Judge Rules For Universal But Lets Redbox Antitrust Claim Stand

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Judge Rules For Universal But Lets Redbox Antitrust Claim Stand

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DVD rental biz Redbox took a big hit in its efforts to sue several Universal Studios units over a policy withholding new releases from vending machines for 45 days. After a months-long delay, U.S. District Judge Robert Kugler dismissed two counts in the suit late Monday, in a 13-page ruling laden with campy movie references. (With the “Mercury Rising” in the relationship between Redbox and Universal, Redbox employees turned to a “Cloak and Dagger” exercise, visiting Wal-Mart (NYSE: WMT) and Best Buy stores in an attempt to purchase multiple copies of Universal DVDs.) But Kugler left a door open, as well, by refusing to dismiss the antitrust claim against Universal.

Just last week, Redbox added Twentieth Century Fox to its legal hit list by suing in in the same Delaware district court over the studio’s decision to withhold new releases from vending machines for 30 days. It expanded its claims a bit but may opt to amend that suit following this ruling. From Kugler’s ruling:

—Copyright misuse claim dismissed: Kugler dismissed Redbox’s claim of copyright misuse. The vendor wanted a ruling that Universal was misusing copyright law and, as a result, Redbox had the right “to lawfully reproduce and sell copies of Universal’s copyrighted material for as long as Universal restricts distribution of its DVDs to Redbox. But the judge ruled that “copyright misuse is not a claim but a defense,” adding “the Court is not convinced that Plaintiff’s case raises questions of copyright law.”

—Contract interference: Redbox claimed that Universal was interfering with its contracts for DVDs with VPD and Ingram. But the judge didn’t see any language to that effect in the contract Redbox offered, so no proof of breach.

—Antitrust: Kugler left this claim in place, writing, among other points, that he “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.”

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