In the battle for the future of digital streaming, Disney is losing. U.S. District Court Judge Dean Pregerson was disinclined to acquiesce to Disney’s request to block Redbox from selling download digital codes. Basically, Disney asked the court to block Redbox from selling codes until this case was finished. Pregerson said “no.”
In an opinion released on Tuesday, Pergerson said Disney failed to meet the requirement that “A private party seeking a preliminary injunction must show that [the court case] is likely to succeed on the merits.” In addition, he said Disney’s actions have pushed the company into Copyright misuse.
"The terms of both digital download services’ license agreements purport to give Disney a power specifically denied to copyright holders....This improper leveraging of Disney’s copyright in the digital content to restrict secondary transfers of physical copies directly implicates and conflicts with public policy enshrined in the Copyright Act, and constitutes copyright misuse.”
You can read the full opinion here.
Back in Episode 159, this seemed like an open and shut case. Redbox was buying Disney Blu-Rays and DVD’s and offering the accompanying digital download codes at a significant discount. Redbox does not have a distribution agreement with Disney so it is forced to buy the movies to fill its kiosks. The download codes are just a bonus.
Disney sued in December saying that Redbox was violating the terms of sale of the combo packs, which usually include a warning that “Codes are not for sale or transfer.” Redbox struck back arguing that the codes should not be treated any differently than the physical discs and, for now, it seems like the judge agreed.
The Redbox legal team may have got the jump on Disney, but there is no way Disney loses a copyright battle with their other big L team: Lobbyists. If -- or more likely when -- Redbox wins this case, Disney will do whatever is necessary to protect its profit and intellectual property.
At best, Disney will add legal language to its Blu-Ray and DVD packaging so that anyone who opens the package is agreeing to unseen terms and conditions. If they wanted to take it a step further, Disney could lobby congress to make a few changes to copyright law -- which they’ve done for several years.
What’s more likely is a nightmare scenario where Disney stops including digital codes with its combo packs and only releases digital copies through the streaming app it is launching in 2019. Microsoft, Adobe, and several other companies have gotten onto the subscription train and Disney is already headed in that direction. It’s only a matter of time.