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Star Wars Prequels Digital Movies Software The Courts The Internet Entertainment

How a Fight Over Star Wars Download Codes Could Reshape Copyright Law (arstechnica.com) 96

An anonymous reader quotes a report from Ars Technica: A federal judge in California has rejected Disney's effort to stop Redbox from reselling download codes of popular Disney titles like Frozen, Beauty and the Beast, and the latest Star Wars movies. Judge Dean Pregerson's Tuesday ruling invoked the little-used doctrine of copyright misuse, which holds that a copyright holder loses the right to enforce a copyright if the copyright is being abused. Pregerson faulted Disney for tying digital download codes to physical ownership of discs, a practice that he argued ran afoul of copyright's first sale doctrine, which guarantees customers the right to resell used DVDs.

If the ruling were upheld on appeal, it would have sweeping implications. It could potentially force Hollywood studios to stop bundling digital download codes with physical DVDs and force video game companies to rethink their own practices. But James Grimmelmann, a copyright scholar at Cornell Law School, is skeptical that the ruling will survive an inevitable appeal from Disney. "I don't see this one sticking," Grimmelmann told Ars. Copyright misuse has such sweeping legal implications that an appeals court will be reluctant to apply it to a common movie industry practice.

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How a Fight Over Star Wars Download Codes Could Reshape Copyright Law

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  • Fucking Disney... (Score:1, Insightful)

    by Anonymous Coward

    "Copyright misuse has such sweeping legal implications that an appeals court will be reluctant to apply it to a common movie industry practice."

    Okay, so just break the law enough times that no one will want to charge you with the crime because it would change the status quo... great line of thinking...

    • While I agree with you, holding the decision would simply mean that all future DVDs and games will come withOUT download codes. Customer loses anyway.

      • by sexconker ( 1179573 ) on Friday February 23, 2018 @08:38PM (#56179455)

        Good! I don't want to pay for a shitty download code. I want the full quality disc.

        • Wait, wait...
          Currently you have the movie on the disk AND the download code.
          In the future, you will just have the movie... or just the code, but not both.
          Therefore, you, the customer, lost something.

          • No. If they separate them out then the price will be lowered.
            Now, I'm sure you're thinking "fat chance", but if they still end up offering physical discs and codes separately, they will do a value proposition analysis for both of those and the old disc+code combo packs.

            I don't know what the prices are now, but I can imagine:

            Disc + Code = 30
            Disc = 25
            Code = 10

          • by Rakarra ( 112805 )

            Wait, wait...
            Currently you have the movie on the disk AND the download code.
            In the future, you will just have the movie... or just the code, but not both.
            Therefore, you, the customer, lost something.

            Much of the time, those download codes are unusable. I don't know WTF they have an expiration date, but there you go.
            I've never used them, because ripping the disc and creating my own copy gives far superior results.

    • Re: (Score:2, Informative)

      Copyright misuse is not a crime and never has been so there is no crime to charge them.

  • by Anonymous Coward

    Copyright isn't magical, it is the right to make copies. They sold two copies. One that can be easily transfered with a code. I don't see how they can legally prevent transfer and even if they do, it would likely violate first sale doctrine.

    • by dgatwood ( 11270 ) on Friday February 23, 2018 @09:11PM (#56179561) Homepage Journal

      They absolutely can prevent transfer of a license. The license is obtained by entering the code into a website, and that code is usable only once. That's not where Disney's argument falls apart from a legal perspective.

      The problem with Disney's argument is that their reasoning, when applied to slightly different situations, results in a legal interpretation that fails the common sense test. Consider three scenarios:

      • Case 1: You buy a DVD for $10. You use the code, and keep it, because it is nontransferable. However, you sell me the DVD for $5 because you don't need it, according to your right of first sale.
      • Case 2: I buy a DVD for $10. I sell you the code from that DVD for $5. The company claims that I'm not allowed to sell the code to someone who is not the original buyer.
      • Case 3: I buy a DVD for $10 and sell it unopened to you for $10, which is my right (first sale again). You open it, use the code, and sell back the disc to me for $5.

      In all three cases, the result is the same: I have a DVD and you have an electronic copy, and we each spent $5.

      Nothing in Title 17 could plausibly explain why only one of these three transactions is legal, given that the end result and process are effectively identical except for trivial accounting differences. Such a requirement completely fails to stand up to the slightest bit of logical scrutiny, and any legal code that would result in such an outcome would have to be patently absurd.

      Now the question of whether the second person (being not the original buyer) has the right to *use* the code is another question, but if you apply the same reductio ad absurdum to that, you get the same results.

      So the correct question is not whether the judge's decision is correct — it very clearly is — but whether the particular path to that conclusion will survive appeal or will be replaced with a different path to the same inevitable conclusion.

      You really have to wonder what Disney's lawyers were smoking to have believed that they could pull this off. IMO, it isn't just clear-cut legally; it is *laughably* so.

      • by c6gunner ( 950153 ) on Friday February 23, 2018 @09:39PM (#56179661)

        The workaround for that seems pretty simple; they only have to specify that your license for the downloaded movie is only valid so long as you have the original disc. If you sell the disc then the license is revoked, and you have to delete the downloaded copy. This doesn't violate the "first sale" doctrine since you still retain the right to sell the disc.

        I'm not sure whether that's part of their license or not ... if not then it was obviously a rather large oversight. Expect it to be rectified.

        • by nzkbuk ( 773506 )
          The possible issue here is that this may constitute shrink wrapped licencing terms. By purchasing the combo pack you have purchased
          1x DVD
          1x Blueray
          1x Digital Code
          by First Sale Doctrine Disney cannot prevent you from splitting that combo pack and selling the DVD and Blueray's independently.
          Now comes the tricky question of the digital code. To make use of the code you need to accept additional terms and conditions which legally is known as a "Shrink Wrap Contract" which is unenforceable. Why shouldn
        • by Quirkz ( 1206400 )

          The workaround for that seems pretty simple; they only have to specify that your license for the downloaded movie is only valid so long as you have the original disc.

          I could kind of see that argument against resale, but your wording would apply if I broke or lost the disc, and that hardly seems fair. If my kid drops the disk and steps on it, there's no reason I should delete the digital version, too.

          • by dgatwood ( 11270 )

            Of course there's a reason. Continuing to use the digital copy costs Disney potential sales for replacement discs. :-D

            Oh, you mean a good reason. Never mind.

      • Case 1: I have access to anything from OTA to the biggest CATV package. I buy a dvr. I edit out all the commercials and have a nice DRM-free copy.>br> Case 2: I have access to anything from OTA to the biggest CATV package. Someone else does the legwork, for free, even. So long as I have access, I download that DRM-free copy.

        Nothing in the "Betamax case" could plausibly explain why only one of these 2 actions is legal, given that the end result and process are effectively identical except for trivia
      • by AmiMoJo ( 196126 )

        Disney's lawyers were probably snorting coke off the toilet seat when they came up with that argument.

        They don't care that it's obviously flawed, Disney told them to defend their position. And it's probably only a prelude to bribing some lawmakers to charge the law anyway.

      • While I agree with your logic, your conclusion goes against one of my three rules:
        1.) Never get involved in a land war in Asia.
        2.) Never go up against a Sicilian when death is on the line.
        3.) Never oppose Disney in court when Intellectual Property rights are involved.

      • They absolutely can prevent transfer of a license.

        Yes they can, but let's skip ahead slightly; I promise we're not going far and we're coming right back.

        That's not where Disney's argument falls apart from a legal perspective.

        Are you sure about that? After all, Redbox never obtained the license they're supposedly transferring because they never used the codes they are selling and, as you just said:

        The license is obtained by entering the code into a website

        Of course, then I read the rest of your post and realized that we're on the same side of this discussion. Still posting this because, well, you could have been ever slightly more right than you already were.

      • Everything you said. But also, the actual legal defense here is that, "Everyone is doing it, so you have to let it persist even if it harms consumers, even if it breaks right of first sale". Except, the entities doing it control vast sums of wealth and power, so yeah, they can do whatever they want.
        • by dgatwood ( 11270 )

          Of course, the workaround is for Redbox to add one extra line to their terms of use:

          "By purchasing a digital license, you acknowledge that you have purchased a retail copy of the DVD from Redbox and resold that retail copy of the DVD back to Redbox for the purchase price minus the cost of this digital license."

          And then account for each digital license sale as a $5.01 sale and a $0.01 purchase. And Disney still fails at that point.

  • ... we couldn't possibly stop now. Imagine the consequences!

  • Copyright misuse has such sweeping legal implications that an appeals court will be reluctant to apply it to a common movie industry practice.

    Would an appeals court be more concerned about the 'legal implications' aspect or the 'movie industry practice' aspect? I suspect the latter. And even if it is 'sweeping legal implications', I translate this as 'we've let copyright abuse continue, grow, and thrive for too long because we were lazy, corrupt, or disinterested. Now even we can see that it needs to be reined in, but we're scared senseless of the shitstorm that would result from pulling down the festering dungheap we've allowed to grow so high,

    • by dgatwood ( 11270 )

      The frequency at which a law is violated has no bearing on whether something is illegal or not. Don't believe me? Drive 10 over the speed limit past a cop, and then tell a judge that because the overwhelming majority of Americans speed, you shouldn't have to pay a fine for doing it.

      • > The frequency at which a law is violated has no bearing on whether something is illegal or not.

        If I may say, it actually does. The existence of prevalent exceptions to a law can demonstrate selective enforcement of the law, which can itself be illegal.

      • by Agripa ( 139780 )

        The frequency at which a law is violated has no bearing on whether something is illegal or not.

        The government regularly uses the "common use" argument to keep things not in "common use" illegal and then uses that as a justification to keep those things illegal.

  • by rsilvergun ( 571051 ) on Friday February 23, 2018 @08:19PM (#56179383)
    how do I not have a right to sell it? If Disney sells me a license, how do I not have a right to resell that license? And if I don't have that right then we're not even pretending to be a free market anymore, are we?
    • Licensing is a contract where you agree to not sell the license. If you were free to resell licenses you've obtained then licensing would be pointless.

      Licenses are not tangible, it would be similar to selling ideas, you can't divest yourself of an idea, hence you cannot sell it because even if you could, you wouldn't lose access to it.

    • by Kjella ( 173770 )

      If Disney sells me a license

      A license is not a piece of property, it's a contract or in even more layman terms an agreement. And no, you can't just sell your end of an agreement. If you buy that disc, use the download code and the license agreement doesn't let you transfer it to anybody else you're stuck with it forever. You can sell the disc as you own that, but Disney don't have to offer the service to anyone else. I think that part is quite well settled, try selling your Steam account and you'll find it banned real quick. And I don

      • A license is not a piece of property, it's a contract or in even more layman terms an agreement. And no, you can't just sell your end of an agreement.

        And yet mortgages, which are, as far as I can see, also contracts, are bought and sold routinely. My mortgage for example was sold twice, and I was never consulted at my end of the agreement. There are whole industries built around the buying and selling of contracts - futures, insurance, student loans, mortgages.

        • by Kjella ( 173770 )

          And yet mortgages, which are, as far as I can see, also contracts, are bought and sold routinely. My mortgage for example was sold twice, and I was never consulted at my end of the agreement. There are whole industries built around the buying and selling of contracts - futures, insurance, student loans, mortgages.

          If you can get the other party to agree to it, sure. If you got the market power to put in your boilerplate agreement that you can transfer the loan then you can. That is if it's actually sold and not pass-through, like I can quasi-sell that debt for $x now and agree to forward all future payments to you. As long as you remain a legal entity in the middle you don't need permission for that.

    • I'm surprised Disney doesn't have a separate package for Redbox that omits the digital license. A Redbox ad in the previews section of those disks should be enough of an enticement for them to be willing to select those over the standard ones. .

  • by ZorinLynx ( 31751 ) on Friday February 23, 2018 @08:22PM (#56179399) Homepage

    Redbox purchased the DVD or Blu-Ray. They paid the same amount that a regular person would when buying the disc. The code can only be used once, so it's not like this is enabling mass piracy by everyone who rents the video or anything. What's the big deal?

    If Redbox didn't sell the code, the first person to rent the disc would get it anyway and probably use it. It's not like Disney is losing any money from this.

    They need to chill out and stop trying to stop people every time they find a way to do things that they did not anticipate when there isn't even a harmed party.

    • by swb ( 14022 )

      I read where Redbox was selling the codes at the kiosk in addition to renting the discs. Disney sells the combo for $20. Redbox makes $100 renting the disc (I made that up, theoretical lifetime income from a specific disc) and another $8 from selling the code.

      Disney is super torqued that Redbox is making $80 (rental - disc cost) off the rental -- that's 4 discs Disney didn't sell and they don't see any of the $80 in rental income. Insult to injury is Redbox selling the codes as well, *another* $8 Redbox

  • by Frosty Piss ( 770223 ) * on Friday February 23, 2018 @08:32PM (#56179437)

    Copyright misuse has such sweeping legal implications that an appeals court will be reluctant to apply it to a common movie industry practice.

    The Appeals Court: "It's so common that consumers are getting fucked up the ass, we see no compelling reason to change this established practice."

  • by Anonymous Coward

    I must have missed the schoolhouse rock episode where we learned that if companies are doing something for a long time that this becomes the law

  • If the ruling were upheld on appeal, it would have sweeping implications. It could potentially force Hollywood studios to stop bundling digital download codes with physical DVDs and force video game companies to rethink their own practices

    IANAL, but I don't see how this will "force" Hollywood to stop giving people digital download codes with discs. They already sell combo packs of Bluray + DVD, or 4K Blu-ray + 1080p Blu-ray, and sometimes all three, and people can always resell one or the other discs separate of the package. The code is just another portion of the package in this case, and the consumer will be free to sell it now (as they already are doing -- not just Redbox).

  • Never understood why DVDs and Blu-Rays come bundled with download codes.

    The content is literally on the disc you purchased why bother to enter a code or download it from the Internet (I assume with strings attached) when you can just copy content of disc and play it on anything you want?

    • Never understood why DVDs and Blu-Rays come bundled with download codes.

      The content is literally on the disc you purchased why bother to enter a code or download it from the Internet (I assume with strings attached) when you can just copy content of disc and play it on anything you want?

      I've never actually used a download-code, but I imagine they are one-use-only. Whereas, if they let you copy the DVD/BluRay then I would assume someone could find a way to copy it an unlimited number of times.

      • Whereas, if they let you copy the DVD/BluRay then I would assume someone could find a way to copy it an unlimited number of times.

        Im rather sure he is referring to the fact that anybody with a computer and compatible optical drive could do that, regardless of what disney or anybody says. It is not illegal to make a digital copy of something you own as a backup afaik, so long as you dont share it. Their encryption has been broken for some time. You can take any BD or DVD with a few free programs make perfect copies in multiple formats to be played on any device you can imagine.

    • by suutar ( 1860506 )

      because in theory you're not allowed to copy the content of the disc?

    • Never understood why DVDs and Blu-Rays come bundled with download codes.

      It solves the problem of "how do I watch this disc on my laptop which has no optical drive", and that's about it. Still, it does that, for some reasonable value of "solves".

    • by mark-t ( 151149 )
      I always assumed that it was most practical for devices which don't have DVD's, like phones or tablet devices.
    • I Just bought the Justice league bluray from VUDU it allowed me to instantly watch the movie which isn't even being sold on DVD till march 13th which will be also be shipped to me from walmart. I saved 2 bucks as that the cost of using the code that comes in the box PLUS the account doesn't cost me one red cent to watch those movies.I have 12 movies on a digital service SO IMO Redbox shouldn't be allowed to resell those codes they were never meant to be resold they were to be used as i use them pay a fee to
    • Never understood why DVDs and Blu-Rays come bundled with download codes.

      The content is literally on the disc you purchased why bother to enter a code or download it from the Internet (I assume with strings attached) when you can just copy content of disc and play it on anything you want?

      1. As others have pointed out, I would argue that the number of devices used to watch movies which do not have an optical drive exceed the number of devices which do. Download codes solve that problem for those use cases.
      2. The MPAA long ago made it clear that they desired a world where DVD ripping wasn't a common practice, despite the fact that CD ripping was commonplace. "Just copy the content of the disc" is something that the MPAA has technological measures, copyright law, and case law on their side. An

  • Disney just needs to sell discs (and only discs--no download codes or even retail cases) to Redbox for at least $4 less than what they're paying now. Problem solved?
    • by Mal-2 ( 675116 )

      Disney would prefer to forbid Redbox from buying the discs at all, but haven't yet come up with a method for doing so.

      • That's easy to do. Just stop selling discs.

        If that's too extreme, then just starting Knowing Your Customer. Have direct sales instead of selling through intermediaries. The upside of this is that they could also have sales contracts, where the purchaser agrees to a license as a condition of obtaining the disc. Do that and everything is solved. It's how every other contract-based business works. Maybe Disney should stop trying to be a weird, shady exception.

  • The important high level idea here is the difference between granting a license to the underlying media content, vs granting a license separately for each medium of distribution.

    This is an example of how hollywood is trying to have it both ways. I buy DVD's, and I'd like to rip them to my PC to host a digital version for myself on plex or kodi. Technically, using a decoder to rip the DVD is illegal - I don't have the legal right to duplicate the content for myself in a different medium. My license is onl
  • What does this download code do? Do you need to download something before you can watch a DVD.

    Sorry, I do not buy DVD Videos, so I am at a loss here.

    • Nevermind, it is in the article:

      When you buy a Disney DVD or Blu-ray disc, it will often come bundled with a special code that can be used at one of two Disney-sponsored websites, ... to obtain a digital copy that can be viewed on PCs and mobile devices.

      Apparently people don't really own videos anymore.

  • by pecosdave ( 536896 ) on Saturday February 24, 2018 @02:55PM (#56181925) Homepage Journal

    Cars 3 was right at $20.

    It's on Amazon right now [a.co]BluRay, DVD and the code for the same price. (oddly, at the time of this post the combo pack I just mentioned is $0.19 cheaper than just the DVD).

    I looked at a couple of other Disney releases on their site, with similar outcomes.

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