Nature of the Case
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Facts
D markets itself as 'the world's first and only online marketplace for digital used music.' D's website invites users to 'sell their legally acquired digital music files, and buy used digital music from others at a fraction of the price currently available on iTunes.' D's sales take place entirely in the digital domain. A user must first download D's 'Media Manager' to his computer. The Media Manager analyzes the user's computer to build a list of digital music files eligible for sale. A file is eligible only if it was purchased on iTunes or from another D user; music downloaded from a CD or another file-sharing website is ineligible for sale. Media Manager also ensures that the user has not retained music that has been sold or uploaded for sale. Once uploaded to D's server, a digital music file undergoes a second analysis to verify eligibility. Once verified the user is given the option of simply storing and streaming the file for personal use or offering it for sale in D's marketplace. If a user chooses to sell his digital music file, his access to the file is terminated and transferred to the new owner at the time of purchase. No money changes hands in these transactions. Users buy music with credits they either purchased from Di or acquired from other sales. D's credits cannot be exchanged for money. They can only be used to purchase additional music. D sends users to either YouTube or iTunes to listen to and view promotional material on its songs for sale. D's credits cannot be exchanged for money. They can only be used to purchase additional music. D earns a fee for every transaction. D's website prices digital music files at fifty-nine to seventy-nine cents each. When users purchase a file, with credits, 20% of the sale price is allocated to the seller, 20% goes to an 'escrow' fund for the artist, and 60% is retained by D. P sued D alleging multiple violations of the Copyright Act including direct copyright infringement, inducement of copyright infringement, contributory and vicarious copyright infringement, and common law copyright infringement. P filed a motion for partial summary judgment on the claims that D directly and secondarily infringed Capitol's reproduction and distribution rights. D filed its cross-motion seeking summary judgment on all grounds of liability.
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