Starz Entertainment is suing Walt Disney's Buena Vista Television (BVT) for breach of contract in making some shows available through iTunes.
Starz filed the suit in the US District Court for the Central District of California claiming Disney is selling films through iTunes Disney had previously licensed exclusively to Starz.
Under the terms of the 1993 and 1999 Starz-BVT agreements, extended by BVT in 2005, Disney is prohibited from selling its films for transmission over the internet prior to Starz's first exclusive license period and during all of Starz's exclusive license periods.
Despite this prohibition, the suit notes Disney has "begun to sell over the internet through services like Apple's iTunes and Walmart.com the very same Disney films licensed to Starz."
The lawsuit describes the move as a "blatant breach" of the licensing agreements between BVT and Starz. The suit notes that over the life of the contract Starz has paid "over one billion dollars" for periods of exclusive rights to the films.
Starz Entertainment CEO and chairman Robert Clasen said: "Disney has been a great partner. We hope to continue our relationship. But our agreements clearly prohibit them from selling their movies by electronic download over the internet while they are exclusive to Starz. If Disney is permitted to violate our contract in this manner, it will undermine the integrity of copyright in general which is a cornerstone of our industry."
He added, "The film studios have been very aggressive, and quite rightly so, in protecting their copyrights, particularly with regard to the internet. Starz must be equally aggressive in protecting the value of the deal it made. It is especially disappointing to see one of the largest studios ignore so blatantly its own contractual obligations to protect the copyrights it has licensed to Starz."
Starz was one of the first firms engaged in delivering films online, and claims it previously invested "millions of dollars to develop, launch and market its service last year."
The suit notes that the licensing agreements do allow Disney to distribute its films on a pay-per-view or on-demand basis. It also permits home video distribution but that it prohibits BVT from licensing its films "for exhibition in any form of television or electronic delivery."
The suit seeks to prevent BVT "from continuing to infringe on Starz's rights" and asks for all profits BVT has realized from its infringing activities.