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Video Pipeline Loses Decision in Buena Vista Case

14 Aug, 2003 By: Holly J. Wagner

Fair Use is of no use to Video Pipeline in defending against Buena Vista Home Entertainment's copyright claims because Pipeline's trailers compete not with the Buena Vista films from which they are drawn, but with the studio's ability to profit from its own trailers, a federal judge has ruled.

“The evidence indicates ... that Disney and BVHE, as well as those it has licensed to use its trailers on the Internet, including Apple Computer, are forced to directly compete with [Pipeline] as sources of Disney trailers on the Internet,” wrote Judge Jerome Simandle, who ruled for Buena Vista on several points in the long-running dispute.

At issue is Video Pipeline owner Jed Horovitz's play for a judicial order stating he may use Disney and Buena Vista clips and trailers without violating copyrights or other trade laws.

Horovitz's attorneys argued that providing previews actually helps, rather than competing with or harming rentals and sales of Buena Vista titles.

But Simandle found that, while instore play of the trailers and clips may foster sales and rentals, digitizing them and charging between 2 and 12 cents per megabyte to stream them over the Internet does put the businesses in direct competition.

“Trailers have become more than advertising material for other products; they have become valuable entertainment content in their own right as Web surfers continually frequent the Internet to view these online commodities prior to movie releases,” the judge wrote. “Such previews increase Web site traffic and online ‘stickiness,' which give Web site owners additional time and opportunities to market their services and products.”

Video Pipeline has agreements with 25 e-tailers, including Netflix.com, Amazon.com/IMDb, Movie Gallery, Best Buy and Yahoo! Shopping, according to court papers.

Although Buena Vista prevailed on the claims of liability, Horovitz was ordered only to pay $1 on a breach of contract claim and to return promotional tapes Disney/Buena Vista provided to him for his instore promotions business. The low dollar amount was because Buena Vista was unable to satisfy the judge that it could prove it has suffered actual damages.

Although the opinion theoretically resolves issues of copyright and trademark infringement, unfair competition, breach of contract, conversion and replevin (recovery of goods Pipeline converted to its own use) in Buena Vista's favor, the case is not over. An appeal is pending on a ruling that Simandle made a year ago on similar claims in the case. If the Third Circuit Court of Appeals rules in Pipeline's favor on that appeal, Simandle might be forced to revisit some of his Aug.7 ruling.

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