Judge Gives Redbox OK to Sue Universal

Similar to its Fox lawsuit, the kiosk giant wants studios to provide DVDs on day-of-release.

Last Updated: August 19, 2009 @ 6:49 AM

Redbox and Universal … to your corners.

 
A U. S. District Court judge in Delaware has agreed to let the kiosk giant continue with its 10-month-old lawsuit seeking to force Universal to provide DVDs on day-of-release.
 
Judge Robert Kugler did, however, dismiss two of the counts against Universal, relating to copyright and contract interference between Universal and its wholesalers.
 
“The court is convinced that plaintiff sufficiently pleaded that Universal has induced or otherwise convinced others to boycott Redbox in distribution of Universal DVDs, producing anti-competitive effects, specifically Redbox’s inability to compete in the DVD rental and sales markets of Universal DVDs,” the judge wrote.
 
The decision came less than a week after Redbox filed a similar suit against 20th Century Fox, which has directed wholesalers to not sell its new titles to any vending operator until 30 days after street date, beginning with the fall release of “Ice Age: Dawn of the Dinosaurs.”
 
Also giving pushback to Redbox is Warner Home Video, which last week refused to provide its DVDs to the kiosk operator for 28 days after release date — though Warner isn’t pushing for an outright ban but a rental-share agreement.
 
Redbox has not yet filed suit against Warner.
  
On the other hand, on the same day it sued Fox, Redbox announced a five-year, $158 million deal with Lionsgate on to distribute its DVDs on day-of-release. It also has made agreements with Sony and Disney to supply its DVDs, as long as Redbox destroys its copies after their rental lives end.
 
Owned by coin-exchange machine maker Coinstar, Redbox rents films for $1 per night at more than 17,000 automated kiosks in the U.S.
 
"We appreciate the court’s thoughtful review of this issue and look forward to pursuing our claim and protecting our consumers’ rights," said Redbox president Mitch Lowe in a statement.
 
However, Universal also claimed victory for having two of the charges dismissed. "Universal … appreciates that the claims made by Redbox are now reduced significantly," the studio said in a statement.
 
In the complaint against Fox, Redbox charged that "Fox’s actions constitute copyright misuse, violate the antitrust laws and interfere with Redbox’s existing supply contracts with its distributors.”
 
It accused Fox of violating antitrust laws by "reducing consumer choice in the marketplace and increasing the prices that consumers must pay."

Redbox said Fox is seeking to "strangle" its low-cost rental option "to prop up an artificially high pricing scheme."

Retorted Fox in a statement: "Fox spent several weeks trying to negotiate a deal with Redbox that offered Redbox varying terms that gave Redbox the option of purchasing DVDs either on the initial DVD release date or with a 30 day window. Unfortunately, Fox and Redbox could not reach an agreement … This lawsuit aims to limit Fox’s ability to make legitimate business decisions."