Nastygram over renting out DVDs

by Walter Olson on June 15, 2007

Travis Corcoran gets an “angry and curt” call from an intellectual property lawyer over this practice, and reacts with some ferocity (TJIC, May 17).

{ 6 comments }

1 Ima Fish 06.15.07 at 9:27 am

I know Blockbuster, Netflix, etc, pays licensing fees to the movie studios for their rentals. I wonder why DVD rental companies would pay those fees if they didn’t have to.

2 Brian P. 06.15.07 at 1:17 pm

To Ima:

I’ll bet that Blockbuster and the like are paying licensing fees for the privilege of copying the DVDs rather than buying a ton of individual copies and renting them, which is probably more cost efficient if you have a large customer base. I certainly sympathize with Mr. Corcoran. He seems to be in the right and his post is beyond hilarious, but I wonder whether, after all this, he will be able to negotiate a licensing deal if his business grows to the point that it becomes the right business decision.

3 Ima Fish 06.16.07 at 9:39 am

Thanks Brian, but this is the first time I’ve ever heard that my local Blockbuster gets to copy movies.

Seriously, the major rental companies don’t even buy movies, the studios give them knowing they’ll get a cut of the rental.

I think Travis Corcoran is correct that there is no specific law forbidding the leasing of a dvd, but there would be licensing issues. Every DVD I’ve ever seen has legalese limiting it for noncommercial uses. Whether such licensing is binding, I have no idea.

4 David Schwartz 06.16.07 at 2:57 pm

If those licenses could prohibit rental, one wonders why we needed a special law to restrict software rental.

5 LAN3 06.16.07 at 6:33 pm

The original business model of rentable movies (this was back in the videotape days, extending into the mid-to-late 1980s) was that the video tapes would be released initially at what might be considered prohibitive prices, say between $90 and $140/movie, and then the price would drop after a couple of weeks as the competitive renting of the brand-new release was reduced by the other, newer releases.

I recall that it was a revelation when 1986’s “Top Gun” was released at an affordable $19.99 right out of the gate; that might’ve been one of the first affordable movies at first release. (Of course, VCR ownership (instead of renting) might’ve hit some saturation point where the price had to come down).

I even worked for a video rental store, and it was not a major chain store, yet it received advanced video screeners (kept a nice library for employees in the back) because of all the business they would give in return. I don’t know exactly how things are changed in the world of uniformly affordable DVDs, but I’d find it hard to believe that suddenly the movie distributors and video rental establishments developed mutual hostilities.

As for copying movies, the store did some off-the-record copying of movies for the aforementioned library, but we had no reason to copy movies as part of regular business practice, except, I think, to repair physically damaged movies that weren’t easily replaced through purchasing channels — placing a new video-tape into the movie’s original cassette was the method, IIRC.

6 TJIC 06.20.07 at 11:21 am

Hi, this is Travis Corcoran.

I can tell you, based on my extensive investigation, my copyright attorney, and my firm’s membership in the tradegroup VSDA / EMA, that (a) under the first sale doctrine, renting out legally purchased videos is entirely legal; (b) there is no licensing issue involved.

I’d find it hard to believe that suddenly the movie distributors and video rental establishments developed mutual hostilities.

Indeed, we find the few negative interactions we have with vendors to be puzzling as well. The last 30 years clearly shows that a robust rental market is mutually beneficial for both video rental firms, and for content owners. The few vendors we’ve come across who are unhappy with a video rental aftermarket are typically smaller players, less well versed in the economics of the video rental business (and business generally).

In related news, after this post in Overlawyered, I received another email from Mr. Tourtelot:

Dear Mr. Corcoran: How long do you believe you are going to be able to keep your past from the public, especially, your customers? Yopur life is about to unravel. Cheers!

Amazing.

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