Disney Loses in Redbox Copyright Row (bbc.com)

Disney has lost a bid to stop movie rental company Redbox from reselling download codes for its films. From a report: Redbox bought Disney movies on DVD to offer for rental in its kiosks. The DVDs were often bundled with a code to download a copy of the film. Disney requested an injunction to stop the practice, saying that Redbox had no business arrangement with it. A California federal judge accused Disney of "copyright misuse." Redbox rents and sells movies via tens of thousands of automated kiosks that dispense DVD and Blu-ray discs.

Comments

Coming soon the Sequel!

[Zorro]

Darth Mouse Strikes Back!

Copyright misuse?

[Anonymous Coward]

A judge ruled against Disney on a copyright case?

Please send him gifts, chocolates, etc!

Re:Copyright misuse?

[viperidaenz]

No, when they bought the DVD they bought two copies, a downloadable one and a physical one.

There's no other way to interpret it. Once you use the code, you can't give it to someone else when you give them the DVD. It's a separate copy.

Re:I wonder if this ruling creates precedent

[arth1]

He also sided with Redbox's argument that Disney was misusing its copyrights by trying to restrict the reselling of copies of its movies after they had already been sold.

Yes, the First Sale doctrine is still valid, despite many copyright holders thinking it doesn't apply to them.

Doctrine of First Sale

[Khyber]

Sorry, Disney. Redbox actually buys retail copies. If you didn't want them reselling what's legally theirs, you should've actually fucking cooperated and given them license to distribute instead of forcing them to go this route, which has obviously bitten you in the ass.

Re:Doctrine of First Sale

[R3d M3rcury]

Actually, the question comes down to "what did you buy?"

Disney feels that what they sold was the movie. You have two ways of watching it--disk or download. But the movie remains the same and that's what you paid for.

Redbox feels that what they bought was the disk & the download code. They stick the disk in their kiosks and resell the download code because they don't need it and it defrays the cost of buying the disk through retail.

Disney would be fine if they resold the disk and the download code. But reselling the download code and keeping the disk is akin to making a copy.

The Judge, it appears, basically says, "Your contract doesn't say that, so you lose."

Re:Doctrine of First Sale

[Anonymous Coward]

Disney would be fine if they resold the disk and the download code. But reselling the download code and keeping the disk is akin to making a copy.

The Judge, it appears, basically says, "Your contract doesn't say that, so you lose."

Not quite. The judge actually said, "just writing something down doesn't make it true." Your ability to buy a legal copy and then resale it trumps the notion that Disney can choose how or if their sold works are re-sold.

The notion of one piece of work bundled in two formats is only interesting in this case because one of the formats is purely digital. If we had been two different physical media being bundled together -- say, those Blu-Ray/DVD dual-disc packs -- that Disney had sued to keep off the secondary market, then it would have similarly lost and no one would bat an eye.

Now, if Disney could prove that they sold the same code multiple times, then you'd have an argument for copyright infringement.

Re:Surprising from a legal perspective

[Waffle Iron]

The minds did meet: Redbox bought a box containing two things a set price. If Disney didn't intend to sell two things for one price, they wouldn't have put both in the box.

Re:Surprising from a legal perspective

[Albanach]

In which case there would be no contract, no agreement to sell. Without a contract of sale, Redbox would have no license at all.

But there was a sale. Redbox paid for the item it purchased. The meeting of the minds is between the seller, say Walmart, and the purchaser, Redbox. Walmart said "I have this box and I'll sell it to you for $14.99", an offer Redbox accepted.

The judge appears to have found that Disney's language was insufficient to create a binding shrinkwrap contract.

Deadline has this by way of explanation:

“The phrase “Codes are not for sale or transfer” cannot constitute a shrink wrap contract because Disney’s Combo Pack box makes no suggestion that opening the box constitutes acceptance of any further license restrictions,” the judge wrote.

So absent a shrinkwrap agreement with Disney, you're left with regular copyright law in its place. Alongside that, the purchaser, Redbox, has all the rights that go with the First Sale Doctrine.

Re:I wonder if this ruling creates precedent

[UnknowingFool]

No. Unlike what the title implies, Disney did not lose the case. Disney lost its motion for a preliminary injunction to stop Redbox from selling the codes. Next, the court has to address Redbox's motion to dismiss. If Disney loses that one, then they are closer to losing the case setting some precedent. If Disney wins, then there is still a court case to go through.

Re:So uh...

[BronsCon]

So you've read the entire 26 page order, then? You know, as I suggested you do when Disney loses. The judge ruled that Redbox can do what they're doing, which I said would happen, and he did so for the very same reasons I said he'd do so. By any reasonable definition of the word "right" as it applies in this context, I was right.

The Copyright Act gives copyright owners the exclusive right to distribute copies of the copyrighted work. 17 U.S.C. 106(3); Adobe Sys., Inc. v. Christenson, 809 F.3d 1071, 1076 (9th Cir. 2015). That right is exhausted, however, once the owner places a copy of a copyrighted item into the stream of commerce by selling it. Id.; 17 U.S.C. 109(a); Vernor v. Autodesk, 621 F.3d 1102, 1107 (9th Cir. 2010). In other words, once a copyright owner transfers title to a particular copy of a work, the transferor is powerless to stop the transferee from redistributing that copy as he chooses. UMG Recordings, 628 F.3d at 1180.

There can be no dispute, therefore, that Disney’s copyrights do not give it the power to prevent consumers from selling or otherwise transferring the Blu-ray discs and DVDs contained within Combo Packs. Disney does not contend otherwise. Nevertheless, the terms of both digital download services’ license agreements purport to give Disney a power specifically denied to copyright holders by 109(a). RedeemDigitalMovies requires redeemers to represent that they are currently “the owner of the physical product that accompanied the digital code at the time of purchase,” while the Movies Anywhere terms of use only allow registered members to “enter authorized . . . Digital Copy codes from a Digital Copy enabled . . . physical product that is owned by [that member].” Thus, Combo Pack purchasers cannot access digital movie content, for which they have already paid, without exceeding the scope of the license agreement unless they forego their statutorily-guaranteed right to distribute their physical copies of that same movie as they see fit. 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.

Accordingly, Disney has not demonstrated a likelihood of success on the merits of its contributory copyright infringement claim.

The judge hasn't ruled yet but has certainly indicated how he intends to rule in this matter. This is the court's way of telling Disney they've lost before the trial even begins.

Much of the parties’ briefing and argument focuses on Redbox’s contention that Disney’s attempts to prohibit transfer of digital download codes are barred by the first sale doctrine. For the reasons stated above, the issues presently before the court can be resolved irrespective of the first sale doctrine question. Indeed, at this stage of proceedings, it appears to the court that the first sale doctrine is not applicable to this case.

That's yet another point I made profusely in the prior discussion, and wouldn't ya know it, according to the judge who issued this 26 page order, I was right.

By Disney’s reading, no “copy” exists until a copyrighted work is fixed onto a downloader’s hard drive, and Redbox’s purchase of a download code therefore cannot possibly involve a “particular copy” to which a first sale defense could apply. Thus, Disney contends, this case is solely about the exclusive right to reproduce a copyrighted work, and has nothing to do with the right of distribution or, by extension, the first sale doctrine’s limitation on that exclusive right.