Judge Rules Against RealDVD
UPDATE: Just one day after Judge Patel's ruling against RealDVD, a California appeals court has ruled against Kaleidescape, reversing the lower court and sending that case back for a fresh determination of whether Kaleidescape violated the terms of the DVD-CCA license. More bad news for innovators who want to bring legitimate consumers DVD jukebox products.
Judge Patel (who also handled Napster and Bernstein cases) has granted a preliminary injunction in favor of the major motion picture studios and DVD-CCA in their legal battle with Real Networks over its RealDVD products.
The case involves the legality of two products intended to allow DVD owners to make digital copies onto hard drives for later playback. One product, which Real briefly offered until being hit with a temporary restraining order in November 2008, was software intended for use on a personal computer. The second, which never made it out of prototype, was a "video jukebox" that combined DVD player and a hard drive -- what Real hoped would be a sub-$300 competitor for the fantastic (and fantastically expensive) Kaleidescape media server.
Of course, courts have ruled against DVD rippers before (see, e.g., DeCSS and DVD X Copy). But unlike those situations, both Kaleidescape and Real first obtained licenses from DVD-CCA, the entity that administers the keys that decrypt DVDs, believing that those licenses could be read to permit DVD copying. Sued by DVD-CCA in state court for breach of contract, Kaleidescape won (the ruling is pending on appeal). Sued in federal court for both breach of contract and violating the DMCA's ban on trafficking in circumvention tools, Real lost (Judge Patel barely mentions the Kaleidescape case, dismissing it as different facts and different parties). Judge Patel found that the DVD-CCA license clearly meant to forbid the making of permanent digital copies. And since Real was operating beyond the scope of its license, the court concluded that Real was effectively in the same position as the makers of unlicensed DVD rippers -- distributing a tool that was designed to circumvent the encryption on DVDs without the authority of the movie studios.
The heart of Judge Patel's ruling is her interpretation of the DVD-CCA license agreement, and since large portions of those agreements remain confidential, it is difficult to evaluate the merits of her reasoning. However, she does make the troubling suggestions that fair use is never a defense when you circumvent an "access control" like encryption on DVDs. She also suggests that irreparable harm can be presumed whenever copyright infringement or a DMCA violation is likely, something that runs afoul of the Supreme Court's 2006 ruling in eBay v. MercExchange, which rejected these automatic presumptions in intellectual property cases. The ruling also represents the first time that a court has recognized two newer DVD anti-copy systems, RipGuard and ARccOS, as protected by the DMCA.
Real will likely appeal this ruling. Unfortunately, given the pace of the federal appeals process, this means that the RealDVD products will likely stay off the market for at least a year. And whatever the outcome of that appeal, this ruling sends a chilling message to any technology innovator interested in delivering new products that interact with the DVDs you own. At the same time, Judge Patel's ruling is not likely to make any dent in the widespread availability of free, easy to use, unauthorized DVD rippers like Handbrake, Mac the Ripper, and DVD Shrink.
In other words, as we've said before, this case has nothing to do with "piracy," and everything to do with Hollywood using the DMCA to control the pace and nature of innovation for DVDs, to the detriment of those who legitimately buy their DVDs.