Fox court papers outline defense against Redbox antitrust lawsuit

By Eriq Gardner

Twentieth Century Fox wants a Delaware District Court to dismiss an antitrust complaint filed last year by cut-rate DVD rental outlet Redbox.

Last August, Redbox sued Fox for refusing to allow wholesalers to provide the studio's DVDs so it could offer $1-per-night rentals at its 15,000 kiosks. The lawsuit claimed Fox was abusing its copyright in a "naked restraint of trade."

Last week, Fox filed new court papers that gave three reasons why the lawsuit should be dismissed:

1. Redbox claims that Fox is "seeking agreement" with retailers such as Blockbuster, Wal-Mart, and Netflix, which isn't the same as "reaching agreement," and thereby assumes retailers otherwise have no reason to limit the number of units sold to customers.
2. Redbox hasn't sufficiently described competitive injury. The company is assuming that retailers will charge "artificially high" prices, ignoring that these retailers compete against each other to rent Fox titles.
3. Redbox's complaint is premised on a fictitious market where every DVD is its own market and no DVD competes with any other DVD or any other form of entertainment. Everyone knows customers compare and shop. 

In short, Fox says that Redbox is giving it way too much credit for being overly powerful in the marketplace when these retailers have their own agenda. The argument tip-toes around discussion about the "first sale doctrine," the area of copyright law that lets purchasers of legal copies do what they wish with them. Fox says these retailers have competitive choices. It's an interesting argument. 

Fox has requested an oral hearing to discuss the motion.