July 24, 2001 5:00 AM PDT

Coming to a court near you: Movie previews

The company that brought you "Lady and the Tramp" and "Pinocchio" is cracking down on online movie trailers, sparking a legal case that could help clarify how far film studios can go to compete with retailers by selling their own products on the Web.

Buena Vista Home Entertainment, a unit of Disney, will go to court next week to ask a judge to stop trailer distributor Video Pipeline from providing some parts of its movie trailers online.

Buena Vista, which is trying to increase its share of the home-video retail market, hopes to become a major online destination for people who want to buy its movies. If the company succeeds in getting a preliminary injunction, online movie retailers such as Netflix and others might not be able to offer some movie previews to their customers.

The case marks yet another iteration in the debate over copyrighted material in the digital age and highlights a looming conflict between content companies and retailers concerned that the Internet could cut them out of the distribution chain.

Although Buena Vista has long approved of Video Pipeline's distribution of its previews in brick-and-mortar stores, the company has different ideas about the Web, where it, too, is selling videos. Video Pipeline claims it has fair-use and first-sale rights to show snippets of films online, but Buena Vista says the practice violates copyrights and is asking a judge to ban unauthorized use of the movie portions.

Video Pipeline President Jed Horovitz argues that the case could have wide-reaching ramifications for many companies dealing with video on the Web, from retailers to reviewers. Horovitz said Buena Vista executives are hiding behind copyrights to cut out competition. "They want to have total control because they want to compete with retail," he said.

Horovitz also warned that if his company loses its battle, it may chip away at the rights of all sites to use video clips. "The only way you'll be able to have a review of a Disney movie with a clip would be on a Disney-approved site, which I can't imagine would be negative," he said.

Buena Vista would not comment on pending litigation, but it did release a statement saying it would work to enforce its copyrights: "Our purpose is to ensure that our properties are appropriately presented to the public. Video Pipeline is before the court because it knowingly took our copyrighted materials and infringed on them by making unauthorized movie trailers."

Chuck Sims, who has represented copyright holders in high-profile cases including the DeCSS suit and Tasini v. The New York Times, said Video Pipeline will have a hard time taking on the movie studio giant.

"Motion-picture trailers are copyrighted, and if somebody is taking them and putting them up on their own site--particularly if they're doing it for profit, but probably even if they're not--it isn't permissible," Sims said.

The Web has raised concerns more broadly among retailers over their long-term ability to compete with online ventures owned by industry players that stand to receive preferential treatment.

For example, as the big record labels move toward offering online music-subscription services jointly owned by the major music companies, stores such as Tower Records, Wherehouse Music and Best Buy have raised the specter of antitrust concerns.

The music retailers' concerns are similar to those going on in the travel industry, where online agencies have been fighting an industry-supported online ticketing service. Dubbed Orbitz, the venture has the backing of five of the top airlines: United Airlines, Delta Air Lines, Continental Airlines, Northwest Airlines and American Airlines.

The issue of how much control Hollywood should be allowed to exercise over distribution of its products promises to become only more heated as major film studios pursue plans to develop video-on-demand Internet services.

The Justice Department has intervened numerous times to prevent movie studios from controlling distribution. Chief among these actions, the Justice Department forced studios to spin off theater chains in the 1950s and blocked plans for a pay-TV channel in the 1980s.

Video Pipeline has had the rights to distribute Buena Vista trailers since 1993. When the companies first signed the deal, the trailers appeared as part of packaged shows that ran on the screens above shoppers browsing their local video outlets.

As the Internet became more of an entertainment and e-commerce destination, Video Pipeline began packaging the trailers for online use--giving people a chance to view a snippet of a movie before they bought it. According to court documents filed by Video Pipeline, the company notified Buena Vista of its plans in 1997.

When Buena Vista didn't protest, Video Pipeline built a customer base of 25 home-video retailers, including Netflix, which showed the trailers to potential movie buyers or renters. However, in September 2000, Buena Vista notified Video Pipeline that it would have to pull the movie studio's trailers from its distribution network.

Video Pipeline sued to get permission to continue to distribute the trailers. But after getting a warning from Buena Vista that it did not have permission to distribute about 50 or 60 official trailers of movies such as "Good Morning Vietnam" and "Pretty Woman," Video Pipeline pulled the previews from its network.

It then began compiling produced pieces that included small snippets of the movies instead, distributing them to its customers. Video Pipeline claims that it took the snippets from already published works and has a fair-use right to include them.

But Buena Vista has countersued, and a judge on Tuesday will hear arguments from both sides over whether Video Pipeline has the rights to use the trailers.

 

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