Capitol Records, LLC v. Redigi Inc.

Filing 107

TRANSCRIPT of Proceedings re: CONFERENCE held on 10/5/2012 before Judge Richard J. Sullivan. Court Reporter/Transcriber: Rose Prater, [phone]. Transcript may be viewed at the court public terminal or purchased through the Court Reporter/Transcriber before the deadline for Release of Transcript Restriction. After that date it may be obtained through PACER. Redaction Request due 11/16/2012. Redacted Transcript Deadline set for 11/29/2012. Release of Transcript Restriction set for 1/25/2013.(McGuirk, Kelly)

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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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CAPITOL RECORDS, LLC,

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Plaintiff,

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v.

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REDIGI, INC.,

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12 CV 00095 (RJS)

Defendant.
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New York, N.Y.
October 5, 2012
10:22 a.m.

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Before:
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HON. RICHARD J. SULLIVAN,
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District Judge
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APPEARANCES
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COWAN, LIEBOWITZ & LATMAN, PC
Attorneys for Plaintiff
RICHARD S. MANDEL
JONATHAN Z. KING

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DAVIS SHAPIRO LEWIT & HAYES, LLP
Attorney for Defendant
GARY ADELMAN

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ALSO PRESENT:

SARAH MATZ

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SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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(In open court)

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(Case called)

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THE COURT:

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MR. MANDEL:

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Good morning.

Richard Mandel, Cowan, Liebowitz and

Latman for the plaintiff, Capitol Records.

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THE COURT:

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MR. MANDEL:

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MR. KING:

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Have a seat.

Okay.

Mr. Mandel, good morning.

Good morning, your Honor.

Jonathan King, also with Cowan, Liebowitz

and Latman.

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THE COURT:

All right.

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MR. ADELMAN:

Mr. King, good morning to you.

Gary Adelman, Davis, Shapiro, Lewit and

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Hayes for the defendant, and with me is my non-admitted

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associated.

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help me at the table today and --

With your permission, your Honor, I'd like her to

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THE COURT:

And that is?

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MR. ADELMAN:

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THE COURT:

Her name?

Sarah Matz, M-a-t-z.

Okay.

Good morning, Miss Matz.

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seat.

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just like to see lawyers go at it.

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money's worth.

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is welcome here.

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Have a

I gather we have some interested parties or people who

today are very interesting ones, I think.

Welcome.

So I think you'll get your

It's a public courtroom.

Everybody

The issues that we're going to be discussing

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I want to thank the parties for their briefs.

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thought they were very well written and helpful to me.

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a lot of stuff here.

There are two motions.

I
There's

They are really

SOUTHERN DISTRICT REPORTERS, P.C.
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cross motions for summary judgment.

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there are no issues that are disputed, no fact that would be

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disputed that would require this to go to a trial or a fact

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finder; so that each should win as a matter of law, since there

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are undisputed facts.

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we'll talk about that.

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Each party believes that

And, yet, you seem to dispute facts.

So

I guess I should be clear on a couple of things.

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There are a lot of people who are very interested in what the

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law should be and what would be a wise way to arrange ourselves

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with respect to this kind of technology and having access to

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music or other things like this digital recordings.

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That's a fascinating issue in its own right, but

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that's not really what we're here to decide today.

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today to decide what the law is and what is the proper

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application of that law.

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ought to be different, but if the law is clear and the

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application is obvious, then that's what we're going to do.

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We're here

And so certainly I think the law

So I think there are honest disagreements as to what

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the law says and how it ought to be applied, but I want to make

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it very clear that just sort of broad policy arguments about

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what -- in an ideal world what we ought to do is not really

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relevant, at least not for this forum.

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So each of you has a motion.

Okay?
I thought we'd start

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with the plaintiffs, since it's their case.

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start, and then we'll go to the defense.

And so they'll

And I'll allow each

SOUTHERN DISTRICT REPORTERS, P.C.
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of you to respond to the other.

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don't want to be here all day either.

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the ball for your team --

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MR. MANDEL:

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THE COURT:

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MR. MANDEL:

I'm in no terrible rush, but I
So you're going to carry

Yes.
-- Mr. Mandel?
Your Honor, Capitol believes that it is

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entitled to partial summary judgment with respect to its

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copyright infringement claims that turn on violation of the

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right of reproduction and the right of distribution.

I just

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point out, at the outset, the motions are not perfect mirror

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images in that we haven't moved on the performance and display

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portion of the case; so I just want to make that clarification.

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There's no dispute with respect to ownership.

It's

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not disputed on its motion.

It's been admitted in the 56.1

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statement that Capitol owns valid copyrights in the sound

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recordings, both under federal law with respect to the

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post-1972 recordings and state law with respect to the pre-'72

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recordings.

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turns on, is their an infringement of the exclusive rights

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under 106 of the Copyright Act.

And the issue, really, and I think what this case

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I'll start, if I may, with the reproduction, which is

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in 106.1 and grants the copyright owner the exclusive right to

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reproduce the copyrighted work in copies or phono records and

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in this case, of course, dealing with sound recordings, it's

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phono records that are applicable.
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THE COURT:

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MR. MANDEL:

It's such a quaint term.
I know.

I love it.

It's interesting, and I think

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the first time, throughout the PI we talked about copies

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because there's a tendency to lump them together.

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the same definitional effect, but phono records is the precise

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term for purposes of the material object that embodies sounds,

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which is what we're talking about here.

They do have

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And picking up on your Honor's statement, we believe

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that the issues are clear under existing law, and we actually

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think that much of what Redigi spends its time arguing on are

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broad policy items.

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way.

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amended.

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Congress and that were the subject of a report at Congress'

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request by the copyright office to decide that issue.

They think the law should be a certain

They think the Copyright Act should, in effect, be

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These are the same arguments that were put before

But the reality is, that Congress had the opportunity

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to amend the copyright law.

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statute, actually, that was under consideration at the time of

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the Digital Millennium Copyright Act that would have changed

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the law with respect to first set.

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and, instead, to send it out to the copyright office for its

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report, which the copyright office issued.

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THE COURT:
stuff.

Congress specifically had a

So it chose not to do that

Right, but they choose not to do a lot of

That's another story.
MR. MANDEL:

But beyond not amending it, they

SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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actually, in the statute, said that they wanted further

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certificate, enact a pretty significant statute in the Digital

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Millennium Copyright Act.

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digital age, and they did choose to act in certain respects,

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but on the question of the first sale doctrine, they didn't

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and, instead, said we'd like to see a report on this.

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sent it to the copyright office.

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It was designed to bring us into the

And they

I think the copyright office report is very
significant because what the copyright office did, it looked at

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the existing law, and there really wasn't much debate about

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what the existing law was.

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on whether a change should be made, and the copyright office

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made arguments, from a policy perspective, as to why it didn't

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think an amendment was a good idea.

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in fact, enact an amendment in any of the ten years since then

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or more than ten years.

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The whole report was really focused

And Congress chose not to,

But in the report, it talks about, although it's a

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report on the first sale doctrine and distribution, it explains

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why you would need an amendment.

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first sale doctrine does not apply if there's been a

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reproduction.

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actually reproduce the copyrighted work, and the work that's

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being distributed or the phono record that's being distributed

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is not the particular phono record with which you start.

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And the reason is because the

You can't claim a first sale defense if you

So it's not just a report on distribution.
SOUTHERN DISTRICT REPORTERS, P.C.
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It's a

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report that looks at the reproduction right, and it explains in

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very clear terms why there is a reproduction, by necessity, in

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a digital transmission.

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THE COURT:

Can I ask you a question, though, because

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last time we were here for the preliminary injunction, maybe it

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was the pre-motion conference, I forget which, but I asked you

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if I could sell my iPod to somebody and you said I could.

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MR. MANDEL:

Yes, and you know, it's interesting you

say that because I would actually have to say that I think that

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answer probably was not a correct one.

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the problem, you know, with the hypotheticals, to be frank,

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it's tough, you know.

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weeks about an actual dispute on a similar issue with Bruce

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Willis and Apple are disputing whether Bruce Willis would have

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the right to bequeath his collection of iTunes recordings,

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which is apparently quite extensive, as part of his will and

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apparently that's a subject for litigation.

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reaction on that might not have been correct because the

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problem with the iPod is, you know, that there's copy thereto.

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THE COURT:

I think that part of

I was reading an article in the past few

So my initial

Right, that's where I was going.

It seems

to me it's been copied to get to the iPod.
MR. MANDEL:

Right.

And, you know, fortunately, I

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think the answer is none of it is, I think, very difficult in

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the context of this case and the issues that are here.

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know, we've been playing with hypotheticals a lot in the
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

You

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context of this case because it is interesting to think about

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all the ramifications and what would happen in this case and

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what would happen in that one.

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example highlights that you could probably have other very

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interesting litigations about some of those issues as well.

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And I guess the Bruce Willis

But in terms of the issue that we're here to decide

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today, I think it's pretty clear, and it's largely governed by

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the statutory definitions in the Copyright Act itself, what a

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phono record is, and what's involved in the process of upload

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in order for a Redigi user to be able to sell their recording.

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And if I can turn --

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THE COURT:

There is a dispute on that, isn't there?

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What is involved in the process of uploading, it's sort of

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obviates a dispute between defendant's first set of papers and

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their latter set of papers, but there is a dispute as to

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whether it's copying or migrating, which all sounds like

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semantics on some level.

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MR. MANDEL:

And I think that is my answer to it.

I

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think it is semantics.

It's semantics because here's what's

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not in dispute.

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recording on their home computer and has to upload it to get to

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the Redigi cloud in order for it to be sold.

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dispute that there are two separate material objects there.

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There is the computer hard drive, where that sound recording

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sits at the beginning of the process, and then there's the

When a user for Redigi starts with is a sound

There's no

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Redigi server out in Arizona, where the sound recording ends up

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before it can be distributed.

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If you look at the statutory definitions under the

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Copyright Act of what a phono record is, those are two

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different phono records.

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you look at what the right of reproduction is, as it's been

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explained in the House and the Senate report, and really, as

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very basic copyright law, Professor Nimrick describes it as

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anytime you create a new phono record, that is a reproduction.

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THE COURT:

And they -- our position is that if

I guess they're saying it's not a copy,

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right?

They're saying that it's transported from one place to

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another, and it's sort of schuu -- like that.

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MR. MANDEL:

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THE COURT:

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MR. MANDEL:

I think -Let the record say I said "schuu."
I'm not quite sure what they're saying in

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terms of technologically.

I don't think they're really saying

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it flies through the wire.

I mean, they're kind of a little

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vague about that, but here's what they can't dispute and what

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the facts say, and that is undisputed.

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there are two different material objects here, that there is a

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server in Arizona, the Redigi cloud, as it were; there's a

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server on which the user first has that sound recording

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embodied, and that there are two different phono records.

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THE COURT:

There's no dispute that

But I think that there are -- I assume

you're going to dispute that, right?
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MR. ADELMAN:

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THE COURT:

Yes, absolutely, your Honor.

I kept thinking about this, but -- I'm not

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a Trekkie, but I kept thinking it's the difference from Captain

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Kirk going from the Enterprise to the planet through that

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transporter thing, where he's not duplicated, to the cloning

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where there's a good and a bad Captain Kirk where they're both

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running around.

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other was transported and it's only one Captain Kirk.

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I think one is a copy and the other is -- the

MR. MANDEL:

Right.

And, you know, that's part of the

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problem we have at a basic level because it's not Star Trek

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here, and I don't think they're really saying --

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THE COURT:

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MR. MANDEL:

Wouldn't it be cool if it were?
I know.

It would be exciting and maybe

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it would require a whole other Copyright Act, but, you know,

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that's not where we are.

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they can't say that.

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it's not just a dispute between their prior papers and their

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current papers.

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different contexts.

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answer, where they admit that -- and state clearly that they

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delete the existing file.

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And they don't quite say that because

And, you know, the dispute between --

It's a statement that appears in a number of
It's a statement that appears in their

Well, obviously, if you have to delete the original

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file on the user's hard drive, then, obviously, there's a copy.

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You know, that's what they said in their answer.

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stands.

It's there.

It still

They said it in a sworn declaration that

SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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Mr. Rudolph submitted to this Court, and they, frankly, said it

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a number of times at the deposition.

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Mr. Rudolph's testimony at Page 132 and 236, I believe it is of

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his deposition, these are pretty clear questions.

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very precise in the questions he put to them, and he said to

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them the first time, we need to be precise.

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the original file.

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If you look at

That's the lead in.

Mr. King was

I'm talking about

The answer is yes.

The second time, at Page 236, they're talking about
specifically the declaration.

Mr. King is going over the

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language of the declaration and, again, it says, okay, that

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file, we're talking about the file itself, the original file.

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That's the lead in.

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admission in their answer, in deposition testimony, in the

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declaration.

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The answer is yes.

So you have that

You also have an admission in the preliminary

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injunction brief in absolutely crystal clear terms that we

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submit it should be binding and should be a judicial admission.

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And while they dispute that, they don't dispute that it's

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appropriate legally for that to constitute an admission.

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just say the statement is not sufficiently clear, that it's

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ambiguous, and therefore, you shouldn't construe it as a

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binding judicial admission.

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They

But if you look at that statement, it's absolutely

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crystal clear.

I mean, their explanations to try to argue

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around that, frankly, just make no sense.

They say, well, you

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know, it's a colloquial usage.

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using it colloquially, but that's not the context.

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legal brief talking about the Copyright Act, introducing an

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argument as to why it's permissible and saying, okay, the only

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copying that occurs is in this context.

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excused by the fair use doctrine.

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That's legal terminology.

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THE COURT:

THE COURT:

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MR. MANDEL:

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That's not colloquial usage.

I'm sorry to interrupt you,

resale, but storage, is that a violation of the Copyright Act?

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That copying is

but the process of just using the cloud for storage, not

MR. MANDEL:

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This is a

That's --

All right.

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People can say copies and be

The simple act of storing?
Yeah.
It's certainly not something we challenge

in this case.
THE COURT:

Okay.

But why not?

If copying is going

on, why not?
MR. MANDEL:

Because in a case of pure storage, there

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probably is a fair use defense.

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about, we wouldn't have brought this lawsuit.

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these storage situations is they're all different business

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models that involve different things and do different things.

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In this context, the business model is quite clearly

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not about storage.
THE COURT:

If that's all we're talking
The problem with

It's about a marketplace, and it's about -I get that, but I just, I'm thinking poor

Bruce Willis who spent so much time and money on his
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collection.

I remember a friend of mine years and years ago

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took all his records and converted them to reel-to-reel, great

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period sound, all in one spot, I'm sure he regrets it now, but

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spent a lot of time and money doing that.

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reel-to-reels, would that be a violation?

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MR. MANDEL:

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THE COURT:

If he sold his

I'm sorry, if he sold his?
He took all his records, and then he

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trans -- he recorded it on reel-to-reel all the songs, I guess,

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he liked, in the he order he liked them.

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MR. MANDEL:

And then he sold them?

I think it would

be a violation.
THE COURT:

Okay.

But just having them in on the

reel-to-reel would not be?
MR. MANDEL:

Right.

And that's the distinction, and

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they really walked away from that.

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argument at the preliminary injunction stage.

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asserted fair use with respect to the upload process.

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haven't even done that here, I mean, because I think they

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recognize how weak the fair use argument is under the four

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factors, and so they've adopted the recharacterization

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approach.

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I mean, that was their
They basically
They

They haven't even attempted to posit this case as

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being about storage, and if you read Mr. Ossenmacher's

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deposition testimony, he was quite clear that this business

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model is not even viable as a storage option.

The only way

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they make money is by taking commission on sales.

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So this is not about storage.

This is about a

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marketplace in which Redigi profits by having sales of the

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recordings made.

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what we're seeking to enjoin.

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according to the data we receive to bring it up to the cloud,

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do sell it, or at least offer it for sale because that's what

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they're doing here.

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recordings, make some bucks at it or, you know, buy some other

That's what it's in business to do.

That's

The fact is that most people,

They're saying take your old, unwanted

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music out of it, turn it into something profitable.

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what they're pitching.

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on.

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lawsuit.

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That's

That's what they have built a business

That's what we say is illegal.

That's why we filed this

So I think storage really was a red herring, and I

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think that's why they moved away from it, frankly, because they

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know that defense isn't going to work.

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it done for them.

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decided to walk away from their own statements, recharacterize

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everything and adopted a new approach.

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It's not going to get

So what have they done?

They've basically

Now, the problem with that is, even apart from the

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fact that we say you can't do that, that you're bound by your

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judicial admissions, and we think that's a separate independent

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ground for summary judgment, the definitional argument still,

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from our perspective, also defeats their position.

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can call it whatever you want, you know, you can pretend that
SOUTHERN DISTRICT REPORTERS, P.C.
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Because you

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we're in a new century and it's Star Trek now, but it doesn't

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change the fact that there are two different phono records.

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A phono record is a material object in which sounds

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are fixed and from which they can be perceived, reproduced or

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otherwise communicated.

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is not a phono record.

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The electronic file, in and of itself,

In fact, the undisputed evidence shows that while this

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process of upload is taking place, you can't access that

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recording, you can't perceive it, you can't hear it.

It's just

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data that's being copied, we say.

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or moved, migrated, but whatever you want to say, there's no

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dispute that you -- it can't be a material object as a

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definitional matter.

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They would say transmitted

I mean that's a legal dispute, I guess, but we think

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that it's pretty clear that if you can't perceive it, you can't

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access it, you can't hear it, that's not a material object.

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And so you have created a new material object, and the process

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of creating -- and I should really say a phono record to be

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more precise.

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THE COURT:

So what is the phono record?

The phono

record is the server in Arizona?

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MR. MANDEL:

Yes.

The phono record is the server in

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Arizona, which now has digital sequence magnetically encoded on

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it.

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reproduce it, you can do all the things that you were able to

So that from that server, you can play it, you can

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do when it was on the user's home drive -- home computer, which

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is a separate phono record, a different material object.

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And that's what we think controls this case, as a

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matter of statutory definitions, and why they can call it

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whatever they want, they can say whatever they want, but it is

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reproduction.

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it's always been understood in its most fundamental

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application, the right to create a new phono record.

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some defense to be able to do that.

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It's a violation of the reproduction right, as

You need

Now, they talk about, well, then if you move it on

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your hard drive, that would be a problem under my

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interpretation because that's a new phono record.

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if it is, there are lots of things that may be technically a

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violation of the reproduction right, which would have a valid

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defense.

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your files on your hard drive.

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would be crazy to bring a case like that.

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a fair use right to do that, but it doesn't change the fact

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that there may be a reproduction.

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Well, even

Nobody is challenging the ability to move it among
Nobody would be -- anybody
Obviously, you have

Certainly there is in the context where we're talking

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about two different servers.

We're talking about two different

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computers.

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has, and we're talking about a material object that exists

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somewhere out in Arizona.

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reproduction of the copyrighted work in a new phono record in

We're talking about a material object that the user

And that, by definition, is the

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violation of the reproduction right in the absence of some

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defense; so....

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THE COURT:

No, but I see why you want to back off the

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statement you made the last time about selling the iPod because

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it seems to me that if the copy is made to your iPod or to your

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computer, you download it, and then you allow someone else

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access to your computer, do you sell the computer or the iPod

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or you sell them the right to come onto your computer iPod and

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listen?

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Mr. Adelman is saying goes on in Arizona.

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That would basically seem to be the same thing that

MR. MANDEL:
thing.

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Right?

Well, I don't know if it's the same

I guess if you sold your iPod, you're saying -THE COURT:

Well, I guess what it would really be is I

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got my iPod at home, and I allow my law clerk to go to my home

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and listen to it.

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getting the recording, the phono record in Arizona and allowing

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it to be accessed by someone other than the person who bought

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it.

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He's saying that Redigi is about making --

MR. MANDEL:

Nobody is saying that you can't in your

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home, you know, play something that's on your iPod and have

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somebody -- you could have somebody over and you could be

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playing recordings and give them access, in a sense, to the

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iPod.

24
25

I mean, that would -THE COURT:

Right, but what if you charged them for

it?
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

18
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1

MR. MANDEL:

2

THE COURT:

Right.
I have twins.

They each have an iPod, and

3

I can certainly imagine charging the other two to listen to

4

their songs.

5

MR. MANDEL:

Well, I think that's the point.

At some

6

point, when you move into the commercial realm, the facts do

7

change under, you know, what you might have a right to do, you

8

don't have a right to do.

9

fun hypotheticals.

10

That's why you can play with kind of

But in this context, it's not that you're just giving

11

access.

12

that recording.

13

copy, and that is a violation of the reproduction right that

14

has no defense.

15

effect, in their papers, in their answer, in their deposition

16

testimony.

17

I mean, you are basically selling and distributing
And in order to do that, you'd have to make a

And, really, that has been admitted, in

I can address the technological issues, as well.

18

They're not part of our motion.

19

to reach them in order to grant us summary judgment.

20

put them into issue in this case.

21

response to their motion.

22

discuss those at that time, but it depends on how your Honor

23

wants to --

24
25

THE COURT:

I don't think it's necessary
We didn't

We have raised them in

It might be more appropriate to

I'll give you a chance to respond to

Mr. Adelman, but I just want to make sure that I've heard you
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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CA5PCAPC
1

with respect to Redigi 2.0.

2

MR. MANDEL:

Okay.

With respect to Redigi 2.0.

I

3

think with respect to Redigi 2.0, our basic position is that is

4

not this case.

5

filed.

6

challenged in the complaint that we filed.

7

that's raised in their answer.

8

brought a declaratory judgment on.

Redigi 2.0 did not exist when this lawsuit was

It wasn't something that we thought about, knew about,

9

THE COURT:

10

MR. MANDEL:

11

THE COURT:

12

MR. MANDEL:

13

THE COURT:

14

It's not something

It's not something that they

So you're not seeking to -No.
-- enjoin that?
No.
And you're not seeking damages off of

that?

15

MR. MANDEL:

No, not in this case.

Frankly, we don't

16

even know, at this point, whether Capitol Recording has ever

17

been the subject of a sale through Redigi 2.0.

18

that was unveiled nine days before the close of discovery that

19

we learned about -- when I say unveiled, it was implemented

20

nine days before the close of discovery that we learned about,

21

for the first time -- a day before the close of discovery.

22

It's something

We haven't had an adequate opportunity to consider all

23

the facts that are necessary to address that.

And we, frankly,

24

think it would be an advisory opinion to get into at this

25

point.

It's not the case we brought about, and it's not the
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

20
CA5PCAPC
1

subject of our motion, certainly.

2

most fundamentally.

3

THE COURT:

4

MR. MANDEL:

So that's my position on it,

All right.
Let me briefly talk about the

5

distribution right.

Some of it is encompassed within the

6

discussion of the reproduction right for the reasons that I

7

said.

8

first sale defense?

9

isn't because the first sale doctrine, as enacted now, the

You know, the basic issue on distribution is, is there a
And our response on that is, no, there

10

existing law, is very clear that you have the owner of a

11

lawfully made phono record, of a particular lawfully made phono

12

record, has the right to dispose of possession of that phono

13

record.

14

The reason that Congress was considering at the time

15

of the Digital Millennium Copyright Act implementing a first

16

sale doctrine that would work in the digital context was

17

because it recognized that the existing law wouldn't allow

18

that.

19

office to prepare a report, which the copyright office did.

20

The copyright office recommended not amending.

21

not amended.

They decided not to do it.

Sent it out to the copyright

Congress has

22

And the bottom line is that there is no existing

23

defense that would allow you, in the context of a digital

24

transmission, to claim a first sale defense because you are not

25

distributing the phono record, the same particular phono record
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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CA5PCAPC
1

with which you began.

2

And, you know, again, they talk about their

3

technology.

One of the things that I think is interesting is

4

that Mr. Rudolph admitted at the deposition, they haven't

5

invented a new way of upload; this is, in fact, he says, a very

6

old way of doing it.

7

that the -- what the copyright office was actually considering

8

was some of the same kind of basic technology.

9

something new that Redigi invented by their own admission.

And that's important because, at the time

There's not

10

If you look, I think it's at Page 82 of the copyright

11

office report, they actually talk about, quote, unquote, "move

12

technology"; so that was kind of one of the proposals.

13

talk about move or forward and delete.

14

terminology, both of them, at Page 82, move or forward and

15

delete.

16

considered.

17
18
19

They

Now, they use that

So, you know, this is the same thing that was being
It's -- and it's borne out by all the evidence.

THE COURT:

How can I include that now?

You didn't

call an expert, right?
MR. MANDEL:

Well, we do have an expert in response,

20

who explains it.

I think if you look at what's undisputed,

21

even between their experts, you can tell that, but again, it's

22

really simpler than that.

23

basically defines the argument on distribution because if you

24

accept, which we think is right under the statute, that in

25

order to effect that upload, you have created a new phono

I think the argument on reproduction

SOUTHERN DISTRICT REPORTERS, P.C.
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CA5PCAPC
1

record.

2

definition, when you create a new material object.

3

You have, in effect, you've reproduced it, by

THE COURT:

What you're saying is a phono record is

4

that is my hard drive laptop, and then the new phono record is

5

a new server in Phoenix.

6

MR. MANDEL:

Correct.

And because of that, you have

7

not met the requirements of Section 109 of the Copyright Act

8

because you have not disposed of the particular phono record

9

with which you began.

10

And the copyright office is instructive because it's

11

basically explaining why it is that -- it doesn't spend a lot

12

of time on it because, frankly, it was pretty much a given that

13

digital transmissions are not covered by the first sale

14

doctrine.

15

be.

16

that point that you can see why it is the case, and it really

17

is just, again, a question of statutory language.

18

It was analyzing the question of whether it should

But the discussion is useful in terms of that -- making

It's not the same phono record that's being

19

distributed in a digital context because it does have to be

20

embodied or fixed in a new fixation on a new phono record in

21

order for it to be perceived or reproduced.

22

perceived or reproduced during the upload process, only when it

23

hits the hard drive of -- not the hard drive, the server in the

24

Redigi cloud, and that's a new phono record.

25

phono record with which you started, and for that reason, the

It can't be

It's not the same

SOUTHERN DISTRICT REPORTERS, P.C.
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23
CA5PCAPC
1

first sale doctrine does not apply.

2

think reproduction is at the heart of this because if we're

3

correct about reproduction, we're also correct about

4

distribution for the same reason.

5

THE COURT:

6

MR. MANDEL:

7
8
9

And that's basically why I

All right.
Unless your Honor has any other

questions, I think that is the gist of our motion.
THE COURT:

No, I'll let you respond to Mr. Adelman

when he's wrapped up.

Okay.

Thank you, Mr. Mandel.

10

Give me one second, Mr. Adelman.

11

MR. ADELMAN:

12
13

Your Honor, with your indulgence, I was

just going to ask if I could go to the men's room for a second.
THE COURT:

Okay.

14

back in five minutes.

15

restroom, they can do that.

That's fine.

Why don't we come

If anyone else needs to use the

16

(Recess taken)

17

THE COURT:

18

MR. ADELMAN:

19

THE COURT:

20

MR. ADELMAN:

Five minutes.

All right.

Is it Adelman or Adelman?

Adelman.

Okay.

Mr. Adelman.

Thank you, your Honor.

This case is

21

really not about a definitional issue.

22

evidentiary issue, which is what most cases should be about.

23

It's about plaintiff having the burden of proof, demonstrating

24

that there's a violation of one of his exclusive rights.

25

It's about an

The purpose of the Copyright Act, essentially, is to
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

24
CA5PCAPC
1

accept somebody's creation, to serve the ultimate goal of

2

promoting broad public availability of literature, music and

3

other arts.

4

reflects the balance between the two competing claims.

5

noted in 20th Century Music Corp. v Aiken, the Copyright Act

6

does not give the copyright control over all uses of his

7

copyrighted work.

8

are made exclusive to the holder of the copyright.

9

Copyright laws' limited scope of protection
As

Instead, it enumerates several rights that

The two rights that Mr. Mandel discussed today were

10

the reproductive right and the distribution right.

11

as the reproduction right is concerned, plaintiff has the

12

burden of proof of demonstrating that there was an actual

13

reproduction, and within the papers itself there is no evidence

14

that Redigi ever reproduced any of Capitol's files.

15
16

THE COURT:

What are the phono records?

MR. ADELMAN:

18

THE COURT:

20
21
22

I mean,

that's the language of the statute, right?

17

19

Now, as far

Right.

I mean, we all feel sheepish saying it

because we know what it means, those vinyl things.
MR. ADELMAN:

I actually like it.

I'm old school.

I

still have vinyl.
THE COURT:

The phono record is the material object in

23

which sounds are affixed by any method, now known or later

24

developed -- how's that for broad -- and from which the sounds

25

can be perceived, reproduced or otherwise communicated, either
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

25
CA5PCAPC
1

directly or with the aid of a machine or a device.

2

So what are the material objects here?

Mr. Mandel is

3

saying that the material object that is my laptop, and there's

4

a separate material object that is, you're calling it a cloud,

5

which makes it sound like it's etherial.

6

MR. ADELMAN:

7

THE COURT:

8

MR. ADELMAN:

9

THE COURT:

10

It's a hard drive.

It's a hard drive?
Yes, absolutely.

It's in Arizona.

Isn't that a separate

phono record?

11

MR. ADELMAN:

12

THE COURT:

13

MR. ADELMAN:

No, it's the same phono record.

How can it be the same phono record?
In our papers, we cited CM Paula, and CM

14

Paula goes through the process and CM Paula stands for the

15

fact --

16

THE COURT:

There are a lot of people here; so tell

17

them what that case is about.

18

MR. ADELMAN:

19

THE COURT:

20

MR. ADELMAN:

21

THE COURT:

22

MR. ADELMAN:

It's not about records.

No, it's not about records.

It's about greeting cards -Yes.

-- or plaques or something.
Exactly.

What happened was that

23

defendant in that action purchased 100 greetings cards with a

24

copyrighted design on it, and they used the chemical process to

25

lift the ink, the copyrighted picture, off of the greeting
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

26
CA5PCAPC
1

cards and placed them on tiles.

2

copyrighted material from the greeting cards to the tiles, and

3

then they sold those tiles.

4

the owner of the copyright to that design brought an action

5

against them for reproduction and distribution.

6

the Court found that it was not a reproduction.

7
8
9

THE COURT:

Right.

They transferred the

Then they sold those tiles, and

And, in fact,

And what lofty court found this

and what year?
MR. ADELMAN:

10

THE COURT:

11

MR. ADELMAN:

12

THE COURT:

13

MR. ADELMAN:

14

THE COURT:

15

MR. ADELMAN:

16

THE COURT:

It was -- I believe it was 19 --

1973.
'75?

1973, the Northern -1973.

The Northern District of Texas.
That's true.

Not the Supreme Court, not the Second

17

Circuit, not one of my colleagues here, but some guy in Texas.

18

I don't mean to disparage him.

19

but it's certainly not controlling precedent.

20

MR. ADELMAN:

He might have had great wisdom,

No, it's not, but it stands for the

21

logic with which we stand here today, which is Redigi has

22

developed technology which does ostensibly the same thing.

23

what CM Paul, the judge in CM Paul was saying is is that -- he

24

wasn't talking about phono records, but what he is saying is

25

you're not changing the phono record.
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

And

27
CA5PCAPC
1

What he said, in order to get a hundred tiles, you

2

must have purchased a hundred greeting cards and, therefore,

3

the plaintiff in this case has extinguished his right.

4

gotten the benefit of that right and, thus, the distribution

5

right has now been extinguished.

6

was entitled to sell that copyrighted material on the tiles.

7

THE COURT:

He's

And, therefore, the defendant

But the deference difference is that the

8

process there, by necessity, only allowed you to do one of

9

these at a time, right?

10

MR. ADELMAN:

11

THE COURT:

It's the same thing with Redigi.

Oh, no.

12

of these at one shot.

13

MR. ADELMAN:

14

THE COURT:

You could easily do a gozillion

You've just chosen not to.
No.

You've designed it so that it doesn't do

15

more than one, but if you wanted to do a million, you could do

16

a million like that.

17

MR. ADELMAN:

Right.

Well, that's what file-sharing

18

services do and that is specifically what Redigi wanted to

19

prevent.

20

copyright law.

21

the rights of the copyright owner and facilitate a sale of the

22

109, the first sale voucher.

23

make sure that their process worked perfectly, in that it

24

migrates the file from one hard drive --

25

They wanted to make sure that they followed the
They designed a system specifically to protect

THE COURT:

They went to great lengths to

What does it mean, it migrates the file?

SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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CA5PCAPC
1

MR. ADELMAN:

It's like a train, as we said in our

2

paper, your Honor.

3

ones and zeros, and it pulls it in a matter of seconds to the

4

cloud hard drive.

5
6

THE COURT:

It grabs the file on the hard drive, the

It pulls it one little one and then a zero

right behind it?

7

MR. ADELMAN:

Yes.

Actually, it goes in reverse, to a

8

certain degree, but again, that's exactly what it does.

9

the technology, like you had said earlier about Star Trek.

10

THE COURT:

11

MR. ADELMAN:

12

THE COURT:

That's

Right.
I mean 40 years ago --

I'm going to regret that one.

13

every blog in America is going to go with that.

14

I know

like the show.

15

MR. ADELMAN:

It has some truth in.

I didn't even

I mean, one of

16

the examples I was thinking of was Willy Wonka.

17

they put Tommy on the stage.

18

particles go across the top and, boom, there he was,

19

miniaturized, but still him in that TV.

20

believe?

21

Remember when

They beamed him, and you saw the

What's so hard to

No, but seriously, as far as data is concerned, why is

22

it so hard to believe that that occurs?

Because it does.

I

23

mean, they filed a patent on it.

24

farfetched for human beings, but for physical objects, in this

25

computer world, when 20 years ago, would you believe that data

Now, I agree, it's a little

SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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1

could sync or migrate through the air from your computer to a

2

handheld device?

3

take a handheld device and walk around and type to your friends

4

or make phone calls?

5

improves.

6

I mean, did you even believe that you could

No.

Technology changes.

We have very smart people.

THE COURT:

Okay.

Technology

This has happened.

Well, look, the difference between

7

migrating and copying could be significant.

8

you talking about migrating and using other analogies to

9

describe the process, and we're all groping for analogies, it

10
11

Earlier I heard

seems.
MR. ADELMAN:

It's true.

But, actually, I mean, I

12

object to the use of the word copying because in the case law

13

it's reproduction, and that, I believe, is different than

14

copying, but nevertheless --

15

THE COURT:

16

is the phono record, right?

But, again, it's the material object that

17

MR. ADELMAN:

18

THE COURT:

Yes.

So you've got a material object that is my

19

laptop, and material object that is the server, and it's not

20

the code.

21

someplace else, I don't think is really the issue, right?

22

the material object is the phono record.

23

The fact that my code got sucked out of this and put

MR. ADELMAN:

It's

Well, the thing is, I think London-Sire

24

also addressed this, is that -- well, they addressed one other

25

point, which was that the material object does not have to
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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CA5PCAPC
1

exist throughout the entire process to distribute a phono

2

record, but --

3
4

THE COURT:

Well, I understand that.

I'm not sure why

that's either here or there, at least for this case.

5

MR. ADELMAN:

Well, they're also -- I mean, part of

6

their reproduction right is that it's not perceivable, and they

7

clearly say that it doesn't have to be during the transaction

8

process, that transitory three seconds.

9

But as far as the material object is concerned,

10

there's no question, I think if you follow the logic of CM

11

Paula and what they were trying to say, that it's perfectly

12

permissible.

13

what's important?

14

It is that same unique file, and isn't that

What's important in copyright law is that iTune --

15

Capitol, through iTunes, sold a unique file.

16

say they're selling music tracks.

17

consumer, I have purchased that file.

18

rights associated to that file.

19

They certainly

They sold a file.

Me, as a

I am entitled to the

That is property for me, okay?

Now, under 109, once I purchased that file, the

20

distribution rights of Capitol, they're extinguished.

And,

21

now, I have the right to sell, dispose or destroy.

22

choice.

23

You only have the right to destroy it.

24

right to sell, and that's -- that's the antithesis of what 109

25

is about.

It's my

But what Capitol is saying, you don't have that right.
You don't have the

109 -SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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1

THE COURT:

Can I -- It seems to me Redigi 2.0 is

2

basically saying we've got this code.

3

access rights to that code, but before it gets downloaded on

4

your hard drive, it's going to get sent someplace else so that

5

the only phono record, under 2.0, is going to be sitting on a

6

server in Phoenix.

7

MR. ADELMAN:

8

THE COURT:

9
10

case.

That's correct.

And so Mr. Mandel said, that's not his

He's not pushing that case now, but that's where you

have moved to.

11

You've purchased the

Isn't that where we ought to be focused?

MR. ADELMAN:

Well, I think that's part of it,

12

absolutely.

13

get stronger and stronger.

14

plan from the beginning, which was cloud storage is where it's

15

at.

16

And as their technology develops, it's going to
But certainly, this was part of the

It's what everybody is moving to.
Everybody wants stuff in their cloud.

They want to

17

access it everywhere.

18

whole section of their agreement which focuses on cloud

19

service, and it allows all of those things that we've been

20

discussing to happen, move the files to the cloud service.

21

THE COURT:

In fact, iTunes and Capitol, they have a

I know that.

I get all that.

If we're

22

looking at the language of section 106 and 101, which is where

23

the definition of phono records is, I mean, it seems to me that

24

what we're dealing with there is a very antiquated provision,

25

which limits the focus to material objects in which sounds are
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

32
CA5PCAPC
1

fixed, which requires a process of taking code, putting it on a

2

server someplace, and that is the phono record.

3

MR. ADELMAN:

Correct, your Honor.

And in 2.0, that's

4

what Redigi does.

The user, instead of it coming directly onto

5

the user's hard drive, it's just directed to the user's Redigi

6

cloud.

So that's the first time that it's fixed and --

7

THE COURT:

Right.

I think you've got a great

8

argument under 2.0.

9

under the original, classic version of Redigi.

I think you've got a much tougher argument
Because it

10

seems to me what you're talking about is the process.

11

migration is not really any different than my playing my record

12

here, putting the phone next to it and having somebody record

13

it at the other end of the phone.

14

MR. ADELMAN:

15

THE COURT:

16

MR. ADELMAN:

17

THE COURT:

The

No, it's.

Let me finish.
Sorry, your Honor.

The phono record is here, and there's a

18

new reproduction of the phono record at the other end of my

19

phone.

20
21
22
23
24
25

MR. ADELMAN:

It's not.

It's the same data that was

on the hard drive.
THE COURT:

It's the same data that's basically coming

off of my record player.
MR. ADELMAN:
your phone?

You know, what's not on the recording on

The metadata that's encircled in that.
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

That's one

33
CA5PCAPC
1

thing.

2
3

THE COURT:

But the statute doesn't say anything about

metadata.

4

MR. ADELMAN:

5

THE COURT:

6

MR. ADELMAN:

7

THE COURT:

8

No, what I'm saying is --

It just says sounds.
Yes, I understand, your Honor.

It could be a crappy recording, and it's

still a copyright.

9

MR. ADELMAN:

10

technologically is not a copy.

11

unique file that you purchased from iTunes and moving it from

12

the computer's hard drive to the cloud's hard drive.

13

THE COURT:

That's a copy.

What Redigi is doing

It is actually taking the

I get that, but I'm not sure it isn't

14

still a new phono record, a reproduction phono record because

15

the way the statute is set up is it focuses on the material

16

objects in which the sounds are fixed.

17

You are focused on the unmaterial, the code that is in

18

the ether, and I don't think that's what the Copyright Act is

19

about.

20

obsolete.

Now, again I think Redigi 2.0 may have made all of this

21

MR. ADELMAN:

The copyright, well, reproduction is not

22

defined in the Copyright Act.

23

reproduction, in essence, is two files existing at the same

24

time, and that never happens with Redigi.

25

file existing at one time; so therefore, it's the same material

The case law indicates that

There's only one

SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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CA5PCAPC
1

object.

2

It's just in a different place.
THE COURT:

But it's sort of like if I combined my

3

photocopier and my shredder so that I made a photocopy and the

4

original, instead of coming out of the bin where I can pick it

5

up, goes straight to the shredder.

6

same time, but it seems to me the other one is still a copy.

7

MR. ADELMAN:

The two don't exist at the

They actually do exist at some point

8

together, in your scenario.

9

THE COURT:

No, they don't.

No, they don't.

It takes

10

a minute for that image to get transported from the original to

11

the copy, and if in the interim, while that is taking place,

12

the transfer to the second page is taking place, the original

13

is getting shredded, then they don't both exist at the same

14

time.

15

MR. ADELMAN:

But in Redigi's technology, there's no

16

copy.

17

There's no copy; so there's nothing to be shredded.

18

nothing to be deleted.

19

is not a forward and delete situation.

20

They're pulling the exact file from the hard drive.

THE COURT:

There's

There's no shredding or delete.

This

I guess I'm not buying necessarily the

21

argument that, as long as the two don't exist at the same time,

22

then the second one is not a copy.

23

argument --

24

MR. ADELMAN:

25

THE COURT:

I think you could use that

Right.

-- to justify the photocopy I just talked

SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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about not being a copy; so I don't think that's what the

2

language of the statute is.

3

MR. ADELMAN:

Yes, but the -- Well, I don't think the

4

language -- I think the language of -- As the case law has come

5

down, that's basically what's been intimated, that a copy is

6

like the file sharing.

7

and then you down load millions of copies to all types of

8

people.

9

You have a copy on your file sharing,

That's reproduction.

There's no question about that.

But Redigi is not copying or reproducing at all.

It's

10

how their technology works.

11

declarations trying to explain exactly how it works, that there

12

is no copying involved whatsoever.

13

the actual file that is being transported like in your Star

14

Trek example or migrating.

15

THE COURT:

16

MR. ADELMAN:

17

THE COURT:

18

MR. ADELMAN:

We spent a lot of time with

There's no deleting.

It is

Or your Willy Wonka.
Or my Willy Wonka.

Nicely done.
That's migrated.

That's how the

19

technology works.

20

rebuttable evidence in this case that says it doesn't work that

21

way.

22

the case, is that there's no two copies ever at the same time.

23

That's reproduction.

24
25

That's what the evidence says.

There's no

And that's what -- that's actually, I think, the heart of

There's no reproduction.
reproduction right.

Capitol only has a

They don't have a copying right.

SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

Copying

36
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1

is not in the statute.

Reproduction is what's been defined as

2

the right, and there is no reproduction of the file in the

3

Redigi system ever.

4

THE COURT:

Now, we haven't talked about it in the

5

papers, spent a lot of time on this, is that certainly

6

previously your client, through different counsel, has made

7

statements that copying does take place.

8

which takes place in the Redigi service occurs when a user

9

uploads music files to the Redigi cloud.

10

The only copying

Thereby storing

copies thereof in the user's personal cloud locker.

11

Now, I know you've worked hard to make that an

12

ambiguous statement, but, boy, that seems pretty emphatic.

13

Maybe that's why he is no longer counsel of record.

14

see how you get past that.

15

MR. ADELMAN:

16

past that.

17

I don't

Well, there are a number of ways to get

copying.

18

First of all, in the answer we've clearly denied

THE COURT:

Well, you can deny copying, but then when

19

you say that, it sure looks like you just admitted certain

20

facts that are going to be fatal.

21

MR. ADELMAN:

22

though.

23

It's not what's actually happening,

That's the first thing.

taken out of context.

24

THE COURT:

25

MR. ADELMAN:

The second thing is, it's

What is it taken out of context?
The only copying that takes place when a

SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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user uploads music to a Redigi cloud.

It is like we explained

2

in our files, it was not explained in the PI hearing papers.

3

We have explained --

4

THE COURT:

5

user's personal cloud locker.

6

what's in the cloud locker is a copy.

7

And it says it's a copy that results from the Redigi service

8

and the user uploading music, right?

9

Thereby storing copies thereof in the

MR. ADELMAN:

No.

This sentence says that what
That's what it says.

I mean, it's -- The way that cloud

10

locker storage works is that people put copies up into the

11

cloud.

12

It's within PI papers.

13

were not copying.

14

Redigi is not copying.

It's not a judicial admission.

In the answer they clearly said they

It's very difficult, especially in a preliminary

15

injunction situation, technology is often very hard to

16

describe.

17

you're putting together papers in a very quick scenario.

18

the ability to spend weeks with the plaintiffs discussing their

19

technology, understanding their technology, understanding what

20

they were doing, and understanding what it did.

21

our motion papers look the way they do.

22

It's often very hard when you just met your lawyer,
I had

That is why

It's unfortunate that we have to explain this away

23

because we shouldn't have to because no copying occurs on the

24

system.

25

archival copy that was -- that, in the event that there was no

The only copy that they were talking about here was an

SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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other copies on the system, they would place an archival copy

2

on the system in the --

3
4

THE COURT:
this statement says.

5
6

Look, that's not -- That is just not what
I think that's said.

MR. ADELMAN:

It's the essence of what it means, your

Honor.

7

THE COURT:

No.

Look, you may have changed your

8

theory.

You may have come to a deeper understanding of the

9

technology, but there's no way that statement is referring to

10

an archival copy.

11

That's just -- I mean, that is -- you can't

defend it as that.

You can't do it.

12

MR. ADELMAN:

13

a colloquial use of the word.

14

happening with the system.

15

THE COURT:

Well, your Honor, they don't copy.

It's

It just doesn't reflect what was

Well, I mean, you're moving for summary

16

judgment too.

17

the statements that were made that I just recited, there is a

18

disputed fact between your former lawyer and your current

19

expert as to what exactly goes on with this process.

20

It would seem to me, at the very least, based on

Should I make a credibility finding as to whether your

21

expert is making sense, or whether the more accurate statement

22

is the one that was previously made on your client's behalf?

23

MR. ADELMAN:

I don't think that you would have to do

24

that.

I think that, based on that there's no other evidence

25

other than declarations from the people who have put together
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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1

the technology stating, under oath that this is the way it

2

works, that your Honor can rely on it.

3

There's no opposing -- There's nothing from Capitol

4

saying it doesn't work that way.

5

technology.

They had the opportunity to look at the

6

technology.

The only evidence in the record is that no copying

7

takes place.

8
9

They didn't look at the

That is the evidence before you, your Honor.

THE COURT:
respond to that.

10

to hit on?

11

I mean -- All right.

All right.

There are other points you want

talk about 2.0.

12

What about 2.0.

And Mr. Mandel can

MR. ADELMAN:

Mr. Mandel says we're not here to

We are here to talk about Redigi and

13

Capitol's claim that they violate the reproduction right.

14

Capitol -- and the distribution right.

15

If

On top of that, what Capitol is trying to claim, which

16

I think is ridiculous, that the first sale doctrine does not

17

apply to digital goods.

18
19

THE COURT:

2.0 didn't come out until -- is a

Johnny-come-lately in terms of this case, right?

20

MR. ADELMAN:

21

THE COURT:

22

No.

I'm sorry.

When was this disclosed in this discovery,

that 2.0 was coming out?

23

MR. ADELMAN:

24

THE COURT:

25

Certainly 2.0 is in play here.

That 2.0 was already out.

When was 2.0 disclosed as part of

discovery?
SOUTHERN DISTRICT REPORTERS, P.C.
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2
3

MR. ADELMAN:

Probably, you know, within two or three

weeks before the end of discovery.
THE COURT:

All right.

I mean, it's not supposed to

4

work that way, but the case has radically changed because since

5

the filing of the papers, you are have changed your technology

6

in a significant way.

7

that they're locked into the discovery deadline that prevents

8

them from assessing this technology when a your argument is now

9

different than what it was at the time you --

10

MR. ADELMAN:

I don't think it's appropriate to say

It's not the argument that's different.

11

It's the technology -- the technology has improved to the point

12

where it fits in, even with what the plaintiffs are saying.

13

THE COURT:

But it's certainly different.

I mean, it

14

has an impact on Mr. Mandel's arguments.

15

difference as far as you're concerned, but Mr. Mandel's

16

arguments are premised not on 2.0, but on classic.

17
18
19

MR. ADELMAN:

I agree.

It may not make a

But what I'm saying is even

under Mr. Mandel's arguments, 2.0 is perfectly proper.
THE COURT:

Well, Mr. Mandel is saying 2.0 is not his

20

complaint, and it's not been tee'd up in this action.

21

saying it is tee'd up in this action.

22

well, if it is tee'd up in this action, don't I have to allow

23

additional discovery?

24

MR. ADELMAN:

25

You're

And I'm asking you,

Well, what -- I'm -- No because the --

We gave them the opportunity to look at the technology.
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

The

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1

technology for 2.0 was already in place.

2

released yet.

3

THE COURT:

4

MR. ADELMAN:

5

It just wasn't

Well, you said in two weeks -I'm sorry.

Wait.

Your Honor, I

apologize.

6

THE COURT:

No.

7

MR. ADELMAN:

8

THE COURT:

9

MR. ADELMAN:

I came onto this case on April 24th.

Okay.
And one of the first things that I

10

discussed with plaintiff's counsel was the technology and

11

looking at it.

12

discovery.

13

all part and parcel to the same system.

14

effects, okay -- was readily available for them to look at at

15

that time.

16

That was two months before the end of

Redigi 2.0 -- we're calling it 2.0, but it's just
It just has different

Because of marketing efforts, it wasn't released until

17

the end of May.

18

my clients until the middle -- until the middle, late end of

19

May.

20

only on this case for less than a minute, you know.

21

it together.

22

And, in fact, when they wrote you somewhere around June 20th,

23

they already knew about Redigi 2.0 but did not make the

24

request.

25

And they chose not to take the depositions of

I understand the discovery schedule was short, and I was
And we put

But nevertheless, they had their opportunities.

THE COURT:

But it's their complaint, right?

SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

42
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MR. ADELMAN:

2

THE COURT:

I agree it's their complaint.

So if they want this to be about Redigi

3

classic, I mean, why do you get to say no, no, no, I've decided

4

this is about something else?

5

MR. ADELMAN:

Well, it's not necessarily about

6

something else.

It's still the same law, and we're arguing the

7

same arguments.

What we're just saying is, hey, you know, even

8

if what you say is correct, Redigi 2.0 complies with that.

9

THE COURT:

Well, I'm not --

10

MR. ADELMAN:

11

THE COURT:

So I hear what -- I'm sorry.

I'm not sure they're disagreeing.

12

sure Mr. Mandel wants to engage on that right now.

13

I'm not

right, Mr. Mandel?

14

MR. MANDEL:

No.

Is that

Actually, we do disagree, and we did

15

brief, after our other arguments, as to why we think Redigi 2.0

16

also is a violation on the limited information we had.

17

THE COURT:

18

it's not this case.

19

MR. MANDEL:

But I asked you a minute ago, and you said

We don't think it's this case, but

20

obviously, they made a motion, and I don't know what your Honor

21

is going to say is a part of this case or not.

22

to consider it and think we're not entitled to discovery, we do

23

have an argument as to why we think it's a violation.

24

basic position is, no, it's not part of this case.

25

if it is going to be part of this case, we have to have an

If you're going

SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

But our

Certainly,

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opportunity for further discovery.

2

THE COURT:

Okay.

3

MR. ADELMAN:

4

THE COURT:

5

MR. ADELMAN:

Mr. Adelman?

Yes, your Honor.

Any other points you wanted to make?
Since you asked us not to make policy

6

arguments, if you wouldn't remind if I just reviewed my notes

7

for a second.

8

THE COURT:

Sure.

9

MR. ADELMAN:

Take your time.

If I could just address the DMCA report

10

for a second.

Our response to that is that the DMCA report is

11

not binding.

It's only entitled to get more deference based on

12

the power to persuade, and the Second Circuit has already

13

declined to follow this report's interpretation concerning

14

duration or requirements in cartoon networks.

15

The one part that I want to address about the report

16

is that Mr. Mandel said that they talked about moving, and the

17

technology was already available.

I didn't see anywhere in the

18

report that it discussed moving.

What it discussed was forward

19

and delete.

And, actually, it did say that --

20

THE COURT:

What did say?

21

MR. ADELMAN:

That the report did say that the -- that

22

their findings were premised on the fact that technology was

23

not available in 2001 to be able to effectuate Section 109, and

24

the report itself conceded that if the right technology was

25

available, it may be conceivable.

So I think that that rebuts

SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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Mr. Mandel's arguments on that point.

2

Unless your Honor has any other questions....

3

THE COURT:

4

No, I don't think I do.

I'll give

Mr. Mandel an opportunity to respond, if he wants.

5

MR. ADELMAN:

6

THE COURT:

7

MR. MANDEL:

Thank you, your Honor.

Okay.

Thank you, Mr. Adelman.

Your Honor, you know, Mr. Adelman talks

8

about they filed a patent, but I think it's important to point

9

out the patent they filed is not on this so-called Star Trek

10

technology that we're hearing about today.

11

look at the language of the patent, which was put in our

12

papers, what it actually says is for a digital media object,

13

which is a music file, to be offered for sale.

14

copied to a remote server, and served on the disk.

15

In fact, if you

It is first

That's the way they described their technology in the

16

patent they applied for, which Mr. Adelman just said is the

17

patent that they have.

18

process that, apparently, now they've decided is what truly the

19

technology is.

20

don't think it's necessary to delve into the technology.

21

There's nothing about some migration

And while, for all the reasons I've said, I

I do think that even if you look at it at the

22

technological level, based on the evidence before your Honor,

23

that it is clear that they delete the file.

24

our expert said in response, they said this in paragraph 14 of

25

his declaration and it's not disputed in the reply

Because what are

SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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1

declarations, that basically they use a function called set and

2

defile.

3

environment.

4

At least that's what they use in the Windows

And what that does is effectively truncates the

5

original file that's on the user's hard drive in pieces; so as

6

each piece is read into memory, they truncate that original

7

file so it gets smaller and smaller until, by the end, it's of

8

zero length and it no longer has the recording there.

9

Now, our expert said, and don't dispute this, that the

10

only reason that's there -- that has nothing to do with getting

11

the file to the cloud.

12

reason only, to make sure that that file that existed on the

13

hard drive can no longer be accessed and that the original file

14

is no longer on the user's hard drive.

That's there for one reason and one

15

So if that didn't exist, if they weren't using that

16

truncate function to set and defile, you could do everything

17

they do.

18

nobody would be disputing that there's a copy because that

19

would just be a basic upload, like any other upload, that ends

20

up with two copies.

21

cloud.

22

Take it in reverse order, read it in pieces, and

One here, the original, and one in the

Now, obviously, they didn't want that to happen; so

23

they had to figure out a way to make sure.

It wasn't good

24

enough to just read it in reverse order and send it up that

25

way, because you'd still be left with two, and that would
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

46
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defeat their argument on reproduction.

2

additional function, set and defile.

3

THE COURT:

4

MR. MANDEL:

So they have this

You think that's just a shredder?
Exactly.

That's what it is.

It serves

5

no purpose in terms of making sure that it's duplicated.

6

there only to be shredded.

7

in the record, but there's the evidence of their own

8

admissions, and not just in the brief.

9

It's

in the answer, upon the upload of an eligible file to the

Now, they say there's no evidence

There's the statement

10

cloud, such file is deleted.

11

That's their language.

12

it, and now they say, well, "such file" means the archival copy

13

that we were making temporarily.

14

Such file and all other copies.

That's how they affirmatively described

That's preposterous.

I mean, that's not what it says.

15

It says such file in reference to the eligible file is deleted.

16

And they said it again in their deposition on two occasions

17

when they confirmed that that statement was accurate, and

18

that's a statement that they made in a sworn declaration.

19

there is evidence that comes right from them that unequivocally

20

establishes that there is a deletion, and that we're only

21

talking about characterization.

22

So

And in terms of the copyright office report, if I can

23

just read from Page 81, what it says, they're talking about the

24

proposals.

25

THE COURT:

Page 81 of?

SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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MR. MANDEL:

Of the DMCA report that the copyright

2

office did, and they're talking about the similarities between

3

a physical transfer and the technological process that's going

4

to happen online.

5

enhance the similarity by requiring the use of technological

6

measures, in some cases referred to as 'move' or 'forward and

7

delete' technology that will disable access to or delete

8

entirely the source file upon transfer of a copy of that file."

9

And they say, "Some of these proposals would

So it is the same thing they were talking about, and

10

Redigi has said, we didn't invent something new.

11

we came up with a new way to do uploads.

12

a very old way, and, in fact, they admitted that they delete

13

the file.

14

It's not like

In fact, we're using

Now, Mr. Adelman says, why is it so hard to believe?

15

I mean, one of the reasons it's hard to believe is that if you

16

really had this new technology and you were coming into court

17

to defend a preliminary injunction, where you claim your whole

18

business is at stake, I think that might be front and center.

19

It might be one of the first things he said.

20

our technology doesn't make a copy.

21

anything close to that.

22

Oh, by the way,

But they didn't say

In fact, they admitted, clearly and unequivocally, in

23

the brief that they made a copy.

They admitted in the

24

declaration and in the answer, that they delete, and they

25

acknowledge that it at the deposition.

So the evidentiary

SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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record is absolutely clear on this point, and there is a

2

violation of the reproduction right.

3

And, in essence, all we have is what they're trying to

4

say, what they're straining to say, well, but there's not two

5

copies at the same time; so therefore, it shouldn't be a

6

reproduction.

7

the reasons that your Honor said.

8

photocopy machine and page by page copied it and shredded the

9

page that I copied, there's no dispute that you wouldn't have

10

But that's not what it means.

I mean, I -- for

I mean, if I stood at my

two at the same time, but what you'd end up with is a copy.

11

The fact of the matter is, the Copyright Act does not

12

permit you to reproduce the work and sell the reproduction.

13

Even if you destroyed the original.

14

original is irrelevant.

15

the reproduction right, and with it, the first sale defense, as

16

well.

17

Whatever you do with the

Now, I think that really disposes of

And I just want to such briefly on the first sale

18

defense.

Mr. Adelman talks about London-Sire, and the fact

19

that a material object doesn't need to exist throughout the

20

process, but London-Sire is a distribution case.

21

is not analyzing a first sale defense to decide whether the

22

particular phono record, which they used to begin, is what's

23

been sold.

24

violation of the distribution right, and they reached the

25

sensible conclusion, the same conclusion the Supreme Court

London-Sire

They were just analyzing whether there's a

SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

49
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1

reached in Tasini, that, yes, that's a violation of the

2

distribution right.

3

You are distributing with a phono record.

If you end up one here and you end up with one at the

4

other end of the process, that's a violation of the

5

distribution right.

6

to look at for first sale.

7

be the particular phono record, and if you look at London-Sire,

8

even they were very careful in a passage that really didn't

9

matter for purposes of the issue they were deciding, but is

But that's not the question that you have
For first sale purposes, it has to

10

critical in the context of this case.

They said, or more

11

precisely, when they were describing what the phono record is,

12

it's the electronic file or more precisely the segment of the

13

hard drive on which the electronic file can be found.

14

And that really is the point, that it's not the

15

electronic file, the data floating in the air that's the

16

material object.

17

the distribution right is violated, but there is no first sale

18

defense.

19

because you're interpreting different statutory language that

20

applies in each case.

21

of those provisions is not the same.

22
23

There's no inconsistency between those two positions

Phono record is the same, but the rest

The last point I want to just briefly talk about is
Redigi 2.0.

24
25

It is the hard drive, and for those reasons,

THE COURT:

I thought you didn't want to talk about

that.
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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MR. MANDEL:

Well, I want to talk about where it fits,

2

and since your Honor has asked about it and is interested; so I

3

want to explain our position on that clearly.

4

First of all, Redigi 2.0, according to the deposition

5

testimony, was implemented on June 11th, 2012.

We didn't take

6

the depositions in late May.

7

witnesses June 20th, I believe the 20th and the 19th, right at

8

the close of the discovery period, literally the day the

9

discovery period was closing.

We took the deposition of their

10

And that's when we found out about it, in a

11

deposition, when -- it wasn't something that anybody was even

12

focusing on or new existed.

13

that, oh, we do it this way now.

14

we didn't have an adequate opportunity to fully flush this out

15

and figure out what's involved.

16

first of all, we say it would be an advisory opinion, it's not

17

an issue here.

18

considered, there has to be a full opportunity for discovery.

19

It came up in answer to a question
So, you know, it's clear that

And that is the reason why,

And, secondly, certainly if it's going to be

Now, the discussions with counsel, and I think this is

20

an important point, part of the problems we had, to be honest,

21

is we were shooting at a moving target.

22

discussions with their prior counsel in which he frankly said,

23

look, we don't think we need to look at your technology if the

24

position you're taking is that it's a copy, and that's conceded

25

as you said in your preliminary injunction papers.

You know Mr. King had

SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

And he

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1

said, yeah, that's our position, and that's not in dispute.

2

We also submitted two case management plans to your

3

Honor, including one after Mr. Adelman was substituted in, that

4

specifically said the parties believe that the issues can be

5

resolved on summary judgment following fact discovery, and

6

that's why we're asking that you put off expert disclosures,

7

put off expert discovery until after the summary judgment

8

dates.

9

Now, we still believe that, based on the arguments we

10

made, but the fact of the matter is, they changed completely

11

the position that they were asserting.

12

for believing that was we thought we were all in agreement

13

that, of course, a copy is made and a deletion has occurred, as

14

they had said repeatedly.

15

we implemented a new technology that was not the subject of

16

your complaint, that was not disclosed in any documents we

17

produced, that was revealed for the first time in a deposition

18

the day before discovery closed or perhaps the day discovery

19

closed, and now it's tee'd up for decision I think is just not

20

fair, and it violates basically Rule 56D and the reason you

21

have that there.

22

discovery, you should be given that.

23

A part of our reason

So to now try and say, by the way,

That if you need an opportunity for further

So our position is it's not part of this case.

If it

24

is part of this case, we should have some discovery on it.

25

finally, if your Honor disagrees with us on those two points,
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

But

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and says, yes, it is part of this case, we don't agree that

2

it's not a violation.

3

opposition brief.

4

And we've explained that in our

And the reason for that is it's not the case that this

5

is just limited to the Redigi cloud.

I think the deposition

6

testimony that Mr. Ossenmacher offered when he first told us

7

about this technology, was that the file appears in two places

8

virtually simultaneously, in the Redigi cloud and also on the

9

user's hard drive; so that there are two copies.

So it's not

10

the case that there's one copy that's delivered just to the

11

Redigi cloud, and more fundamentally, it's not the case that

12

Redigi has any right to intervene in the relationship here and

13

deliver it in a different manner.

14

Certainly that's part of the Capitol/Apple

15

transaction.

16

by virtue of this, that the downloads can appear in a non-Apple

17

environment.

18

issues there that would really need to be thought about,

19

developed and further looked at.

20

I mean, Capitol and Apple are not agreeing that,

That's not what the agreement says; so there are

By no means do I want to say today that we concede

21

that Redigi 2.0 is okay.

We don't concede that point, but we

22

just don't think this is the appropriate vehicle, this motion,

23

to actually resolve that question.

24

brought us to court, and what is at the heart of this case, is

25

that they were setting up a used marketplace that would cover

And the question that

SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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all kinds of existing music that's already been purchased from

2

iTunes that's on users' hard drives that they would now be able

3

to resell.

4

What's going to happen in the future with respect to

5

if somebody who buys something in June has decided, you know,

6

they want to resell that, that's for another day, but that's

7

not what caused this lawsuit to be filed.

8

we're seeking relief against.

9

that's what we think is really at the heart of this case.

And that's what

That's why we're here, and

10

THE COURT:

11

Mr. Adelman, anything you want to say in response?

12
13

All right.

Thank you.

Any last words?
MR. ADELMAN:

Yes, some short comments.

All right.

14

So one point that I want to just address was that Mr. Mandel

15

said earlier that he said that files moving within the same

16

hard drive must be okay, but I think one of the things with

17

Redigi 2.0 is we have to know what uses fall within this

18

statute and what uses fall without.

19

files on my own hard drive and that doesn't violate the

20

production, but to move my file to a cloud does violate

21

reproduction?

22

Why is it okay to move

It doesn't seem to make sense to me.

THE COURT:

But wait, isn't that the same difference?

23

Just if I record my album to my cassette, and then put it in my

24

walkman, which I had 20 years ago, but are you suggesting that

25

is a violation or is not a violation?
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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MR. ADELMAN:

No.

What I'm saying is that the

2

computer itself moves the file around, through certain actions,

3

to make things more efficient, et cetera.

4

earlier that that would be ridiculous, that wouldn't be a

5

violation, but the file is clearly moving.

6

around the hard drive.

7

And Mr. Mandel said

It's clearly moving

So what I'm saying is, there's no difference between

8

the file moving around a hard drive and the file moving to a

9

cloud drive.

10

It's the same file is what I'm saying.

I just want to clarify that the patent that Mr. Mandel

11

was just referring to is not the patent that I was talking

12

about.

13

was talking about is a business model patent that Redigi filed

14

early on.

15

patent, which specifically discusses the migration process.

There's a second patent.

The patent that I'm talking about is a process

16

THE COURT:

17

MR. ADELMAN:

18
19

The patent that Mr. Mandel

And when was that filed?
That was filed within the last month or

two.
THE COURT:

Okay.

But why wouldn't you be also held

20

accountable to what you say in your patents, you know, as a

21

business model?

22

MR. ADELMAN:

I think we do, but there's a difference

23

between a process patent and a technology patent.

A

24

business -- a process patent and a business model patent.

25

There's differences.

And taking what Mr. Mandel just said out

SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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of context is not necessarily the whole of what the patent

2

stands for.

3

There's no question that on our computers we do

4

delete.

Though, I don't like the word delete because nobody

5

really deletes.

6

computer, it goes into the trash.

7

When you move it from the trash, it's still not really deleted

8

because anyone whose hard drive has crashed and has gone to the

9

genius bar knows that sometimes they can recover it.

I mean, when you delete something off your

10

THE COURT:

11

MR. ADELMAN:

It's not really deleted.

Right.
In this case, it's not deleted because

12

it's not there anymore.

This end truncates the argument that

13

their supposed expert, which -- who's only in security and not

14

really in computer science, said it's just not the way it

15

works.

16

papers, the way it's described in the declarations, and the way

17

I've described it today, is that the file actually moves,

18

leaves no data.

19

is the name of the file.

The way it works is the way it's described in our

The only thing that's left when the file moves

20

THE COURT:

Okay.

21

MR. ADELMAN:

A couple other points.

You mentioned

22

the London-Sire point.

That was actual reproduction.

It's a

23

file sharing case.

24

two different places because there was a reproduction.

25

case, it is the particular phono record that Redigi is selling.

That's what -- that two different files at

SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

In this

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It is the particular phono record that they're migrating from

2

the hard drive to the cloud.

3

THE COURT:

4

They're migrating the

phono record?

5
6

Wait, wait, wait.

MR. ADELMAN:

They're migrating the unique file.

The

unique file that they purchased from iTunes is my --

7

THE COURT:

The phono record is not the file.

The

8

phono record is the material thing that allows a listener to

9

hear sounds, right?

10

MR. ADELMAN:

11

THE COURT:

Right.

And so it's when you have that piece of

12

code, the file, on a particular material thing, which is, in

13

this case, a hard drive; it's no longer in the turntable --

14

MR. ADELMAN:

15

THE COURT:

16

MR. ADELMAN:

17

in the cloud, though.

18

THE COURT:

Right.

-- that's the phono record, right?
That -- Yes.

It's the same phono record

It is.

Well, how is it the same phono record?

19

Phono record is a material thing.

20

what's in the cloud is the same as the thing that's on my desk?

21
22
23
24
25

MR. ADELMAN:

So how can you say that

Because you can perceive it and listen

to it.
THE COURT:

But that's -- It's material.

something doesn't make it material, right?
MR. ADELMAN:

No.

SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

Listening to

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2

THE COURT:
the time.

A material -- I listen to the radio all

The radio is material; the songs aren't.

3

MR. ADELMAN:

4

THE COURT:

5

MR. ADELMAN:

6

The ability to hear it, though.

The ability to hear it makes it material?
Without the material object, there could

be no ability to hear it.

7

THE COURT:

But that is the point.

That is what the

8

phono record is.

9

fixed, and so the argument of the plaintiffs is that the phono

10

It is a material object in which sounds are

record is the file on a hard drive.

11

MR. ADELMAN:

12

THE COURT:

The hard drive --

And that you, therefore -- that to have

13

the same thing, the same original in Phoenix is a non sequitur,

14

right, if the hard drive is still on my lap?

15

MR. ADELMAN:

16

THE COURT:

It's just the same as in CM Paula.

But that's a 1973 case involving greeting

17

cards and somebody taking stencils and putting them on top of

18

greeting cards.

19

MR. ADELMAN:

20

THE COURT:

21
22
23
24
25

The logic still applies.

But that logic is -- I'm not bound by that

logic.
MR. ADELMAN:

No, you're not.

I'm trying to persuade

you to that.
THE COURT:

All right.

So then you're really relying

on the Northern District of Texas.

That is your case.

SOUTHERN DISTRICT REPORTERS, P.C.
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2

MR. ADELMAN:

That's a small point.

We're saying

there's no reproduction; so you're right.

3

THE COURT:

Okay.

But it seems to me you keep going

4

back to the suggestion, which is appealing to the casual

5

observer, that what you own is the sounds, but you don't.

6

you buy these things, what you own is the piece of code that's

7

on your hard drive or your iPod.

8

MR. ADELMAN:

9

THE COURT:

10

When

Yes.

That's the phono record.

MR. ADELMAN:

You own that particular copy.

Okay?

11

Having -- It would flip the law on its head if the law said

12

that in order to sell that phono record, I had to sell my hard

13

drive.

14

purchased a music track from iTunes.

15

me.

16

my hard drive, it's mine.

17

says --

18

If I wanted -- I own that track.

For $1.29, I

ITunes delivered it to

Whether it's in my cloud, they delivered it to me, or on

THE COURT:

19

arguments.

20

arguments there.

21

I now own it.

It's a sale.

It

Now, I think you're moving into policy

Now, I think you're arguing and there's some great

for Congress, right?

They're not for me, though.

22

MR. ADELMAN:

23

THE COURT:

No.

They're really

They're actually for you.

We the people make the laws.

You're

24

asking me to basically take over the drafting, and I guarantee

25

I can do it better than Congress will, but I don't have that
SOUTHERN DISTRICT REPORTERS, P.C.
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authority.

2

MR. ADELMAN:

3

was created from Bobbs-Merrill.

4

Before Bobbs-Merrill there were some cases about first sale,

5

but it really didn't exist in the way it does today.

6

Bobbs-Merrill, in essence, codified first sale, and Congress

7

took Bobbs-Merrill and said, yes, this is what we want to do

8

now.

9

do so because I think --

10
11
12

I think you do.

But I mean, Section 109

Bobbs-Merrill was court's law.

So, yes, I think you have the absolute right and power to

THE COURT:

That's another conversation about courts

and their authority.
MR. ADELMAN:

I know, your Honor, but if I could just

13

say I think what Redigi is doing is perfectly proper under the

14

copyright law and, therefore, the arguments we're making are,

15

while may be policy, are founded in at least some law and, you

16

know, the arguments against the policy are nowhere.

17

evidence of it.

18
19
20

THE COURT:

There's no

Well, I think the argument is against the

policy having been made.
MR. ADELMAN:

I don't think Mr. Mandel --

I have not.

I don't mean the policy.

I

21

mean, the definitional issue about -- I mean, we argued it; so

22

I'm not going to reiterate it.

23

So the last two things.

One is that Mr. Mandel didn't

24

point out the page and section, but Mr. Ossenmacher in his

25

deposition never said that there are two copies.
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

He never

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said.

He described the technology exactly the way I've been

2

describing it today, the way we described it in our papers.

3

It's completely consistent.

4

And the last thing, his comment about iTunes.

5

does not tell you you cannot -- where to put the file.

6

know, by default they put a file in a certain place; so that

7

the files get delivered all into the same folder.

8

could put that folder anywhere, and there's nothing in the

9

terms -- A, there's nothing in the terms of service that says

10
11

ITunes
You

But you

you can't put that folder into the cloud.
In fact, Apple actually encourages you to put it into

12

their cloud or put it into, you know, any other space.

13

Nevertheless, Apple isn't here.

14

Redigi putting the files into the cloud, and I don't think

15

that's an issue here.

16

THE COURT:

Apple isn't objecting to

Thank you very much, your Honor.

Okay.

All right.

Let me thank all the

17

lawyers, those who argued and those who participated in

18

briefing and preparing for the arguments.

19

exceptionally well done.

20

I don't always get briefs of this caliber on a subject that's

21

very interesting in which, you know, obviously, the lawyers

22

have to educate the Court.

23

job of that each of you so thanks.

24
25

It really was very

I thought the briefs were terrific.

So that's, I think you did a good

I'm going to reserve.

I have a lot to think about.

know this is an important issue for both of your clients and
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

I

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beyond that.

There's a large public and other interests that

2

are very focused on this.

3

want to just temper everyone's expectation to acknowledge that

4

we're in a court of law here.

5

blank slate, and so ultimately, what this is about is

6

interpreting and applying an existing statute.

7

up on that will make some people happy and some people unhappy,

8

but it's -- you know, don't confuse what I'm doing with what

9

the folks in Congress will be doing, where they will be

It's not lost on me, but again, I

We're not making policy on a

And where I end

10

balancing different policy arguments and reaching conclusions

11

based on the strength of those arguments.

12

something that eventually is going to have to happen and

13

probably is already happening.

14

Great.

Thanks a lot.

And so that's

Let me thank the court

15

reporter, who has worked feverishly the whole time and we

16

really benefit greatly from her skills and talents.

17

the technology is truly not that advanced.

18

that much in 50 or 60 years.

19

(Adjourned)

Okay.

Although,

It hasn't changed

Thanks.

Have a good day.

20
21
22
23
24
25
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]