The Blockbuster Documentary on Netflix: How It Explains Fair Use

The Blockbuster Documentary on Netflix: How It Explains Fair Use

Sona Sulakian
 | 
From 9,000 stores down to just 1.

Netflix recently released a documentary about the demise of Blockbuster. The reason the former video rental giant went bankrupt? Netflix.

Some may say Netflix is unabashedly dancing on its once-upon-a-time rival’s grave.

To be fair, Netflix did try to save Blockbuster. 

Netflix founder Reed Hastings offered to buy them out. The Blockbuster boy refused and even mailed a sink to the Netflix headquarters.


Another great tidbit in this documentary? Blockbuster or even Netflix may never have existed if the content industry, i.e. the studios, had been able to ban or regulate them. 

History of Blockbuster
Home media consumption began in the early 1980s with the advent of the VCR, when studios decided to sell movies directly to consumers. Some clever entrepreneurs decided to buy and rent out the VCR tapes to consumers. The studios sued to shut down the movie rental stores popping up across the country, and their lobbyists pushed for legislation to regulate and effectively squash the rental business model. 

Universal City Studios sued Sony to stop the manufacture and sale of Betamax tapes, leading to a decision often referred to as the “Betamax” case. The studios primarily wanted to stop consumers from recording movies and other live television at home on their VCR, and simultaneously stop the quickly growing rental industry. The case eventually reached the Supreme Court, resulting in a 5-4 decision in favor of Sony upholding the VCR as fair use. 

An explanation of "first sale doctrine" 
The Betamax decision protected Blockbuster and Netflix with the first sale doctrine, which affords an individual who buys a copy of a copyrighted work from the copyright holder to sell or use that copy however he or she pleases. This doctrine also allows libraries to lend books. 

After the loss in court, the content industry pushed Congress to introduce a bill that would give copyright holders, i.e. the studios, the exclusive rights to the movie rental industry. However, public backlash prevented this and similar bills from passing.

So what is fair use?
Fair use is a legal doctrine that provides a defense against copyright infringement, with the goal of protecting the freedom of expression. This doctrine allows for the use of copyrighted works without permission from the copyright owner. However, fair use is limited to certain purposes, such as criticism, comment, teaching, research, and news reporting. 

Uses of copyrighted works that qualify as fair use include those for nonprofit education and noncommercial purposes. Furthermore, the law prefers transformative uses, which aren’t just a replica of the original but add something new to the original work. These ambiguous guidelines give the courts discretion to weigh different factors to decide whether or not a use is fair.

Today, similar fair use concerns arise in a variety of circumstances, such as streaming. For example, video game players on twitch stream gameplay, which relies on copyrighted work owned by the game developer. The fair use doctrine allows these players to stream their gameplay for criticism or comment, especially if the streamers add their commentary. Many copyright holders and online streaming platforms, such as YouTube have technologies that flag copyrighted material online and either take them down or file takedown notices. 

So, streamers and anyone else using copyrighted material should become familiar with their fair use rights to learn how to protect against copyright infringement claims. LawChamps can connect you with an experienced lawyer to advise you on your rights. 


This article is intended to convey generally useful information only and does not constitute legal advice. Any opinions expressed are solely those of the author, not LawChamps.
Sona Sulakian

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