Movie rental laws changing
March 2, 2007
Over the past few months, a debate has raged in a Massachusetts court over a tradition as American as hot dogs, Superman, McDonald’s and the World Series combined: our right to rent movies.
In November, Blockbuster signed a three-year deal with Bob and Harvey Weinstein, founders and former CEOs of Miramax films, giving the industry giant exclusive rental rights to theatrical and direct-to-DVD releases from their independent film studio, The Weinstein Company.
In exchange, Blockbuster agreed to pay them a hefty sum for each title and prominently display them in its rental outlets across the country.
Business critics praised the innovative arrangement, calling it a win-win situation. The Weinstein Company would not only receive financial compensation for their ventures, but also get free promotion for all of their releases.
In addition, anyone who wanted to rent these titles would have no choice but to go to Blockbuster, giving the company an upper hand on its main competitor, Netflix.com, and aiding its quest to snuff out the dying independent rental store once and for all.
Sounds like a deal made in corporate heaven, right? Wrong. What it appears to many of these analysts, and perhaps the companies themselves, failed to take into account — at least initially — is what’s known as the first sale doctrine, which states that “the distribution rights of a copyright holder end on that particular copy once the copy is sold.”
This means that even though The Weinstein Company refuses to ship its DVDs to stores other than Blockbuster directly, anyone who has a rental license can buy the film at an approved retailer (Best Buy, Wal-Mart, eBay etc.) and rent it out to customers, essentially defeating the purpose of the arrangement for Blockbuster.
After realizing their mistake, the companies concocted a plan to include an 800 number on the DVDs asking consumers who rented the disc from a retailer other than Blockbuster to call and report it. This way, Blockbuster and the Weinstein’s could at least imply that by renting out these titles, some law was being broken. Unfortunately, this idea didn’t sit well with the National Entertainment Buying Group, which represents 300 independent video retailers across the country.
The group, along with two other retailers, sued The Weinstein Company and its distributor in December, citing five business violations: unfair competition, unfair or deceptive acts and practices, untrue and misleading advertisements, negligent misrepresentation and torturous interference with advantageous business relations; quite a mouthful.
The plaintiffs in the ongoing lawsuit have demanded a temporary restraining order to prevent the company from including the phone number on its releases.
So far, the first DVDs released under the Weinstein-Blockbuster agreement have not included this number, but have added a disclaimer asserting the discs are intended for sale only. The next court date is scheduled for some time this month.
Pay attention to the outcome of this case. Though, in the end, it may not affect your all- American right to rent, it may be a rare opportunity to see a rich corporation called out for not playing fair.
Tyler Liedman is a student at UW-River Falls.