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Redbox's Workaround for Stocking Disney Movies Backfires with Lawsuit
- 1024core 9y agoThis is going to be interesting. They're not selling any copyrighted material; just the ability to download the material. I don't understand one thing, though: why can't Disney make these codes single-use? Or limit them to a handful of uses? Or use some form of customer authentication (like a CC number, or phone number) to limit the access to these codes?
- aibara 9y agoAren't the codes that came with the DVDs that Netflix is then reselling one-time use? So Netflix doesn't ever use them, just sells them (i.e. the ability to download the material) to someone once. Netflix only has many to sell because they bought so many DVDs. At least that was my understanding, but maybe I'm wrong. Edit: And by Netflix I mean Redbox, oops.
- deleted 9y ago[deleted]
- applecrazy 9y agoIt's not Netflix (the provider of digital movies and TV shows with a subscription). It's Redbox (a company which specializes in renting movies out using automated kiosks on a per-night basis).
- luck_fenovo 9y ago> Netflix (the provider of digital movies and TV shows with a subscription) Netflix started 20 years ago by mailing rented movies to people, a business they still engage in with millions of customers. https://dvd.netflix.com https://dvd.netflix.com
- StavrosK 9y agoSure, but it's still not Netflix in the article.
- deleted 9y ago[deleted]
- sdenton4 9y agoNear the end of the article, it's mentioned that they ARE single use: RedBox isn't re-using them, just selling the code that they get out of each retail dvd that they buy, and then renting the physical DVD.
- allenz 9y agoI don't see any legal difference between the content and access to the content because circumventing copy protection is still a copyright violation. I am curious, however, whether this will be a copyright case or contract case.
- matt_wulfeck 9y agoThere’s nothing being circumvented here. As another member pointed out you should check out how “first-sale” doctrine is used to decide these types of cases. Once Disney sells the DVD to Redbox they lose rights to dictate how further sales work. My take is that Redbox is totally in the clear, and if Disney has a beef with somebody it’s with the consumer. Usually suing the consumer is bad for business.
- Spivak 9y agoIt's a bit of an absurd position to take that it's legal to sell the codes but not legal to buy/use them.
- matt_wulfeck 9y agoIt wouldn’t be illegal to buy them either. Disney can make a policy not to honor the codes, but it’s consumers they’re fighting against.
- StavrosK 9y ago> They're not selling any copyrighted material; just the ability to download the material. They're selling codes that the DVD box said "aren't for sale". Whether that will hold up in court, I guess we'll see. I don't see why the owner of a thing gets to dictate what I do with the thing after I buy it from them. I bought the DVD with the code, it's mine to resell if I want, even if you didn't want me to when you sold it to me.
- rubyfan 9y agoThe digital download is a license though. They can stipulate that the person with the code bought it with the DVD. Though practically I can’t see how they can enforce it.
- StavrosK 9y agoThey can deny service to the person if they didn't buy it with the DVD, but they can't sue the seller, no?
- rubyfan 9y agoYes they can deny service. It will be interesting if they stick it to the end consumer. They can sue all they want, but I can’t see how they win. The seller here hasn’t broken a law or violated license terms which they would be bound to. I don’t know what’s on the box, but I’d have a hard time believing when I buy a DVD from Walmart that I have entered into an agreement with Disney. When I go to use the code and download the movie, that’s when license terms and conditions and agreement between parties comes into play. But that should be between the holder of the code and Disney. Disney can say the holder must have come across the code by some way Disney likes but this to me is where enforcement gets tricky without implementing some kind of DVD verification or something.
- derefr 9y agoObvious precedent: bulk food items, also usually marked "not for resale." I presume that that wording has no legal impact; I've definitely seen various convenience stores selling the "not for resale" food portions.
- mcphage 9y agoThey are single use. But they're selling each code they get once.
- naner 9y agoReselling digital download codes seems like a bizarre risk for such a well known established company to take.
- TheAdamAndChe 9y agoYes, but they both doubled their revenue while undercutting Disney, so the potential payoff was very large. Plus, the stipulation that "codes are not for sale _or transfer_" seems to be a particularly egregious stipulation that may be overly broad, thus arguable.
- rubyfan 9y agoI don’t see how Disney can arbitrarily put a word on the box that limits your ability to do something with it. What is they put “not for use as a coaster” and you resell the disc as a coaster? Can they sue you for that?
- ams6110 9y agoThey can put whatever words they want in the box, probably assuming that few people would have the resources to fight them about it.
- rubyfan 9y agoLooks like they hit the jackpot. I’ll say it another way, just because it’s on the box doesn’t mean they can legally limit you. So yeah they can put whatever they want but we’ll see if it holds up.
- Spooky23 9y agoThey can say what they want. The law doesn’t agree. You reply “fuck you, sue me”. Libraries have been doing what redbox did for a long time. One of the studios sent a local library a nasty letter, and the library replied with a nasty letter. Nothing happened.
- platz 9y ago
- jjeaff 9y agoAlthough the digital download portion muddies the water, this seems to fall clearly under the first sale doctrine. As mentioned in the article, the seemingly applicable case of digital downloads getting exempted from first sale was only applies because the downloaded music was already downloaded once and sending it to someone else constituted copying which I assume falls under dmca. I predict Disney will lose. Big textbook publishers have been trying to pull this crap for years and were finally trounced in the Supreme Court when it was ruled that once a textbook is sold to someone, you don't get to dictate whether and where it can be resold. Disney is selling a code for a one time download. Once you purchase it, and you haven't used it yet, you should have the right to do whatever you want with it.
- Noos 9y agoThey aren't selling a code for the download, though. They are selling you physical movie that comes with code to enjoy a digital copy. It's a bundled service, and I'm not sure first sale allows resellers to strip that and sell for profit, any more than Wal-Mart could order blu-rays that come with a DVD, open them up, and sell both separately. Or open up a PS4 with a code for a free game in it, and sell the game.
- eli 9y agoWait, why couldn't Walmart do that?
- Noos 9y agoI'm not sure. I was arguing that if it's feasible, they probably would be doing it by now. My guess is either the UCC or walmart's contract with Disney prevents the breaking apart or reselling of bundled services.
- astura 9y agoBecause Walmart has to play nice with the studios to keep their supply of wholesale movies coming. The difference is, in this case at least, RedBox is buying their movies retail. So Redbox buys Disney movies just like you and I do, from a store shelf.
- TazeTSchnitzel 9y agoDisney could avoid this issue by printing the download codes onto the discs.
- mjmahone17 9y agoAre you sure? Couldn’t Redbox “dissasemble” the disc by transferring the code to paper and physically removing it from the disk? How would that be different than buying an all-in-one computer, taking it apart and selling each component individually?
- johansch 9y agoOr by simple selling the one-time code before they put the corresponding disc in a vending machine.
- TazeTSchnitzel 9y agoAh, perhaps. I was thinking they'd have to copy the code, which seems harder to get away with.
- merubin75 9y agoThis is how Redbox always plays hardball with the studios; don’t want to negotiate a fair deal for us to stock your movies? Fine, we’ll give our employees credit cards, send them to Best Buy, and have them buy 10 DVDs. Then we’ll have a pizza party, unwrap all the shrinkwrap, and then ship them out to all the field workers who stock the kiosks. How is this any different, except with digital downloads codes instead of physical discs? FWIW, I worked at Redbox back in the day as the company’s social media manager. The process I described is exactly what happened when the studio that owned the Twilight movies refused an agreement that would let Redbox stock “Breaking Dawn (Part 1)” earlier than 54 days. Fun times. Of course, it was all fun until we discovered that we’d sent out disc 2 (special features) instead of disc 1 (the movie) by mistake to about 80% of the kiosks. The Twitter shitstorm from angry suburban moms was ... not fun.
- sherburt 9y agoYeah, you know what? Fuck redbox on this one. Selling the digital codes separately, while renting the physical item? That sounds like kind of ridiculous behavior, considering you’d imagine them to have a wholesale side-channel for their operation. Do they have unskilled workers acquiring optical disks via retail, over the counter, and then shucking them out of the consumer product package, and sleeving them for rental operations? But, still, fuck Disney too. It is completely irrational that they insist on operating as this elitist, vertically integrated smoke stack that issues forth a plume of animated gruel intended to placate sheltered infants, piped in by a specially insulated A/V channel for two hours at a time, at like $40 bucks a go. Both of them suck, but if the game is cricket, the rules are stacked in Disney’s favor in this instance.
- jrochkind1 9y ago> Do they have unskilled workers acquiring optical disks via retail, over the counter, and then shucking them out of the consumer product package, and sleeving them for rental operations? Yes, that's what the article said they do. That is perfectly legal with the DVDs. You are allowed to resell things you buy, that's the first sale doctrine, and it's why you can sell a used book or DVD without paying a licensing fee. But it's unclear if it applies to the download code. This is literally what the article was about.
- jstanley 9y ago> Selling the digital codes separately, while renting the physical item? That sounds like kind of ridiculous behavior Why? If Disney sold a DVD with a bundled toy, and Redbox wanted to rent out the DVD and sell the toy separately, would that be "kind of ridiculous behaviour"? They bought the DVD+toy fair and square, I don't see an issue here.
- astura 9y agoImagine instead if it were a DVD+Blueray set. Would you be ok with selling (or renting) the DVD and the Blueray separate? If I buy the DVD+Blueray set and I only own a Blueray player why shouldn't I sell the DVD? TFA indicates that, yes, these are retail items, at least for Disney movies. Meaning they have people buying them at retail stores. I'm not sure why you find this so shocking.
- greggman 9y agoLooking the arguments here I can see things going either way Way #1 first sale doctrine. You sold me a box + dvd + code. I can sell the box, dvd, and code separately. I can use the box for other things. I can build art from the DVDs. I can sell the code Way #2 license doctrine. You sold me a license to me specifically. That license is non transferable. The first thing that came to mind for me is plane tickets. Some company's websites even say if the name you register doesn't match your ID you have to buy a new ticket, no exceptions. No idea if that's legal or not, just repeating what the site (Expedia) said when I bought tickets last week. I'm sure there are better examples. Paying for gym membership. You could argue I pay $XX a month for ~720hrs of access. I should be able to re-sell every hour of access. How do you decide which it is? It seems like First Sale doctrine comes down to selling physical things? IIRC you can't resell iOS apps, Steam apps, etc... I guess the difference is you register for iOS, plane tickets, Steam.
- rtpg 9y agoWell most of the time the license is about permission to use software. It doesn't matter if you have the Windows 98 disk, if you don't have a license you're committing copyright infringement to use it. So you could sell the paper code, but the recipient doesn't have the right to use it. I'm actually unsure of what legal mechanism is used for enforcing software licenses though... is it an implicit contract when buying the DVD for example?
- nitrogen 9y agoWell most of the time the license is about permission to use software. It doesn't matter if you have the Windows 98 disk, if you don't have a license you're committing copyright infringement to use it. I don't think this is entirely decided yet. IIRC GPLv2 did not include a specific license to use the software, since the right to use a legally obtained copy was believed to be implied. Some downloads of drivers and applications don't include any EULA; it would be absurd to think that those downloads are unusable even when the owner of the copyright is the one distributing the software. As for specific applications that do include an EULA, as I understand it some countries don't recognize any agreement that was not available for reading at the time of purchase.
- jasonkester 9y agoThis seems like it will end as one of those "why we can't have nice things" moments. I thought it was pretty cool that the kids' new Star Wars disc came with a download code so we didn't have to grab the version we actually watch as a torrent. But after this case, win or lose, really, you know that Disney will stop offering that code. There is no real upside for them, and people are being dicks about it. So it goes away. So yeah, cool idea reselling it. But all it does in the end is make the world a little worse for everybody.
- Chris2048 9y ago"why we can't have nice things" assume good faith on part of large corporations. In reality, they push for shit like this the hardest. They pioneer dickishness.