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Selling 'Used' Digital Music Proves Troublesome for Two ReDigi Executives

CEO John Ossenmacher and CTO Larry Rudolph can't escape an ongoing copyright lawsuit

iTunes
Justin Sullivan/Getty Images

Remember ReDigi, the upstart digital company that stirred excitement with a business model around letting consumers buy and sell previously purchased tracks on iTunes? There's more bad news for the company from a federal judge on Tuesday.

In April 2013, U.S. District Judge Richard Sullivan handed the company a great legal defeat by rejecting the company's arguments on summary judgment. ReDigi pointed to the "first sale" doctrine --- which limits a copyright owner from exerting authority on second-hand items -- but the judge pointed to the physical impossibility of transmitting the same "material object" over the Internet. "The embodiment of a digital music file on a new hard disk is a reproduction," wrote the judge.

Nevertheless, at the time of the ruling, ReDigi put out a statement that it now had more advanced technology. The company's website is still live. As is the case brought by Capitol Records.

On Tuesday, Judge Sullivan addressed whether ReDigi CEO John Ossenmacher and CTO Larry Rudolph could be held liable on the plaintiff's infringement claims.

The issue comes down to how much direction and supervision the two executives exerted on ReDigi, and the judge points to the complaint's allegation that they "personally conceived of the infringing business model and technology at issue in this case, were the ultimate decision makers concerning the development and implementation of [the] infringing activity and directed and approved all key aspects of ReDigi's activities found to infringe Capitol's copyrights."

The judge assumes the truth of the allegation for purposes of a motion to dismiss and writes in his new opinion it's sufficient to advance the claims against the two men. The lawsuit was fairly vague about what exactly they did besides fitting them under the general rubric of the very small company's conduct at large, but nevertheless, the two executives can't escape the lawsuit that is moving from the discovery phase to the damages portion.

ReDigi hasn't filed any appeals in this case yet.

Email: Eriq.Gardner@THR.com
Twitter: @eriqgardner