Redbox’s next product may be piracy lawsuits

There’s a new twist in the long and winding saga of Redbox’s demise: Assets originally belonging to the company’s corporate parent, Chicken Soup for the Soul Entertainment, may have finally found a buyer. But don’t expect a resurrection of Redbox’s red kiosks, or Chicken Soup’s Crackle streaming service, any time soon.

According to a late Wednesday court filing, a company called Grove Street Partners has offered $100 million for so-called “IP Litigation Assets” owned by Chicken Soup for the Soul Entertainment and its subsidiaries. Chicken Soup for the Soul Entertainment owned the rights to hundreds of movies, mostly through its subsidiary Screen Media Films. “The IP Litigation Assets consist of the Estates’ rights to pursue litigation for copyright infringement against various third parties related to, among other claims, violations of the Digital Millenium Copyright Act (“DMCA”) for media titles owned or controlled by the Estates,” the filing says. The exact content of those assets wasn’t disclosed.

Grove Street Partners is actually the former name of Grove Street Funding, I was told by the company’s CEO Tom Murphy. Grove Street Funding helps IP holders finance and manage copyright infringement lawsuits, with a particular focus on DMCA-related litigation. In broad strokes, the company doesn’t just go after individuals sharing movies online, but actually uses the DMCA notices as ammunition to then go after ISPs that allegedly didn’t do enough to stop their customers from engaging in infringement.

Murphy outlined this tactic in a 2021 pitch deck of sorts for American Films, a company that took a similar approach to piracy lawsuits: “Internet Service Providers (ISP) are now exposed to paying the liability created by film pirates through their illegal BitTorrent file sharing. Estimated net total damages for the film copyright owner per film is between $200,000 and $4 million.”

Grove Street needs to pay the $100 million for the transaction in five annual installments, according to the legal filing. “We have lined up litigation funding to help us handle the legal fees, digital evidence showing the piracy events, the DMCA notices, and the annual payments due to the Trustee,” Murphy told me without elaborating further on how the company is financing this.

There have been a growing number of lawsuits against ISPs, with rights holders alleging that these companies aren’t doing enough to disconnect file sharers. One example of this is the music industry’s lawsuit against Cox, which led to a $1 billion verdict against the ISP in 2019. That verdict was overturned last year by an appeals court, with both sides now making their case in front of the Supreme Court.

Not all such lawsuits against ISPs end up being lucrative for rights holders. Chicken Soup for the Soul Entertainment’s subsidiary Screen Media Ventures actually went after a number of ISPs with similar claims. Some of these cases are still dragging on years after being filed. At least one lawsuit, filed against Astound Broadband’s subsidiary Grande Communications, was unceremoniously withdrawn in 2023, with Astound’s general counsel Jeff Kramp boasting at the time that the company “did not pay a cent to resolve this case.”

Meanwhile, Redbox’s and Chicken Soup for the Soul Entertainment’s bankruptcy case drags on, as are lawsuits filed against the company’s leadership by former employees and the trustee administering the bankruptcy case. Those lawsuits have raised serious accusations of corporate mismanagement against Chicken Soup for the Soul Entertainment’s former executives, which those executives have denied.