In a response to Disney’s copyright infringement suit, Redbox argues that the Burbank entertainment giant is engaging in anti-consumer and anti-competitive behavior in seeking to halt a service that its customers like — and that it invested the better part of a year and more than $700,000 to develop.
At issue is Redbox’s sale of the digital download codes that Disney bundles in a “combo pack” that also includes a Blu-ray disc and a DVD of the same film. The studio says it offers the bundle at a discount from the price a consumer would otherwise pay if they purchased the individual discs and digital copy separately. Each package contains a label that expressly notes that these codes “are not for sale or transfer.”
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Redbox disassembles these combo packs and sells the digital version at a discount — promoting them as a “smart buy” or low-price alternative to other digital services. Disney asked the federal district court to stop this practice through a preliminary injunction, saying the kiosk service is contributing to copyright infringement by enabling its customers to download copies of Disney films without authorization.
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The kiosk service countered in its response that Disney is attempting to rewrite seven words — “codes are not for sale or transfer” — into an after-the-fact, restrictive license that violates a principle of contract law known as the “first sale doctrine,” which limits certain rights after a copyrighted work is sold.
“Redbox has the right to transfer the code if it is transferred along with a rest of the Combo Pack,” the company argues in Tuesday’s court filing. “[Disney’s] sole complaint is that Redbox should be preliminarily enjoined from separately selling the codes Redbox lawfully purchases, and thus the digital movie corresponding to it, at a lower cost than what Plaintiffs would like.”
The service argues that Disney’s is simply attempting to derail a cheaper alternative to other digital services — including those that the entertainment conglomerate plans to launch.
“By this motion, [Disney] seek[s] to stifle competition to more smoothly launch Disney’s own digital content streaming service, maximize the price other services like iTunes and Amazon (and their customers) pay for Disney movies, and secure a greater market share for Hulu—the viewing service Disney will control as part of its $52 billion acquisition of 21st Century Fox,” Redbox says in its filing.
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