Redbox Lawsuit Threatens DVD/Blu Ray Future Viability (1 Viewer)

[Mark Talmadge]

You make it sound like Redbox is going to win. Trust me, they aren't going to win.

Redbox is basically using the DVD's from these studios in a way that they aren't permitted to. Fair Use (under Copyright Law) is extremely limited to what you can do with it. DVD's sold in stores cannot be purchased and then be turned around to rent out to make money (profit) from that DVD.

When all is said and done, Redbox will eventually lose their case against Universal, 20th Century Fox and now Warner Brothers.

Red Box is claiming Fair Use as a defense for purchasing and then renting out those DVD's. This defense is faulty because Fair Use is extremely limited to what you can do with something that is protected under Copyright Law: Fair Use.

The fact is that Redbox did not sign a license agreement with these studios to rent these DVD's out, and in the end, if Redbox wants to continue renting out these studio's DVD's and blu ray disks, then I suspect that they will end up signing some kind of licensing / revenue sharing agreement with the studios.

Redbox's whole argument is that they are entitled to rent out those DVD's through Fair Use and I seriously doubt that Redbox read the section of U.S. Copyright Law that deals with Fair Use. The fact is that Washington has been sympathetic to the entertainment industry and Redbox, if they end up winning, could force Congress and the Senate to add even more protections to Copyright Law regarding Sound and Video recordings and what a consumer or retailer can do with that product.

 

[nolesrule]

This is actually brought up in NEBG, LLC v. Weinstein Company Holdings, LLC, 2007 WL 1454460 (D. Mass. May 18, 2007)

Buyers of retail DVDs in the United States are free to sell or exchange them, and rent and lend them to others. There's no copyright prohibition nor doctrine of first sale exception except in regards to computer programs and phonorecords.

And just because there's an FBI warning on the screen or some text on the box doesn't mean it accurately reflects the consumer's legal rights accurately. It's not uncommon for the copyright owner to overstate their rights and restrictions on consumers.

The end result may in fact that the studios will buy some amendments to certain laws through their congress critters, but Redbox isn't doing anything illegal. They might not prevail in their lawsuit and be forced to continue buying certain studio's discs at retail (until such time as the law does get changed), but I don't see what's wrong with Redbox or their business model.

But collusion and price fixing would be serious accusations if indeed that is what is happening between major studios and large rental corporations.

 

[Michael Reuben]

Quote:

Originally Posted by Mark Talmadge

Redbox's whole argument is that they are entitled to rent out those DVD's through Fair Use and I seriously doubt that Redbox read the section of U.S. Copyright Law that deals with Fair Use.

You keep saying that Redbox's argument is premised on "fair use", which makes me seriously doubt that you have ever actually read any of Redbox's pleadings. They don't talk about "fair use". They talk about the "first sale" doctrine mentioned by others in this thread.

Anyone with experience in complex litigation knows better than to make predictions about who's going to win. Too many things can happen along the way. Besides, most cases settle. That seems especially likely here, where several major studios have already entered into agreements with Redbox.

 

[nolesrule]

Michael, stop being so reasonable. This is the Internet.

 

[Michael Reuben]

Originally Posted by nolesrule

True story about complex litigation. Not copyright, but it demonstrates how unpredictable things can be, especially when there's lots of money involved. Simplified, and no names:

My old firm was once retained by one of the biggest property managers in America. You might not recognize their name, but you've almost certainly shopped in one of their malls. I'll call them "Big Manager".

Big Manager wasn't happy with a really complicated deal being set up by one of the largest property owners in America (at the time), which I'll call "Big Owner". They came to us at the last minute (and I mean 3 or 4 days before the deal was set to happen) to figure out a claim against the deal. One of the top guys at our firm came up with a creative but untried approach, and a whole team of us worked around the clock to make it happen.

We sued Big Owner. Big Owner sued back. The whole thing resulted in a fierce courtroom battle for about a year and half. The judge we drew was a famously tough, smart, experienced jurist who was impatient with nonsense, and decided we were full of it. He threw out our claims, kept Big Owner's, and started wailing on us. Big Owner's lawyer's licked their chops and poured on the pressure.

Then something happened. In a totally unrelated deal, Big Owner put up a block of properties for auction -- the kind of package that only a handful of bidders could afford to bid on, one of them being Big Manager. But because of the bitter court fight, Big Manager didn't bid. So the guy in charge of the auction at Big Owner -- a middle management fellow -- called up the guy at Big Manager he'd dealt with in the past (another middle management type), and the conversation, as later described to me, went something like this:

Owner Guy: The deadline for bids is almost here, but I haven't gotten yours yet. Is there a problem?

Manager Guy: Sorry, but the word came down from the top. I'm not allowed to bid, because your company is suing mine.

Owner Guy: We're suing you? I don't know anything about it.

Manager Guy: Me neither. But that's what I hear. And I'm not allowed to bid because of it.

Owner Guy: Well, we need you in this auction. Let me get to the bottom of this.

He hangs up, calls his boss, who calls his boss, etc. etc.

The next day -- and I do mean the very next day -- Big Owner withdrew what was left of the lawsuit. The judge was pissed, but couldn't do anything about it. Big Owner's lawyers were really pissed, but had to do as their client instructed. And that's just one example of why it's dangerous to forecast the outcome of a big business lawsuit. Business moves a lot faster than the legal process, and when it comes to the outcome, business usually trumps law.

 

[Stephen Tu]

Mark, you have no bloody clue what you are talking about. Redbox may or may not win their restraint-of-trade case vs. the studios. If they lose they will take some hit to their profit margin having to buy retail rather than wholesale. But they are not going to be paying fines for copyright infringement! Redbox is suing the studios. The studios are defendants here, not plaintiffs. If the studios had any sort of legitimate copyright claim vs. Redbox, don't you think they would have filed a massive lawsuit or counter-suit against them already? But they don't, because the law has already been established here.

Use some common sense, if you have any.

Copyright law deals with rights to copy. If Redbox was making copies of the discs, and trying to rent/sell them, then that would be blatantly illegal & they'd be sued to oblivion. But these are legally bought copies, they have every right to rent them. "Fair use" refers to legal copying of portions of work for certain purposes that are considered non-infringing if they meet various criteria. Renting of purchased legal copies falls under "first-sale doctrine" which is a different concept than "fair use".

 

[Mark Talmadge]

Copyright Law is not simply limited to "copying." If you believe that, then you have a very narrow view of what Copyright Law is all about.

First Sale Doctrine grants you the right to resell that DVD you purchase, provided it's a legalized copy. It does not grant you license to "rent" out that DVD in an effort to build your business around it. This has been established through consumers purchases of DVD's, CD's, books and whatnot.

First Sale Doctrine doesn't mean that Redbox can do whatever they want with it. Purchasing a DVD means that you're buying it for personal use, not to center your business around it.

It's like if I decided to buy a retail copy of Windows 7 to upgrade all of the computers in my business. Just because I purchased that software doesn't mean that I have the right to upgrade every machine. I would be in violation of the agreement for using that software. The same is with DVD's.

When you buy a DVD, you're not buying the movie. You're actually paying for a license to be able to watch that movie in your own home. You're not paying for the right to rent that DVD out in order to make a profit from it. In effect, Redbox is violating Copyright Law because what they're doing is in violation of the "Performance Law" provision written in the U.S. Copyright Law.

 

[Stephen Tu]

First Sale Doctrine grants you the right to resell that DVD you purchase, provided it's a legalized copy. It does not grant you license to "rent" out that DVD in an effort to build your business around it. This has been established through consumers purchases of DVD's, CD's, books and whatnot.

It has been pointed out numerous times in the thread, that you are simply flat out wrong about this. The case that reaffirmed this right, NEBG v Weinstein, has been referenced. You provide absolutely nothing to support your statement, no cases, no articles, no links, nothing besides your opinion, which is just wrong. It also flies in the face of logic, since if this were truly the case, the studios would be suing Redbox, not Redbox suing the studios. You are totally unable to explain this.

Rental of *CDs* is prohibited, by a special carve out exception for music recordings and computer programs. Does not apply to DVDs.

It's like if I decided to buy a retail copy of Windows 7 to upgrade all of the computers in my business. Just because I purchased that software doesn't mean that I have the right to upgrade every machine. I would be in violation of the agreement for using that software. The same is with DVD's.

No, it's *nothing* like this. You are making extra copies of the software you haven't bought licenses for. Redbox is buying multiple copies, legally. The studio got compensated for each of these copies. If they feel that "their product is being undervalued", as the Fox people say, then they should have simply raised the wholesale price!

Redbox then has the right to resell or rent them. They just don't have the right to make extra copies from these copies.

When you buy a DVD, you're not buying the movie. You're actually paying for a license to be able to watch that movie in your own home. You're not paying for the right to rent that DVD out in order to make a profit from it.

You are buying *that one physical copy of the movie*. You *do* have the right to rent it to someone else for private use or sell it. You *do not* have the right to exhibit it publicly, or to make copies of it. Copyright law leaves those latter rights with the holder, but does *not* prohibit you from renting that one physical copy.

In effect, Redbox is violating Copyright Law because what they're doing is in violation of the "Performance Law" provision written in the U.S. Copyright Law.

1. They aren't. 2. If they were, explain why no lawsuit against them.

You aren't going to win any arguments by just repeating the same statements without anything to back them up, and ignoring facts that directly contradict your hypothesis.

http://www.videobusiness.com/article/CA6398859.html

In comments surrounding the deal, Genius CEO Trevor Drinkwater said the companies understood that under the First Sale Doctrine, they would not be able to prevent other rental stores from buying TWC discs at retail and using them as rental inventory. He said TWC and Genius would, however, include on sell-through copies some sort of message to consumers that the discs were intended for sale only and should not be rented. “With the First Sale Doctrine, there’s nothing we can do to prohibit someone from walking into Costco and buying the DVD and renting it,” Drinkwater told VB. “What we can do as a distributor is brand all Blockbuster DVDs with the Blockbuster logo, and all the DVDs that are out for sale will be clear to consumers as being for sale only. We’ll encourage people to call us if they did rent [a DVD that is labeled for sale].”

In response to the lawsuit, they specifically *stopped* putting warnings about rentals on DVDs. In fact if you look at the overwhelming majority of DVDs and Blu-rays today and the past, the warnings say *nothing* about rentals, because it is clearly legal.

http://www.videobusiness.com/article/CA6461951.html?nid=2705

Explain to us why we should believe your declarations vs. a zillion other web sites, court cases, and a video business news publication?

 

[Mark Talmadge]

The problem you guys are missing is that the only reason Redbox filed against Universal, Fox and Warner Brothers is the fact that these studios ordered their distributors to stop providing their DVD's to Redbox. To make matters worse, Redbox signed revenue sharing agreements with some studios while refusing to sign similar agreements with Universal, Fox and Warners.

Redbox, in the only remaining claim that the court allowed, is claiming anti-trust violations. However, they will have a hard time proving this since the studios are not preventing Redbox from buying DVD's from retailers. They are merely refusing to allow their distributors from selling DVD's to Redbox.

Every business, retailer, corporation has the right to refuse to do business with anyone for any reason. It happens on a daily basis and more often than you think. Redbox will eventually end up losing their lawsuit against these studios. If they happen to win, expect the entertainment industry to lobby Congress and the Senate to take up legislation supporting the movie studios.

 

[Michael Reuben]

Originally Posted by Mark Talmadge

The problem you guys are missing . . .

Mark, speaking only for myself: I'm not "missing" anything. I merely pointed out that you either haven't read, or have grossly misstated, the applicable pleadings in this case.

As for the rest, I have no interest in discussing this, or any other issue, with you.

 

[Mark Talmadge]

Michael, all I was saying is that Redbox is clearly in the wrong and it will be proven in court that Redbox has no basis for the lawsuit. The only remaining argument they are allowed to present is the antitrust argument and even that argument is flawed.

Redbox, simply put, isn't being denied access to DVD's. If Universal or any other studio doesn't want it's distributors selling their DVD's to Redbox, then they are completely within that right. Redbox is simply refusing to play ball with these studios and refusing to sign agreements with these studios to share a percentage of their profits from these DVD rentals. It's no different than the agreement with many DVD rental stores like Blockbuster and Family Video.

The studios expressed the fact that they wanted Redbox to agree to a revenue sharing agreement and that they would allow their distributors to sell their DVD's to Redbox. Redbox refused to deal with the studios and this is going to have a backlash against Redbox.

If Redbox wins, these studios could just end up changing the way they distribute their DVD's by having each retailer or vendor order directly from Universal, which would give Universal the ability to refuse to do business at all with Redbox.

What I'll also say is that these studios aren't violating antitrust laws. They are simply trying to get fair compensation for the product that they create and sell. Redbox just doesn't want to fairly compensate these studios for the rental of these DVD's. To make matters worse, these studios have a right to file a lawsuit against Redbox itself since they are also in violation of said laws for attempting to drive down the prices of retail DVD's and rental DVD's by undercutting prices.

 

[David Willow]

Good grief. You should get a job with OPEC.

 

[Stephen Tu]

To make matters worse, these studios have a right to file a lawsuit against Redbox itself since they are also in violation of said laws for attempting to drive down the prices of retail DVD's and rental DVD's by undercutting prices.

Redbox is not in violation of any laws, except for ones that only exist in your own warped mind. If this were in any way true whatsoever, a lawsuit would have already been filed. Movie studios aren't known for being shy about filing lawsuits.

Redbox is not clearly in the wrong about the anti-trust either. If their claim clearly had no merit, the judge would have dismissed it. Despite your declarations, this is an issue that will be decided in the courts, not by you.

What do you have against Redbox? Why are you so much in the studios corner on this?

It's not even clear to me that the studios are acting in their own self-interest. They *think* that delaying Redbox accessibility will lead to a rebound in sales, from people not wanting to wait an extra 1-1.5 months, but that's only a guess that may not turn out to actually be true.

Ultimately, the consumer determines how much they are willing to buy/rent movies for. These legal maneuvers might give one or the other side a slightly smaller/bigger slice of the pie, but really the consumers, us, determine the size of the pie.

Redbox isn't blanket refusing to deal with all studios. They made a deal with Sony & Lionsgate. They just couldn't come to mutually agreeable terms with the others. How do you know that it is not the studios being unreasonable/unrealistic in their demands, rather than Redbox?

Stop spouting complete nonsense backed by no facts other than opinions made up in your own head.

They are simply trying to get fair compensation for the product that they create and sell

They are getting compensated, by DVD sales to the distributors who are feeding Redbox. If they feel the compensation is unfair, they are free to raise the price!

 

[Zack Gibbs]

I have a couple of questions, everyone do your best to answer them;

1: It sounds to me like these certain studios are preventing distribution to Redbox in order to try and force them into an unfavorable profit sharing agreement. Is that legal?

2: Couldn't Redbox just set up some kind of shell company to buy from distributors with?

 

[Mark Talmadge]

Technically speaking, Universal has the right not to do business with any retailer/business entity it doesn't want to. That is the whole beauty of business in the United States. Businesses routinely ban customers from their properties. There's nothing that can be done to prevent this.

Universal simply told its distributors, who distribute its merchandise, not to sell its product to Redbox. There's nothing in violation of anti-trust law. Redbox is simply whining because they are forced to buy their DVD's at full retail. Redbox doesn't want to pay full retail and are demanding from the courts that they be allowed to buy the DVD's at wholesale.

Sounds to me like it's not an antitrust issue but rather a two year stomping their feet because they're not getting their way.

Universal is not preventing Redbox from buying its DVD's. It's simply refusing to allow their distributors to sell them the DVD's at wholesale. Redbox is allowed to buy the DVD's at full retail at video stores.

Also, these studios have expressed that they want Redbox to sign a revenue sharing agreement. It sounds fishy that Redbox signed agreements with other studios such as Sony but refuse to sign agreements with Universal, Warner Brothers or Fox. Not only that, but the studios want Redbox to increase their rental fees to at least $2-3. Redbox flatly refused to deal with the studios and have adamantly refused any cooperation with said studios.

Just sounds to me that Redbox has decided not to share any of its revenue for the other studio DVD's with these studios. I just think that if Redbox ends up winning their suit against the studios that you might be shift with these studios distributing their own DVD's and new policy agreements with retailers who are acquiring DVD's from them for either sale or rental.

 

[Mark Talmadge]

It's also nice to see that HTF is allowing members to personally insult other members.

Originally Posted by Stephen Tu


Redbox is not in violation of any laws, except for ones that only exist in your own warped mind. If this were in any way true whatsoever, a lawsuit would have already been filed. Movie studios aren't known for being shy about filing lawsuits.

 

[Michael Reuben]

Originally Posted by Mark Talmadge

It's also nice to see that HTF is allowing members to personally insult other members.

That's rich, coming from someone who has repeatedly insulted other members (and been warned for it). As has frequently been the case in the past, you have a hard time distinguishing between vigorous argument and personal attack. But to eliminate the problem, and to conclude this no-longer-fruitful discussion, I'm going to close the thread. The topic is closed.