Disney is suing Redbox to stop it from selling digital download codes

[satam55]

https://www.theverge.com/2017/12/1/1...download-codes

Disney is suing Redbox to stop it from selling digital download codes

And the studio isn’t fooling around

by Bryan Bishop @bcbishop Dec 1, 2017, 1:08pm EST



Redbox may be best known for renting physical DVDs and Blu-rays, but The Wall Street Journal reports that the company is facing a lawsuit from Disney for selling digital download codes to the studio’s films. Redbox started the practice last month, offering customers the ability to purchase printouts of codes for movies like Rogue One: A Star Wars Story and Moana at its kiosks, with prices set far below digital retailers like iTunes or the Google Play Store.

“Redbox is selling our digital movie codes in blatant disregard of clear prohibitions against doing so,” the company said in a statement to Variety. “Their actions violate our contracts and copyrights, and we have filed this action to stop Redbox’s unauthorized conduct.”

Redbox’s kiosk business primarily revolves around renting physical copies of movies. The company has distribution deals in place with major studios like Warner Bros., 20th Century Fox, and Lionsgate that allow them to offer their films for rental soon after they’re released on home video. Disney, on the other hand, has no such deal in place, leaving Redbox to purchase retail copies of the studio’s titles. Disney is known for bundling digital download codes, like allowing customers to download a digital version of The Avengers after buying the Blu-ray, for example. Printouts of those codes are what Redbox is now selling directly to its customers, despite the fact that — as the Journal points out — retail copies feature language the specifies that digital codes are “not for sale or transfer.”

A spokesperson for Redbox told the Journal that “we feel very confident in our pro-consumer position,” but it’s not difficult to understand why Disney is seeking a legal remedy to the situation. Looking over the movie selections, there is a vast gap in price between Redbox and the digital retailers that carry Disney’s films. Buying a digital code for Pixar’s Inside Out runs $3.99 through Redbox, while buying a download of the movie from iTunes or Amazon costs $19.99. Guardians of the Galaxy Vol. 2 has the same retail price, yet the download code is only $7.99 when purchased at a Redbox kiosk. With the expansion of Disney’s Movies Anywhere digital locker service earlier this year, that essentially turns Redbox into a low-cost backdoor to movie ownership, allowing consumers to obtain a copy of a Disney movie that they can then download from any of the major digital retailers at a fraction of the price.

As part of the suit, Disney is asking for profits from the sales of the codes up to $150,000 per title, along with an injunction to prevent Redbox from selling the digital codes. As of this writing, however, they are still available for purchase.

[imsounoriginal]

Disney should win this easily. Pretty sure the code sheets explicitly say they're not for individual sale. I wonder how much money they'll really win but regardless, Redbox should be worried.

[twobelowpar]

Family Video has been doing this for a long time. Why did they never go after them??


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[floridaswamprat]

Originally Posted by PenguinInfinity

There's no reason why the first-sale doctrine shouldn't apply to digital codes. Just as companies can't limit reselling of physical media they shouldn't have any control over reselling digital codes.

If Disney wins this case it'll be extremely sad for consumer rights.

I agree. I can see this case (or one similar) making its way up the judicial chain.

* NOTE: This is not intended to convey any legal advise or opinion. I am not an attorney nor do I play one on TV.

[AnemicOak]

Originally Posted by imsounoriginal

Disney should win this easily. Pretty sure the code sheets explicitly say they're not for individual sale. I wonder how much money they'll really win but regardless, Redbox should be worried.

Disney can print whatever they want on the code sheets, doesn't mean that it's necessarily enforceable (that's what a court and possible appeals will have to decide). Since they have no agreement to buy discs directly from Disney, RedBox buys their Disney titles by going into Wal-mart, Target, etc. just like any other consumer at retail. Publishers used to, and some may still, print in the front of their books that they couldn't be resold, but the first sale doctrine says differently.

[Blaze_Chamberlin]

Originally Posted by twobelowpar

Family Video has been doing this for a long time. Why did they never go after them??


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I wonder if Disney is even aware of this.

https://www.familyvideo.com/trending...-digital-codes

[bladerunner1]

I wasn't aware I was legally allowed to buy Disney movies and rent them out for profit?

I think that is where the problem is.

I don't believe the first sale doctrine applies here because there is no deal with Disney.

[Greyman]

Originally Posted by bladerunner1

I wasn't aware I was legally allowed to buy Disney movies and rent them out for profit?

I think that is where the problem is.

I don't believe the first sale doctrine applies here because there is no deal with Disney.

That would be why the first sale doctrine does apply at least for the code sheets.

[veritas]

I think this will come down to red box arguing first sale and disney arguing shrink licenses, copyright and unbundling laws. I'm betting red box stops selling codes and settles with disney paying them some percentage of whatever they want because quite simply disney will lawyer them into the ground and it wont matter who even has the better case.

[BlakkMajik3000]

Redbox will lose here. They pretty much have to decide how much money they are willing to dump into a case that involves them violating pretty clear language in regards to digital codes.

What I'm worried about most, as an active participant in the so-called "gray market", is that Redbox may cause more of a spotlight to be shined on other avenues for the buying and selling of digital codes. If this goes in Disney's favor, what's to stop them, and possibly other studios, from going after smaller sites that sell codes?

In a way, the more Redbox fights this, the WORSE it could end up for consumers if they lose the case. Studios have been ok with turning a blind eye to the gray market for years now in an attempt to, in my opinion, drive digital adoption. They will not, however, ignore it once a player the size of Redbox gets involved.

[rdodolak]

Originally Posted by AnemicOak

Disney can print whatever they want on the code sheets, doesn't mean that it's necessarily enforceable (that's what a court and possible appeals will have to decide). Since they have no agreement to buy discs directly from Disney, RedBox buys their Disney titles by going into Wal-mart, Target, etc. just like any other consumer at retail. Publishers used to, and some may still, print in the front of their books that they couldn't be resold, but the first sale doctrine says differently.

Exactly. Disney even prints the following on their releases, but it doesn't mean the first sale doctrine doesn't apply.

This product (including the soundtrack) is authorized for sale in the U.S.A and Canada only. This product is authorized for private use only. It is prohibited for any other use and cannot be resold or rented individually.

[erlinmeyer]

Originally Posted by BlakkMajik3000

Redbox will lose here. They pretty much have to decide how much money they are willing to dump into a case that involves them violating pretty clear language in regards to digital codes.

What I'm worried about most, as an active participant in the so-called "gray market", is that Redbox may cause more of a spotlight to be shined on other avenues for the buying and selling of digital codes. If this goes in Disney's favor, what's to stop them, and possibly other studios, from going after smaller sites that sell codes?

In a way, the more Redbox fights this, the WORSE it could end up for consumers if they lose the case. Studios have been ok with turning a blind eye to the gray market for years now in an attempt to, in my opinion, drive digital adoption. They will not, however, ignore it once a player the size of Redbox gets involved.

Worse would be going after individuals that sell codes, like on this site.

[GuyIncognito]

Originally Posted by BlakkMajik3000

Redbox will lose here. They pretty much have to decide how much money they are willing to dump into a case that involves them violating pretty clear language in regards to digital codes.

What I'm worried about most, as an active participant in the so-called "gray market", is that Redbox may cause more of a spotlight to be shined on other avenues for the buying and selling of digital codes. If this goes in Disney's favor, what's to stop them, and possibly other studios, from going after smaller sites that sell codes?

In a way, the more Redbox fights this, the WORSE it could end up for consumers if they lose the case. Studios have been ok with turning a blind eye to the gray market for years now in an attempt to, in my opinion, drive digital adoption. They will not, however, ignore it once a player the size of Redbox gets involved.

Originally Posted by PenguinInfinity

Redbox isn't violating any laws. Just because Disney says you can't resell the codes doesn't mean it's illegal to do so.

As far as I know it's never been clearly defined one way or another if selling codes is legal. If this becomes an issue then the courts will have to take a definitive stance.

Decades ago the courts definitely would have sided with the consumers just as they did when it came to reselling physical media. But lately this country has been going way too much on the side of big business so it's anyone's guess which way it'll go.

Right. That type of wording is only for retailers who get the products at a wholesale price. It's to prevent stores like Walmart from getting a volume discount on 30-packs of Pepsi and then selling them for $1 per can in their vending machines.

If Redbox really has to pay retail to get all of their movies, then they can do whatever they want with the parts of the package. If they want to sell the artwork they can. It is now their product.

Hell, people can buy "Trespassers will be shot. Survivors will be shot again" signs to put on their fence but it doesn't mean that it's acceptable by law just because the sign was made.

[BlakkMajik3000]

Originally Posted by GuyIncognito

Right. That type of wording is only for retailers who get the products at a wholesale price. It's to prevent stores like Walmart from getting a volume discount on 30-packs of Pepsi and then selling them for $1 per can in their vending machines.

If Redbox really has to pay retail to get all of their movies, then they can do whatever they want with the parts of the package. If they want to sell the artwork they can. It is now their product.

Hell, people can buy "Trespassers will be shot. Survivors will be shot again" signs to put on their fence but it doesn't mean that it's acceptable by law just because the sign was made.

False. It is prohibited for anyone that buys a BD to sell a code or otherwise transfer ownership of the digital copy. Period. There is no “exclusion” because you buy the disc at retail price. The fact Redbox is a major player in the home video rental market makes this worse, not better.

The fact is, a digital copy belongs to the person that purchased the disc, and that’s it. The code is not to “do with as you please”. The studios have been lenient this far and virtually ignored the code resell market, but you can be rest asssured they know it exists.

If this goes to court, and the ruling is in favor of Disney, which it likely will, the “gray market” will effectively be shut down because no entity can afford to battle the sheer amount of lawyers at the studios’ disposal.


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[BlakkMajik3000]

Originally Posted by PenguinInfinity

Can you give a source for this?

A source for what?

I’m looking at a UV code I have for Ali, and it plainly states “Licensed for consumer use only. Not for sale or resale.” No exclusions, no exceptions are listed.

The onus is not on the content owner to prove Redbox can’t sell the digital copy. It’s on Redbox to prove they have the right to sell it. Nothing I’ve come across on any digital copy I’ve seen/redeemed gives permission to the owner of said digital copy to sell or otherwise transfer ownership of it.

Please find language on any redemption sheet that says something to the effect of “As long as you bought this at retail, you are allowed to do what you want with it.”


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[GuyIncognito]

Originally Posted by BlakkMajik3000

A source for what?

I’m looking at a UV code I have for Ali, and it plainly states “Licensed for consumer use only. Not for sale or resale.” No exclusions, no exceptions are listed.

The onus is not on the content owner to prove Redbox can’t sell the digital copy. It’s on Redbox to prove they have the right to sell it. Nothing I’ve come across on any digital copy I’ve seen/redeemed gives permission to the owner of said digital copy to sell or otherwise transfer ownership of it.

Please find language on any redemption sheet that says something to the effect of “As long as you bought this at retail, you are allowed to do what you want with it.”


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"Consumer use" can include the consumer selling parts of it. Your mattress also says that you cannot remove the tag under penalty of law. That doesn't apply to the person who buys the mattress. It's for the seller.

Is it alright to buy the movie, use the code, and sell the discs? It's the exact same thing but in reverse.

Like I said, those instructions are not for telling what the owner of the disc can do with the product. It's for the store who is selling the disc. To use Walmart as an example again, they do not want the store to buy the combo packs and selling the pieces separately. They don't want them opening their products and selling the 4K disc, blu-ray disc, DVD disc, and digital copy as four different products that they removed from one package.

[veritas]

Originally Posted by PenguinInfinity

None of that is legally binding. When Walmart or Target buys their movies from Disney they sign a contract. It would be a violation of that contract to split up the movies and sell the DVDs, Blu-rays, and digital codes individually. When Redbox buys Disney movies from Walmart or Target no contract is signed.

Redbox has no agreement with Disney so Disney can't dictate what Redbox can do with it's own property. As I previously stated just because Disney states that codes can't be sold, doesn't mean it is illegal to do so.

the legally binding portion would come from shrink wrap licenses when you open the package you broke the shrink wrap and in so doing agreed to the licensing for the digital copy which said no sale transfer etc.

The way its written I always thought it would basically be legal to buy a package use the code then sell the blu and dvd under first sale (studios would still hate this but it would be almost impossible to really win a case like that in court given first sales precedence already set up for disc sales and the inability to transfer digital copies) because the license says you cant sell or transfer the digital copy but it says nothing about selling the blu ray or dvd (and precedence for thats already been established).

The legality of going the other way isn't so clear because you would be violating the written instructions on the code and violating the license. It then comes down to is what was written on the code sheets legally binding and if you broke the license are you committing a copyright violation.

Its also a bit confusing on who is more liable the guy selling codes or the guy buying codes. You are violating the license when you sell a digital copy and if the license isn't proper you could easily argue the buyer is committing copyright infringement (and the sellers enabling the buyer making the seller just as guilty).

[GuyIncognito]

Originally Posted by veritas

the legally binding portion would come from shrink wrap licenses when you open the package you broke the shrink wrap and in so doing agreed to the licensing for the digital copy which said no sale transfer etc.

The way its written I always thought it would basically be legal to buy a package use the code then sell the blu and dvd under first sale (studios would still hate this but it would be almost impossible to really win a case like that in court given first sales precedence already set up for disc sales and the inability to transfer digital copies) because the license says you cant sell or transfer the digital copy but it says nothing about selling the blu ray or dvd (and precedence for thats already been established).

The legality of going the other way isn't so clear because you would be violating the written instructions on the code and violating the license. It then comes down to is what was written on the code sheets legally binding and if you broke the license are you committing a copyright violation.

Its also a bit confusing on who is more liable the guy selling codes or the guy buying codes. You are violating the license when you sell a digital copy and if the license isn't proper you could easily argue the buyer is committing copyright infringement (and the sellers enabling the buyer making the seller just as guilty).

So you are legally bound by a "contract" that you cannot read until you open the package? Is there anything on the outside of the package which states this (since we're all playing armchair lawyer in here)?

I'm going to open a store where I have signs posted in the back of the store which states that by entering the front doors you are required to sign a 1 year membership fee and that by entering the front doors means you consented to said contract.

Or better yet, a car dealership where when people turn on the car to take a test drive the navigation system prompts them that by entering the car they agreed to lease the car for the next three years

[veritas]

Originally Posted by GuyIncognito

So you are legally bound by a "contract" that you cannot read until you open the package? Is there anything on the outside of the package which states this (since we're all playing armchair lawyer in here)?

I'm going to open a store where I have signs posted in the back of the store which states that by entering the front doors you are required to sign a 1 year membership fee and that by entering the front doors means you consented to said contract.

Or better yet, a car dealership where when people turn on the car to take a test drive the navigation system prompts them that by entering the car they agreed to lease the car for the next three years

it also says it on the back of the package in size 5 print along with in size 15 print on the code sheet and sometimes in size 3 print it says go to website for terms condition and expiration date. the information isn't just on the inside on the package but it will give you a migraine trying to read it its so small. The websites you redeem these codes at also normally have terms and conditions which will state you are not to sell or transfer the codes somewhere I assume.

Basically its their in a few places but god is it hard to find.

Originally Posted by PenguinInfinity

I'm really confused as to why anyone is on Disney's side here. And I'm even more confused as to why anyone who thinks that studios have absolute control over everything to do with digital copies are buying them (especially you BlakkMajik3000). You're giving away a lot of rights for a bit of convenience.

we arent really on disneys side so much as saying both sides the lawyers are going to argue. Disney has a case and they have lawyers to back it up. Their is a risk to them that they will lose and set up a precedence that will make code trading legally white which is why companies are reluctant to fight this fight because they do have a lot to lose.

[GuyIncognito]

Originally Posted by veritas

it also says it on the back of the package in size 5 print along with in size 15 print on the code sheet and sometimes in size 3 print it says go to website for terms condition and expiration date. the information isn't just on the inside on the package but it will give you a migraine trying to read it its so small. The websites you redeem these codes at also normally have terms and conditions which will state you are not to sell or transfer the codes somewhere I assume.

Basically its their in a few places but god is it hard to find.

So going by what you say and picking a random movie I went to Rogue One back cover
https://www.blu-ray.com/movies/Rogue...u-ray/139135/#
It says:
"This product (including its soundtrack) is authorized for sale in U.S.A. only. This product is authorized for private use only. It is prohibited for any other use and cannot be resold or rented individually. All other rights reserved. Unless expressly authorized in writing by the copyright owner, any copying, exhibition, export, distribution or other use of this product or any part of it is strictly prohibited."

So breaking this down "this product" includes the product as a whole, not just the digital rights. Combined with "cannot be resold" which would mean, according to you, that none of it can be resold. Therefor, F.Y.E., Family Video, eBay, pawn shops, any used bookstore, etc., are all under violation of the law and are subject to litigation. Further, "unless expressly authorized in writing by the copyright owner, any copying, exhibition, export, distribution or other use of this product or any part of it is strictly prohibited.", would indicate that no one is allowed to ship this out of the country unless they have writing from Disney to allow them to do so. Do Zavvi and BluFans have permission to do this? The Disney vault seems to only apply to USA so why would they implement that in one country but still allow other countries to sell their product to us?

I did find this to be interesting from the Movies Anywhere page

[Show spoiler]Digital Copy Code Redemption. You can enter authorized, unexpired, valid, and unused Digital Copy codes from a Digital Copy enabled and Movies Anywhere-eligible physical product that is owned by you in the "Redeem" section of the Movies Anywhere Service. Upon validating the Digital Copy code, an Entitlement for the Movies Anywhere-eligible movie will be included in your My Movies Collection. You will not transfer, sell, or rent (or offer to transfer, sell, or rent) any Digital Copy codes. All Digital Copy codes are owned by Movies Anywhere, its affiliates, Participating Studios and/or other licensors and you may only use Digital Copy codes as specifically authorized under these Movies Anywhere Term of Use and the terms and conditions of the applicable issuer of each Digital Copy code that you use. The sale, distribution, purchase or transfer of Digital Copy codes outside of the methods set forth in such terms and conditions is strictly prohibited.

So I wonder how they differentiate between "I bought the code" and "I bought the disc, redeemed the code, and sold the disc".