Redbox Files Lawsuit Alleging Disney Copyright Misuse, Unfair Competition

The most recent shot fired in the ongoing legal conflict between Redbox and Disney is a new lawsuit by the video kiosk company which makes claims of copyright misuse, tortious interference, false advertising, and unfair competition by the media giant. This follows similar allegations made recently by Redbox as they defend themselves from a Disney suit centered around their reselling of digital download codes from pre-packaged “combo packs.” Redbox is not only seeking damages, but also looking to remove Disney’s ability to enforce any copyrights while they are currently “illegally purporting to prohibit resale or rental of copies of those works.”

Redbox is demanding a trial by jury in the United States District Court, Central District of California, Western Division. Defendants listed are: Buena Vista Home Entertainment, Disney Enterprises, Lucasfilm, MVL Film Finance, and Movies Anywhere.

The lawsuit makes the claim that Disney’s actions dealing with Redbox, up to and including Disney’s current “combo pack” suit, are an effort by the company to unfairly stifle competition.

“This case is about Disney’s unlawful efforts to stifle Redbox’s lawful sales of DVDs, Blu-rays and digital movie codes to Redbox’s customers in an effort to prop up high prices to consumers. Disney wants to eliminate low-cost options like Redbox in order to force consumers to pay as much as possible for Disney’s content, even though Disney is already fully compensated when it first sells that content to a distributor or retailer.”

Along with references to the current “combo pack” issues, Redbox mentions other instances in which they believe Disney has carried out a campaign of unfair competition against them.

“Over the course of the past couple of years, however, BVHE (Disney’s distribution company) has intensified its efforts to stop Redbox from selling Disney titles. First, Redbox is informed and believes that BVHE has pressured both distributors and retailers not to sell Disney titles to Redbox. Redbox at one time procured approximately 50% of its Disney titles through a third-party distributor. In 2016, however, Redbox is informed and believes that BHVE coerced that distributor into disclosing its customers, including Redbox. On information and belief, BVHE subsequently reduced that distributor’s allocation of Disney titles, and Redbox is now unable to procure Disney titles through that distributor. Redbox has similarly been unable to procure Disney titles from other distributors since that time as well… But BVHE did not stop there. In October of 2017, a local retailer told Redbox, ‘It is actually in our contract agreement with Disney that we do NOT sell to Redbox vendors . . . .’ “

This lawsuit restates the claims made by Redbox’s defense in Disney’s current lawsuit against them: the disassembling and renting or selling of “combo pack” content is legitimate under the first sale doctrine. The first sale doctrine allows for the reselling or disposal of an individual copy of a copyrighted work by the buyer. Redbox sees Disney’s lawsuit as a misuse and manipulation of copyright laws in an attempt to hamper competition.

“By attempting to prohibit purchasers of DVDs, Blu-ray discs and digital movies in Combo Packs from renting, reselling or otherwise disposing of those copies as they desire, Disney Enterprises, Lucasfilm and Marvel, through their distribution agents BVHE and Movies Anywhere, violate the Copyright Act’s first sale doctrine.”

There is also a claim of tortious interference by Disney’s BHVE for “effectively orchestrating a boycott by its distributors against Redbox,” which hampers the kiosk content provider’s ability to maintain supply and meet demand for Disney content.

Redbox levels allegations of false advertising as BHVE and Movies Anywhere state that they, or affiliated studios, own the rights to the digital download codes included in the “combo packs.” These statement are false according to Redbox, who once again site the argument that once a buyer purchases the “combo pack” they have resale ability under the first sale doctrine.

The demands by the plaintiff include damages to be determined by a jury, that Disney desist making false ownership claims, and that until all false advertising and copyright misuse practices cease, Disney loses the ability to enforce copyrights relating to motion pictures in question.

A response was offered by Disney, with a spokesperson stating,

“This countersuit is nothing more than Redbox’s attempt to distract attention from its unauthorized sale of our digital codes as we have set forth in our lawsuit. We are confident in our position and, unlike Redbox, want the court to resolve this matter quickly.”


Source: The Hollywood Reporter, United States District Court Central District of California


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