Redbox Automated Retail LLC v. Universal City Studios LLLP: Difference between revisions

Redbox Automated Retail LLC v. Universal City Studios LLLP, Dist. Court, D. Delaware 2009 was a case before Robert B. Kugler concerning copyright misuse, antitrust, and tortious interference with contract.

Redbox rents and sells DVDs through automated kiosks, and Universal Studios is a major movie studio. Redbox sued Universal on counts of copyright misuse, antitrust, and tortious interference with contract when Universal pressured Redbox to accept an agreement to only obtain titles from them after 45 days of initial DVD release. Universal pressured Redbox's distributors to stop providing titles to Redbox if Redbox did not accept this agreement. Universal did this to protect their profits, but since Redbox makes a majority of their profits within two weeks of DVD release, Redbox did not accept.

The court dismissed Redbox's copyright misuse and tortious interference with contract claims, but allowed the antitrust count to move forward.

Background

Redbox is a company that rents and sells DVDs through over 12,000 automated retail kiosks inside chain restaurants, grocery stores, and drug stores in American cities. Universal Studios is a major movie studio that produces many of the titles that Redbox rents. Universal was concerned that DVD kiosks jeopardize their profits from DVD sales and rentals, so they pressured VPD and Ingram, two of Redbox's major film distributors, to stop distributing to Redbox unless Redbox signs a Revenue Sharing Agreement to only obtain DVDs directly from Universal and only after 45 days of initial DVD release. Since new release DVDs generate 30% of the total revenue for that particular title in Redbox's kiosks, Redbox did not sign the agreement as it would damage their profits.

As a result, Redbox claimed that they could no longer obtain titles through VPD and Ingram. They also claim that they could not obtain these titles through Walmart and Best Buy stores because the stores would either impose a limit on how many DVDs can be purchased at a time, or not sell to Redbox personnel entirely.

Legal action history

In October 2008, two months after the Revenue Sharing Agreement was proposed, Redbox began to raise claims against Universal Studios. In response, Universal motions to dismiss some complaints. Redbox amends their previous complaint, adding and omitting facts, and adds more claims against Universal. Universal motions in favor of their previous motion. The Court orders mediation, but that fails. Eventually, the Amended Complaint sounds in six counts: (1) copyright misuse; (2) antitrust violations under the Quick Look Doctrine; (3) antitrust violations under the Rule of Reason doctrine; (4) antitrust violations amounting to restraint of trade; (5) antitrust violations under Section 1 of the Sherman Act; and (6) tortious interference with contract.

Opinion of the Court

Copyright misuse

Redbox asserts that Universal staged a boycott of sales of Universal DVDs to Redbox, which violates the first sale doctrine of Section 109(a) of the Copyright Act. The Court dismisses this assertion, because the claim of copyright misuse is unavailable to Redbox and is impertinent to the dispute. The Court claims that copyright misuse is a defense and not a claim, so Redbox cannot raise such a claim.

References

See bibliography

External links

• Court Opinion on Justia