Redbox’s Next Move: Piracy Lawsuits
▼ Summary
– Grove Street Partners has offered $100 million to acquire Chicken Soup for the Soul Entertainment’s IP litigation assets, which include rights to pursue copyright infringement lawsuits.
– The company specializes in using DMCA notices to target ISPs for allegedly failing to prevent customer piracy, rather than focusing on individual file-sharers.
– Grove Street will pay for the assets in five annual installments and has secured litigation funding to cover legal fees and related costs.
– Similar lawsuits against ISPs have had mixed outcomes, with some cases still ongoing and others being withdrawn without payment from the ISP.
– The bankruptcy proceedings for Redbox and Chicken Soup for the Soul Entertainment continue, alongside lawsuits accusing former executives of corporate mismanagement, which they deny.
The ongoing bankruptcy proceedings of Redbox and its parent company, Chicken Soup for the Soul Entertainment, have taken an unexpected turn with a proposed $100 million acquisition of their intellectual property litigation assets. Rather than signaling a revival of the iconic red kiosks or the Crackle streaming platform, this development points toward a new chapter focused entirely on copyright enforcement. Grove Street Partners has stepped forward with an offer to purchase the rights to pursue legal action for copyright infringement, targeting parties accused of violating the Digital Millennium Copyright Act.
According to recent court documents, the transaction centers on what are termed “IP Litigation Assets.” These consist of the bankruptcy estates’ authority to initiate lawsuits over media titles owned or controlled by Chicken Soup for the Soul Entertainment and its subsidiaries, including Screen Media Films. While the specific titles involved remain undisclosed, the filing makes clear that the assets empower the holder to litigate against various third parties for alleged DMCA violations.
Grove Street Partners is actually the former name of Grove Street Funding, a firm specializing in financing and managing copyright infringement lawsuits. The company’s CEO, Tom Murphy, confirmed this detail. Grove Street Funding helps intellectual property holders pursue litigation, with a particular emphasis on DMCA-related cases. Their strategy extends beyond targeting individual file-sharers; they leverage DMCA notices as a basis to pursue legal action against Internet Service Providers accused of failing to prevent customer infringement.
Murphy previously outlined this approach in a 2021 presentation for a similar company, American Films. He argued that ISPs face liability for piracy conducted by their users through illegal BitTorrent file-sharing, estimating potential damages for copyright owners between $200,000 and $4 million per film.
The proposed deal requires Grove Street to pay the $100 million purchase price in five annual installments. Murphy indicated that litigation funding has been secured to cover legal expenses, digital evidence of piracy events, DMCA notices, and the scheduled payments to the bankruptcy trustee, though he did not provide specifics on the financing arrangement.
Legal actions holding ISPs accountable for user piracy are not new. The music industry’s lawsuit against Cox Communications resulted in a $1 billion verdict in 2019, though an appeals court overturned that decision last year. The matter is now under consideration by the Supreme Court. However, not all such lawsuits yield financial success for rights holders. Screen Media Ventures, a Chicken Soup for the Soul Entertainment subsidiary, previously filed similar claims against several ISPs. Some of those cases remain unresolved years later, and one lawsuit against Astound Broadband’s subsidiary Grande Communications was withdrawn in 2023 without any settlement payment.
As these copyright enforcement efforts move forward, the bankruptcy case for Redbox and Chicken Soup for the Soul Entertainment continues. Former employees and the court-appointed trustee have filed separate lawsuits against the company’s former leadership, alleging corporate mismanagement, claims which the executives have consistently denied.
(Source: The Verge)