Zediva May Not Be So Legal After All

Zediva, the video streaming service that uses physical DVDs and DVD players is trying to use a loophole that may not even exist.

The service’s popularity has grown substantially in just a few weeks, but that might not be good for them. It appears studios are not happy with their “loophole” to stream newly released movies before other popular streaming services. Zediva claims that since only one user can watch the DVD at a time, they aren’t any different from a traditional rental store or Netflix’s DVD by Mail service.

As James Grimmelmann, an associate law professor at New York Law School, said on his blog, “Zediva’s supposed “loophole” in copyright law doesn’t exist. Zediva is about to get pounded by the movie studios, and hard.” It’s easy to see why Hollywood movie studios might be a little peeved. They see that first month a DVD is released as a chance to earn millions of dollars. If that movie is rented then one copy is watched by multiple parties, and that substantially cuts down the number of people who would buy the DVD. And they aren’t likely to take a someone trying to cut in on their profits lightly.

Current copyright law gives the studios exclusive rights to license ‘public performances’, like a movie theater. It’s logical to think that Zediva thinks that since people view these films personally, that constitutes a ‘private performance’. Grimmelmann cites a court case from 1984, in which Maxwell’s, a video, rental store, allowed customers to rent movies and then watch them in booths private booths with room for two to four people. In this case the court ruled against Maxwells. “Although Maxwell’s has only one copy of each film, it shows each copy repeatedly to different members of the public,” the court ruled. “This constitutes a public performance.”

Going by that judgment, then Zediva is in fact guilty of copyright infringement. They rent out the same movie multiple times to different people. There is someone what of a gray area however. Unlike Maxwell’s, Zediva users don’t view them at Zediva, they view them in the ‘privacy’ of their own home. Does this constitute a ‘private performance’?

If Zediva does end up getting sued, it will really be up to judge to decide which cases they want to follow precedent with. Jason Schultz, an associate professor at the Berkeley Law School, agrees that they’re in a gray area, “In the modern world of innovation and copyright you are never in the clear, and they are taking huge risks.”

There is something called the “First Sale” in copyright law. Basically that allows the purchaser to transfer a particular lawfully made copy of the copyrighted work without permission once it has been obtained. Once a DVD is bought, whoever bought it can do whatever they want with it, as long as they aren’t making illegitimate copies. Since Zediva buys physical copies, is it free to lend them to it’s subscribers?

So far no lawsuits have been officially filed, but surely they’re on the way, judging by how protective Hollywood is with it’s first month of sale. These potential lawsuits could be the end of Zediva, who is already a small company. Who knows maybe Zediva will get lucky and the studios won’t seem then as enough of a threat. All I know is they should prepare of the worst. I’d hate to see them fall by the wayside because they get eaten up in court.

Sources: Ars Technica, Court Case