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Intertainer Files VOD Antitrust Suit Against Three Studios

24 Sep, 2002 By: Hive News

Video-on-demand company Intertainer said today it filed an antitrust suit Monday against AOL Time Warner, Vivendi Universal and Sony, accusing them of engaging in a conspiracy to fix prices in digital distribution of entertainment.

The suit, filed in the U.S. District Court for the Central District of California, alleges the three companies have conspired to control the VOD marketplace and hinder businesses like Intertainer. Intertainer says the named defendants have caused the delay to give them time to create a monopoly by deploying their own VOD service, Movielink, owned in part by the named defendants and other studios.

"The actions taken by these leading studios will, in effect, eliminate consumer choice, produce higher prices, reduce output and lower quality services that would prevail in a competitive market," said Jonathan Taplin, CEO of Intertainer, in a statement.

Movielink communications director Corey Weiss declined comment on the lawsuit, citing a venture policy against commenting on pending litigation.

The complaint alleges:

* That the defendants conducted "less than arm's length" transactions with Moviefly -- now named Movielink -- a service that was launched to be competitive with Intertainer and owned in part by defendants.

* That the group conspired to boycott intellectual property rights to Intertainer.

* That AOL Time Warner induced its subsidiaries Warner Bros. and New Line to terminate existing agreements with Intertainer to impede delivery of a broadband VOD service through rival Microsoft Network.

* That Sony took advantage of its role as investor and board observer with Intertainer to gain knowledge of Intertainer's business plans and proprietary technology to build Movielink using that technology.

* That Sony induced former employees of Intertainer to violate their confidential knowledge of Intertainer's proprietary technology to help build Movielink.

In addition to the above complaints, Taplin argues that the defendants tried to release themselves from prior agreements with Intertainer by arguing that Intertainer's security was flawed, but then going on to establish new agreements with cable companies with similar security measures.

Intertainer is available nationwide to U.S. subscribers with broadband connections and, in some markets, is distributed to digital-cable TV customers by Comcast Cable and Adelphia Communications.

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