Redbox gains an upperhand in business litigation against Disney

Most California movie watchers are familiar with The Walt Disney Co. The entertainment giant and Redbox, a movie rental company, have been battling out a few issues in court. The business litigation appears to have tipped the scales to Redbox's favor following a federal judge's recent ruling. A central focus of the legal dispute is whether Redbox has infringed upon Disney's rights by selling download codes for Disney movies in its red kiosks, stationed at various locations throughout the country.

The judge denied Disney's petition for a preliminary injunction against the movie rental company. Redbox has apparently incited Disney's anger by selling download codes to very recent, top selling Disney releases, not cartoons from decades past. Interestingly, companies do not have an existing licensing contract between them.

One may wonder how Redbox is able to obtain the download codes to Disney movies in order to sell the codes at its kiosks. The company reportedly purchases hard copy Disney combo packs from retail stores. It then obtains the codes (written numerically on slips of paper included in the packages) and repackages them for sale in movie boxes at supermarkets and convenience stores. In many locations, the codes cost consumers less than $8.

The judge presiding over the business litigation situation determined that although Disney's combo pack states that the codes are not for sale or transfer, the company failed to include language that specifically alerts consumers that opening the package constitutes an agreement to the license restrictions contained therein. The judge ruled that, in light of that fact, the license restrictions are not legally enforceable. Legal disputes are often complex and difficult to resolve; California business owners do well to retain experienced assistance from business and commercial law attorneys before addressing such issues in court.

Source: Los Angeles Times, "Disney dealt setback in Redbox copyright dispute", Ryan Faughnder, Feb. 21, 2018

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