By Thomas Long, J.D.
Plaintiffs Disney Enterprises, Inc.; Buena Vista Home Entertainment, Inc.; Lucasfilm Ltd., LLC; and MVL Film Finance LLC (collectively, "Disney") owned the copyrights to numerous well-known movies, including "Beauty and the Beast," "Frozen," and "Star Wars: Episode VII -The Force Awakens." Disney distributed its films in multiple formats through a variety of channels, including "Combo Packs," which bundled a DVD, a Blu-ray disc, and a piece of paper containing an alphanumeric code that could be inputted or redeemed at Disney’s websites RedeemDigitalMovies.com or DisneyMoviesAnywhere.com to allow a user to stream or download high-definition digital versions of the films. The exteriors of the Combo Pack boxes stated that "Codes are not for sale or transfer." The RedeemDigitalMovies and Disney Movies Anywhere websites set forth additional terms and conditions of use, purporting to prohibit consumers from redeeming digital codes that were sold or transferred separate from the original physical products.
Defendant Redbox Automated Retail, LLC ("Redbox") rented and sold movies to consumers via automated kiosks that dispensed DVD and Blu-ray discs. Redbox also offered a "Redbox on Demand" service that allowed consumers to stream or download movies owned by studios other than Disney. More recently, Redbox had begun to offer digital downloads of Disney movies in the form of download codes. Redbox did not have a vendor agreement with Disney. It obtained the download codes by purchasing Disney Combo Packs at retail stores and removing the piece of paper bearing the download code from Disney’s packaging. Redbox then placed that piece of paper into its own Redbox packaging and offered the code for sale at a Redbox kiosk.
Disney filed suit against Redbox, asserting that Redbox’s resale of Combo Pack digital download codes constituted contributory copyright infringement, was a breach of the contract that Redbox had entered into with Buena Vista when Redbox purchased Combo Packs, interfered with Disney’s contracts with RedeemDigitalMovie.com users, and violated California false advertising laws. Disney moved for a preliminary injunction enjoining Redbox from, among other things, selling or transferring Disney digital download codes.
Likelihood of success. Disney alleged that Redbox customers who purchase a Disney code from Redbox violate Disney’s copyright when they redeem the code because Redbox customers must represent, as a condition of obtaining a license to download the movie, that they did not obtain the code separately from the Combo Pack. Any such representation by a Redbox customer, Disney asserted, was necessarily false, resulting in an unauthorized download. According to Disney, Redbox was contributorily liable for that infringement because it knew that customers will make unauthorized downloads, and it contributed to those improper downloads by selling codes and instructing Redbox customers to redeem them.
Remaining factors. With respect to irreparable harm, Disney presented extensive evidence that Redbox’s code sales were damaging Disney’s relationships with its licensees. This evidence was sufficient to warrant injunctive relief, the court held. Redbox identified no compelling interests that would tilt the balance of equities in its favor. Accordingly, Disney’s motion for a preliminary injunction was granted.
This case is No. 2:17-cv-08655-DDP-AGR.
Attorneys: Carolyn H. Luedtke (Munger Tolles and Olson LLP) for Disney Enterprises, Inc., Lucasfilm Ltd. LLC and MVL Film Finance LLC. Kelly M. Klaus (Munger Tolles and Olson LLP) for Buena Vista Home Entertainment, Inc. Breton A. Bocchieri (Robins Kaplan LLP) for Redbox Automated Retail, LLC.
Companies: Disney Enterprises Inc.; Lucasfilm Ltd. LLC; MVL Film Finance LLC; Buena Vista Home Entertainment, Inc.; Redbox Automated Retail, LLC
MainStory: TopStory Copyright TechnologyInternet CaliforniaNews
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