Disney May Be Legally Vulnerable
According to The Verge, Disney may have proven they’re not invulnerable after they tried to file a preliminary injunction in their lawsuit against Redbox. Some people may get intimidated by this language, but I can explain.
Why Did Disney Sue Redbox?
As you probably know, Redbox is a DVD rental service that you can find outside of your local convenience store. Most of the time, they get the DVDs through distribution deals with major movie studios. Since Disney isn’t fond of losing money when it doesn’t have to, they are not part of this distribution deal. However, Disney movies are still really popular, so Redbox still wants to be able to rent them. Therefore, Redbox gets retail DVDs and rents them to customers.
There’s more to this than Redbox renting Disney’s DVDs without their explicit permission. If you’ve looked inside a brand new Disney DVD Combo Pack recently, you may have noticed a code you can use to get a digital copy of the same movie. Someone at Redbox gets an idea: why not sell these digital codes that come in the Combo Pack boxes? Disney gets upset that, not only are they not a party to this deal (ie: they’re not making any money off of it), Redbox is selling their digital download codes for much less than Disney sells their digital movies. Anyone who’s paid any attention to the behavior of big companies knows what was likely to happen next. Unsurprisingly, Disney sued Redbox for “contributory copyright infringement, a breach of contract, interference, false advertising and unfair competition”.
How Did This Lawsuit Lead to Possible Problems for Disney?
I don’t know if you know this, but lawsuits can take a long time to resolve. When they brought the lawsuit, Disney also pushed for a preliminary injunction against Redbox. An injunction is a court order that’s supposed to prevent a party from doing something because it causes damage to another party. A preliminary injunction is a court order that is put forth before the lawsuit is decided. Therefore, Disney filed a preliminary injunction to prevent Redbox from selling any more digital codes. The reason they gave for the injunction was that the continued sales might damage Disney’s reputation. This did not go well for them.
When Disney filed this injunction, Redbox put up a defense, since they too like to make money. They claimed that Disney was trying to illegally enhance its copyright reach. They argued that Disney’s claims violate “first sale” doctrine, which allows the first buyer of an item to do what they choose with it. As covered above, Redbox would be that first buyer, which (according to them) should allow them to sell the codes. Redbox argued that one of the reasons behind Disney’s lawsuit was to protect their upcoming streaming service. They also argued that the injunction would actively harm them by inhibiting their progress into the digital world. Since everything is digital now, Redbox argued that inhibiting their progress could permanently harm the company.
Disney’s injunction did not succeed. This means that Redbox can continue to sell the digital codes until and unless a different court order says they can’t. The California federal judge who denied this injunction did so because he did not think it was probable that Disney’s arguments would succeed on their merits. This is a requirement for preliminary injunctions. The California federal judge seemed to be leaning towards Redbox’s arguments, at least for the injunction. Although the lawsuit is far from over, this does not look good for Disney.
What do you think about this lawsuit? Tell us in the comments!