Intellectual Property Implications in Business Decisions

Intellectual Property and DVDs

As a business owner, it is important to research any intellectual property concerns before proceeding with an idea, especially when it concerns the intellectual property rights of well-known companies in the entertainment industry.

On August 29, 2018, the United States District Court for the Central District of California granted a preliminary injunction to Disney that barred Redbox from selling individual download codes that were initially included within combo packs.

Disney sells combo packs which include a DVD and/or Blu-ray disc version of a movie as well as a piece of paper that has a download Code that can be redeemed online for a user to stream or download the same movie as on the physical disc. Redbox would purchase and disassemble the combo packs and offer the combo pack download codes for individual sale. Disney’s language on the Black Panther combo packs notes that the codes are “only for personal use by recipient of this combination package or family member” and presents terms and conditions that require affirmative assent. Disney stated at oral argument that if a purchaser does not accept the terms and conditions of the digital license, they may return the combo pack to the retailer.

Provided Disney shows clearly on it packaging that purchasers may return codes or combo packs for a refund if they do not agree to the later-disclosed digital license terms, Redbox is enjoined from selling the download codes from the combo packs separately. Since Disney’s applicable language on these combo packs only exist in some movies at this time, the effect may not affect Redbox too much, especially since Redbox will still be able to provide the alternative option of a DVD and Blu-ray disc. Even though the effects may not be catastrophic, the issue, and attorneys’ fees, could have been avoided if Redbox had considered the terms provided by Disney prior to selling the combo pack download codes separately.

No matter the size of the business, be wary when it comes to potentially utilizing the intellectual property of these entertainment giants. It is always best to consult first with an intellectual property attorney to assess the issues and proactively protect your business from incurring any unnecessary costs.

For more information on this topic, contact your Intellectual Property Counsel at Smith, Gambrell & Russell.

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