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Redbox, Uni Looking to Settle

By Chris Tribbey | Posted: 24 Feb 2009

Both Redbox and Universal Studios Home Entertainment (USHE) have told a judge in their federal civil suit that they’re willing to sit down and discuss a settlement over the use of the studios’ DVDs in Redbox’s rental kiosks.

“Defendants claim they are willing to engage in settlement discussions,” lawyers for Redbox wrote in a letter filed Feb. 23 with the United States District Court in Delaware. “Redbox is also willing to appear at an in-person settlement conference, without preconditions, and would accept a magistrate judge as a mediator of those disputes if the court thinks that result is appropriate. Redbox would not object to suspension of briefing on the current motion, if the Court deems it appropriate. Such a result might be appropriate in light of defendants’ stated position that the current disputes should be resolved through ‘business negotiations rather than litigation.’”

The “current motion” is Universal’s motion to dismiss.

Redbox first sued the studio in October 2008 claiming Universal’s new revenue-sharing terms for vending machine operators violate antitrust laws and misused copyrights. The new terms would prohibit Redbox from selling Universal DVDs until 45 days after the original street date; limited the number of Universal DVDs Redbox could stock; and require Redbox to destroy previously viewed rental Universal DVDs. Redbox claimed the new terms would “have the effect of restricting output, eliminating competition in the rental and sales markets, and raising prices to consumers.”

Video Product Distributors and Ingram Entertainment — Redbox’s two suppliers of Universal DVDs — would have their contracts with the studio terminated if they continued to supply Redbox with Universal DVDs. Since the lawsuit was filed, Redbox said it has obtained Universal DVDs from other sources.

In a Feb. 5 filing regarding Universal’s request for a dismissal of the suit Redbox brought against it, the studio argued: “An allegation that consumers cannot get Universal titles at a particular price through one particular company’s kiosks (while consumers presumably can continue to rent or buy all the other studios’ titles at Redbox, and consumers presumably can continue to rent or buy Universal titles through all sorts of other distribution channels, such as Blockbuster or Wal-Mart or Amazon.com or Netflix.com, at whatever prices those outlets determine to charge) simply is insufficient to suggest any market-wide impact.”

Representatives of Universal and Redbox did not immediately return requests for comment.

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