Disney Has Won an Injunction Against Redbox

Disney isn't just winning at the box office, but also in court in a long-running lawsuit against Redbox.

For context, Disney filed a lawsuit in December against Redbox. That lawsuit has to specifically do with Redbox going into retail stores and buying combo packs, which typically include a Blu-ray, DVD, and digital code. Redbox did this for movies like Beauty and the Beast, Star Wars: Episode VIII - The Force Awakens, Frozen, and Guardians of the Galaxy Vol. 2, and after buying they would remove the packaging and sell each one in its Redbox kiosks, including the digital codes.

As a result, Disney sought an injunction to halt the sale of those, but it lost against Redbox the first time around. The second time was the charm, at least for now, as Disney was granted a motion for a preliminary injunction by a California judge (via THR).

The difference between the two approaches came down to some updated language on the boxes of Combo Packs. In response to that decision, Disney amended their terms in regards to the download codes. The new terms features language like "Digital code redemption requires prior acceptance of license terms and conditions" and "The digital code contained in this package may not be sold separately."

After updating their terms they submitted their suit and said the new language acted as an enforceable "clickwrap" agreement, but Redbox fought back and said that a post-purchase restriction like that was unenforceable, since no contract was formed at the point of sale. The court sided with Disney though, despite Redbox also saying that there was misuse since the "code is rendered worthless" unless a customer forgoes physical disc first sale rights.

"That statement is not accurate," retorts the judge. "Under the old terms, a Combo Pack owner who disposed of the discs was indeed left with a worthless code because continued possession of the discs was a condition of digital access. Now, however, digital access is conditioned not on possession of the discs, but on the manner of Code acquisition. A Combo Pack owner who disposes of the discs is left with the same digital access rights he or she always possessed. Although Redbox is correct that, because Codes are not separately transferable, a Combo Pack owner cannot transfer a Code if he or she disposes of the discs first, the right to transfer a separate Code is not protected by the first sale doctrine or any unconditional ownership rights. ... A copyright misuse defense, therefore, is unlikely to succeed."

Redbox issued a statement that revealed they can still sell codes that don't have the updated language, and also stated this doesn't really affect them much. They also pointed out it will affect Disney though, saying "The same isn't true for Disney. In addition to having been forced to change misleading language on its packaging and its websites, Disney now must offer consumers the ability to return digital codes or Combo Packs for a refund if they disagree with digital license terms."