Disney – Not the Happiest Place. A California federal judge has denied Disney’s motion for a preliminary injunction that would have stopped Redbox from selling movie download codes. And on top of the Judge denying Disney’s injunction request, he concluded that Disney is leveraging its copyright monopoly beyond the scope of its rights stating:
“This improper leveraging of Disney’s copyright in the digital content to restrict secondary transfers of physical copies directly implicates and conflicts with public policy enshrined in the Copyright Act, and constitutes copyright misuse,” the judge wrote.
To summarize, Redbox allows you to rent physical copies of movies. They have distribution deals in place with major studios like Warner Bros., 20th Century Fox, and Lionsgate that allow them to offer their films for rental soon after they’re released on home video. However, Disney has no such deal in place, leaving Redbox to purchase actual retail copies of the studio’s titles. Disney is known for bundling digital download codes allowing customers to download a digital version of the movie after buying the DVD. Printouts of those codes are what Redbox is now selling directly to its customers, despite the fact that retail copies feature language the specifies that digital codes are “not for sale or transfer.”
Disney argued such a practice interfered with its branding, relationship with customers, copyright infringement and deals with licensees. It asked the court to enforce a preliminary injunction against Redbox to stop them selling the codes.
“Redbox is selling our digital movie codes in blatant disregard of clear prohibitions against doing so,” the company said in a statement to Variety. “Their actions violate our contracts and copyrights, and we have filed this action to stop Redbox’s unauthorized conduct.”
The judge sided with Redbox and pointed out that Disney loses the right to exclusively distribute copies of its work as soon as that work is placed “into the stream of commerce.”
A good “peeling back” of the realities of unilateral “terms & conditions” on labels:
Indeed, the presence of other, similarly assertive but unquestionably non-binding language on the Combo Pack boxes casts further doubt upon the argument that the phrase “Not For Sale or Transfer” communicates the terms or existence of a valid offer. The packaging also states, for example, that “This product . . . cannot be resold or rented individually.” This prescription is demonstrably false, at least insofar as it pertains to the Blu-ray disc and DVD portions of the Combo Pack.
The Copyright Act explicitly provides that the owner of a particular copy “is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy.” 17 U.S.C. § 109(a); UMG Recordings, Inc. v. Augusto, 628 F.3d 1175, 1180 (9th Cir. 2011) (discussing first sale doctrine). Thus, the clearly unenforceable “cannot be resold individually” language conveys nothing so much as Disney’s preference about consumers’ future behavior, rather than the existence of a binding agreement. At this stage, it appears that the accompanying “Not For Sale or Transfer” language plays similar role.
You can find Judge Pregerson’s Decision here
For now, Disney has lost this first copyright battle against Redbox. However, this will most likely not be the end.
Resources:
https://www.theverge.com/2017/12/1/16724344/disney-redbox-lawsuit-digital-download-codes
http://variety.com/2018/biz/news/disney-redbox-injunction-judge-denies-1202706168/