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Bryan E. Kuhn
Counselor at Law, P.C.
Business & Employment Law Attorney

Two major corporations involved in property and contract dispute

As those in Colorado may know, intellectual property disputes can involve disagreements between large corporations over distribution procedures. Such is the case with entertainment giant Disney and one of the major rental distribution companies, Redbox.

In a recently filed lawsuit, Disney claims Redbox is using unlawful procedures in the distribution of Disney movies. The suit involves the method in which Redbox uses Disney combo packs. Combo packs sold by Disney provide three methods of watching a video: through a DVD, a Blu-ray disc and a computer code that allows the user to download the movie. The combo pack sells at a slightly higher price.

Redbox has developed a method of purchasing the combo pack and dividing the contents. It then leases each method to consumers individually. Blu-ray and DVD discs are offered for lease through its nationwide network of rental kiosks, which are located in front of retail and grocery stores. The computer codes accessing a download of a movie are offered online through Redbox’ website.

According to the complaint, Disney objects to this procedure, claiming it is a form of copyright infringement. Disney claims the selling of the access codes to customers by Redbox is in violation of its copyright protection and that Redbox is doing so with the knowledge that Redbox customers will use the access codes for unauthorized purposes.

Intellectual property rights often involve not only copyright or trademark protections, but contract provisions. An owner of an intellectual property right has the right to sell, lease or otherwise permit use of the protected material. The owner also retains the right to set forth the terms of use. If the party agrees to those terms, it must abide by them. This case demonstrates one of those disputes that involve not only Disney’s property rights but also the contract between Disney and Redbox. The crux of the dispute is whether Redbox followed the terms of its contract with Disney.

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