Disney hit with lawsuit over Internet film deal

Cable TV programmer Starz Entertainment has filed a lawsuit against The Walt Disney Co.’s Buena Vista Television unit for copyright infringement and breach of contract. Disney’s move to license Apple Inc. and Wal-Mart Corp. to sell electronic movie downloads violates terms of 1993 and 1999 Starz-Buena Vista agreements, Starz says.

Starz contends the agreements, extended by Buena Vista in 2005, say that Disney is prohibited from selling its films for transmission over the Internet prior to Starz’s first exclusive license period and during all of Starz’s exclusive license periods.

Disney, the parent of DisneyShopping.com, No. 55 in the Internet Retailer Top 500 Guide, did not respond to a request for comment on the suit.

The suit, filed in the U.S. District Court for the Central District of California, seeks to prevent Buena Vista “from continuing to infringe on Starz’s rights,” and seeks all profits Buena Vista has realized from the licensing. Starz notes it has paid more than $1 billion for contract rights to Buena Vista films.

Starz has been a pioneer in Internet delivery of films, investing millions of dollars to develop, launch and market its Internet service last year, says Robert B. Clasen, Starz Entertainment chairman and CEO. Starz delivers more than a thousand movies per month--including the Disney films--to subscribers via broadband Internet connections, he says.

“We want to encourage consumers to have every opportunity to access a wide array of films over the Internet. But we cannot allow Disney to sell those rights to us on an exclusive basis and then sell the same rights to other parties,” Clasen adds.

The suit alleges that Buena Vista recently began selling the same films it licenses to Starz on the Internet via services like Apple’s iTunes and Wal-Mart’s Walmart.com. Apple is No. 15 and Wal-Mart is No. 12 in the Internet Retailer Top 500 Guide. Starz Entertainment is an operating unit of Starz LLC, a wholly owned subsidiary of Liberty Media Corp.

Apple’s director of data mining, David Moriarty, will speak at the Internet Retailer Conference & Exhibition, June 4-7 in San Jose, in a session titled Web Security: Identifying and Avoiding the Scam Artists.

Walmart.com’s Brian Osborn, vice president of category marketing, also will speak at the conference, in a session titled Wal-Mart: The Giant Uses the Web to Extend its Market Reach.