Redbox sues Fox, vows to keep DVDs at popular kiosks
As expected, Redbox filed a lawsuit against 20th Century Fox this week after the movie studio tried to keep its new releases out of Redbox’s DVD rental kiosks. Redbox says that the lawsuit aims to protect consumers’ rights to have access to new release DVDs, and that it plans to continue offering all major new releases—including 20th Century Fox’s—at its 15,000 rental locations.
Redbox took legal action less than a week after Fox ordered wholesalers to stop supplying Redbox with Fox DVDs until 30 days after release. The Redbox kiosks, which each house more than 600 DVDs, rent out movies for $1 per day and sell used movies for $7. The company has more kiosks than Blockbuster has stores, and each kiosk rents out an average of 50 movies per day.
Fox believes that outlets like Redbox are ruining its business. “Having our [movies] rented at $1 in the rental window is grossly undervaluing our products,” News Corp COO Chase Carey said at the time.
Fox also said that it was prepared for a lawsuit from Redbox, and the studio now has what it asked for. In a complaint filed on Tuesday, Redbox said that “Fox seeks to strangle” the low-priced rental market in order to maintain its own “artificially high” pricing scheme. Redbox emphasizes that it has a contractual relationship with the two suppliers in question, Ingram and VPD, but that the two will be forced to stop filling Redbox’s orders for Fox DVDs due to coercion from Fox.
As a result, Redbox accuses Fox of copyright misuse by violating Ingram and VPD’s first sale rights, violating the Sherman Antitrust Act’s Quick Look Doctrine by “restraining trade,” and misuse of the Copyright Act by trying to meddle with the distribution rights of third parties. Additionally, Redbox accuses Fox of engaging in unlawful boycotts—”Fox has orchestrated this boycott to artificially restrain output, raise prices and give Fox a bigger cut of rental revenues, or in the alternative to force Redbox out of business,” reads the complaint. Redbox demands a jury trial in order to resolve these issues with Fox.
This pattern follows one set by Universal last year when it decided to order wholesalers to stop supplying DVDs to Redbox until 45 days after their release. Redbox promptly sued Universal for engaging in anticompetitive behavior and abusing copyright law, as well as trying to use coercive tactics to get Redbox to shell out 40 percent of its total gross revenues in exchange for new releases. Universal responded by countersuing; a decision on the case is expected to land soon.
While Fox and Universal declare war on Redbox’s business, other movie studios are embracing the kiosks. Both Sony and Lions Gate have entered into five-year deals to allow Redbox to distribute their DVDs at release time. Meanwhile, Redbox plans to continue offering new releases from all studios, even if it means employees have to buy the DVDs at retail price the old-fashioned way.
Further reading:
- Search the federal court’s PACER system for case number 1:09-cv-00592-UNA in the District of Delaware
