Warner sues 'disc destruction' company

Warner Home Video has sued the "disc destruction" company IWMB for $10 million USD, claiming that the company was not destroying the DVDs and Blu-rays as promised, and instead selling them for full profit.

The company has a contract in place to destroy excess title inventory caused by retail returns of unsold movies, but instead, alleges Warner, they sell the movies at below market prices to small retailers. Warner claims IWMB has already sold 750,000 of the discs.

The studio is claiming that they stand to lose over $10 million in revenue due to IWMB's actions, because the cheaper products cannibalize Warner's market priced movies.

�The illegal sales of Warner product have caused WHV substantial injury and unless enjoined, threaten irreparable harm to WHV,� reads the lawsuit, via VideoBusiness. �Defendants� sale of the Warner product at lower-than-market prices not only deprived WHV of the benefit of possession of the product, but has also undermined and diluted the value of the home video titles.�

Written by: Andre Yoskowitz @ 7 Aug 2009 0:44

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32 comments

ydkjman

Ok I'm not good at doing the math but someone here is going to do it.
I can just see that, maybe, if they actually lowered the price on these to begin with they wouldn't have been sending back 750,000 unsold movies. And it would have been complete profit for WHV and not IWMB.

7.8.2009 01:00 #1

KillerBug

That's logic, and these are the same people that support the DMCA!

Given the choice, they would rather sell a hundred DVDs for a million dollars profit each ($100M) than one billion for $1 profit each ($1,000M).

What's realy sad is this: They consider their own movies so worthless that they must be destroyed...they don't even warehouse them in case of future demand because they know how horrible they are! So many of their movies fit this category that they must hire an outside firm to destroy them. So rather than selling their movies for what their worth plus $5 (in other words, nothing plus $5), they instead pay to have them destroyed (in other words, they are paying people to take them).

7.8.2009 01:17 #2

varnull

Over production and willful waste.. Warners should be sued by the environmental lobby for deliberate waste of resources and energy!!!

7.8.2009 01:20 #3

kyo28

I'm 100% with Warner on this. They have the right to set the price they want for their products, just like consumers are free to decide whether or not to buy at that given price.

By doing what they did, IWMB has breached their contract with WB and WB is rightfully suing them.

Moreover, some of these discs are returns due to errors and have been replaced by WB's replacement program (like the Matrix Reloaded issue). The faulty discs are then shipped to IWMB for destruction but instead they pump them back into the market. That's hardly doing favors to customers.

7.8.2009 03:12 #4

Bluevoid

I agree with the environmental issue here. The fact that they are destroying perfectly sound discs (unless the returns are due to production issues) is just sickening! They should refurbish the disks and put them back into the market. As long as the discs are in new condition there is no reason they can't sell them as new disks. It will be good when we can get rid of this type of waste and use some form of digital file.

7.8.2009 03:13 #5

varnull

Originally posted by kyo28: I'm 100% with Warner on this. They have the right to set the price they want for their products, just like consumers are free to decide whether or not to buy at that given price.

By doing what they did, IWMB has breached their contract with WB and WB is rightfully suing them.

Moreover, some of these discs are returns due to errors and have been replaced by WB's replacement program (like the Matrix Reloaded issue). The faulty discs are then shipped to IWMB for destruction but instead they pump them back into the market. That's hardly doing favors to customers.I don't see anywhere in the article that these disks are in any way faulty.. They are unsold unopened retail returns.. not faulty customer returns.. Pure waste .. I applaud this company for "disposing" of them in an environmentally responsible manner. I don't understand why they didn't just give them away.. then they could have said they were "destroyed" because effectively they would have been. Disposal for no financial gain = destruction.. my earlier comment about willful waste still stands.. if they don't sell the correct thing to do is remainder them and sell them off at a lower price.

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7.8.2009 04:21 #6

Mysttic

Well it all depends on what was specified on the contract? It if it stated to be "disposed of" then that doesn't necessarily mean destroy, it could imply it, but it could imply reselling, redistribution, giving it away and so forth. However it is clearly stated by federal law in many countries, that reselling is prohibited without permission of the owner. So in that regard, IWMB is fucked.

Then again, getting a judge that will rule fairly over this case is another scenario altogether. Most seem to side with the ones with the most $, as it has ever been; so IWMB is still fucked, regardless if they can prove their innocence or not. In the end the only chance they have is to show a contract signed by the appropriate people of Warner that it was a deal to "dispose" the discs and not "destroy", if it says the latter, then Warner will win this hands down.

7.8.2009 05:16 #7

KillerBug

Originally posted by Mysttic: Well it all depends on what was specified on the contract? It if it stated to be "disposed of" then that doesn't necessarily mean destroy, it could imply it, but it could imply reselling, redistribution, giving it away and so forth. However it is clearly stated by federal law in many countries, that reselling is prohibited without permission of the owner. So in that regard, IWMB is fucked.

Then again, getting a judge that will rule fairly over this case is another scenario altogether. Most seem to side with the ones with the most $, as it has ever been; so IWMB is still fucked, regardless if they can prove their innocence or not. In the end the only chance they have is to show a contract signed by the appropriate people of Warner that it was a deal to "dispose" the discs and not "destroy", if it says the latter, then Warner will win this hands down.By selling the discs, they did wrong...but the whole idea of the company is wrong! Here is a company dedicated to taking saleable merchandise (perhapse not saleable for $20, but clearly worth something if they were able to resell them) and destroying it!

Still, I think the worst part of this whole story is the fact that WB's movies are so terrible that WB has to pay a company to dispose of them...I would have done it for free for the empty DVD cases!

7.8.2009 06:26 #8

bomber991

Come on, everyone here knows WB can't just sell these perfectly fine movies for $5 each. Then nobody will buy the $20 movies anymore. It's going to be "Hey bob, I just got the new Ironman 3 DVD!". "Why the hell did you do that? They're just going to sell it for $5 next year!!!"

7.8.2009 07:25 #9

kyo28

Quote:Originally posted by kyo28: I'm 100% with Warner on this. They have the right to set the price they want for their products, just like consumers are free to decide whether or not to buy at that given price.

By doing what they did, IWMB has breached their contract with WB and WB is rightfully suing them.

Moreover, some of these discs are returns due to errors and have been replaced by WB's replacement program (like the Matrix Reloaded issue). The faulty discs are then shipped to IWMB for destruction but instead they pump them back into the market. That's hardly doing favors to customers.I don't see anywhere in the article that these disks are in any way faulty.. They are unsold unopened retail returns.. not faulty customer returns.. Pure waste .. I applaud this company for "disposing" of them in an environmentally responsible manner. I don't understand why they didn't just give them away.. then they could have said they were "destroyed" because effectively they would have been. Disposal for no financial gain = destruction.. my earlier comment about willful waste still stands.. if they don't sell the correct thing to do is remainder them and sell them off at a lower price.Not always so. Sometimes items get recalled before the launch date when last-minute mastering errors are detected. This was the case with, among others, Iron Man to cite just one example. I'm not saying that all discs are faulty ones, just that it might not all be 'sellable' discs.

7.8.2009 07:43 #10

Mysttic

KillerBug,

Quote:By selling the discs, they did wrong...but the whole idea of the company is wrong! Here is a company dedicated to taking saleable merchandise (perhapse not saleable for $20, but clearly worth something if they were able to resell them) and destroying it!

Still, I think the worst part of this whole story is the fact that WB's movies are so terrible that WB has to pay a company to dispose of them...I would have done it for free for the empty DVD cases!I ain't saying what they did wasn't wrong; I am all against profiting off another person's property for the sake of making money. *To be clearer, I believe that having a copy for one self use, or immediate family's, is acceptable use of experimenting to see if one will buy a product* However if said people turn that into $ than I am against it. In this case, they were given in good faith the dvd's from whatever sources to dispose of when they were not selling on the market *likely most of these products were returned from resellers to WB warehouse which in turn got shipped to said company in question, which apparently in turn broke faith by profiting of these DVD's where nobody else could*.

Basically yes they are wrong, and I agree the extra dvd cases would be awesome for anyone's collection, and even the dvd's could be used as modern decorative drink coasters. Okay maybe not that far, pending on the movie, but still... Fact is, Warner trusted this business to dispose of the discs properly, the only thing that isn't stated in this article is; how does the contract define "dispose", if at all? Regardless of the answer the company is still liable for not getting permission from WB to resell the discs, *sealed and/or open*. Which I stated in my first comment, which means they fucked.

7.8.2009 08:23 #11

oappi

Originally posted by bomber991: Come on, everyone here knows WB can't just sell these perfectly fine movies for $5 each. Then nobody will buy the $20 movies anymore. It's going to be "Hey bob, I just got the new Ironman 3 DVD!". "Why the hell did you do that? They're just going to sell it for $5 next year!!!"Well that is already going on.. well maybe not $5 but at half of the price it first hit the market (depending on the movie more or less than half). Also most studios are screwing customer by releasing longer versions of the movie called as "directors cut" which you must buy if you want to see "whole" movie even if you already own the non-directors cut. So why ppl now want to pay more if you can get full length versio cheaper later on?

7.8.2009 09:22 #12

SGSeries2

It's called supply & demand, WHV. Supply & demand. If you make too much of it, tough. Learn from your supply mishaps to better estimate your demand in the future and make better use of your existing resources. This is pretty basic stuff. Don't take it out on the 'little guy' for doing what should have been done in the first place.

I have no sympathy for them.

7.8.2009 10:21 #13

Coyote42

Something just doesn't add up here

$10,000,000 / 750,000 movies = $13.3333333333/offense

$657,000 / 30 songs = $21,900/offense

Now I know IWMB is a big company with alot of mouths to feed, and Tenenbaum was big bad college student with no one but himself to support. But seriously, perspective much?

7.8.2009 11:05 #14

Footie979

That's hilarious!

7.8.2009 14:25 #15

KillerBug

Originally posted by Coyote42: Something just doesn't add up here

$10,000,000 / 750,000 movies = $13.3333333333/offense

$657,000 / 30 songs = $21,900/offense

Now I know IWMB is a big company with alot of mouths to feed, and Tenenbaum was big bad college student with no one but himself to support. But seriously, perspective much?There is a difference...the college student did not attempt to sell the songs. If she had, the fine might only have been about $400. ;->

7.8.2009 22:51 #16

scorpNZ

Apart from the needless waste there is no reason not to store them for sale a year or two later when they end up in bargain bins anyway for $5...lol..

8.8.2009 00:03 #17

cousinkix

Why don't they go after the stores which sell USED CDs and DVDs right along side of the brand new ones? Imagine the money they lose on these sales; because somebody didn't buy a new one at retail prices...

8.8.2009 05:01 #18

varnull

Possession being 9/10ths of the law.. once they had possession of the disks the first principles of property ownership come into play.. They owned them and so they can do anything they like with them. Burn them.. ship them overseas.. sell them.. make pretty mosaic pictures with them.. in fact anything they want... Just because warners can't sell them at their vastly over inflated prices doesn't (under a fair market system) preclude anybody else from selling surplus stock.. How long have the military sold overstock and surplus goods through middlemen and others to the public? .. it's as good a way of destroying excess stock as any other. Maybe you have to pay somebody to take the overstock (because you class it as worthless) off your hands.. What they then decide to do with it is up to them. It's their property the moment it arrives at their facility...

Lets look at it from a purely business and logical standpoint.. What is this all about.. Oh dear.. Warners are all pissy and having a hissy fit because somebody can do a better marketing job than they can. They couldn't sell these junk films.. so the argument of "lost revenue" is immaterial.. fact is.. they couldn't sell them so they can't possibly have lost income.

Strewth.. I would love to be the defence lawyer in this case.

8.8.2009 07:47 #19

scorpNZ

Originally posted by cousinkix: Why don't they go after the stores which sell USED CDs and DVDs right along side of the brand new ones? Imagine the money they lose on these sales; because somebody didn't buy a new one at retail prices...
They would if they could,however the discs that are being referred to here are new releases,not discs a year or more old,anyone who is looking to buy 2nd hand stuff doesn't want to spend more than they need too,why pay $30 or more when if you wait a bit you can get it for under $10 2nd hand or new due to price drop for old stock,that's a decent saving if you buy a good amount during the year,even better savings if they're console games

8.8.2009 15:24 #20

st1kyH4nD

can one say OWNED

but im sure wb has enough money already they are just greedy

8.8.2009 22:37 #21

KillerBug

Originally posted by scorpNZ: Apart from the needless waste there is no reason not to store them for sale a year or two later when they end up in bargain bins anyway for $5...lol..Yes there is, the movies are so terrible that they cannot sell them...not even for $5.

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11.8.2009 06:22 #22

Mez

kyo28, they have the right but they are still the moronic ass-holes that would prefer to burn the disk than sell it for half price which is a fairer price. Like all the media mafia, they only want to rape the public. �Consensual sex� is a turn off for them. Then they blame pirates for their losses.

bomber991, that is what piracy is for! They get to sell it for 0 dollars. That is WAY smarter! Once you realize it is easier just to download the file for free you stop buying most movies.

As long as they refuse to sell at a fair price they just encourage piracy.

13.8.2009 07:46 #23

EEE31

So Warner Brothers was unable to bilk us for $30 a disc so they decided to destroy them... this destruction company manages to sell the complete collection at what $12 a disc??? What does tell us, perhaps people will buy more WB crap if they werent trying to charge us 50x cost?

13.8.2009 13:25 #24

hotdotdog

Economics 101 anybody?
The property belongs to Warner with an assurance by the destruction company the excess product would be destroyed. Some of you have opinions of what Warner should do with their stuff. So what! I don't want anybody telling me what to do with my stuff. I don't like the cost of DVDs and wish just about everything costs less than it does. It's not our call. Everybody sets their own price and no matter how low, someone, if they can will try to get away with selling it cheaper. In this case Warner was paying a company to destroy the discs. That company not only took Warner's money but sold the DVDs for pure profit. Not cool. I don't support the record companies but if these guys get away with stealing from Warner, how will any of us nobodys get any justice?

13.8.2009 16:50 #25

RickWJ324

Ok.. I'm quite certain this is how BIG LOTS got all of their recent $3/$6 TV sets. In the last couple of weeks I've managed to pick up the following:
1)Tales From the Crypt Seasons 1-6 = $3 each
2)Flintstones Seasons 1-5 = $3 each
3)Thundercats Season 2 both sets = $6 each
4)Josie and the Pussycats Complete Series = $3
5)Birdman and the Galaxy Trio = $3
6)Adventures of Superman Seasons 1-4 = $3 each
7)Dastardly and Muttley Complete Series = $3
8)Wacky Races Complete Series = $3
9)Joey Season 1 = $6
10)Challenge of the SuperFriends Seasons 1 = $6 each
11)Superfriends Legendary Super Powers Show Complete = $3
12)Top Cat Complete Series = $3
13)Jonny Quest Season 1 = $3
14)Huckelberry Hound Volume 1= $3
15)Smallville Season 7 Blu-ray = $6
16)NipTuck Season 4 Blu-ray = $6
17)Justice League Season 1 Blu-ray = $6
18)Blade: The Complete Series - $6
I know I picked up a few others, drawing a blank right now. I spent roughly $120.00 for all of these shows, brand new at Big Lots. All of these added up on Best Buy's website comes to more than $1,100.00!! :) :)
There were quite a few others out there, but I wasn't fortunate enough to find them. Still, made out pretty nicely on these. If this was due to that company's screw up, I hope it happens again!! :)

13.8.2009 22:23 #26

ydkjman

Originally posted by RickWJ324: Ok.. I'm quite certain this is how BIG LOTS got all of their recent $3/$6 TV sets. In the last couple of weeks I've managed to pick up the following:And these were all Blu-ray's ?

14.8.2009 00:23 #27

RickWJ324

Quote:Originally posted by RickWJ324: Ok.. I'm quite certain this is how BIG LOTS got all of their recent $3/$6 TV sets. In the last couple of weeks I've managed to pick up the following:And these were all Blu-ray's ?No... just the ones that I marked as "blu-ray".
There were other sets as well.. that I forgot to mention. They had all of the Pinky and the Brain sets and Animaniacs for $6 as well. The Complete Wonder Woman series (3 seasons boxed together) for $6!! Also the Looney Tunes Golden Collection (5 volumes) for $10 total. I was never able to find the Wonder Woman or Looney Tunes though. Now the Big Lots seemed to have dried up!?

14.8.2009 07:30 #28

varnull

ffs.. I love pinkie and the brain .. we never see it over here. cartoon network (pay) bought everything and now we never get any of our classics either.

It's a cultural desert these days.. no animated mindless violence for kids.

I'll do you a deal for pinkie and the brain Rick.. not allowed to offer invites but pm me yeah?

14.8.2009 08:00 #29

Mez

RickWJ324, I like your style and taste.

hotdotdog, WMB was obligated to destroy the disks. It is just the media mafia are such pigs! They don't have a shred of decency in the entire organization. I wouldn't feel bad if something seriously terrible happened to one or all of them.

17.8.2009 13:49 #30

EEE31

Yes, the destruction company was wrong... but at least this showed what the market is willing to pay for these discs. And if WB would take notice of this then they would have less discs to send to them for destruction.

17.8.2009 13:55 #31

Mez

EEE31, I am sure they knew that already. They just don't want to give anyone a break. That is one of the reasons we call them the media mafia. They are a bit evil and are not as much into making a profit as sticking to the public. That is what they enjoy.

17.8.2009 14:20 #32

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