January 26, 2018
Redbox is doubling down on its legal fight with The Walt Disney Co.
The kiosk vendor Jan. 26 filed litigation against Disney companies, including Buena Vista Home Entertainment, Lucasfilm, and Disney-owned “Movies Anywhere” digital movie service.
The suit – filed in U.S. District Court in Los Angeles – alleges Disney is trying to eliminate third-party home entertainment options for its own much-publicized direct-to-consumer streaming strategy.
Redbox says Disney plans to launch a streaming service in 2019, and its majority interest in Hulu as part of the $52 billion acquisition of select 21st Century Fox assets, is driving an “illegal” campaign to prevent it from reselling digital copies of movies contained in Disney combo packs purchased at retail.
Redbox last year began selling digital codes to select Disney movies. Disney in November filed suit seeking an injunction prohibiting Redbox from selling codes to titles such as like Rogue One: A Star Wars Story and Moana at a discount to what digital copies sell for on Amazon or iTunes.
Redbox, in its filing, accuses Disney of abusing its dominant market position and violating the First Sale Doctrine with statements on packaging claiming its digital codes “cannot be resold or rented individually.”
First Sale Doctrine, which video retailers used in the early 1980s to establish their right to rent videocassettes over strong studio opposition, says a copyright owner cannot prohibit a purchaser from reselling a copy of a work, such as DVD.
Redbox maintains the terms on Disney’s packaging are unenforceable, and that it is engaging in copyright misuse and violating California’s unfair competition law.
The kiosk vendor is asking Disney to issue corrective advertising on all existing inventory. It seeks compensatory and punitive damages, in addition to legal fees and costs.
The suit is the latest chapter in Redbox’s tumultuous relationship with Disney. The studio stopped selling its titles to Redbox in 2012, and while other studios have had a change of heart, Disney hasn’t, prompting Redbox to acquire Disney product through retail channels.
Redbox earlier this month filed a countersuit, saying Disney digital codes should not be treated any differently than physical discs that it is legally entitled to rent. It filed a separate motion Jan. 25 asking the court to dismiss Disney’s suit.