Redbox and Disney have filed their briefs in preparation for argument, scheduled for February 5, on Disney’s motion for a preliminary injunction against Redbox’s alleged copyright infringement. The judge’s ruling could make new law on the meaning of a “copy” in the digital age.
The underlying facts are these: Redbox legally purchased “Combo Packs” of Disney movies. These included DVD and Blu-Ray discs as well as a code by which the purchaser could download a copy of the movie. Redbox unbundled the packs and sold the download codes to consumers.
As Disney anticipated in its original motion, Redbox’s principal defense relies on the first sale doctrine under copyright law, which allows someone who lawfully acquires a “copy” of a copyrighted work to sell or dispose of that copy. Redbox claims that a download code is legally indistinguishable from a physical copy such as a DVD. Just as the first sale doctrine permits it to rent DVDs through its ubiquitous red kiosks, it can resell the download codes on its website.
Disney asserts that the codes are not themselves copies of the films but rather keys to open up a copy. Therefore Redbox’s activities do not implicate the distribution right in the movies (which would be permitted under the first sale doctrine), but the reproduction right, which is infringed when Redbox’s customers make unauthorized copies by using the code.
One interesting consequence of Disney’s position is that its claims against Redbox can only be based on contributory rather than direct infringement of Disney’s copyrights. Since Disney’s position is that the codes are not “copies” of the movies (and thus outside the first sale doctrine), it cannot assert that Redbox is distributing or reproducing its copyrighted works. The direct infringers are the Redbox customers who use the codes. Redbox contributes to the infringement by selling the codes. This argument raises the further question whether consumers are, in fact engaged in infringing activity.
In order to establish this, Disney relies on the “shrink wrap license” that governs its sale of the codes. The Combo Packs are packaged and priced to be sold as a unit. The outside packaging of the Combo Packs states that “codes are not for sale or transfer”; similar language appears on the package insert containing the code. A consumer redeeming the codes on the Disney portal is likewise required to represent that he or she is “the owner of the physical product that accompanied the digital code at the time of purchase.” A customer buying a code would not see the first two of these warnings. Redbox used this fact to argue that Disney was trying to impose the terms of a license between Disney and Redbox on to its customers. Disney’s response is that the license terms to which customers agree before downloading a movie from the Disney portal are sufficient to create the underlying infringement on which Redbox’s contributory liability rests.
This lawsuit is one of a number of recent cases testing the status of links and download codes under copyright law. Playboy Entertainment Group has commenced litigation against a website that posted links to a third party site displaying every Playmate photo ever published. Although the content of the copyrights at issue in that case could not be more different from the family-friendly content of the movies at issue in the Disney-Redbox litigation, they both address the problem of defining what constitutes digital copying and distribution of copyrighted works.