Last year, the video rental and streaming company Redbox shut down its service and filed for bankruptcy.
The service, owned by Chicken Soup for the Soul Entertainment (now CSS Entertainment), was running hundreds of millions in losses per year and no longer saw a path to profitability.
The decision also had a direct impact on its ongoing litigation, including some piracy-related lawsuits. Through its subsidiary Screen Media Ventures, it previously sued several Internet providers, including RCN. That case was administratively closed as a result of the bankruptcy.
The demise of one company can provide opportunities for others and in this case, the intellectual property rights of Redbox’s parent company appear to be of particular interest. These can be used to sue ISPs and similar targets, with the potential for massive damages awards in the event of a successful outcome.
$100m For ‘Right to Sue’
This opportunity was recognized by a company named Grove Street Partners LLC, who are bidding at least $100 million for the “IP Litigation Assets” of CSS Entertainment.
On Wednesday, the bankruptcy estate’s trustee, George L. Miller, requested approval from the court to finalize and execute a deal reached with the primary creditor, a requirement for the sale to continue.
“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,” he explained.
The proposed agreement also includes details on how the proceeds of the sale would be shared. As the primary secured creditor, HPS Investment Partners would receive the bulk, paid in installments, and the remainder would go to the estate and could be used to pay other creditors.
Details aside, this case highlights how intellectual property claims, specifically the right to sue under the DMCA, can be packaged and sold as a valuable asset to generate funds in a major corporate bankruptcy.
As far as we know, this may be unique and if the deal goes through, more ISP piracy lawsuits could be on the horizon. And after paying at least $100 million, the stakes would be significant.
Experienced Piracy Litigators
The company bidding for the “IP Litigation Assets” is no stranger either. While Grove Street Partners isn’t widely known, the company has been involved in ISP piracy lawsuits for years.
In 2023, before Redbox went bankrupt, Grove Street announced a partnership with American Films and its subsidiary FACTERRA, to “provide data monitoring and record evidence” supporting copyright infringement cases.
The same press release also mentioned ongoing litigation against the Internet providers RCN Telecom Services, WideOpenWest, and Grande Communications. The Grande lawsuit has since been settled.
Supreme Court Challenge
While the proposed deal clearly suggests that the ‘right to sue’ can be valuable, there’s a pending Supreme Court case that could have a significant impact on the ability to exploit this opportunity.
Internet provider Cox, which was previously ordered by a Virginia jury to pay $1 billion in damages after being held contributorily liable for pirating subscribers, is challenging this verdict at the Supreme Court.
The ISP, which received high-profile support from the U.S. Solicitor General, argues that ISPs should not be held liable for failing to take action against repeat infringers based on third-party complaints.
If the Supreme Court agrees, it could mean that these types of lawsuits aren’t as lucrative going forward.
Funding & Finances
The legal paperwork does not mention the source of the funding for the rights sale. Speaking with The Verge, Grove Street’s CEO said that the necessary funds are in place, without mentioning any financial partners by name.
“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 noted.
Money hasn’t always been readily available to Grove Street. Court records reveal that Jamie Warren, the former CFO of both American Films and Grove Street Funding (which is linked to Grove Street Partners), sued both companies over unpaid salary.
In an amended complaint, dated March 5, 2025, Warren alleged that the defendants repeatedly breached employment contracts and fraudulently induced her to continue working with false promises of payment.
The legal paperwork mentions that the companies were working to secure funding from a venture capital firm to support a case involving Chicken Soup for the Soul Entertainment. This would presumably result in an infusion of cash.
In May, 2025, a Texas federal court entered a final judgment in favor of the former employee, granting her $525,000, plus attorneys fees and costs. According to court filings, the case remains ongoing as the judgment has not been paid.
All in all, the situation presents a complex convergence of legal and financial variables. With a $100 million deal awaiting bankruptcy court approval, a landmark Supreme Court case set to define the rules for ISP liability, and an outstanding court judgment against the prospective buyer, the path forward seems anything but straight.
From: TF, for the latest news on copyright battles, piracy and more.
Powered by WPeMatico
