Redigi – Did Ossenmacher Know He Was Risking Personal Liability?

by Lee Gesmer on September 1, 2016

Redigi - Did Ossenmacher Know He Was Risking Personal Liability?

In August, MediaPost reported that Redigi and one of its founders, John Ossenmacher, had filed bankruptcy:

“ReDigi recently stipulated to pay Capitol $3.5 million in damages, but also appealed the underlying copyright infringement finding to the 2nd Circuit Court of Appeals. This week, the company said in an appellate filing that it had declared bankruptcy in U.S. District Court for the Southern District of Florida. ReDigi co-founder John Ossenmacher also declared bankruptcy in the same court.” (link)

Very likely, this ends the appeal to the Second Circuit.

I’ve written about this case several times, and in April 2013 I observed:

In addition, Capitol may seek leave of court to add as defendants the individual owners and employees of Redigi that exercised control over or benefited from the infringement.  While Redigi could oppose such as motion as coming too late in the case, a decision would be at the discretion of the judge. As Capitol Records showed in its copyright suit against MP3tunes and Michael Robertson, Capitol is not above suing not only corporate infringers but their founders and owners. (See: The Record Labels Want My Minivan).* The philosophy of the record companies in many copyright cases may best be described as, “never kick a man when he’s down, unless that’s the only way to keep him there.” Capitol may be preparing to put on its steel toe boots in this case. (link)

In fact, this is what transpired. In September 2013 Capital Records amended its complaint to include Redigi founders John Ossenmacher and Larry Rudolph as defendants.

I also noted that –

According to the court decision Redigi consulted legal counsel before launching Redigi and engaging the recording industry in a test case.

A test case can be a great idea, but I can’t help but wonder whether the lawyers Redigi consulted warned Messrs. Ossenmacher and Rudolph that they risked personal liability. Business people are told that a corporation or LLC protects them from personal liability, but there are many exceptions to this rule, and one of these is copyright infringement. To quote a New York federal court on this issue:

It is well established that all persons and corporations who participate in, exercise control over or benefit from an infringement are jointly and severally liable as copyright infringers.  . . .  An individual, including a corporate officer, who has the ability to supervise infringing activity and has a financial interest in that activity, or who personally participates in that activity is personally liable for infringement.

Arista Records LLC v. Lime Grp. LLC, 784 F. Supp. 2d 398, 437 (S.D.N.Y. 2011).

Sadly, I have met many lawyers, including “IP lawyers,” who were unaware of this fact. I hope Mr. Ossenmacher’s lawyers were not in this group, and that he knew the personal risk he undertook when founding Redigi.

Previous post:

Next post: