Hollywood Tries To Block RealDVD; Real Networks Strikes Back

Posted by: Stephen Wildstrom on September 30, 2008

That didn’t take long. Today, Real Networks made RealDVD, a program that lets non-techie folks copy DVD movies and television shows to computer hard drives. available for download.

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As I guessed in my column on RealDVD, the movie industry lost no time filing a lawsuit to block its sale. And Real immediately stuck back with a suit of its own, asking a court to declare that RealDVD is legal.

The pair of suits raise important questions about a key section of the Digital Millennium Copyright Act. The crux is a single sentence of Section 1201: “No person shall circumvent a technological measure that effectively controls access to a work protected under this title.”

Real claims RealDVD is fundamentally different from other products that have been ordered off the market by courts or that are sold semi-surreptitiously from sources outside the jurisdiction of U.S. courts. The key differences: RealDVD actually makes a copy of the DVD that preserves, rather than decrypts, the Content Scramble System (CSS) used to protect disks. And Real obtained a license from the DVD Copy Control Assn. (DVD-CCA), which manages CSS.

Nonsense, say a group of studios, led by GE's NBC Universal*. The industry suit (link courtesy of the Los Angeles Times), backed by the Motion Picture Assn. of America, says "there is noting legal or legitimate about[RealdDVD]." The suit also charges that RealDVD violates the DVD-CCA license, which it says only allows Real to build a DVD player, not a recorder. The breach of contract clam is a bit odd, since the studios are not parties to the contract they accuse Real of violating. But they claim "third-party beneficiary rights" as the owners of ocntent released under CSS.

The studios want the court to issue a temporary restraining order followed by a permannet injunction to black the sale of RealDVD, plus unspecified damages. Real's action seeks declaratory judgment--a statement by the judge that the DVD-CCA license permits the manufacture and sale of RealDVD and that RealDVD does not violate the DMCA.

It's always dangerous to predict the outcome of a legal action, especially for a non-lawyer. But I can venture a couple of guesses. First, the Real suit, filed in U.S. District Court for the Northern District of California (San Francisco) and the industry suit, filed in the Central District (Los Angeles) are going to be consolidated in one place or the other. The other is the both sides will probably lose in the first round. Judges hate declaratory judgments and rarely grant them. For the studios to win a temporary restraining order, they would have to prove in a hearing (at which Real would not participate) not only that they are likely to win the case on its merits but that they would suffer "irreparable harm" if sales continue. TROs are not issued often in cases where monetary damages could compensate the winner.

In the end, nothing is likely to happen until both sides have had a chance to argue their cases fully. I hope that happens, because the issues raised by these suits is important and deserves resolution.

*--Correction: Due to brain freeze, the original said "Viacom's Universal," which is nonsense. Viacom's Paramount is a plaintiff, but GE's Universal City Studios is the lead plaintiff.

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Bloomberg Businessweek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, and Douglas MacMillan, dig behind the headlines to analyze what’s really happening throughout the world of technology. Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.

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