Judge Prohibits Redbox From Selling Movie Download Codes

Changing course, a federal judge has ordered Redbox to stop selling codes that enable consumers to download Disney's digital movies.

In a ruling issued last week, U.S. District Court Judge Dean Pregerson in the Central District of California said Disney is likely to prevail on a claim that Redbox encouraged customers to infringe Disney's copyright by using the codes to obtain digital downloads. The ruling marked a reversal from February, when Pregerson ruled that Disney wasn't entitled to an injunction against Redbox.

The legal battle between Disney and Redbox centers on movie combination packages that include a DVD, Blu-Ray Disc and code for a digital download from RedeemDigitalMovie.com.

Disney alleged in a 2017 copyright infringement lawsuit that Redbox purchases the packages, rents or sells the discs at its kiosks, and then separately sells codes that allow consumers to download movies like "Black Panther" and "Guardians of the Galaxy." 

The movie studio initially argued that Redbox couldn't legally sell the download codes because the combo boxes stated: "Codes are not for sale or transfer." Disney contended that language created an enforceable contract between itself and purchasers. The company sought an injunction that would have prohibited Redbox from continuing to offer the codes.

In February, Pregerson rejected Disney's request, ruling in a 26-page opinion that the phrase "Codes are not for sale or transfer" doesn't inform consumers they are agreeing to a binding contract by opening the packages.

Disney now says that it has revised the language at the redemption site, which no longer says that consumers must own the physical DVDs and Discs in order to download movies. Instead, the new language informs consumers that they are only authorized to use a download code if they have purchased the code from a combination pack.

Disney also revised the language on the packaging, which now says that digital codes can't be sold separately, and can only be redeemed by purchasers or their family members. Lawyers for the company also said at a court hearing that customers who didn't want to accept the restrictions on digital downloads could return the combo packs, according to Pregerson.

He ruled that the new language online, and on the packaging -- combined with customers' right to return the combination packages  -- entitled Disney to an injunction prohibiting Redbox from selling the download codes. "Because Redbox did not obtain an ownership right to any digital content when it purchased Combo Packs, Disney has adequately shown that it is likely to succeed on its claim that Redbox encouraged Redbox customers to infringe Disney’s copyrights by redeeming codes in violation of the license terms set forth on the redemption sites," he wrote.

Pregerson said in the ruling that customers' right to return the material for a refund was critical to his decision, and said the injunction will expire on November 27, unless Disney "clearly and prominently" notifies consumers that they can return material if they don't want to accept the restrictions on downloads. 

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