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Originally Posted by innerSpaceman
Um, that would be blatently illegal. No, Alex, Netflix cannot do that. Nor can you or I.
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So far I know, yes they can, and so can you. The only thing the copyright holder can prevent is public exhibition.
In 1983 legislation was introduced that would give the copyright holder the right to control the secondary rental market but it was never passed in the face of protest from the new video rental industry.
So long as you don't make copies, once you own a physical copy of a movie you can do whatever you want with it.
I'd be happy to be pointed to the laws that say otherwise (since this all came up when an aunt opened a video store years ago) but
Section 109 of the copyright act specifically says that the owner of a lawful copy can do whatever they want with it (except make additional copies). Musical recordings (in 1984) and computer software (in 1990) were specifically exempted from this (renting music CDs is illegal without permission but renting book CDs is legal without permission) but as mentioned, the attempt to exempt movies from this in 1983 failed.
Now, a lot of rental companies do enter into licensing agreements with distributors for the special consideration and Netflix likely wouldn't be willing to risk those over the mediocre movies The Weinstein Company has been releasing. But so far as I know, there is no mandatory licensing requirement. I know you don't like to look stuff up, but if I am wrong I'd really like to be set straight.