Capitol Records (EMI) was denied a motion request for a preliminary injunction in the U.S. District Court in New York on February 8.

ReDigi, an online marketplace for pre-owned digital music and revolutionary cloud service technology that verifies the legitimacy of a digital music file before it can be uploaded for storage, won a major victory in a court hearing when Capitol Records was denied a request for a preliminary injunction in an attempt to shut down ReDigi.

In Capitol’s filing, the label challenged the legal principles at the foundation of the entire cloud computing industry, worth an estimated 41 billion dollars per year. Capitol’s challenge to the process of ReDigi’s cloud computing technology has drawn the ire of both consumers and industry leaders such as Google, which petitioned the courts for permission to file its own brief in the case.

“This is a fascinating issue,” stated District Judge, Richard J. Sullivan, who turned down Capitol’s request for a preliminary injunction. “It raises a lot of technological and statutory issues.”

ReDigi transposes the familiar process of selling a used CD or LP onto the digital world, enabling consumers to exercise their ownership rights lawfully, observing and preserving the legitimate rights of the artists and labels in their copyrighted music.

ReDigi’s Founder and CEO John Ossenmacher said of the decision:

“We are grateful for the judge’s decision in our favor. Our technology is helping consumers unlock billions of dollars of previously unrealized wealth in their digital media collections. We hope today’s ruling will help to expedite the trial so that we can get back to our business and providing consumers with access this incredible technology. And we hope Capitol can get back to their business and find a way to catch up to the times instead of trying to stop the innovation process, denying rights to their paying customers along the way.”

“Technology has done a great job of virtualizing physical goods, such as removing the clutter of records and CDs in our living rooms. Technology can now make the virtual goods feel like physical,” explains Prof. Larry Rudolph, ReDigi’s CTO. “Our advanced technology can distinguish legally acquired online music files from those ripped from a CD or file shared, but more significantly, our use of cloud computing and other modern computer techniques makes transfer of ownership compatible with copyright regulations. ReDigi is the pioneer of the ‘cloud as the digital goods marketplace’ — the marketplace of the future — where people go to buy and sell and where sophisticated technology ensures safety, legality, and convenience.”