
Redbox's Workaround for Stocking Disney Movies Backfires with Lawsuit - uladzislau
https://gizmodo.com/redboxs-crafty-workaround-for-stocking-disney-movies-ba-1820925295
======
jjeaff
Although the digital download portion muddies the water, this seems to fall
clearly under the first sale doctrine. As mentioned in the article, the
seemingly applicable case of digital downloads getting exempted from first
sale was only applies because the downloaded music was already downloaded once
and sending it to someone else constituted copying which I assume falls under
dmca.

I predict Disney will lose.

Big textbook publishers have been trying to pull this crap for years and were
finally trounced in the Supreme Court when it was ruled that once a textbook
is sold to someone, you don't get to dictate whether and where it can be
resold.

Disney is selling a code for a one time download. Once you purchase it, and
you haven't used it yet, you should have the right to do whatever you want
with it.

~~~
gamblor956
There's a good chance Disney will win without having to pay off any
politicians.

In a nutshell: first sale doctrine applies to physical goods, i.e., the DVD
purchased by Redbox. It doesn't apply to non-tangible goods (specifically, the
code that accompanies the DVD) because intangible goods are licensed, not
sold. So, Redbox while Redbox can sell the DVDs it purchases without
restraint, it has to abide by the terms of the license if it wants to sell the
download code.

~~~
prepend
I’m not sure why you think that first sale doctrine doesn’t apply to
intangible goods. There are some court cases to say it does apply to software,
(verner v Autodesk,
[https://www.techdirt.com/articles/20080522/0016171201.shtml](https://www.techdirt.com/articles/20080522/0016171201.shtml)).

Companies definitely want to exempt digital goods from first sale, but there’s
no logical reason to do so. Hopefully this case helps establish precedent.

~~~
gamblor956
That ruling was overturned because it was simply wrong as a matter of law.
Intangible goods are licensed, not sold. Will explain in follow up when I get
to a computer.
[https://en.m.wikipedia.org/wiki/Vernor_v._Autodesk,_Inc](https://en.m.wikipedia.org/wiki/Vernor_v._Autodesk,_Inc).

Basically, under US and Western law, an intangible good is only "sold" when
all of the relevant right to it are sold. If you only sell copies, you are
only selling a right to use the copy, which the law calls a license. (The copy
doesn't actually exist, by the way, it's just a legal construct, as
downloading actually creates a new set of bits.) Since the license is
trivially copied, the owner of the good is allowed to control how the license
is used.

~~~
rasz
How western is EU?

[https://en.wikipedia.org/wiki/UsedSoft#ECJ_ruling](https://en.wikipedia.org/wiki/UsedSoft#ECJ_ruling)

But its not applicable in this case, same German court rejected resale of used
games on account of identifying them as art and not software.

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merubin75
This is how Redbox always plays hardball with the studios; don’t want to
negotiate a fair deal for us to stock your movies? Fine, we’ll give our
employees credit cards, send them to Best Buy, and have them buy 10 DVDs. Then
we’ll have a pizza party, unwrap all the shrinkwrap, and then ship them out to
all the field workers who stock the kiosks.

How is this any different, except with digital downloads codes instead of
physical discs?

FWIW, I worked at Redbox back in the day as the company’s social media
manager. The process I described is exactly what happened when the studio that
owned the Twilight movies refused an agreement that would let Redbox stock
“Breaking Dawn (Part 1)” earlier than 54 days. Fun times.

Of course, it was all fun until we discovered that we’d sent out disc 2
(special features) instead of disc 1 (the movie) by mistake to about 80% of
the kiosks. The Twitter shitstorm from angry suburban moms was ... not fun.

------
greggman
Looking the arguments here I can see things going either way

Way #1 first sale doctrine. You sold me a box + dvd + code. I can sell the
box, dvd, and code separately. I can use the box for other things. I can build
art from the DVDs. I can sell the code

Way #2 license doctrine. You sold me a license to me specifically. That
license is non transferable. The first thing that came to mind for me is plane
tickets. Some company's websites even say if the name you register doesn't
match your ID you have to buy a new ticket, no exceptions. No idea if that's
legal or not, just repeating what the site (Expedia) said when I bought
tickets last week. I'm sure there are better examples. Paying for gym
membership. You could argue I pay $XX a month for ~720hrs of access. I should
be able to re-sell every hour of access.

How do you decide which it is? It seems like First Sale doctrine comes down to
selling physical things? IIRC you can't resell iOS apps, Steam apps, etc... I
guess the difference is you register for iOS, plane tickets, Steam.

~~~
rtpg
Well most of the time the license is about permission to use software.

It doesn't matter if you have the Windows 98 disk, if you don't have a license
you're committing copyright infringement to use it. So you could sell the
paper code, but the recipient doesn't have the right to use it.

I'm actually unsure of what legal mechanism is used for enforcing software
licenses though... is it an implicit contract when buying the DVD for example?

~~~
nitrogen
_Well most of the time the license is about permission to use software.

It doesn't matter if you have the Windows 98 disk, if you don't have a license
you're committing copyright infringement to use it._

I don't think this is entirely decided yet. IIRC GPLv2 did not include a
specific license to use the software, since the right to use a legally
obtained copy was believed to be implied. Some downloads of drivers and
applications don't include any EULA; it would be absurd to think that those
downloads are unusable even when the owner of the copyright is the one
distributing the software.

As for specific applications that do include an EULA, as I understand it some
countries don't recognize any agreement that was not available for reading at
the time of purchase.

------
naner
Reselling digital download codes seems like a bizarre risk for such a well
known established company to take.

~~~
TheAdamAndChe
Yes, but they both doubled their revenue while undercutting Disney, so the
potential payoff was very large. Plus, the stipulation that "codes are not for
sale _or transfer_" seems to be a particularly egregious stipulation that may
be overly broad, thus arguable.

~~~
rubyfan
I don’t see how Disney can arbitrarily put a word on the box that limits your
ability to do something with it.

What is they put “not for use as a coaster” and you resell the disc as a
coaster? Can they sue you for that?

~~~
ams6110
They can put whatever words they want in the box, probably assuming that few
people would have the resources to fight them about it.

~~~
rubyfan
Looks like they hit the jackpot.

I’ll say it another way, just because it’s on the box doesn’t mean they can
legally limit you. So yeah they can put whatever they want but we’ll see if it
holds up.

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TazeTSchnitzel
Disney could avoid this issue by printing the download codes onto the discs.

~~~
mjmahone17
Are you sure? Couldn’t Redbox “dissasemble” the disc by transferring the code
to paper and physically removing it from the disk? How would that be different
than buying an all-in-one computer, taking it apart and selling each component
individually?

~~~
TazeTSchnitzel
Ah, perhaps. I was thinking they'd have to copy the code, which seems harder
to get away with.

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jasonkester
This seems like it will end as one of those "why we can't have nice things"
moments.

I thought it was pretty cool that the kids' new Star Wars disc came with a
download code so we didn't have to grab the version we _actually_ watch as a
torrent. But after this case, win or lose, really, you know that Disney will
stop offering that code.

There is no real upside for them, and people are being dicks about it. So it
goes away.

So yeah, cool idea reselling it. But all it does in the end is make the world
a little worse for everybody.

~~~
Chris2048
"why we can't have nice things" assume good faith on part of large
corporations. In reality, they push for shit like this the hardest. They
pioneer dickishness.

------
1024core
This is going to be interesting. They're not selling any copyrighted material;
just the _ability_ to download the material.

I don't understand one thing, though: why can't Disney make these codes
single-use? Or limit them to a handful of uses? Or use some form of customer
authentication (like a CC number, or phone number) to limit the access to
these codes?

~~~
aibara
Aren't the codes that came with the DVDs that Netflix is then reselling one-
time use? So Netflix doesn't ever use them, just sells them (i.e. the ability
to download the material) to someone once. Netflix only has many to sell
because they bought so many DVDs. At least that was my understanding, but
maybe I'm wrong.

Edit: And by Netflix I mean Redbox, oops.

~~~
applecrazy
It's not Netflix (the provider of digital movies and TV shows with a
subscription). It's Redbox (a company which specializes in renting movies out
using automated kiosks on a per-night basis).

~~~
luck_fenovo
> Netflix (the provider of digital movies and TV shows with a subscription)

Netflix started 20 years ago by mailing rented movies to people, a business
they still engage in with millions of customers.
[https://dvd.netflix.com](https://dvd.netflix.com)

~~~
StavrosK
Sure, but it's still not Netflix in the article.

------
sherburt
Yeah, you know what? Fuck redbox on this one.

Selling the digital codes separately, while renting the physical item? That
sounds like kind of ridiculous behavior, considering you’d imagine them to
have a wholesale side-channel for their operation. Do they have unskilled
workers acquiring optical disks via retail, over the counter, and then
shucking them out of the consumer product package, and sleeving them for
rental operations?

But, still, fuck Disney too. It is completely irrational that they insist on
operating as this elitist, vertically integrated smoke stack that issues forth
a plume of animated gruel intended to placate sheltered infants, piped in by a
specially insulated A/V channel for two hours at a time, at like $40 bucks a
go.

Both of them suck, but if the game is cricket, the rules are stacked in
Disney’s favor in this instance.

~~~
jrochkind1
> Do they have unskilled workers acquiring optical disks via retail, over the
> counter, and then shucking them out of the consumer product package, and
> sleeving them for rental operations?

Yes, that's what the article said they do. That is perfectly legal with the
DVDs. You are allowed to resell things you buy, that's the first sale
doctrine, and it's why you can sell a used book or DVD without paying a
licensing fee. But it's unclear if it applies to the download code.

This is literally what the article was about.

