No matter what you call it or how you try to frame it, internet streaming is internet streaming.
Zediva tried to claim otherwise, setting up a rather elaborate system that attempted to get around the copyright law requirements for licensing movies streamed over the internet. A lot of times this is how the law is figured out, attempts to get around it lead to law suits and court-issued clarifications. (See the Napster/Grokster/Limewire string of cases.) But in this case, the Zediva folks missed an important part of copyright law history, and the District Court for the Central District of California issued an injunction.
How Zediva tried to avoid licensing fees
First, I want to acknowledge that I was not able to locate a copy of the decision so my information is coming from various news sources, all listed at the end of this post.
Zediva set-up the service to mimic a video rental store. Users rented a dvd that Zediva had purchased and the dvd was played in a remote dvd player also purchased by Zediva and shown to the customer via the internet. One article mentions that users would sometimes get messages that movies were out of stock. I’m guessing this occurred when customers had rented out all of the DVDs Zediva had purchased of that film.
Rather than finding this system as a way of remotely renting purchased DVDs, the court found that this was just an annoyance and potential source of confusion for customers learning about video streaming.
Zediva wasn’t paying licensing fees, trying to rely on the first sale doctrine saving their rental model. But, as one law professor pointed out, Zedvia seemed to have missed the case where renting a video to be watched in a booth inside the store was infringement. (That case was Columbia Pictures Indus. v. Redd Horne, Inc. from 1984.) Even if Zediva could persuade the court that it was renting and not streaming movies, the facts are more similar to Redd Horne than to a regular video rental store.
However, the court did not buy the rental concept and instead found that Zediva was transmitting the performance to the public and thus infringing copyright. Wonder if they’ll be another attempt at a work around…