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ReDigi, a company that lets people buy and sell “pre-owned” digital music, said today that it isn’t concerned about Amazon’s new patent on methods for reselling and lending used digital goods.

GeekWire broke the news of the Amazon patent earlier this week. The patent, originally filed in 2009 and granted on Jan. 29, covers transferring digital goods among users, setting limits on transfers and usage, charging an associated fee, and other elements of a marketplace for used digital goods.

News of the patent put a spotlight on Massachusetts-based ReDigi because it already operates a market for used digital goods. However, ReDigi said in a statement today that its approach is “significantly different from the marketplace described in Amazon’s patent.”

Here’s an extended excerpt from ReDigi’s statement.

What did Amazon Patent?

As ReDigi understands Amazon’s patent, it is for a marketplace that employs a seller to buyer “copy and delete” mechanism, in which a user sells a “copy” of a digital good to another user while both the buyer and seller simultaneously own the copy (even if only for an instant in time), and then supposedly the seller’s copy is subsequently “deleted.”  ReDigi takes no position on the legality of this technique under copyright law, but simply notes that it has been central to the music and publishing industries’ skepticism and opposition to a “used” digital marketplace, and that the ReDigi Marketplace does not use this technique.

How is ReDigi’s technology and intellectual property different from the “used” marketplace Amazon intends to create, as described by their patent?

ReDigi’s advanced technology employs a “Verification Engine” and “Atomic Transaction”, resulting in a TRANSFER ONLY mechanism. This means that all digital goods are first verified to ensure that they are legally eligible for resale.  Once verified, ReDigi’s technology transfers the “original” good from the user’s computer to ReDigi’s Cloud (Marketplace).  With ReDigi’s method, only the “original” good is instantaneously /atomically transferred from seller to buyer without any copies.  ReDigi then assists the seller with an anti-virus like software application that monitors the seller’s computer and synced devices to ensure that any personal-use copies of the sold good are removed.

Why should artists, authors and copyright holders be concerned by Amazon’s approach used digital market?

To our knowledge Amazon has NEVER compensated artists, authors or copyright holders for the secondary sale of their goods, and they have sold billions of dollars worth of them.  There is nothing in the Amazon patent that addresses this issue.

In contrast, the ReDigi model frees up billions of dollars of locked up wealth.  It enables the participation of all parties–from consumer to artist/author to copyright holder–in the profit chain.  The nexus between the physical and digital marketplace can be defined by the emergence of a true secondary marketplace. ReDigi has managed to create just that, not only by solving the riddle of “original” content transfer, but by taking an enlightened step forward in bringing the artists and copyright holders back into the revenue stream.

ReDigi’s marketplace for used digital goods that has attracted legal attention from major music labels. Amazon is already using elements of its technology in its feature for lending Kindle books.

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