Disney Loss in Digital Download Case Against Redbox Could Cost Millions

A judge has blown up a lawsuit brought by Disney like the Death Star, after the company tried to stop Redbox from selling digital download codes for its movies.

According to the Verge, “A California federal judge has rejected the studio’s request for an injunction that would have halted the practice,” and, “Instead, the judge called into question Disney’s stringent policies about the codes, accusing the studio of ‘copyright misuse.'”

Disney’s discontent started after Redbox started selling the free digital download codes for movies found within retail DVDs, pushing the price of digital Disney movies down.

“Redbox is selling our digital movie codes in blatant disregard of clear prohibitions against doing so,” declared Disney. “Their actions violate our contracts and copyrights.”

US District Judge Dean D. Pregerson, however, dismissed Disney’s grievances, claiming “the warning that ‘Codes are not for sale or transfer’ on the DVD and Blu-ray packaging did not constitute a binding contract.”

Pregerson also added that Disney’s licensing agreements “improperly forced consumers to give up some of their basic ownership rights,” according to the report.

“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,” the judge proclaimed.

The judge’s decision could cost Disney millions in revenue due to multiple factors. Not only will Redbox presumably continue to resell the digital download codes, but others may as well. Additionally, Disney may be forced either by lawsuits or market conditions to change the way they bundle and market digital downloads with physical media.

The Verge reported that Redbox has since filed their own lawsuit against Disney for anti-competitive behavior.