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Australian Court Says No To Tiered Pricing

7 Dec, 2001 By: Thomas K. Arnold

A federal court judge in Australia sided with angry retailers who sued Warner Home Video over the studio's controversial dual-pricing system for rental and sellthrough DVDs, according to plaintiffs.

The Australian Video Retailers Association (AVRA) filed suit in federal court Aug. 28, accusing Warner of breaching the Trade Practices Act and Copyright Act by telling retailers they couldn't rent lower-priced DVDs the studio says should only be sold to consumers for personal use.

Retailers were told they could only rent discs specifically created for the rental market, which cost more than twice as much (approximately $27.50 U.S., as opposed to approximately $12 U.S. for the sellthrough discs).

"We have won on all five points that were put forward in our submission," says jubilant retailer Kevin Jellard of Movies Plus, a leading Australian rental chain. "That's excellent news."

Details of the Dec. 7 ruling were not available at press time.

Jim Cardwell, Warner's executive v.p. for North America/Australia, was contacted moments after the ruling came down and had no comment, as he had not yet reviewed the findings with Warner attorneys at presstime.

The dispute originated with the July release of Proof of Life. Beginning with that title, Warner issued new releases simultaneously on two different DVDs, a blue one for the rental market and a silver one for sellthrough. The discs are identical except for color and price.

Warner prohibited retailers from renting the cheaper discs, maintaining that a DVD, unlike a videocassette, is a computer program and thus cannot be rented under Australian copyright law. The studio also claimed that each time a DVD is played, the DVD player makes a copy of the program and thus infringes upon reproduction rights.

Retailers, however, successfully argued that DVD is just another format for pre-recorded entertainment, like a videocassette—and that while there is no statute in Australian copyright law like the First Sale Doctrine, which effectively gives retailers the right to rent videos, there is also no provision specifically prohibiting them from doing so.

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