Home » Copyright/Intellectual Property » Disney’s lawsuit against Redbox may have backfired

Disney’s lawsuit against Redbox may have backfired

27 February 2018

From Engadget:

Disney’s attempt to prevent Redbox from buying its discs for rental and resale may have blown up in the House of Mouse’s face. The Hollywood Reporter describes how District Court Judge Dean Pregerson sided with Redbox to shoot down a Disney-mandated injunction. In addition, Pregerson contended that Disney may itself be misusing copyright law to protect its interests and its own forthcoming streaming service.

If you’re unfamiliar with the backstory, Redbox didn’t have a deal in place to procure Disney DVDs and Blu-rays for its disc rental kiosks. So, the company simply bought the discs at retail, often snagging combo packs that include a DVD, Blu-ray and a download code for the movie as well. Redbox would then offer up the discs for rental, and sell on the codes at its kiosks for between $8 and $15.

Such a move enraged Disney, which includes language in its packaging and on the website demanding that users must own the disc if they download a copy. But this is where Pregerson began to disagree, saying that Disney cannot dictate what people do with copyrighted media after they have bought it. Specifically, that there’s no law, or explicit contract term, that prevents folks from doing what Redbox did with Disney discs. Although it’s possible that Disney can amend the wording on its packaging in future to make its objection to reselling legally binding.

Link to the rest at Engadget and thanks to Felix for the tip.

PG thinks a lot of overreaching contract language printed on product packaging or popped up on a computer screen on a click-to-accept basis may be difficult to enforce if such language goes very far beyond what the copyright laws protect.

While he does not advise anyone to violate the rights of a copyright owner or any other owner or licensor of intellectual property, PG suspects a rule of reasonability will be applied more liberally by most judges to shrinkwrap and fine print contracts included as part of a product’s packaging, click-to-accept agreements or website terms and conditions referenced in a small-print link at the bottom of a computer screen.

PG suggests that customers/visitors, etc., read and understand such documents, but observes that a great many IP owners rightly hesitate before applying sanctions to violators more serious than terminating customer access to the protected material.

At least in the United States, if a judge sees anything resembling a trap for the unwary, particularly an unwary consumer, that judge will seek and find a reason to avoid enforcing provisions that overreach. Of course, most individuals are not anxious to be the test case under which the agreement is voided in whole or in part.

Copyright/Intellectual Property

10 Comments to “Disney’s lawsuit against Redbox may have backfired”

  1. “Although it’s possible that Disney can amend the wording on its packaging in future to make its objection to reselling legally binding.”

    And in doing so may find their sales dropping (which might be why it was worded as it was in the first place.)

    Many people will refuse to pay ‘bought’ prices for things they can’t really ‘own’ and have the right to resell/give away.

    Sorry, the more you try to control it the less people will think it’s worth to jump through your hoops to view it.

    • Really? Cuz iTunes and Amazon seem to be doing just fine with an identical model.

      • And are they charging the same?

        Like ebooks, most of us don’t mind paying a few bucks for one, but say ‘never mind’ when we see them over a certain price.

  2. I wonder if Disney’s lawyers remember the origin of the First Sale Doctrine.
    (NYC publishers tried to use copyright and licensing to control the post-sale use of books. Courts all the way to SCOTUS said “Hell no!” )

    A more recent precedent was the rise of home video rentals.
    Businesses from BLOCKBUSTERS on down got their start by buying retail copies of movies and renting them out.

    So REDBOX is walking a well-trod road.
    Disney is risking an extension of First Sale to digital content.

  3. I’ll add something about click-through EULAs, TOSs, and other my-way-or-the-highway agreements. My experience is with software, not media, but I observe that many software vendors are not eager to enforce the click-through agreements that their legal departments insist on.

    Both consumer and enterprise software is very sensitive to public opinion, especially in this day of social media and open public platforms. Many product executives are much more worried about falling sales and service cancellations than things like sharing a manual (enterprise software licenses frequently have an NDAs on instruction manuals) or an extra backup copy that the click-through forbids. Users’ power to complain justifiably is much stronger than a EULA that says the software is not warranted for any purpose and may cause damage, which most EULA do specify.

  4. The more things change… I’ve been working with computers and software since the very early 80’s, and I can still remember how the ‘Big Boys’ tried and failed to enforce the ‘no copying’ rule. It didn’t work then and it won’t work now.

    Beyond the futility of this kind of bullishness, I believe the erosion of consumers ‘rights’ has probably done as much to turn the average consumer towards pirates as the ‘everything the market can bear’ pricing.

    Piracy and streaming, although very different, are two sides of the same coin. It’s consumers saying that buying digital content is no longer value for money.

    Consumers, especially the younger ones, now see all large corporations as the enemy, so they feel no shame in hurting the enemy where it hurts.

    On a philosophical level, all commerce is based on a tacit agreement that the product = value for money. Digital content has allowed ‘manufacturers’ to redefine the meaning of ‘product’. Consumers who buy that product are withholding their money because they do not see value for money, especially when they can get the same product for much less

  5. You could, at least in part, blame the problem on DRM. If the movie industry hadn’t prevented people from legally ripping their movies the way they can rip CDs, they wouldn’t have this problem.

    Of course, they might feel the problems they’d have instead would be even worse…

  6. What I find interesting is that the description misses something rather “significant” in the rental biz. The versions sold at retail stores like Walmart are licensed for home use only — and separate from the “packaging”, Disney sells rental versions as well as versions for “showings”. This last one is not religiously enforced — no one is chasing the local school board for showing a copy of Madagascar at the school without paying the higher “showing” price. This is not unlike the costs they charge when showing a movie in a theatre.

    But whereas a “home” use / single family license is set at the $20 mark (or less), a “rental” license has routinely been $100 or more. So back in the days of Blockbuster, you had to buy the “rental” version @ $100 a pop if you were going to be renting it out (that was the license that Blockbuster had to pay).

    And when you play the movies, the different versions have different licensing info clearly indicated. Now, outside of dealing with chains like Blockbuster, the production companies weren’t actively chasing the little 7-11 that also rented movies…they frequently bought the version from Walmart and rented it out. I can remember being in Walmart the day one of the big movies came out, and a guy was going through buying 20 bags of milk, 10 dozen eggs, etc. — and 5 copies of each of the latest “hits”. Clearly a business with intent to rent.

    You are buying something with a set license and the license for the home use / single family price is $20. You want something else, you pay more. Not unlike software, as someone mentioned above, you don’t get to buy one copy of a program and then install it on your computer, and everyone at your company. You have to buy a site license.

    While the “packaging” rules are interesting, and I agree with PG that a consumer wouldn’t get caught by the rules, Redbox is NOT a consumer. It is a business with people who should know these things; I think the bar will be considerably higher. It will clearly be appealed…none of the production companies can let it stand without protecting their IP licensing schemes.


    • The danger for Disney now is that the judge might invalidate the license terms on the consumer version and apply straight First Sale rules.


      At that point Disney would have to argue DVDs and BDs are software to justify aplying any kind of licensing terms to the physical media.

      Disney might be headed for a quagmire if they don’t settle before the trial starts.

      • Here’s the original 1908 ruling that created tbe doctrine.


        Note how the phrasing undercuts the idea of separate pricing for/prohibition of rental applications.

        Also, this:

        “The case centered on the publisher setting additional terms not specifically stated in the statute and claiming that the work was licensed and not sold. The Court’s ruling established what came to be known as the “first-sale doctrine”, which was later codified as § 109(a) of the Copyright Act of 1976.”

        To an extent, Disney is asking the judge to legislate and create an exemption for video similar to the one for music and software, something tbat is properly up to Congress to do.

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