EMI’s Capitol Records asked for a preliminary injunction against ReDigi, the “used” digital music reseller, telling U.S. District Judge Richard Sullivan in New York that ReDigi doesn’t fall under the first-sale doctrine and is misleading the public about the legality of its service. “The ‘used’ music files ReDigi markets, however, are not secondhand, scratched CDs that physically pass from one user to another, but pristine digital files that ReDigi reproduces, stores and distributes without authorization,” EMI said. The U.S. Copyright Office itself has concluded the first-sale doctrine “does not apply to digital transmissions, which by their very nature do not involve the physical transfer of any material object,” the filing said. ReDigi’s video tutorial on its website acknowledges that it has to upload users’ files to offer them for resale to other users, EMI said: “Uploading, by its very nature, can only be accomplished by making an unauthorized copy of the original user’s track. … The user does not ’sell’ that original track but merely agrees to its deletion after it has been duplicated in a copy and that copy transferred, by ‘upload,’ to the ReDigi service.” It’s irrelevant whether the uploading user “simultaneously or subsequently” deletes the file, because “the Copyright Act does not excuse unauthorized reproduction simply because the infringer chooses to destroy the source copy.” EMI used an analog example to make its point: If one person “owned a print of a photograph, allowed the second individual to make a digital scan of it, and then immediately threw the original print into the fire, no one would suggest that the first individual had ’sold’ his print to the second individual.” ReDigi also fails the first-sale test because it’s not the “owner” of the tracks it uploads, and because it doesn’t have the copyright holder’s authorization, “the copies it holds on its ‘cloud’ are not lawfully made copies either,” EMI said. The label also said ReDigi’s streaming of 30-second preview clips to users and display of album artwork constitute infringements. ReDigi had already told Sullivan that the preview clips and artwork are provided by an authorized third-party source “pursuant to license,” and that EMI has a “profound misunderstanding” of the factual particulars of its service (WID Jan 23 p5). Because ReDigi claims it erases files as it transfers ownership from one user to another, “the chain of infringing copies itself is in constant flux,” EMI said: “It thus becomes tremendously difficult to monitor ReDigi’s inventory of files constantly to keep tabs” on what’s being uploaded and downloaded. Without an injunction, EMI won’t have “even a fair chance” of understanding the damage to its business from ReDigi’s service. The label scolded ReDigi for claiming on its website that it “gives back to artists and labels through generous payments with every track sold,” when in fact “Capitol has received no compensation” for its tracks posted on ReDigi. One question EMI’s filing appears to raise is whether ReDigi has found a loophole in the licensing terms governing the songs that it will accept for upload. ReDigi said in its initial answer to EMI, which had the same date as EMI’s request for an injunction, that contrary to EMI’s assertion, it only accepts songs downloaded from iTunes for upload to its cloud and that it’s not violating any terms attached to iTunes downloads. EMI’s initial complaint said Amazon MP3 was “likely the origin of many” tracks on ReDigi, and that Amazon terms “expressly” prohibit transfers of the sort that ReDigi facilitates. In its motion for an injunction, EMI again said ReDigi “encourages those users to violate the terms of certain of their original vendor agreements, such as those imposed by Amazon.com,” and in another reference said “vendors like Amazon … provided those files to users with carefully stated restrictions against redistribution.” EMI’s filings don’t appear to allege any specific violation of iTunes terms by ReDigi, citing Apple’s digital music platform only as a legitimate distributor whom ReDigi is undermining. Sullivan told EMI in a Friday order that it must respond to ReDigi’s letter requesting a pre-motion conference by Tuesday, and that ReDigi must answer EMI’s injunction request by Friday. The judge scheduled a hearing on EMI’s request for Feb. 6, and said he'll consider ReDigi’s summary judgment motion there as well.

The U.S. 5th Circuit Court of Appeals upheld the FCC’s 2009 wireless zoning shot clock order, in a decision handed down Monday. That was a win for wireless carriers who sought the shot clock, over broad opposition from many local government groups. The New Orleans court rejected arguments by Arlington, Texas, that the way the order was developed was “arbitrary and capricious” and a violation of the Administrative Procedure Act (APA). The court dismissed a second petition from San Antonio outright on the grounds that it was filed too late and thus the court lacks jurisdiction.

Almost three months after the FCC approved a Universal Service Fund/intercarrier compensation reform plan, major industry players continue to seek significant changes. Comments were due last week on a further rulemaking notice approved as part of the order. How USF dollars ultimately will be divided as the fund is reconfigured to primarily pay for broadband is the key question addressed in most filings. They show that the FCC still has a huge job ahead as it continues to tackle changes to the USF. Numerous petitions for reconsideration have been filed in response to the Oct. 27 order. A second round of comments focusing on intercarrier compensation issues is due Feb. 24. Next week, the commission will begin to tackle Lifeline reform. Also looming are likely changes to the contribution side of USF.

Senate Majority Leader Harry Reid, D-Nev., postponed Tuesday’s cloture vote on the PROTECT IP Act, marking a dramatic turning point for the divisive legislation. In an announcement Friday, Reid said he decided to postpone the vote, “in light of recent events,” but was “optimistic” the Senate would “reach a compromise in the coming weeks."

Senate Majority Leader Harry Reid, D-Nev., postponed Tuesday’s cloture vote on the PROTECT IP Act, in an announcement Friday, marking a dramatic turning point for the divisive legislation. Reid said he decided to postpone the vote, “in light of recent events,” but was “optimistic” the Senate would “reach a compromise in the coming weeks.” Support for the antipiracy bill quickly eroded after Wikipedia, Craigslist, and thousands of other sites blacked out their homepages Wednesday in a coordinated protest of PROTECT IP and its companion bill, the Stop Online Piracy Act (SOPA) (WID Jan 19 p1). And a new source of opposition popped up -- Republican presidential candidates.

Verizon Wireless and the cable companies behind SpectrumCo on Thursday voluntarily offered more details on their proposed deal, expected to be the subject of an intensive examination by the FCC (CD Jan 19 p1). SpectrumCo agreed in December to sell 133 AWS licenses to Verizon for $3.6 billion. Verizon is also buying several dozen AWS licenses from Cox. All the companies also announced various commercial agreements between the cable operators and Verizon Wireless, under which they would sell each others’ products. That part of the agreement has led to additional controversy.

The author of the PROTECT IP Act, Senate Judiciary Committee Chairman Patrick Leahy, D-Vt., is considering substantial changes to the legislation, Senate staffers told us. Most of the remaining PROTECT IP cosponsors said they were still supporting the bill, but urged leadership to slow its pace and consider modifications to mollify the concerns of the technology sector. The chamber is still planning to take a cloture vote on the bill on Tuesday around 2:15 p.m., a Judiciary spokeswoman said.

The author of the PROTECT IP Act, Senate Judiciary Committee Chairman Patrick Leahy, D-Vt., is considering substantial changes to the legislation, Senate staffers told us. Most of the remaining PROTECT IP cosponsors said they were still supporting the bill, but urged leadership to slow its pace and consider modifications to mollify the concerns of the technology sector. The chamber is still planning to take a cloture vote on the bill on Tuesday around 2:15 p.m., a Judiciary spokeswoman said.

Consumer complaints filed at the FCC were up sharply in last year’s Q1, compared to Q4 2010, the agency said in a report released Wednesday (http://xrl.us/bmo5ts). Inquiries were down overall, the agency said. The commission saw an overall increase in complaints of 27 percent across the four major categories. Complaints about wireline surged by almost 31 percent to 29,480, dominated by complaints concerning the Telephone Consumer Protection Act (TCPA), the Do Not Call list and unsolicited faxes. Complaints about wireless were up more than 30 percent to 27,495, the report said. Call or message to wireless device-related complaints led to the increase. But complaints about radio and TV broadcasting and cable and satellite services fell by 4 percent across both categories. Consumer “inquiries,” meanwhile, dropped in the quarter, driven by deep declines in the wireless arena, the FCC said. The overall number of inquiries for the four major categories decreased by more than 37 percent compared to the final quarter of 2010 to 20,451, the agency said. Inquiries about wireless “notably decreased” by more than 81 percent to 3,477, with a major drop in “bill shock” questions, the report said. The other three categories saw increases. Inquiries about radio and TV broadcasting were up almost 33 percent to 6,381, driven by concerns over programming issues. Inquiries on Cable and satellite services increased 7 percent to 2,057, with billing and rates questions responsible for 45 percent of the inquiries. The number of questions on wireline grew by more than 8 percent to 8,536, with 63 percent of questions raised related to TCPA matters.

Coordinated website blackouts had a resounding impact Wednesday on both public and congressional support for the Stop Online Piracy Act (SOPA). At our deadline at least five of the bill’s original 30 co-sponsors said they had either withdrawn or reconsidered their support for the bill. The bipartisan defections came after thousands of websites including Wikipedia, Reddit, Craigslist and others blacked out their pages and urged users to contact their representatives in protest of the legislation.