When it comes to digital stuff, reselling is different from other goods. Nearly all digital good sales are really licenses rather than sales as conventionally understood. The question here is, can such a license be bought and sold to other users? The court decided that no, users do not have the right to resell digital music files, as doing so violates existing copyright law. ReDigi, the judge found, is also liable for secondary copyright infringement and likely will have to pay damages.
ReDigi argued that it was protected both by fair use and by the first sale doctrine, which allows for a good to be resold. Recently, the Supreme Court ruled in favor of first sale rights, protecting the rights of a used book vendor to import cheaper textbooks from Thailand to the United States. But here, the judge disagreed with ReDigi's premise:
"A ReDigi user owns the phonorecord that was created when she purchased and downloaded a song from iTunes to her hard disk. But to sell that song on ReDigi, she must produce a new phonorecord on the ReDigi server. Because it is therefore impossible for the user to sell her “particular” phonorecord on ReDigi, the first sale statute cannot provide a defense. Put another way, the first sale defense is limited to material items, like records, that the copyright owner put into the stream of commerce. Here, ReDigi is not distributing such material items; rather, it is distributing reproductions of the copyrighted code embedded in new material objects, namely, the ReDigi server in Arizona and its users’ hard drives. The first sale defense does not cover this any more than it covered the sale of cassette recordings of vinyl records in a bygone era."