[5] On March 30, 2013, Judge Richard J. Sullivan ruled in favor of Capitol Records, explaining that the transfer of digital data from one storage medium to another constituted a violation of copyright, because the copy was ultimately an unauthorized reproduction, and therefore outside of the protection of the first-sale doctrine.

ReDigi is an ongoing online marketplace that has operated since October 2011, allowing users to buy or sell music files that are verified to be legally obtained.

[9] Specifically, Capitol Records argued for copyright infringement by claiming that copies of music files were made during the initial transmission to ReDigi servers and during the transactions between users.

[12][13] In its brief, Google claimed to have a vital interest in the case, citing that if Capitol Records prevailed, then it would put the entire cloud computing industry, worth an estimated 41 billion dollars, at risk.

[14] On January 27, 2012, Capitol Records filed a motion for preliminary injunction against ReDigi, primarily claiming irreparable harm.

[16] On February 6, 2012, Judge Sullivan denied Capitol Records' motion for preliminary injunction, allowing ReDigi to continue its online services.

[2][17] The preliminary injunction was denied because, as Judge Sullivan reasoned, the case only involved monetary damages, and that irreparable harm was not shown to warrant an injunction because ReDigi maintained careful records of all transactions for damages to be easily calculated if Capitol Records prevailed in the case.

[16][18] On March 30, 2013, Judge Sullivan granted partial summary judgement for Capitol's "claims for ReDigi's direct, contributory, and vicarious infringement of its reproduction rights.

The court reasoned that Capitol's reproduction right was violated when a new copy was created, thereby barring the defense of the first-sale doctrine.

]"[6] Because it is physically impossible to transfer the original material object over the internet, "the embodiment of a digital music file on a new hard disk is a reproduction within the meaning of the Copyright Act.

[6] The court explained that, "the fact that a file has moved from one material object [the user's computer] to another [the ReDigi server] means that a reproduction has occurred.

The court explained that, in those cases, the original copyright print was physically lifted off and transferred to a ceramic tile, and no new material object was therefore created.

The first-sale defense is a common law principle derived from Bobbs-Merrill Co. v. Straus (1908) and codified in Section 109(a) of the Copyright Act.

The court explained that, "[h]ere, a ReDigi user owns the phonorecord that was created when she purchased and downloaded a song from iTunes to her hard disk.

"[6] In addition, ReDigi argued that "technological change has rendered its literal terms ambiguous, the Copyright Act must be construed in light of [its] basic purpose," which is designed to "promot[e] broad public availability of literature, music, and the other arts.

Purpose and Character of Use As for the first factor, the court held that "[p]lainly, the upload, sale, and download of digital music files .

[6] Direct liability requires that a defendant must have "engaged in some volitional conduct" showing active violation of the plaintiff's copyright.

[6] The court cited evidence from ReDigi's website, including advertisements that its service was legal, despite other published materials which warned otherwise.

[25] In Europe, a similar case, UsedSoft GmbH v. Oracle International Corp.,[26] was decided by the European Court of Justice in July 2012 to affirm the resale of used software licenses.

[27] Copyright scholars closely followed ReDigi because it directly addressed the question of the applicability of the first-sale doctrine to the digital realm.

[30] At least one writer has compared ReDigi to the Star Trek transporter, and argued against a formalistic reading of first-sale in the digital realm.