Redbox obtains the codes by purchasing DVD combo packs, which come with a code that allows access to a digital copy of the film. Redbox separates the codes and sells them separately, despite a warning on the combo packs that “codes are not for sale or transfer.” In February, a federal judge rejected Disney’s request for an injunction, ruling that the warning was insufficient to create a binding contract.
Undeterred, Disney has since expanded on the original language, specifying that customers may only download the digital copies if they or a family member purchased the original combo pack. Disney is now going back to Pregerson to again seek an injunction. The case has high stakes for Disney, which does not want customers to get used to paying $4.99 for movies that sell for $19.99 on iTunes or Amazon.
“Within the last month, Redbox started selling Codes for ‘Coco’ and ‘Thor: Ragnarok,'” Disney’s attorneys said in a motion on Monday. “Absent an injunction, Redbox will continue to sell codes for Disney’s next combo pack release (‘Black Panther’) and releases after that ad infinitum.”
Redbox has filed its own suit against Disney, alleging that the studio has engaged in anti-competitive tactics in its years-long effort to freeze out a low-cost competitor.
Redbox has also argued that the digital download codes should be treated no differently than physical discs, which the kiosk company is allowed to re-sell under the “first-sale doctrine.” Disney argues that there is a significant difference between re-selling a DVD and downloading a digital file. In the latter case, the studio alleges that the customer is creating a new copy of the film, and that Disney’s copyright protections should apply. In an encouraging sign for the studio, Pregerson rejected Redbox’s argument in his original ruling in February, finding that the first-sale doctrine does not apply.