It looks like the Empire isn’t the only thing that strikes back. RedBox is countersuing Disney after Disney hauled the kiosk company into court over resale of Disney movies. The Mickey Mouse giant sued RedBox back in November 2017 to stop Redbox from selling digital codes to access Disney movies to download or stream.
On Friday, January 26th, RedBox filed a motion to dismiss Disney’s lawsuit, claiming Disney hadn’t lost any sales as a result of Redbox’s business practices. Redbox also filed a complaint, alleging that the Disney is attempting to monopolize the movie rental industry because of their plans to launch their own streaming service and that the company is misusing their copyrights via a violation of the First Sale Doctrine.
Under the First Sale Doctrine, copyright holders lose most of their exclusive rights over a copy once they sell the copy to someone to someone. The rules also state that a copyright owner cannot bar a purchaser from reselling an individual copy of a work.
Here’s how it works: Redbox purchases Disney DVD and Blu-ray Disc “Combo Packs,” which include a code for accessing digital copies of the movies.
In their November complaint, Disney alleged that Redbox then separates the physical discs (which it rents out to consumers) from the codes, and re-packages the code inserts into Redbox cases for resale. Disney noted that the packaging on the Combo Packs include the notice that “Codes are not for sale or transfer.”
RedBox says they aren’t doing anything wrong. “While the copyright laws protect the rights of copyright owners in their creative works, the ‘first sale’ doctrine limits those rights by protecting the public’s ability to resell or otherwise dispose of copies of those works once the copyright owner has put the copies into the stream of commerce,” Redbox stated in their complaint. “Disney’s attempt to control the disposition of the Combo Pack components, even after Disney sells the DVD, Blu-ray disc, and digital movie to a Disney-authorized distributor or a retailer, is an illegal abuse of its copyrights and dominant position in the industry.”
Disney has denied the accusation, commenting on Friday that Redbox’s countersuit, “is nothing more than Redbox’s attempt to distract attention from its unauthorized sale of our digital codes, as we have set forth in our lawsuit. We are confident in our position and, unlike Redbox, want the court to resolve this matter quickly.”
The case is set to be heard on March 5, 2018.