Disney sues Redbox for selling DVD digital download codes

Disney has sued DVD-lending company Redbox over its practice of reselling the digital copy download codes included with physical disc purchases. Redbox acquires these codes from the DVDs it purchases (it buys them retail, not through any special arrangements with Disney); rather than discarding the codes, the company puts them to good use by allowing its own customers to buy them.

Redbox, for those who are somehow unfamiliar, has a bunch of red-colored vending 'boxes' at locations throughout the US, enabling customers to rent one of many DVDs directly from the box, then return it at a later date. Though movie-renting franchises are all but extinct, Redbox continues to thrive...but that may depend on the outcome of Disney's lawsuit.

Download codes allowed customers who buy a physical disc to also download a digital copy, eliminating the need to rip the disc or pirate a digital version. Redbox offers customers these codes for Disney movies at rates of $7.99 to $14.99, which means in some cases it undercuts digital versions available to purchase through legit services like iTunes.

The company started selling these codes through its vending boxes about a month ago, and Disney has already slapped it with a lawsuit. Redbox doesn't sell download codes for other content because it has deals in place with those studios to get special disc copies, presumably at less than retail pricing, but those copies don't come with a digital code.

Disney is going after Redbox for copyright infringement, arguing that the DVD boxes all include fine print specifying that the codes aren't allowed to be resold or transferred to others. Disney wants Redbox's profits from the code sales or it wants $150k for every instance of alleged copyright infringement. Plus it seeks an injunction against further code sales.

SOURCE: Wall Street Journal