A judge has granted Disney’s motion for a preliminary injunction against Redbox, disallowing the kiosk chain from selling digital download codes for Disney films.

What’s happening:

  • According to the Hollywood Reporter, a federal judge in California has sided with Disney in their case against Redbox.
  • The ruling will now prevent Redbox from reselling digital download codes for Disney films.
  • In their decision, the judge wrote, “It is undisputed that Redbox has actual knowledge of the redemption sites’ clickwrap terms, which do appear to create a restrictive license.”
  • This was Disney’s second attempt to stop Redbox’s digital codes sales after a judge sided with the rental kiosk company on the first go-round.
  • A key change to Disney’s terms of service made after that loss relates to the consumers’ rights to resell discs, with the judge finding that the updated terms did not infringe on that right.
  • As the judge noted, “Under the old terms, a Combo Pack owner who disposed of the discs was indeed left with a worthless code because continued possession of the discs was a condition of digital access. Now, however, digital access is conditioned not on possession of the discs, but on the manner of Code acquisition. A Combo Pack owner who disposes of the discs is left with the same digital access rights he or she always possessed. Although Redbox is correct that, because Codes are not separately transferable, a Combo Pack owner cannot transfer a Code if he or she disposes of the discs first, the right to transfer a separate Code is not protected by the first sale doctrine or any unconditional ownership rights… A copyright misuse defense, therefore, is unlikely to succeed.”

Catch up quick — Disney vs. Redbox

  • Disney originally filed suit against Redbox in November of last year, claiming that the movie rental kiosks were selling digital download codes in violation of Disney’s terms of service.
  • While Redbox has deals in place with certain Hollywood studios that allow them to purchase rental discs at wholesale, the company was forced to buy Disney’s combo packs in order to rent discs to their customers.
  • As a result, Redbox began selling the digital download codes that came in these combo packs to customers, with prices ranging from $7.99 to $14.99.
  • At the time the first suit was filed, a spokesperson for Disney said, “Redbox is selling our digital movie codes in blatant disregard of clear prohibitions against doing so. Their actions violate our contracts and copyrights, and we have filed this action to stop Redbox’s unauthorized conduct.”
  • Unfortunately for Disney,  a judge found that the studio was over-stepping “the scope of its copyright” in their complaint and declined to issue an injunction against Redbox’s practices.
  • An amended complaint was then filed in April, with Disney noting that they had updated their terms of service.
 
 

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