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RealDVD Case - Litigation Summary (9/2009)

    by Douglas Dixon

Summary of the RealNetworks RealDVD product, litigation, and associated legal entanglements, based on public information, case documents, and news reports -- with extensive links. (Note: While I was an expert witness for RealNetworks in this case, these articles are intended to be factual summaries based on links to publicly available materials.)

The RealDVD product allowed consumers to "save, organize and watch DVDs on their PC and on the go" by copying the disc to a hard drive (but with protection to prevent further sharing). The RealDVD litigation began immediately after the product was released in September 2008. The DVD CCA and several major motion picture studios claimed that Real had breached its license agreement and violated the DMCA. U.S. District Judge Marilyn Patel granted a temporary restraining order in October. After a "mini-trial" in April and May 2009, Judge Patel granted a preliminary injunction in August, enjoining RealNetworks from distributing its DVD copying software.

RealDVD Litigation - Summary

The RealDVD litigation began immediately after the product was released in September 2008. The DVD Copy Control Association (DVD CCA) and several major motion picture studios immediately sued, claiming that Real had breached its license agreement with the DVD CCA and violated the Digital Millennium Copyright Act (DMCA). The studios were granted a temporary restraining order in October by U.S. District Judge Marilyn Patel (who also had declared Napster illegal). 

After a "mini-trial" in April and May 2009, Judge Patel granted the studio motion for a preliminary injunction in August 2009, ruling that RealNetworks was enjoined from distributing its DVD copying software, including RealDVD (code name Vegas) and a related set-top device (code name Facet).

This article provides details and a chronology of the RealDVD litigation and associated legal entanglements, based on public statements, case documents, and news reports that I have found useful. It also includes extensive links to source materials, including news reports that provide information on the ongoing developments in the case. This is a work in progress -- incomplete and open to further editing.

RealNetworks v. DVD Copy Control Association, 08-04548
    U.S. District Court, Northern District of California (San Francisco)
    U.S. District Judge Marilyn Hall Patel, also declared Napster illegal 

RealNetworks - Litigation information - filings
    www.realnetworks.com
    www.realdvd.com/litigation

DVD Copy Control Association (DVD CCA)
    www.dvdcca.org
    DVD CCA - CSS - www.dvdcca.org/css

Studios
    Disney, NBC Universal, Paramount, Sony Pictures, Twentieth Century Fox, Warner Bros., Viacom
    Motion Picture Association of America (MPAA) - www.mpaa.org

For more on copy protection technologies, see my article
    Content Protection Technology for Consumer Electronics

For more on Digital Copy options for studio DVDs, see my article
    Digital Copy: Movie "Downloads" from Blu-ray Disc

RealDVD Timeline

  • Sept. 8, 2008 - RealNetworks Introduces RealDVD product
  • Sept. 30, 2008 - RealNetworks brought action in the United States District Court for the Northern District of California against the DVD Copy Control Association and several major motion picture studios, seeking a declaratory judgment that Real has neither breached its license agreement with DVD CCA nor violated the Digital Millennium Copyright Act (DMCA) by manufacturing and distributing its RealDVD product. 
  • Sept. 30, 2008 - Motion picture studios brought action in the United States District Court for the Central District of California to enjoin Real from manufacturing, distributing or otherwise trafficking in RealDVD, in alleged violation of the DMCA and as a breach of contract. The Central District case was transferred to the Northern District, where the cases were related and consolidated.
  • Oct. 3, 2008 - Hearing before U.S. District Judge Marilyn Hall Patel. 
  • Oct. 7, 2008 - Judge Patel granted the motion picture studios’ requested Temporary Restraining Order (TRO) to restrain and enjoin Real from manufacturing, distributing or otherwise trafficking in RealDVD or any products substantially similar. The TRO was extended several times at the consent of all parties pending the completion of the motion picture studios’ and the DVD CCA’s motions for a preliminary injunction.
  • April and May 2009 - Hearing for preliminary injunction held over five days.
  • Aug. 11, 2009 - Judge Patel grants motion for Preliminary Injunction. Ruled that it was unlawful to traffic in goods to copy DVDs, declared RealNetworks’ DVD copying software was illegal, and barred it from being distributed. Ruled that RealDVD was in violation of the CSS license, and that the RealNetworks’ software violated the Digital Millennium Copyright Act.

   

Legal Documents

[ Top ]

Sept. / Oct.  2008 - RealDVD Hearing on Temporary Restraining Order

Oct. 3, 2008 - Three-hour hearing before U.S. District Judge Marilyn Patel. 

Oct. 7, 2008 - Judge Patel granted the motion picture studios’ requested Temporary Restraining Order (TRO) to restrain and enjoin Real from manufacturing, distributing or otherwise trafficking in RealDVD or any products substantially similar. The TRO was extended several times at the consent of all parties pending the completion of the motion picture studios’ and the DVD CCA’s motions for a preliminary injunction.

   

Statements

Sept. 30, 2008 - MPAA Press Release - Motion Picture Studios File Lawsuit Against RealNetworks
    www.mpaa.org/press_releases/realdvd%20press%20release%209%2030%2008%20final.pdf

  • “RealNetworks’ RealDVD should be called StealDVD,” explained Greg Goeckner, Executive Vice President and General Counsel for the Motion Picture Association of America (MPAA). “RealNetworks knows its product violates the law and undermines the hard-won trust that has been growing between America’s movie makers and the technology community. The major motion picture studios have been making major investments in technologies that allow people to access entertainment in a variety of new and legal ways. This includes online video-on-demand, download-to-own, as well as legitimate digital copies for storage and use on computers and portable devices that are increasingly being made available on or with DVDs.”
  • The Content Scramble System (CSS) built into DVDs prevents the unauthorized reproduction and distribution of copyrighted material released in DVD format. The RealDVD software illegally circumvents this copyright protection system. Among other things, the RealDVD software enables users to engage in an illegal practice known as “rent, rip and return,” whereby a person rents a DVD from a legitimate business like Blockbuster or Netflix, uses the RealDVD software to make multiple permanent illegal copies of the movie, and returns the DVD, only to rent another popular title and make permanent copies of it, repeating the cycle of theft over and over again without ever making a purchase.

Oct. 7, 2008 - MPAA Press Release - MPAA Statement on RealDVD Litigation
    www.mpaa.org/press_releases/mpaa%20statement%20on%20realdvd%208.11.2009.pdf

  • “We are gratified that the Court recognized the harm of RealDVD to the motion picture industry and the strength of our arguments that the product circumvents the copyright protection built into DVDs."  - MPAA Chairman and CEO Dan Glickman.

Articles

Hollywood Control of DVD-Copying at Crossroads
    David Kravets, Wired, Sept. 16, 2008
    www.wired.com/threatlevel/2008/09/hollywoods-grip/

  • RealNetworks caught Hollywood by surprise when it privately informed the studios two weeks ago that it was releasing, by month’s end, a $30 application called RealDVD allowing movie fans to easily make copies of their DVDs with their computer.
  • "The law is deeply unclear. The reality, as far as I know, nobody has ever been sued for making a personal use DVD or CD," said Fred von Lohmann, an Electronic Frontier Foundation attorney.
  • Still, more than 30,000 people have been sued for Copyright Act violations for sharing music online. Far fewer people are sued for decrypting DVDs and uploading them or downloading them from illicit torrent-tracking services.
  • Despite the conflicting opinions regarding the CSS playback contract, the DVD Copy Control Association, which has issued more than 350 similar licenses, has not clarified the contract’s language to clearly spell out its terms. ... Insiders said the group faces potential antitrust issues if it amends its contracts to exclude a competitor’s product, especially a competitor who already has a license. Publicly, however, the group says the playback licensing agreement remains unchanged because of the board’s divergent interests.

MPAA, RealNetworks Wage Court Battle Over DVD-Copying Software
    David Kravets, Wired, Sept. 30, 2008
    www.wired.com/threatlevel/2008/09/mpaa-realnetwor

  • RealNetworks said, "We are disappointed that the movie industry is following in the footsteps of the music industry and trying to shut down advances in technology, rather than embracing changes that provide consumers with more value and flexibility for their purchases."
  • Hollywood is already reeling from open-source DVD decryption software that is free on the internet. It also says it’s losing billions in sales because of BitTorrent tracking services like The Pirate Bay that allow users to upload and download decrypted movies and other content for free.

Judge’s Top Secret Decision Blocks Sale of DVD-Copying Software
    David Kravets, Wired, Oct. 6, 2008
   www.wired.com/threatlevel/2008/10/judges-top-secr

  • A federal judge has issued a secret, interim order blocking the sale of RealNetworks’ DVD-copying software, RealDVD, two sources said Monday. The judge also instructed both parties not to disclose the existence of the restraining order to the public.

Judge Renews Decision Barring Sale of DVD-Copying Software
    David Kravets, Wired, Oct. 7, 2008
    www.wired.com/threatlevel/2008/10/judge-renews-de

  • Judge Patel issued a tentative decision on Friday requiring that sales be halted pending a hearing Tuesday. RealNetworks complied, informing customers on its website that, "Due to recent legal action taken by the Hollywood movie studios against us, RealDVD is temporarily unavailable."
  • After a three-hour hearing Tuesday, Judge Patel upheld the earlier decision and banned RealNetworks from selling its DVD-copying software so she could have additional time to learn for sure whether RealDVD circumvents encryption software in violation of the DMCA. "I’m not satisfied that in fact this technology is not in violation of the DMCA," Patel ruled from the bench.

Wink Wink: RealNetworks Says Don’t Copy Rented DVDs
    David Kravets, Wired, Oct. 8, 2008
    www.wired.com/threatlevel/2008/10/mpaa-realnetwor

  • James DiBoise, the attorney for RealNetworks, said the software wasn’t harming the movie studios. RealDVD won’t cut down on DVD sales because it’s supposed to be used to copy DVDs which a movie fan already owns, not those that were rented, DiBoise said. If a customer has a rented DVD, "they should press play" and not the record button, DiBoise told Patel in a San Francisco courtroom. 
  • Judge Patel ordered the software discontinued until she could fully understand its technology. A new hearing date was not immediately set. Patel said she believed the software violated the Digital Millennium Copyright Act because it allowed users to circumvent encryption technology designed to prevent copying of DVDs, regardless of whether they were rented or owned.

'Napster judge' thumps RealDVD, but will she ban it?
    Greg Sandoval, CNET, Oct. 8, 2008
    http://news.cnet.com/8301-1023_3-10061548-93.html

  • RealNetworks was in court to try to convince Judge Patel to lift a temporary restraining order that forced the company to stop selling RealDVD. Patel refused to lift the order, telling the courtroom there are "serious questions" about whether the software violates copyright law. She worried about whether people would make unauthorized copies of DVDs, saying "it's impossible to bring back copies once they're out in the market."
  • Patel is referred to in Silicon Valley as the "Napster judge." In 2000, Patel ruled that Napster was not entitled to protection from copyright violations because it wasn't an Internet service provider as defined by the Digital Millennium Copyright Act (DMCA). Her decision was upheld by the U.S. Court of Appeals for the Ninth Circuit, and in March 2001 she ordered Napster to remove copyrighted music.
  • The MPAA's attorneys showed the judge a quote from the company's CEO Rob Glazer about RealDVD. "If you want to steal, we remind you what the rules are and we discourage you from doing it, but we're not your nanny."

RealNetworks appeals to public in RealDVD fight
    Greg Sandoval, CNET, Nov. 3, 2008
    http://news.cnet.com/8301-1023_3-10081363-93.html

[ Top ]

April / May 2009 - RealDVD Trial on Preliminary Injunction

April and May 2009 - Hearing for preliminary injunction held over five days before U.S. District Judge Marilyn Patel.

   

Articles

MPAA Claims RealNetworks ‘Destroyed’ Evidence in DVD Copying Case, Used Work of Hackers
    David Kravets, Wired, March 5, 2009
    www.wired.com/threatlevel/2009/03/mpaa-claims-rea/

  • The studios allege that RealNetworks trashed a senior project manager’s "engineering notebooks," an archive containing "actual code files" and other documents, one of which might reveal "Real’s products are based in part on the work of … hackers."

RealNetworks: ‘We Didn’t Think’ MPAA Would Sue Over DVD Copying Software
    David Kravets, Wired, March 23, 2009
    www.wired.com/threatlevel/2009/03/realnetworks-we

  • The MPAA claims RealNetworks destroyed a host of documents relating to RealDVD’s production — well before the MPAA sued it in September.
  • RealNetworks told a federal judge on Monday it didn’t think it would be sued by the Motion Picture Association of America for marketing DVD copying software.

MPAA-RealDVD Trial Portends Legality of DVD Copying
    David Kravets, Wired, April 23, 2009
    www.wired.com/threatlevel/2009/04/mpaa-realdvd-tr

  • Three-day mini trial in U.S. District Court before Judge Patel
  • Witnesses for the MPAA include: Mark Hollar, senior director of product management at Macrovision and, among others, Marsha King, a retired vice president of Warner Bros.
  • Witnesses for RealNetworks include: Rob Glaser, the company’s founder and CEO; Elizabeth Coppinger, a company vice president, and Matthew Bishop, a computer scientist and the University of California at Davis.

DVD Copying Case Focuses on ‘Fair Use’
    David Kravets, Wired,  April 24, 2009
    www.wired.com/threatlevel/2009/04/dvd-copying-cas

  • Hollywood studios told a federal judge consumers have no right to make copies of their DVDs. ... The MPAA said there was no fair use defense to copying personal CDs. “One is not supposed to copy the DVD and that is exactly what RealDVD does,” MPAA attorney Bart Williams told U.S. District Judge Marilyn Hall Patel.
  • The MPAA also said RealDVD was based on the work of Ukrainian hackers.
  • RealNetworks told Patel that the Hollywood studios were acting like a cartel and threatening to disrupt technologies that compete with the studios’ latest marketing tool — DigitalCopy. Under DigitalCopy, the studios sell DVDs along with a digital download of a movie. 
  • Leo Cunningham, RealNetworks’ attorney, said “our product will enhance” the value of DVDs, because it allows their owners to make backup copies that he said were protected under the “fair use doctrine” of copyright law. Cunningham, however, said RealDVD was “designed to prevent piracy.” Copies of DVDs can only be played on up to five hard drives that have RealDVD software downloaded to it. And the copies, he said, cannot be copied.

Real DVD Copying Case Gets Off To An Inauspicious Start
    Michael Masnick, Techdirt, April 24, 2009
    www.techdirt.com/articles/20090424/1620414644.shtml

  • .. there are tons of free DVD rippers out there that put no restrictions whatsoever. In Real's case, it puts significant limitations on the backup copies -- and courts have shown in the past that making a backup of a digital good is accepted as fair use.
  • The MPAA is also claiming that there is no fair use defense to backing up a DVD, which is difficult to believe, given that fair use covers backups of music and software. ... Thanks to the anti-circumvention clause of the DMCA, an action that is clearly fair use (backing up a movie) becomes illegal not because of the backup, but because of the circumvention of the DRM. 
  • Judge Patel, who declared Napster illegal as well, despite a strong safe harbor defense, told RealNetworks: "They have the copyright. That's the issue here right? They have the copyright. They have the right to exclude." ... Copyright does give them a right to exclude, but a limited right, which is supposed to be weighed against the rights of consumers, including their rights to fair use for things like (drum roll....) making a backup.

Scientist Says DVD Copying Software Circumvents Encryption
    David Kravets, Wired, April 28, 2009
    www.wired.com/threatlevel/2009/04/scientist-says-dvd-copying-software-circumvents-encryption

  • Witness Robert Schumann, who owns several encryption patents and testified on behalf of Hollywood’s successful lawsuit against DVD-encryption-busting company 321 Studios, said the RealDVD product circumvents at least two areas of the Content Scramble System designed to prevent DVD copying: disabling drivelocking and bypassing Bus encryption. Other DVD encryption features known as RipGuard and ARccOS were also bypassed.
  • On Friday, Patel closed the courtroom during testimony surrounding the actual CSS code. She said it was a protected “trade secret” although it has been hacked and cracked so much that the decryption code has been adorned on shirts and ties.

Glaser: RealDVD Not For Pirates
    David Kravets, Wired, April 28, 2009
    www.wired.com/threatlevel/2009/04/glaser-realdvd-not-for-pirates

  • RealNetworks CEO Rob Glaser defended his DVD copying software product before a federal court on Tuesday, testifying that DRM controls make it virtually useless for pirates. “You cannot make a copy of a copy. Customers that don’t like those limitations aren’t our target market and we don’t have the best product for them.”
  • He said RealDVD couldn’t block patrons from copying rented or borrowed DVDs, a main concern from the Hollywood studios. “There’s no way to know the difference between a rental disc and a personal disc.”
  • During a brief presentation of the software, Glaser demonstrated how a warning appears when somebody clicks to record a disc. The warning says it’s only OK if the consumer owns the disc.
  • He said the software, and a proposed DVD-player that stores hundreds of copies of DVDs, was designed for business travelers, consumers with large movie libraries and for families with small children. “Discs can easily get scratched or get peanut butter all over them or get misplaced.” 
  • Glaser claimed his product does not allow for the circumvention of a DVD’s Content Scramble System. “We add a second level of encryption on top.”
  • Earlier in the day, a computer scientist testified on behalf of the MPAA and said RealDVD circumvents the CSS encryption system.

RealNetworks device to record DVDs / Judge still needs to declare Facet legal
    Marc Graser, Jennifer Netherby, Variety, May 7, 2009
     www.variety.com/article/VR1118003378.html?categoryid=1009&cs=1

  • RealNetworks is preparing to launch a new DVD player that it calls a game-changer. It plans to introduce Facet, which enables users to record DVDs onto a built-in hard drive, by the holiday season. Company compares Facet to Kaleidescape, a high-end home entertainment system that saves a movie from a DVD onto a home server as a backup copy, just with a lower pricetag.
  • Ruling couldn't come soon enough. RealNetworks reported a $12 million loss in the first quarter, partly blaming $6 million it spent on legal fees to fight the RealDVD litigation.

Is RealDVD dispute really about a DVD jukebox?
    Greg Sandoval, CNET, April 29, 2009
    http://news.cnet.com/8301-1023_3-10229768-93.html

  • "Facet" is the codename for Real's prototype DVD player. The box, which Real CEO Rob Glaser demonstrated in court on Tuesday, comes equipped with a hard drive and software that enables owners to duplicate DVDs--in a similar fashion as RealDVD--and then store hundreds of movies on the device.
  • Glaser credited a DVD-copying device from Kaleidescape, which cost about $10,000, as Real's main inspiration. Glaser fell in love with his Kaleidescape while his wife was pregnant and bedridden. During this period, the couple watched a lot of movies and he said the box "liberated us from DVDs." "Kaleidescapes are like Porsches," Glaser said. "They're very expensive. We thought we could develop Chevys, a $300 product that could replace a person's DVD player."

MPAA Pounds RealNetworks’ Glaser on Witness Stand — Update
    David Kravets, Wired, April 29, 2009
    www.wired.com/threatlevel/2009/04/mpaa-pounds-realnetworks-glaser-on-witness-stand

  • On Tuesday, Glaser testified that it would be “relatively easy” for the Hollywood studios to encrypt rental videos differently than those sold to consumers.
  • Glaser testified that the RealDVD software was not the choice of pirates because it does not allow a copy of a movie to be made from a copy. And playback of the copy can only be played on five machines running the RealDVD software.
  • Patel closed the courtroom for a second time when Matthew Bishop, a University of California at Davis computer scientist, began testifying about the general specifications surrounding the CSS code. Patel, like she did on Friday, declared the specifications a trade secret and ordered spectators and the press removed from her courtroom. She said that, although the CSS code has been hacked and published widely, the general specifications surrounding the code’s inner workings and architectural flow have not. Bishop was called to support RealNetworks’ position that RealDVD does not circumvent the CSS encryption.

RealNetworks battles studios / Company claims majors violated antitrust law
    Jennifer Netherby, Variety, May 14, 2009
    www.variety.com/article/VR1118003657.html?categoryid=1009&cs=1

  • Real filed its amended complaint. It claims that the six major studios have violated the Sherman Antitrust Act, the California Cartwright Act and the California Unfair Competition Law by collectively licensing their DVD encryption technology through the DVD Copy Control Assn., of which the majors are all members. The complaint maintains that the DVD Copy Control Assn. will grant a Content Scramble System encryption license to a company only if all of its members approve. 

MPAA vs. RealNetworks: Five reasons why Hollywood will win
    Greg Sandoval, CNET, May 18, 2009
    http://news.cnet.com/8301-1023_3-10242596-93.html

  • Facet, the device Real hopes is representative of the next-generation DVD player. Facet, which relies on the RealDVD software to make copies, can store up to 70 movies and would retail for about $300. In court, Real CEO Rob Glaser demonstrated the device and it hops between movies and television shows as easy as an iPod flips between songs. Facet provides the kind of functionality that consumers want and could help rejuvenate slumping DVD sales, some observers say.
  • Real denied ARccOS or RipGuard are copy-protection measures. Douglas Dixon, one of Real's technology experts, testified both technologies are ineffective. This was one of the reasons the studios rarely used them, he said. To illustrate his point, Dixon said Sony Pictures used ARccOS or RipGuard on just four film titles last year. Real's argument was this: if a copy protection isn't effective then it isn't really protecting anything and is not covered by the DMCA. 
  • The irony is that Arccos and RipGuard were effective enough to foil Real's months-long attempt to crack them--starting in 2007--court documents showed. The copy protections even stumped Rocket Division, a company hired by Real to decrypt ArccOS and RipGuard, and a group the MPAA calls a "Ukranian hackers."

RealDVD case: Real introduces surprise witness
    Greg Sandoval, CNET, May 20, 2009
    http://news.cnet.com/8301-1023_3-10246213-93.html

  • Real filed a written declaration from Peter Biddle, an Intel executive who had dealings with the movie industry over a decade ago while employed for Microsoft. He disputes Hollywood's claims that the industry included in a license for its DVD-encryption technology a ban on copying DVDs while in a computer hard drive.
  • Marsha King, a retired vice president at Warner Bros., testified during the hearing that the entire reason for the CSS license was to prevent consumers from creating copies. "The studios were adamant that no copy be placed on the (computer) hard drive. The only thing we authorized was playback of the movies...no copies were to be made...it was a mantra."

RealDVD Case: Home Copying Hangs in the Balance
    David Kravets, Wired, May 21, 2009
    www.wired.com/threatlevel/2009/05/dvd-copying-hanging-in-the-balance

  • Six days of hearings spanning a month ended Thursday
  • “The DMCA makes it unlawful to traffic in devices that circumvent access and copy control measures,” Bart Williams, the studios’ attorney, told Patel. He said consumers have no right whatsoever to make copies of their DVDs. “When you buy the DVD you don’t buy the movie. You buy a copy of the movie.”
  • RealNetworks claims a loophole in the contract with the DVD Copy Control Association. A California judge upheld the legality last year of Kaleidescape, under a claim that the DVD Copy Control Association license did not require, as the studios alleged, that a DVD be in the machine to play back the movie.

What to expect from the RealDVD decision
    Greg Sandoval, CNET, May 22, 2009
    http://news.cnet.com/8301-1023_3-10248134-93.html

  • The future of RealDVD, and possibly a consumer's right to create backup copies of their DVDs, now rests in the hands of Marilyn Hall Patel. On Thursday, the U.S. district judge wrapped up a preliminary injunction hearing in the RealDVD case.

RealDVD case centers on copy questions
    CNET News staff - round-up of coverage, April 29, 2009
    http://news.cnet.com/8301-1023_3-10229720-93.html

[ Top ]

Aug. 2009 - RealDVD Ruling on Preliminary Injunction

Aug. 11, 2009 - U.S. District Judge Marilyn Patel grants motion for Preliminary Injunction. Ruled that it was unlawful to traffic in goods to copy DVDs, declared RealNetworks’ DVD copying software was illegal, and barred it from being distributed. Ruled that RealDVD was in violation of the CSS license, and that the RealNetworks’ software violated the Digital Millennium Copyright Act.

   

Ruling / Statements

Aug. 11, 2009 - Court Ruling - RealNetworks v. DVDCCA & Studios
    www.wired.com/images_blogs/threatlevel/2009/08/patel.pdf

  • "RealNetworks is hereby preliminarily enjoined from engaging in, or facilitating others in, manufacturing, importing, offering to the public, providing or otherwise trafficking in the product known as RealDVD, whether termed Vegas, Facet or another internal name, or any substantially similar software application or other product, service, device, component or part thereof that circumvents or otherwise fails to protect against access to, duplication of, and/or redistribution of CSS-protected and copyrighted DVD content."
  • "RealDVD makes a permanent copy of copyrighted DVD content and by doing so breaches its CSS License Agreement with DVD CCA and circumvents a technological measure that effectively controls access to or copying of the Studios’ copyrighted content on DVDs."
  • "Had Real’s products been manufactured differently, i.e., if what happened in Vegas really did stay in Vegas, this might have been a different case. But, it is what it is. Once the distributive nature of the copying process takes hold, like the spread of gossip after a weekend in Vegas, what’s done cannot be undone."

Aug. 11, 2009 - MPAA Press Release - MPAA Statement on RealDVD
    www.mpaa.org/press_releases/mpaa%20statement%20on%20realdvd%208.11.2009.pdf

  • “This is a victory for the creators and producers of motion pictures and television shows and for the rule of law in our digital economy. Judge Patel’s ruling affirms what we have known all along: RealNetworks took a license to build a DVD-player and instead made an illegal DVD-copier. Throughout the development of RealDVD, RealNetworks demonstrated that it was willing to break the law at the expense of those who create entertainment content." - MPAA Chairman and CEO Dan Glickman

Articles

RealNetworks Loses to Studios on DVD-Copying Software (Update3)
    Joel Rosenblatt and Karen Gullo, Aug. 11, 2009, Bloomberg
    www.bloomberg.com/apps/news?pid=20601087&sid=aJLEM4Zz7fgo&refer=home

  • Studios’ lawyers argued that RealDVD violates federal laws prohibiting circumvention of encryption technology that prevents copyrighted works from being duplicated. 
  • Studios claimed the product would encourage people to copy movies they rent and spur other forms of illegal copying and sharing of films, leading to billions of dollars in lost sales. They sell DVDs that can be copied once and stored on a computer, though these cost more than a regular DVD.
  • Reginald Steer, a lawyer for the DVD Copy Control Association representing the computer and electronics industries, said it is committed to “high quality entertainment,” which depends “upon a set of guidelines upon which all participants in these industries can rely.” The association joined the studios in opposing RealNetworks.
  • RealNetworks denies the product violates anti-copying laws. the company said RealDVD provides added security against illegal copying by ensuring that the digitally duplicated DVD can be played only on the computer that copied it.

Judge Rules DVD-Copying Software Is Illegal
    David Kravets, Wired, Aug. 11, 2009
    www.wired.com/threatlevel/2009/08/judge-copying-dvds-is-illegal

  • Judge Patel ruled late Tuesday that it was unlawful to traffic in goods to copy DVDs, and declared RealNetworks’ DVD copying software was illegal. She barred it from being distributed.
  • Patel said the RealDVD software violates the Digital Millennium Copyright Act that prohibits the circumvention of encryption technology. DVDs are encrypted with what is known as the Content Scramble System, and DVD players must secure a license to play discs. She ruled that RealDVD circumvents technology designed to prevent copying.
  • The decision left open the door that copying DVD’s for personal use “may well be” lawful under the fair use doctrine of the Copyright Act, although trafficking in such goods was illegal.
  • “Because RealDVD makes a permanent copy of copyrighted DVD content, there is no exemption from DMCA liability, statutory or otherwise, that applies here. Whatever application the fair use doctrine may have for individual consumers making backup copies of their own DVDs, it does not portend to save Real from liability under the DMCA in this action.”
  • However, she stopped short of sanctioning personal use copies, and gave a conflicting message on whether it was legal. “So while it may well be fair use for an individual consumer to store a backup copy of a personally owned DVD on that individual’s computer, a federal law has nonetheless made it illegal to manufacture or traffic in a device or tool that permits a consumer to make such copies,” Patel said. She added, “fair use can never be an affirmative defense to the act of gaining unauthorized access.”
  • Patel said her decision was supported by the legislative history of the DMCA, which was aimed at outlawing so-called ‘black boxes’ “that are expressly intended to facilitate circumvention of technological protection measures for purposes of gaining access to a work.”

RealNetworks loses critical ruling in RealDVD case
    Greg Sandoval, CNET, Aug. 11, 2009
    http://news.cnet.com/8301-1023_3-10307921-93.html?part=rss&subj=news&tag=2547-1_3-0-20

Judge rules against Real / DVD software determined to circumvent copyright
    Jennifer Netherby, Variety, Aug. 11, 2009
    www.variety.com/article/VR1118007186.html?categoryid=1009&cs=1

Another Court Deals Major Blow to DVD Copying
    David Kravets, Wired, Aug. 12, 2009
    www.wired.com/threatlevel/2009/08/another-court-deals-major-blow-to-dvd-copying

  • Judge Patel said RealNetworks could not market RealDVD because it was in violation of the CSS license, the same one that Kaleidescape acquired.
  • Patel took an additional step, ruling that the RealNetworks’ software violated the Digital Millennium Copyright Act of 1998. That federal law prohibits the trafficking of devices that circumvent encryption technology designed to prevent duplication — in this instance the DVD.

As Expected, Judge Still Bans Real From Selling RealDVD
    Michael Masnick, Techdirt, Aug. 12, 2009
    techdirt.com/articles/20090812/0138215853.shtml

  • Yet, here was a product that was doing everything it possibly could to play within the rules to make DVDs more valuable by letting people make use of their legal right to back up a DVD they had purchased, and Hollywood wants to crack down on it?

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Winter 2009 - Appeal

RealNetworks set to file appeal in RealDVD case
    Greg Sandoval, CNET, Oct. 7, 2009
    http://news.cnet.com/8301-31001_3-10369812-261.html

RealNetworks appeals injunction on RealDVD sales
    Greg Sandoval, CNET, Nov. 10, 2009, by Greg Sandoval
    http://news.cnet.com/8301-31001_3-10394587-261.html

  • Real claimed that Patel applied an incorrect legal standard in granting the injunction and was wrong to presume RealDVD would cause the film industry irreparable harm. Patel failed to consider the public interest or balance the equities.

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Kaleidescape Case - 2007 - 2009

    Sunnyvale, CA
    www.kaleidescape.com

  • $10,000 DVD copying system
  • store and replicate 1,360 DVDs

Legal Documents

Kaleidescape Trial - 8/07

  • Trial: Santa Clara County Superior Court, Superior Court No. CV031829, Judge Leslie C. Nichols
  • 8/07 - Judge ruled that the CSS license did not have require that the DVD must be in the machine for the movie to play, which allowed Kaleidescape to remain on the market.

Hollywood Control of DVD-Copying at Crossroads
    David Kravets, Wired, David Kravets, Sept. 16, 2008
    www.wired.com/threatlevel/2008/09/hollywoods-grip/

  • The Digital Millennium Copyright Act says descrambling or circumventing encryption is a violation of up to $2,500 per DVD. But RealDVD and Kaleidescape allow users to make a persistent copy still in its original encrypted form stored in the comfort of one’s home. They and other similar services say their wares prevent the movies from being uploaded to torrent trackers.
  • But the Copy Control Association maintains that part of the CSS license granted to Kaleidescape, for example, requires that the DVD must be in the machine for the movie to play — all for the obvious reason of disallowing the copying of DVDs and to prevent the so-called "rent, rip and return" concept.
  • In court documents, the DVDCCA said the lower court "reached the absurd result of reading out of the license agreement provisions that are essential to the agreement’s central purpose of preventing the unauthorized copying of copyrighted DVD content."
  • Kaleidescape’s attorney, Keith Slenkovich, maintains in court documents that the contract does not include so-called "phantom provisions" claiming a duty by licensees "to prevent the creation of persistent digital copies of DVD content" and "to implement architectures in which the user must have the physical DVD disc in the drive during authentication and playback."

Kaleidescape Appeal - 8/09

  • DVD Copy Control Association appealed to the 6th District Court of Appeal in San Jose, California
  • Appeals case is DVD Copy Control Association v. Kaleidescape, H031631, California Court of Appeal for the Sixth District (San Jose) / 
  • 8/12/09 - Appeals court ruled that Kaleidescape agreed to build its system “according to specifications that the DVD Copy Control Association” would later provide, and it sent the case back to a lower court to determine whether Kaleidescape violated the contract.

Another Court Deals Major Blow to DVD Copying
    David Kravets, Wired, Aug. 12, 2009
    www.wired.com/threatlevel/2009/08/another-court-deals-major-blow-to-dvd-copying

  • Wednesday’s state-appeals-court decision did not immediately block Kaleidescape from marketing its wares. Instead, it ordered a lower court to review the entire CSS contract to determine whether Kaleidescape’s DVD-copying machines are in breach of contract.
  • A lower state court had ruled that, because some of the terms of the contract were forwarded to Kaleidescape after the deal was signed years ago, the company was not obliged to follow them — including specifications that the DVD be in the machine during playback. The state appeals court noted that Kaleidescape knew full well that other terms of the contract were forthcoming. 
  • “We conclude that the mutual intent of the parties at the time the license agreement was signed was that the DVDCCA would grant Kaleidescape permission to use CSS in exchange for the payment of an administrative fee and Kaleidescape’s promise to build its system according to specifications that DVDCCA would later provide,” the appeals court ruled. “This promise is express and complete on the face of the license agreement.”
  • The Kaleidescape case dealt almost exclusively with California contract law. A ruling in favor of Kaleidescape likely would have presented a showdown between prevailing interests — California contract law and the DMCA.

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321 Studios Case - 2004

  • 321 Studios developed DVD Copy Plus and DVD-X COPY products which allow users to make backup copies of their home DVDs
  • 2/04 - California federal court sided with the motion picture studios in ruling that the software is illegal under the DMCA

Court Says Tool For Backing Up DVDs Is Illegal
    Michael Masnick, Techdirt, Feb. 20th 2004
    www.techdirt.com/articles/20040220/1557255.shtml

While the court admitted that there are legitimate uses of the software, they say that doesn't matter since the software violates the DMCA anti-circumvention provision.

Court Endorses Ban on DVD Copy Technology
    Electronic Frontier Foundation (EFF), Feb. 20, 2004
    w2.eff.org/IP/DMCA/MGM_v_321Studios/20040220_eff_pr.php

Consumers suffered a setback to their digital rights today when a California federal court sided with the major motion picture studios in ruling that a company creating tools people can use to make backup copies of their DVDs is liable under copyright law. Citing the Digital Millennium Copyright Act (DMCA), the court ordered 321 Studios, creator of DVD backup tools, to stop selling its DVD Copy Plus and DVD-X COPY products within seven days.

321 Studios' software has been tremendously popular, especially with parents who have learned through experience with their children that DVDs are much more fragile than VHS tapes. The court acknowledged that consumers are using the 321 Studios software to make backup copies of DVDs, to assist in viewing works in the public domain, and to make fair uses. In its ruling, the court did not recognize the damage to these legal uses, stating: "...the downstream uses of the software by the customers of 321, whether legal or illegal, are not relevant to determining whether 321 itself is violating the statute."

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Digital Millennium Copyright Act (DMCA)

The Digital Millennium Copyright Act of 1998
    U.S. Copyright Office Summary, December 1998, 18 pp.
    www.wired.com/images_blogs/threatlevel/files/dmcapdf.pdf

Digital Millennium Copyright Act, 17 U.S.C. sections 1201 et seq.

10 Years Later, Misunderstood DMCA is the Law That Saved the Web
    David Kravets, Wired, Oct. 27, 2008
    www.wired.com/threatlevel/2008/10/ten-years-later

Wikipedia - DMCA
    http://en.wikipedia.org/wiki/Digital_Millennium_Copyright_Act

For more on copy protection technologies, see my article Content Protection Technology for Consumer Electronics

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