By: Larissa Tiller
In Disney Enterprises et al. v. Redbox Automated Retail, the U.S. District Court for the Central District of California recently granted an injunction against Redbox, preventing the company from selling the digital download codes for the 2018 Disney film, Black Panther. One of the interesting issues raised by the court was the inapplicability of the first sale doctrine as a defense for Redbox distributing the codes included in DVD/Blu-ray/Digital Download Combos they purchased from retailers.
The first sale doctrine, codified in 17 U.S.C. § 109, stipulates that the owner of a copy of a copyrighted work may sell, display, or otherwise dispose of the copy in whatever manner they see fit. In 2017, however, Disney filed a copyright infringement claim against the movie rental company Redbox for selling the digital download codes included in the combo packs Redbox purchased from stores like Walmart and Best Buy. On August 29, 2018, a federal judge in California granted Disney’s injunction against Redbox, prohibiting the company from selling the codes to Black Panther, because the court held that Disney will most likely succeed on its claim against Redbox for copyright infringement. Disney Enterprises, Inc. v. Redbox Automated Retail, LLC, No. CV17-08655DDP(AGRx), 2018 WL 4182483, at *5 (C.D. Cal. Aug. 29, 2018). The court determined that when Redbox customers purchase and download digital copies of works, without purchasing the entire combo pack, they violate Disney’s updated terms of service. Id. The court further determined that “because no particular fixed copy of a copyrighted work yet exists at the time Redbox purchases or sells a Code, the first sale doctrine is inapplicable to this case.” Id. at 7.
The court’s reasoning on this issue, however, is far from self-evident. Alternatively, the court could have held a “particular fixed copy of the work” does exist at the time Redbox purchases and sells a code. The digital codes are printed on a piece of paper, sold through retailers like Walmart, and then entered into a web program to be redeemed. It is reasonable to interpret the code itself as the “fixed” work. As the owner of a physical copy of a work, Redbox has merely exercised its rights under the first sale doctrine to sell, display, or otherwise dispose of the codes as it sees fit. Despite repackaging the codes and selling them through Redbox kiosks, no copying of the work occurred. They are the same codes on the same piece of paper that Redbox purchased, but never used.
Moreover, these codes are only redeemable one time and by one individual. Therefore, the codes cannot be used by an aftermarket buyer once the code has been redeemed. There is no danger that these codes will be reproduced, depriving Disney of its reproduction rights. The only thing Disney has been deprived of is another buyer who decided to purchase the film second-hand. These types of transactions are exactly what the first sale doctrine is meant to protect.