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Disney now wants an order that prohibits Redbox from selling digital codes that allow consumers the ability to access digital copies of its movies. On Thursday, the entertainment giant filed a motion for a preliminary injunction in a move that suggests the case could be headed for a significant decision sooner rather than later.
In a lawsuit filed on November 30, Disney alleged that Redbox was disassembling “combo packs,” which include a Blu-ray disc, a DVD and a code which can be redeemed through authorized digital outlets. Disney brought both contract and copyright claims because Redbox was allegedly breaching the terms and conditions of the licensing agreement and interfering with its relationships.
With a motion for a preliminary injunction (read here in full), Disney now spells out why it believes it is likely to prevail on the merits as well as its irreparable harm.
Disney runs through many of the allegations, including how the combo packs come with notice that “codes are not for sale or transfer” and explicitly states that Redbox’s customers who use these codes are infringing Disney’s right to copy its movies.
As for contributory liability, Disney says Redbox “encourages customers to make the infringing downloads. For example, Redbox advises customers: ‘You can use your digital movie code to download and view the digital copy of your movie on a number of services. Look on the paper insert you received to find the recommended provider for that movie.’ In addition, Redbox promotes its unauthorized sale of Codes as ‘cheap’ and a ‘[s]mart buy.’”
Perhaps most interesting is Disney’s discussion of an anticipated defense by Redbox that the first sale doctrine — the one that gives those who purchase copies of copyrighted work the right to sell, display or otherwise dispose of that particular copy notwithstanding the interests of the copyright holder — provides justification.
“The defense would be inapplicable even if the claim were for violation of the distribution right (which Disney’s claim is not),” states Disney’s motion. “The Code is not ‘a particular copy’ of a work. The Code is just that — a Code that, when redeemed in accordance with the applicable terms of service, allows an authorized user of the Code to obtain a digital download.”
By offering digital codes separately from the combo packs, Disney says Redbox is interfering with the relationships and goodwill with licensed digital services, causing economic damage difficult to calculate and harming relationships with customers’ perceptions of a legitimate digital market. Disney also argues that Redbox is interfering with its digital distribution strategy and causing harm to its brand.
“These harms are imminent and continuing,” states the motion. “Licensed services are complaining about Redbox’s unauthorized sale of Codes; Redbox’s customers are redeeming Codes to obtain unauthorized access to digital copies of Disney’s copyrighted works; Disney and its licensees are losing sales that cannot be easily quantified; Disney’s relationships with its licensees and its customers are suffering; and Disney’s brand and ability to control distribution of its content are being affected. The impact of these harms will be extremely difficult to measure in dollar terms.”
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