USDC D. Delaware, August 17, 2009 (not for publication)  

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  • Court denies defendant movie studio’s motion for summary judgment on anti-trust claims, holding that plaintiff sufficiently pled a Sherman Act violation by alleging that the studio induced or convinced others; court dismisses tortious interference and copyright misuse claims

Redbox Automated Retail rents and sells DVDs through self-service kiosk machines. Redbox had supply contracts with two film distributors, VDP and Ingram. Defendant Universal Studios contracted with VDP and Ingram to distribute Universal’s films. Redbox alleged that, because Universal received less from Redbox rentals and sales of “new release” products than from other sources, Universal representatives met with Redbox personnel to propose a Revenue Sharing Agreement which would remove the distributors from the transaction, but also would prohibit Redbox from selling Universal DVDs until 45 days after the DVD became available to the public. According to Redbox, it refused the proposal and Universal compelled the distributors to stop selling Universal DVDs to Redbox. Redbox also alleged that other retailers would not sell Universal DVDs to Redbox.

Redbox sued Universal for copyright misuse, tortious interference with contract, and antitrust violations. The court dismissed Redbox’s copyright misuse claim, holding that copyright misuse is not a claim, but a defense. The court also dismissed Redbox’s tortious interference claim, finding that there was no breach of the relationship between Redbox and the distributors because the contracts did not obligate the distributors to unconditionally deliver Universal, or any, DVDs to Redbox.

The court declined to dismiss Redbox’s antitrust claims, holding that Redbox sufficiently pled the elements of an antitrust claim: that (1) Universal induced or otherwise convinced others to boycott Redbox in distribution of Universal DVDs, (2) which produced anti-competitive effects, and (3) that those acts are the proximate cause of economic and other injuries to Redbox. The court further held that the rule of reason analysis will be undertaken when the court undergoes its consideration of the claims on the merits.