Livewire even had a property interest in any of the content on Giganews’ servers that Livewire
was capable of selling.^254
Accordingly, Judge Birotte granted partial summary judgment in favor of Giganews and
Livewire on Perfect 10’s claims of direct infringement. In addition, because Perfect 10’s other
theories of indirect liability as to Livewire had already been dismissed without leave to amend,
the court ruled that its order completely disposed of all of Perfect 10’s claims against Livewire.
The court separately addressed Perfect 10’s remaining claims for indirect liability as to
Giganews in a separate order, granting partial summary judgment in favor of Giganews on those
claims (see discussion in Section III.C.2(n) below).^255
(w) Capitol Records v. ReDigiIn Capital Records, LLC v. ReDigi, Inc.,^256 ReDigi operated a web site that enabled users
to “resell” their legally acquired iTunes music files and purchase “used” iTunes files from others
at a fraction of the price on iTunes. To sell music on ReDigi’s web site, a user was required to
download ReDigi’s “Media Manager” to his or her computer. Once installed, Media Manager
analyzed the user’s computer to build a list of digital music files eligible for sale. A file was
eligible only if it was purchased on iTunes or from another ReDigi user; music downloaded from
a CD or other file-sharing webs site was ineligible for sale. After the validation process, Media
Manager continually ran on the user’s computer and attached devices to ensure that the user had
not retained music that had been sold or uploaded for sale. However, Media Manager could not
detect copies stored in other locations. If a copy was detected, Media Manager prompted the
user to delete the file. The file was not deleted automatically or involuntarily, although ReDigi’s
policy was to suspend the accounts of users who refused to comply.^257
Once uploaded, a digital music file underwent a second analysis to verify eligibility. If
ReDigi determined that the file had not been tampered with or offered for sale by another user,
the file was stored in ReDigi’s “Cloud Locker,” and the user was given the option of simply
storing and streaming the file for personal use or offering it for sale in ReDigi’s marketplace. If
a user chose to sell a digital music file, the user’s access to the file was terminated and
transferred to the new owner at the time of purchase. When users purchased a file (at 59 cents to
79 cents), the seller received 20%, 20% went to an escrow fund for the artist, and 60% was
retained by ReDigi. Capitol Records sued ReDigi for direct, contributory and vicarious
copyright infringement.^258
The court found ReDigi liable under all three theories. With respect to direct
infringement, the court noted that courts had not previously addressed whether the unauthorized
(^254) Id. at pp. 14-15.
(^255) Id. at p. 17.
(^256) 934 F. Supp. 2d 640 (S.D.N.Y. 2013).
(^257) Id. at 645.
(^258) Id. at 646.