From Copyright and Technology:
A ruling from a California district judge last month impacts an area we explore here from time to time: when you purchase a digital content product, what rights do you have to that product, and are you buying it or licensing it? Judge Dean Pregerson’s recent ruling in Disney v. Redbox helps define the boundaries between sale and license, but it could hamper media companies’ plans for bundling physical and digital content together.
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Like Blockbuster before it, Redbox has had a contentious relationship with Hollywood studios. It takes advantage of the first sale provision in U.S. copyright law, which enables a purchaser of a copyrighted work to dispose of it in any way — sell, rent, lend, give away, throw away — without any involvement from the copyright owner. The studios have been concerned that Redbox DVD and Blu-ray rentals cut into their sales of those products.
Around nine years ago, three major studios (not including Disney) had tried forcing Redbox to stop making new releases available and to wait until they had been in theaters for at least four weeks. Redbox responded by claiming that the studios were colluding to limit Redbox’s ability to buy their DVDs and Blu-rays in the same ways that ordinary consumers can — in other words, to use their copyrights to violate antitrust law. Those cases settled, so no court decided the issue.
Redbox’s accusation was an example of a legal doctrine called copyright misuse. Intellectual property misuse — it applies to patents as well as copyrights — basically means using your intellectual property in ways that extend your power beyond the rights granted to you by intellectual property law. Copyright misuse doesn’t come up very often, but when it does, it usually applies to situations where copyright holders act to restrain trade or fix prices.
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In its complaint, Disney claimed that consumers who buy Combo Packs are forbidden, by an agreement in the packaging, from transferring ownership of the download codes. It also noted that the download code redemption sites (MoviesAnywhere.com and RedeemDigitalMovies.com) contain language requiring users to “represent” that they own the discs when they redeem the download codes.
Disney moved for a preliminary injunction, which would force Redbox to stop reselling the download codes. Redbox countersued, claiming (among other things) that its actions were lawful under first sale and that Disney’s restrictions on the download codes are another flavor of copyright misuse.
Judge Pregerson, in his order denying the preliminary injunction, agreed with Redbox. He said that the terms in Disney’s license agreement on the download codes required consumers to “forego their statutorily-guaranteed right to distribute their physical copies of that same movie as they see fit” if they want to “access digital movie content, for which they have already paid”, that the court was likely to find that “those terms improperly grant Disney power beyond the scope of its copyright”, and thus that Disney is engaging in copyright misuse.
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If this holding sticks as a precedent, it could inhibit development of various types of physical-plus-digital bundling deals for media products. As we’ll see, the details of physical/digital bundles can be subtle, and the law could cause media companies to question their own product development decisions.
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Consider “P+E” (print plus e-book) bundles in book publishing. Amazon has a P+E bundling program called Kindle MatchBook. It ties Kindle e-book downloads in this program to the same accounts as those who bought the print books. This process makes it virtually impossible to transfer the e-book downloads to other people, and users can get e-book versions of books they bought in print long after they have resold or disposed of those books. Therefore Kindle MatchBook is unlikely to be susceptible to copyright misuse allegations of the type raised by Redbox.
On the other hand, there’s Shelfie, the Canadian startup that was recently acquired by Kobo. Shelfie works by requiring users to hand-sign their names on the copyright pages of print books (that they could have gotten from anywhere) as proof of ownership, and then scan them with the Shelfie app, to get free or discounted e-book versions of those books. One could argue that this diminishes books’ potential resale values and therefore falls under the same copyright misuse rubric as Disney’s Combo Packs — except for the fact that the Shelfie “product” is purchased separately from the print books, and therefore users aren’t “access[ing e-book] content for which they have already paid”.
Link to the rest at Copyright and Technology
I wrote about this myself a few weeks back.
It’s interesting to note that, technically, you’re legally required to destroy or pass along any copies you make of original content when you pass along the original content—for example, MP3s you ripped from CDs. But I doubt anyone really bothers to do that.
And yet, the judge is using a similar principle as a basis for his finding of copyright misuse—that you’re not supposed to pass along the physical copy of the movie without passing along the digital copy, too.
Also, perhaps a crowning irony is that the only reason we have this fuss over the provenance of bundled digital copies is that the movie studios imposed DRM requirements that keep media owners from ripping movie discs like they could rip CDs. If people could legally rip those discs, there wouldn’t be any need for bundled digital copies.
(And the further irony is, of course, that movie disc DRM is so terrible that it doesn’t actually stop anyone with a little technical knowhow from ripping them anyway.)
In any case, it will be interesting to see how this all plays out.
You don’t really need to know more than this:
http://www.softpedia.com/get/CD-DVD-Tools/CD-DVD-Rip-Other-Tools/DVDFab-Copy-Suite.shtml
(or equivalent)
…to back up a movie to a home video server.
Or take a stroll through a Staples or OfficeMax softward aisle.
Now, experienced techies can find free online too!s to do the same but for non-techies the commetcial products work fine and usually have three step GUI’s:
1- insert disk
2- choose target p!atform/format (App!e, XBOX, PS3/4, phone, etc) and file name
3- click go.
Makes the whole DRM thing irrelevant.
As for how it turns out, I still think that Disney will be most eager to settle now that they’ve realized the can of worms they’ve opened. (Antitrust tying charges might apply.)
They really should have licensed their movies to Redbox like the other studios did.
This sentence in your comment doesn’t make sense to me:
“And yet, the judge is using a similar principle as a basis for his finding of copyright misuse—that you’re not supposed to pass along the physical copy of the movie without passing along the digital copy, too.”
I’m pretty sure you actually understand the ruling, so I think what you meant to say is that according to the Judge, Disney is engaging in copyright misuse by trying to use a shrinkwrap license to tie the physical movie disc to the digital download code, while purchasers have a right to resell them separately.
Bottom line, the ruling is that a shrinkwrap license agreement can’t take away a purchaser’s rights under the first sale doctrine.
…and by extension, that First Sale applies to digital video which, unlike digital music and software, have been explicitly exempted.
If the case ends with that opinion in place all heck breaks loose. Because no digital video vendor has in place mechanisms for resale of DRM’ed video. Lawsuits galore to follow.
Nobody in the industry wants it, hence the expectation tbat Disney will have to settle.
Disney claimed that consumers who buy Combo Packs are forbidden, by an agreement in the packaging, from transferring ownership of the download codes.
Can someone explain how the download codes work? What are they? What’s the process? Where do they come from?
I’m not sure if this is the same thing, but if I buy a Disney DVD, I can input a code that allows me to view the same movie on my phone or tablet. I no longer need the physical disk. (This is for newer movies. None of the old Disney movies I own have this code. I know Finding Dory had the code.)
You enter the code in the Disney app, you don’t download anything–you stream the movie but I don’t think it’s saved locally.
Each combo package comes with a BluRay disk, a DVD disk and an insert card. The card has imprinted a unique alpha numeric code that allows you to download a DRM’ed file with the same movie (but typically not the extras). This code works in several places but only once and only for a year from the release of the movie.
The codes are of limited value to techies but some people must use tbem, I suppose.
I never bother with the code myself, since I have a commercial software package that lets me rip the movies to my home network video server. Added features and all. It’s like a DVD jukebox.
okay, PG, what is your take on this?
I’m with Redbox and Matchbook (which is voluntary on the part of the indie author and requires that the reader has purchased the book through Amazon).
I don’t like Shelfie, because, based on my understanding, it’s too easy to game the system to the author’s detriment.
At this point, I don’t know that anyone understands how Kobo may implement or change Shelfie’s approach.