Disney Suing Redbox Over Selling Digital Movie Codes

Disney have filed lawsuit filed in a federal district court in Los Angeles, against Redbox to stop them from selling digital codes for streaming or downloading Disney movies. This is a result of Redbox launching a new service in October 2017, which let customers buy codes directly from Redbox kiosks.

When a customer purchased a digital movie, they would get a printed code along with details on how to download it.

A Redbox spokeswoman told the Wall Street Journal, that “While we don’t comment on pending litigation, we feel very confident in our pro-consumer position.”

Disney said in a statement, “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.”

Disney are alleging that this is copyright infringement and seeks an injunction on Redbox’s sale of its movies. They are asking for damages of up to $150,000 per title sold by Redbox for “willful infringement” and for any money made from these sales.

Redbox does have deals with Sony, Lionsgate, Warner Brothers and Fox, but doesn’t have a direct distribution deal with Disney, as they purchase discs from the open market and according to Disney’s lawsuit, Redbox purchases DVD and Blu-ray Disc “Combo Packs,” and sell on the digital codes from them. Disney does include a notice on the packaging that these “Codes are not for sale or transfer.”

My Take: With Disney building its own streaming service and having recently announced it Movies Anywhere digital platform, it does make sense to launch this lawsuit, since while Redbox might “own” their digital codes, it does state clearly on the box that those codes aren’t for resale, and if Redbox is able to sell a digital code at full price, it is almost getting the cost of the disc for free, to rent out. It’ll be interesting to see how this court case goes.

What do you think?