Welcome back to Legal Geek. This week, we review a question sent in by a listener Justin regarding expiring digital copy codes on movies, and whether that can be deemed false advertising.
Most of us have probably experienced this: you buy a movie from the sales or clearance rack at the store, take the disc home and log on to your computer to claim the included digital copy...and bam, code expired. No digital copy. Or perhaps you forgot to enter the code when you bought the movie and you discover this a couple years later, only to find that the digital copy code is no longer valid. In either case, it's highly frustrating, especially as many move away from print media and discs and store everything digitally or in the cloud.
Well that's roughly what happened to Justin, our listener with the question. He bought a movie with a "digital copy included" label on it, with no expiration date listed on the package, only to find out once he opened the movie that the code expired 5 days earlier. He cannot return the movie since it is open, but he did not get the deal he was hoping for. Does that create a false advertising claim under the law?
You'll be shocked to hear that it's a gray area, the lawyer's favorite playground. False advertising under the law requires advertisement of a product in a misleading way, to make the purchaser believe the product performs better than it actually does. Although many states have some false advertising laws, we will focus this segment on the two federal laws on point: the Federal Trade Commission Act and the Lanham Act, the latter of which establishes trademark law in the U.S.
The FTC Act defines false advertising as advertisements that make representations that the advertiser has no reasonable basis to believe, and only the FTC can enforce this act. We covered some FTC cases a couple months ago, but looking through their archives, it does not appear that expiring digital movie copies have led to a decision under this law as of yet. It seems unlikely that a movie seller would be liable because the representations made of a digital copy being available were likely reasonable and true when the movie disc was produced and sent to retailers. In other words, the only way a seller would have no reasonable basis for belief in advertising a digital copy was included would be if the code for the digital copy expired before the discs could hit shelves, or if the codes were never valid at all. This is a high burden to prove and so I don't expect the FTC to weigh in on such a case.
The Lanham Act defines false advertising as having the following 5 elements, each of which must be proven: (1) false statements of fact were made about the product; (2) the false advertisements deceived or had the capacity to deceive a substantial segment of consumers; (3) the deception was material; (4) the product was sold in interstate commerce; and (5) the party suing the advertiser was injured by the deception.
There's a few potential holes in arguing these 5 factors in Justin's case. First, if the digital copy were valid for a long period of time before he chose to purchase the movie, then it's unclear whether the "digital copy included" label is really a false statement. Especially if the general consumer understands that the standard or common market practice is for digital copy codes to have an expiration date, then it may not be that such a label has a capacity to deceive a substantial segment of consumers. A movie seller could also argue against the materiality of the deception here, as the buyer still receives a copy of the movie they purchased, just on a disc, and if they purchased solely to obtain the digital copy, there were other ways to do that more directly than buy a disc. Particularly if the movie was bought on a sale or clearance rack, the consumer might be expected to understand that the lower price is available in part because the digital copy is no longer available, lowering the market value.
A claim could be made for false advertising, but under the available U.S. laws, it would be exceedingly difficult to prove. It would be best practice for movie sellers to include expiration dates on the outer packaging of a movie, and some do, but it may not be required under the law.
The Bottom Line is, false advertising is a unique branch of law that is honestly more focused on large-scale scams than individual grievances. That being said, some movie companies will still honor the digital copy and offer you a new (valid) code if you reach out to them with your complaint after buying in circumstances like Justin did. That's probably the easiest solution, given that no company wants to deal with bad customer P.R. or a lawsuit, even if such a lawsuit would likely be in their favor in the end. Thanks Justin for this great topic suggestion, and I hope you find some resolution to your digital copy conundrum!
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