A U.S. district court in California recently issued a decision in Disney v. Redbox that solidifies the copyright misuse defense while avoiding controversy on digital first sale.
Redbox, the movie rental firm, offers an on-demand service that allows users to stream or download films. Redbox attempted to enter into a vendor agreement with Disney similar to its agreements with other studios, but Disney refused. Redbox responded by purchasing Combo Packs, removing the slips of paper with the codes, and then selling the slips of paper through the Redbox kiosks. Disney sued Redbox, alleging that the resale of the codes: 1) breached the contract Redbox entered into with Disney when it purchased the Combo Pack; and 2) constituted contributory copyright infringement in that it induced customers to make unauthorized copies of Disney’s works. The district court denied Disney’s motion for preliminary injunction, finding that it was unlikely to succeed on the merits of its claims.