Moser Baer Sues SeventyMMUpdate: Moser Baer has declined comment, saying that the matter is sub-judice.

In a case that should be followed very closely by all content owners and distributors, Moser Baer Entertainment has filed a case against SeventyMM in the Bombay High Court, alleging a violation of its sole and exclusive video rental rights. PTI reports that Moser Baer has asked for Rs. 50 crores in compensation, claiming sole rights to distribute several film titles to “third parties and their members”. The company also claims to have sole and exclusive rental rights to films like Jab We Met, Kabhi Hann Kabhi Naa, Yuva etc. We’ve contacted Moser Baer and are awaiting a response. The case was filed on the 7th of January, 2009.

SeventyMM has, so far, raised $21.4 Million in Venture Capital funding, from VC Firms like NEA-Indo US Ventures, Matrix Partners India, Draper Fisher Jurvetson and ePlanet Ventures. In their third round last August, they had raised $11.4 million

At the heart of this case is the issue of content rights, and the ambiguity that exists around them due to a lack of documentation in Bollywood, and ambiguity in contracts that have been signed over the years. This is a situation that, we’re told, has been improving over the past decade or so, ever since the digital medium and international distribution came into prominence. SeventyMM’s entire business model has hinged upon finding a legal way of renting movies, mirroring the NetFlix model. Other companies in the same space include BIGFlix from Reliance Entertainment and Showtime from Nimbus.

Frankly, I’m rather surprised at the notion of content owners giving exclusive rental rights, since physical distribution of content is usually split according to geography, since few have a distribution network spanning an entire city, leave alone a pan-India distribution network. Physical Distribution includes that of DVDs and CDs.

Among the issues that content owners also face is that of the advent of new technology – IPTV didn’t exist 6 years ago, and can a company which took a license for “distribution” or “digital distribution” also sub-license to IPTV companies? What about a company that has taken IPTV rights – does this include IPTV over Mobile, or even online streaming of content (which is over Internet Protocol)? If a company is given mobile rights – will this include Mobile TV in the future, and what about a conflict there with IPTV over Mobile?

The digital space is throwing up several challenges, and will continue to do so. With time, we’ll see rights being split across specific media, geographies, live streaming vs catalog…