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:

Are DVDs as environmentally friendly as they could be?

By Eriq Gardner

The DVD format has never been so popular. 

No, we're not talking about DVD sales, down 14 percent from last year.

Instead, we're referring to the number of antitrust lawsuits in recent months involving the way the DVD market is controlled by movie studios and manufacturers.

One company says it wasn't able to get a license from studios to sell a technology that allowed consumers to make digital copies of DVDs to their computer hard drives. Another company says it wasn't able to get a studio's DVDs for low-cost rentals.

Now, we have a new lawsuit from a Swiss-based company that claims an antitrust conspiracy is preventing it from introducing an ecologically friendly DVD.

EcoDisc Technology AG is suing DVD Licensing Format and DVD Forum, whose founding members include Sony and Time Warner and controls products offered by as many as 400 manufacturers, for blocking introduction of its "thinner, lighter, more flexible DVD." The product is allegedly recyclable and results in 52 percent fewer carbon dioxide emissions than the standard format. Here's the complaint.

Studios vs. Real Networks adds antitrust twist

By Eriq Gardner

Earlier this year, on the eve of a California district judge deciding whether to issue an injunction preventing the release of a software that allowed consumers to copy DVDs to their hard drive, Real Networks amended its complaint against film studios to include allegations of an antitrust conspiracy. 

In some quarters, the move was seen as a desperate attempt to change the playing field on a game that wasn't going well for Real. It did, though, add some new intrigue in the case.

Flash forward six months.

After suffering a major defeat when Judge Marilyn Patel decided to halt sales of RealDVD, Real Networks appealed the case to the Ninth Circuit. That move was expected. Real will try to get the injunction lifted while attempting to convince a jury it has a "fair use" right to make digital copies of DVDs.

But before the case moves to trial, Judge Patel still has to decide the sticky issue of whether Real Networks can pursue its antitrust claim.

This month, both sides have been lobbing memoranda in the studios' motion to dismiss Real's antitrust allegation.

Real believes that "each of the Studios could, acting independently, license RealNetworks to make and sell a device that copies their DVD content onto a hard drive."

Lawyers on the studio side seem to be getting a little peeved about this argument. 

"It is obvious what is going on here," reads a memorandum filed a week ago by the studios. "Real was properly enjoined from engaging in illegal conduct and now is looking for litigation leverage."

Expect a decision soon.

Redbox can pursue antitrust claims against Universal

By Eriq Gardner

A federal judge in Delaware has allowed Redbox to pursue antitrust claims against Universal Studios Home Entertainment for limiting the ways that distributors can give the studio's DVDs to Redbox for low-cost rentals.

Judge Robert Kugler denied Universal's motion to dismiss the antitrust allegations but agreed to throw out claims of tortious interference and copyright misuse. Here's the court's colorful opinion, notable as much for the way that Judge Kugler goes to extreme lengths to pun as many movie titles as he can into his opening. We count 16 movie titles in the first section, including statements like, "Redbox maintains that Universal has otherwise failed to 'Do the Right Thing' in seeking to prevent Redbox from buying new release Universal DVDs from other wholesalers and retailers..."

Apparently, Redbox has scored a judge that enjoys movies, which may not be such a bad thing. Redbox has become a litigation magnet in recent weeks. The upstart service is not only suing Universal but also recently filed a similar case against 20th Century Fox after the studio ordered its own wholesalers to hold back product from Redbox. The rental kiosk company has shown no fear of going up against the major studios in court, and now it gets to pursue antitrust allegations in a Delaware jurisdiction that may be more hospitable to those types of claims.

Desperate media companies tempt antitrust regulators

By Eriq Gardner

Ben Sheffner of the Copyrights & Campaigns blog has an interesting column up at Slate that notes a "discreet" meeting by the nation's biggest newspaper publishers over whether and how to start charging readers for online content. Sheffner notes:

"Antitrust law is complicated, but one principle is very simple: Competitors cannot get together and agree on price or the terms on which they will offer their services to their customers. It doesn't matter if the industry is ailing or if collusion would be 'good' for society or necessary to preserve democracy. An agreement regarding pricing is 'per se'—automatically—illegal under Section 1 of the Sherman Act, the main federal antitrust law."

Sheffner talks to other lawyers and examines whether this publisher confab might be considered illegal under antitrust law. 

But we're taken with another aspect of the story. Sheffner draws some dots to a 1994 Hawaii hotel room meeting where agricultural-products companies gathered "under the guise of a trade-association meeting to fix prices" on a certain chemical.

Trade associations. Hmm. In the recent weeks, we've seen quite a bit of antitrust scrutiny on this front. Recently, the Department of Justice announced it was going to be looking into a settlement between Google and the Association of American Publishers to see if a forged licensing agreement that ended litigation passed the antitrust sniff test. A couple weeks later, in its case against Hollywood studios over a technology that allows consumers to back up DVDs on a hard drive, Real Networks filed a complaint alleging antitrust on the part of studios for the way they developed and licensed anti-piracy technology standards on DVDs. 

As media companies struggle with ways to monetize their digital future, it's no surprise they would lean more heavily on their trade associations for help. We wouldn't be surprised if the government's attention follows.

Real Networks drops an A-bomb on studios

By Eriq Gardner

We don't find it surprising that Real Networks has lobbed allegations of an antitrust conspiracy in its war with Hollywood over a technology that allows consumers to break copy protections to back up DVDs on a computer hard drive. 

The big question is: Why now, in the midst of an ongoing trial, has Real waited to ask U.S. District Judge Marilyn Patel for permission to file an amended second complaint against the studios?

Skeptics will undoubtedly read the new complaint and see it as some sort of Hail Mary on Real's part to save a game that isn't going so well. 

Hollywood makes a juicy target for this sort of thing, as the major players typically work in close proximity to each other, and actions can appear confounding to outsiders. Napster, Kazaa, and many file-sharers also spewed the A-word against Hollywood after copyright arguments weren't working. 

Antitrust allegations go back much further. Wasn't the modern-day entertainment industry built in part on the back of the 1948 Supreme Court decision in United States v. Paramount, a landmark antitrust case that helped bring down the old studio system?

Today, Real Networks is charging that the studios all agreed that they wouldn't enter into licenses with Real to allow movies to be subject to Real's new technology. The allegation raises the question, essentially, of whether the studios can form an industry group to create technology standards for the DVD industry that would impede piracy.

Real's new allegations brings to mind the case against Rambus over charges the memory chip maker violated antitrust laws by using an industry standards group and its patents to extract big royalty payments from Samsung, Toshiba, and others. 

The issue of technology standards, patents, and antitrust behavior has been a big topic thanks to the Rambus case. Coincidentally, Real's allegations may expand the debate over what standards groups like the DVD Copy Control Association are allowed to do on the very same day that the Federal Trade Commission announced it was dropping its antitrust claim against Rambus.

The FTC may have dropped that case, but the government is looking for more antitrust actions to pursue. Earlier this week, Obama's top antitrust official gave a "fair warning" speech saying the administration would be much more aggressive in enforcing policy against corporations that use market dominance to elbow out competitors.

We wonder if the timing of this speech and Real's new complaint are merely coincidental. It's been known that a new Democratic administration would get serious on antitrust activity since Obama's election. Now seems the right time for anybody (hello?) with an antitrust gripe against Hollywood to come out of the shadows.

Are studios colluding to bring down talent costs?

By Eriq Gardner

Is there a massive antitrust class action brewing in Hollywood's backyard?

The NY Times' Michael Cieply buried that potentially bombshell charge this weekend in the middle of a column about the formidable power that Hollywood studios still command. Cieply notes that studios have cut production costs and that privately, lawyers and agents in town are wondering whether there's some collusive forces at hand driving down the price that studios are willing to pay actors and other talent. Cieply writes:

One theory holds that studio executives and lawyers, while engaged in legitimate joint bargaining through the Alliance of Motion Pictures and Television Producers during the three-month writers strike and, later, with the actors guild, used idle moments to reach an industrywide consensus that talent costs should come down.

The economy has been bad, and many companies throughout America are cutting back. On the other hand, as been noted by many, this year's box office tally may be recession-proof (though studios often site declining DVD sales as the cause of much woe).

Agents and lawyers have been grumbling about clients not getting fair value in deals since agents and lawyers first came to town, and they'll continue to do so regardless of who-is-getting-what. Nevertheless, the situation is getting desperate out there for wide swaths of the talent community, and desperate times breed desperate actions.

A clear channel to litigation

By Eriq Gardner

In 2005, Clear Channel Communications faced a rash of lawsuits and federal regulatory action over antitrust behavior associated with its dominant market position in the concert promotion business.

The solution was Live Nation, which has itself become a mega-power since being spun-off from Clear Channel.

You can run from the suits, but you can't hide. Music promotion has always been fraught with scandal, from payola to countless antitrust cases.

Now Live Nation is being sued in federal court by a couple of Maryland-based music promoters, It's My Party, Inc. and It's My Amphitheatre, Inc.

The plaintiffs claim that Live Nation "has wielded (its) power to entice and coerce artists to appear only at amphitheaters and other venues it owns, operates, or at which it controls booking."

The Maryland music promoters allege that Live Nation continues to have strong ties with Clear Channel, saying that Clear Channel uses its 1,2000 radio stations to advertise only Live Nation-promoted concerts.

We haven't seen much news on the Clear Channel regulatory front lately, although Live Nation's proposed merger with Ticketmaster is under scrutiny from the U.S. Senate Judiciary's antitrust committee . This might not effect that deal, but it's a development that bears some watching anyway.

Judge Refuses To Put Antitrust Claim Against Sports League On Ice

By Eriq Gardner

Let's get excited: The New York Rangers are off to a 5-0 start this year. Yes, that's the National Hockey League, though maybe the word "league" is all wrong. Confused?

In a victory for large-market professional sports franchises, a federal judge has denied the dismissal of an antitrust lawsuit that alleges that the NHL is illegally restraining trade by requiring one of its teams — the Rangers, owned by Madison Square Garden LP — to turn over control of their website to the NHL. The lawsuit was filed last September by MSG as a significant challenge to the idea that sports leagues control intellectual property rights as a single entity. Specifically, MSG challenged the league's authority over new media since these digital properties were not explicitly covered in the team's original consent agreement with the league.

These days, sports leagues make billions of dollars licensing the broadcast and merchandise rights of their product (yes, even hockey), and revenue-sharing has been a sore subject between teams in lucrative markets and teams with a smaller fan base.

The MSG-NHL antitrust issue may deal with the operation of a small website, but the stakes are potentially much larger. Go ask Hank Steinbrenner or Jerry Jones.

Indies Accusing MySpace, Major Record Labels of Possible Collusion

By Eriq Gardner

MySpace has been a respected breeding ground for independent musicians. But is the social networking website about to provoke a major backlash?

News Corp., which owns the site, is about to launch an online retail spin-off called MySpace Music, which many hope will compete with industry leader Apple iTunes. According to the Register, the upstart service has secured the catalogues of three major record companies, possibly by giving them equity. However, the paper also reports that independent labels are being excluded from the service over an inability to secure song rights. Many indiess don't have worldwide rights over songs — only certain territorial rights — and MySpace Music is requiring worldwide rights clearance in order to stave off any copyright infringement claims.

Or at least that's one theory. Another?