A DVD rental service is accusing Universal Studios Home Entertainment (USHE) of threatening to pull its distribution channels unless it agrees to a revenue-sharing agreement.

Redbox, which sells and rents DVDs at approximately 10,000 self-service kiosks across the country, filed suit against USHE earlier this month after USHE allegedly demanded that Redbox adhere to certain conditions.

Specifically, Universal wanted Redbox to wait 45 days until after the DVD release date to make it available in their kiosks; limit the number of USHE DVDs that Redbox could stock; and destroy all DVDs not used in kiosks rather than offer them for sale.

If Redbox refused to sign this agreement, USHE threatened to stop selling its DVDs to Redbox's distributors, VPD and Ingram.

Redbox claims in its suit that USHE's actions violate antitrust laws and constitute copyright misuse.

Approximately 15 percent of the DVDs that Redbox purchases from VPD and Ingram are marketed and sold by Universal, Redbox said. USHE has threatened to cut off Redbox by December 1, 2008 if the agreement is not signed, the suit said.

"The revenue sharing agreement is a naked restriction on output that directly reduces the supply of goods to consumers, and will increase the prices consumers must pay," according to the suit.

Redbox debuted in 2002 in Washington, D.C. and has since expanded to 10,000 kiosks, which can be found in outlets like McDonald's, Wal-Mart, Walgreens, and grocery stores such as Albertson's, Stop & Shop, Harris Teeter, and Meijer's.

Consumers use the touch-screen kiosks or reserve DVDs online and pay $1 per night for the discs. Previously viewed movies can be purchased for $7 per DVD.

"This is a breathtaking attack on the first sale doctrine, which makes it crystal clear that once you've bought a DVD, you can rent and resell it at any price and on any terms you like," Fred von Lohmann, a senior staff attorney with the Electronic Frontier Foundation (EFF), wrote in a blog post. "Universal Studios apparently would prefer a world where millions of DVDs are shredded and put in landfills to one where consumers can rent a DVD for $1."