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Die Hard But Keep Your iTunes Collection in The Family

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Don’t get caught in a tight spot with your digital estate planning.

Guest contributor Brian Keith Felderstein, Esq. discusses the recent rumors about Bruce Willis’ inability to leave his iTunes collection to his children. True or not, if you have digital music, this issue affects you too.

Recently the blogosphere has been abuzz concerning a story about Bruce Willis mulling over the possibility of suing Apple.  As the story goes, Mr. Willis has an extensive iTunes collection consisting of thousands of songs he was intending to leave to his children. Unfortunately, Bruce was prevented from including his music anthology in his will because of a complicated issue surrounding what is known as “the First Sale Doctrine.”

Sadly for most People Magazine readers, this juicy bit of celebrity scuttlebutt concerning Mr. Willis has turned out to be patently untrue. However, it has left behind an intriguing and thought-provoking issue that all of us may want to consider as we turn on our iPods and listen to the latest Kid Rock album we purchased from iTunes – Do I actually own my iTunes collection? And will happen to it when I’m gone?

I wrote about the First Sale doctrine at some length in a post I did last week for Rocket Lawyer. If you missed it,  let me bring you up to speed on what the First Sale Doctrine is all about and how it may substantially affect what you can do with your music collection and other bits of digital property you may own.

The First Sale Doctrine in a Nutshell

The First Sale Doctrine essentially gives anyone who buys a tangible item like a CD or book (which generally has copyright protections baked into the item), the right to resell that item without violating any copyright laws. The reason behind this is that all courts recognize a copyright holder’s control of an item only until the “First Sale” of that item has been made. The Supreme Court ultimately has said that an original owner’s rights to a copyright in a physical product is extinguished at the time of this first sale and the new owner has the right to resell that item after the initial purchase as long as they are reselling what they originally bought.

Not so much, however, for digital products. Technically, there is no digital product that can be resold without making an actual copy of the product. As such, the argument is that the First Sale Doctrine does not apply to digital products like iTunes music because one is not handing off the physical object like a book or CD, but rather, must make a copy of the item. This gives a person the ability to have their cake by selling their iTunes song and eat it too by continuing to keep and enjoy the same song all at the same time.

The Case That Could Turn The First Sale Doctrine on its Head

A recent court case moving through the federal courts may completely upend the First Sale Doctrine as it relates to digital products. The case involves EMI / Capital Records, one of the world’s largest record companies, suing a little-known outfit called ReDigi who considers itself a pre-owned record store for digital music files. EMI / Capital Records are alleging that ReDigi has engaged in material infringement of its copyrighted music. ReDigi sells legally downloaded digital music tracks secondhand. The company uses proprietary software to forensically analyze song files on a user’s computer to make sure they in fact came from iTunes. Once the music has been confirmed to be legitimate, the system then deletes the files from the user’s device and uploads the files into the ReDigi network so it can be resold to a different individual. Redigi argues that this is no different than reselling an actual book or CD and in fact they point out that it’s more secure since somebody can easily photocopy a book or record music off of a CD.

Why EMI Isn’t Buying It

EMI claims that when an individual purchases a song off of iTunes they are only being granted a license to listen to the music which can be revoked at will. Painting any analogy that ReDigi services are the equivalent of a used record store is inapplicable. The suit contends “Used record stores do not make copies to fill their shelves…” and that Redigi is Actually a clearinghouse for copyright infringement and a business model built on widespread, unauthorized copying of sound recordings owned by EMI.”

Here’s Where It Gets Interesting

To bolster its position, ReDigi will likely turn to European precedent under the case of Oracle v. UsedSoft. The judges in this case took a unique position stating that software owners “exhausted” their distribution rights upon the first sale of their software leading others free to trade in secondhand software sales. ReDigi will lean on the argument that MP3 files are analogous to Oracle software because on the first sale, buyers are given an unlimited, perpetual license to play music in exchange for a one-off fully paid fixed fee.

At the end of the day, both sides have compelling arguments for and against the resale of digital products and no matter which way the court decides, all of us are going to have to consider how we deal with our digital property as a personal asset.

What Do You Do With All Your Digital Assets?

Although a hoax, the Bruce Willis story has implications that are far reaching within our personal lives. I personally have a number of online accounts, iTunes music, e-books, and digital files that I would really like to pass on to my children if in fact I were to be hit by a bus tomorrow (knock on wood). Unfortunately, the ability to maintain these personal assets in perpetuity will be difficult if not impossible in most cases because many websites, software and the like have strict licensing restrictions on third-party transferability and licenses are generally nontransferable and typically expire upon death or incapacity.

David Goldman, a Jacksonville Florida attorney may have solved this digital asset conundrum to some extent through a service he created called “DAP Trust.” The service essentially protects an owner’s digital assets by allowing the owner to place their digital belongings in a trust where it can be managed by trustees and given to beneficiaries through the same mechanisms that many ordinary trusts have today.

So there you have it. There’s a lot to think about here and by the way Bruce, if you’re reading this blog post, I think you should throw caution to the wind, dance like no one is watching, and take on that lawsuit against Apple because there’s a chance you may win. If I can quote the words of my all time favorite action hero, “YIPPI KI YAY! Mr. Willis YIPPI KI YAY!”

Brian Keith Felderstein, Esq.  is a California business lawyer and a proud member of the Rocket Lawyer On Call® network. Whether you have a question about forming a new business, issues on a contract, concerns about a partnership, legal compliance on the Internet, or any other general business matter, contact Brian to learn how he can help.

Posted in: Home & Family, Wills & Estate Planning

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