In April, a California court ruled that Kaleidescape did not violate its contract with the DVD Copy Control Association (DVD CCA) by distributing a device that rips and plays DVDs. But now the DRM licensing authority, which is mostly controlled by movie studios, is planning to change the contract and more clearly forbid DVD ripping.
This is a classic demonstration of what's wrong with DRM under the DMCA: it puts a licensing cartel in charge of innovation, and lets copyright holders block disruptive technologies at a whim. Only those tools that DVD CCA blesses can come to market. That's why there are still no mass market tools for backing up your DVDs or copying movies to portable devices, for instance.
DVD CCA's move has nothing to do with stopping "Internet piracy," and it won't do anything to keep software ripping tools like Handbrake out of users' reach. Instead, it has everything to do with crushing Kaleidescape, its disruptive technology, and any other company who could have tried to follow in its footsteps.
Make no mistake: the VCR, TiVo, iPod, and myriad other technologies could have faced Kaleidescape's fate if the entertainment industry had been able to infect TV and music with DRM sooner. This is also the fate that awaits all future television technologies if DRM is baked in thanks to the broadcast flag and CableCARD.