."

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Still, if the entertainment industry has taken a firm stand that there's no such thing as a "used" digital copy and that a supposed "transfer" constitutes a "reproduction" by technological necessity, it's hard to believe that Hollywood will take kindly to Amazon's newest patent no matter the intention.

We've also reached out to the MPAA, and hope to address Hollywood's reaction in a later post.

E-mail: eriq.gardner@thr.com; Twitter: @eriqgardner