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Court backs Mouse in trailer dispute

Webco Video Pipeline ordered to return pic previews

WASHINGTON — A federal district court judge on Monday handed Buena Vista Home Entertainment a sweeping victory in its copyright dispute with movie preview service Video Pipeline.

New Jersey district court judge Jerome B. Simandle ruled that Video Pipeline’s creation, copying and streaming of promotional trailers for Disney and Miramax films without the studios’ authorization does not qualify as a “fair use” under federal copyright law.

The court also ruled for Disney on its federal trademark claims and its state law claims of unfair competition and breach of contract.

Minimal award

Video Pipeline was ordered to pay nominal damages of $1 and to return all trailers provided by the studio between 1993 and 2000.

The court rejected Video Pipeline’s claims of copyright misuse against Disney and its constitutional claims under the copyright clause.

The case was closely watched by retail groups, which argued that Video Pipeline’s retail customers have the right under copyright’s first-sale doctrine to use portions of the studio’s copyrighted works to promote the sale and rental of lawfully acquired copies.

The Video Software Dealers Assn. and the National Assn. of Recording Merchandisers jointly filed a friend of the court brief on behalf of Video Pipeline.

The MPAA filed a brief on behalf of Buena Vista.

Appeal pending

Monday’s ruling may not be the final word on the matter, however.

In April 2002, the same court granted Disney’s request for a preliminary injunction against Video Pipeline barring it from preparing and streaming clip previews of Disney films without authorization.

Video Pipeline appealed that ruling to the federal Third Circuit Court of Appeals, raising many of the same copyright arguments addressed by the district court in Monday’s ruling.

Should the appeals court find in favor of Video Pipeline, the district court could be forced to vacate Monday’s order.

Simmering dispute

The case began in October 2000 after a dispute arose between Buena Vista and Video Pipeline over Video Pipeline’s use of Buena Vista-provided promotional trailers in a new online service.

The service connected retailers’ Web sites to a network maintained by Video Pipeline that streamed the trailers to consumers who clicked on a “preview” button on the site.

After Buena Vista demanded the return of its trailers, Video Pipeline began creating its own “previews” of Disney and Miramax titles by copying clips of the movies from videocassettes owned by its retailer clients.

When Disney objected, Video Pipeline sued, seeking a declaratory ruling that its actions did not violate the studio’s copyrights. Buena Vista then counter-sued.

In issuing the preliminary injunction, Judge Simandle rejected arguments raised by the VSDA and NARM that retailers selling lawfully purchased videos online are entitled by the first-sale doctrine to use the previews to promote those sales without authorization from Disney.

But Simandle ruled that Video Pipeline “may not stand in the shoes of its customers,” to protect itself against Buena Vista’s claims.

(Paul Sweeting is a reporter for Daily Variety sister publication Video Business.)