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Court to RealNetworks: MPAA is not a ‘Price-Fixing Cartel’
In May 2009, RealNetworks filed a claim against the Motion Pictures Association of America (MPAA), the organization that initially sued to keep RealDVD off the market.
Real argued that the MPAA, which represents Hollywood studios, illegally conspired with the studios to craft the Content Scramble System (CSS) licensing agreement – an agreement that prohibits the sale of products that facilitate fair-use copying of encrypted DVDs.
Also named in the antitrust suit was the DVD Copy Control Association (DVD CCA), which licenses the CSS code.
Under the aegis of the MPAA and DVD CCA, the studios are a “price-fixing cartel,” Real claimed.
Judge Marilyn Hall Patel on Friday struck down that argument, according to Wired:
“Real’s purported injury stems from its own decision to manufacture and traffic in a device that is almost certainly illegal under the DMCA [Digital Millennium Copyright Act],” Patel wrote.
In other words, Real’s injury was a result of its own wrongdoings – circumventing CSS technology -- not from illegal cartel activity among the Hollywood set.
For that reason, Patel did not need to decide whether the studios do in fact violate antitrust laws.
First Antitrust Claim Against Studios
RealNetworks is the first organization to attack the studios on antitrust claims.
We argued about five years ago – when the DVD CCA sued media server manufacturer Kaleidescape – that the organization was an “innovation stifling cartel” for other reasons: It used the CSS licensing scheme to protect an unknown group of decision-making board members against small innovators such as Kaleidescape:
So what do you think happens when one of the common members of the DVD CCA launches a new product category, say, video servers? The six competitors on the board, who don't offer video servers of their own, can nix the idea and put the innovator out of business.
"If you want to innovate in that market space, you have to get permission from your competitors," says Fred von Lohmann, a staff attorney for the Electronic Frontier Foundation, a nonprofit defender of digital rights. "They'll say, 'We'll give you that capability, but we'll do it on our own time, in our own way. The Kaleidescapes of the world aren't invited.' They [the DVD CCA] want to eliminate this entire category until their members are ready to enter the segment with the next generation of their cartel-approved solution." …
But a legal challenge, it seems, could only come from an antitrust complaint. Indeed, says von Lohmann, "From the beginning, there have been antitrust concerns because of the obvious cartel structure of the DVD CCA, but it's all cloaked in 'protecting copyright owners from piracy.' Some anti-competitive behavior has to be tolerated."
Antitrust suits are "incredibly expensive to mount," says von Lohmann. "I think the DVD CCA is taking the view that nobody out there has the money... The people that have the money are in the club!"
RealNetworks had the money, but lost round one of the antitrust battle.
In the meantime, RealNetworks is appealing Judge Patel’s ruling last year that prevents the company from selling RealDVD.
That decision is not expected for at least a year.
Learn more in the Digital Media track at EHX Spring. | http://www.ehxweb.com
Electronic House Expo Spring 2010: The New Opportunities Show, March 25-27, 2010, Orlando, Fla.
Smart Energy | Commercial | Home Health Tech | Recurring Revenue | Digital Content | Retrofit
DVD Ripping: The Whole Picture
 | Kaleidescape vs. DVD CCA: Judge Rules Against Movie Servers Tentative ruling in landmark DVD-copying case says Kaleidescape knew its movie servers might be in violation of DVD CCA licensing agreement that prohibits copying of DVDs. DVD Ripping: The Latest on the Legal Front This compilation of articles on the legality of DVD ripping, and related fair-use cases, will be updated continuously. Understanding the Kaleidescape, RealDVD Cases What have the courts really decided on DVD copying, and what are the implications for the future? We debunk the myths about the the two lawsuits and clarify the current legal state of DVD ripping. Is DVD 'Ripping' the Same as 'Archiving?' Is the term "ripping" generally understood as the "illegal" form of copying a disk? Likewise, is "archiving" known as the bit-for-bit "legal" way of doing it? Can You Be Sued for Helping Clients Rip DVDs? EFF attorney Fred von Lohmann explains some of the legal issues involved in selling and installing products that enable users to copy DVDs. Is Your DVD Server Legal? Manufacturers Say Yes! Developers of movie-ripping products insist their products are legal. Here's how the manufacturers justify their solutions. Copy Protection Group Sues Kaleidescape (2005) Kaleidescape has a license from the DVD CCA to employ CSS decoding in its media servers, which it does. Now, DVD CCA is suing Kaleidescape for breach of contract. Would Studios Rather We Buy DVD Ripping Products Offshore? As studios work to quash legitimate products like RealDVD, offshore providers of DVD ripping software -- like AnyDVD developer SlySoft -- are reaping the rewards. Industry Insider: DVD CCA Is an Innovation-Stifling Cartel (2005) The DVD Copyright Control Association (DVD CCA) is a bunch of bullies. The organization manages to coerce all manufacturers of DVD players to sign away their rights to innovation. | |
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Article Topics
News · Video · Digital Media · Media Servers · Digital Rights · Legal · Kaleidescape · Realdvd · Mpaa · Dvd Cca · Drm · Realnetworks · Fair Use · Judge Patel ·About the Author
8 Comments (displayed in order by date/time)
David, that’s not really what this particular case was about.
What you want is here:
http://www.cepro.com/article/understanding_the_kaleidescape_and_realdvd_cases/
Interestingly, the courts really haven’t ruled on whether or not it’s OK for individuals to copy encrypted DVDs—only that it is unacceptable for manufacturers to sell products that enable such copying. Jury is out on Kaleidescape but initial ruling against RealDVD doesn’t look good for any mfr that ships product with decryption software.
What’s interesting (in general) is that while it has been upheld that it’s the U.S. Government who grants / guarantees your right to make a back up copy of your content, the DVDCCA is not compelled to
provide a legal key to the legitimate owners of legally purchased content.
I wish they would move on with this, Hollywood is pushing Blu-ray & HDMI anyway, let us have our content of old how we want it, when we want it. This monkey business damages the innovation of products & the attitudes of consumers. I understand protecting your investment but when these programs brandish files, they usually digitally imprint the origin of the file. For those rare people who are bad, they keep us with good intentions from truly enjoying the spirit of innovation & entertainment. If they can’t do it, no one should be able to do it (Kaleidascape, Escient & a small list of offshoots).
It is just a matter of time before Slysoft cannot break new codes and then everyone will be at the MPAA and DVDCCA’s mercies.
Joel, the MPAA and DVDCCA are pretty clear. You legally purchased the disc and not the content on the disc. It is pretty muddied because the Government grants you fair use, but also enforces DMCA. I forsee 10 years or less it being more a mute issue as broadband, sat, and cable provide instant watching anytime anywhere.
@ David,
The first, most important item to note is that locks are meant to be unlocked.
Encryption will always be penetrable.
In regards to the MPAA / DVDCCA, I do not look to them for the definitions of my rights no more than I look to my Insurance company to have my rights and best interest at heart. Fortunately, we have a Government, who in this case guaranteed us the right to make a back up copy.
In terms of the DMCA, there is no language there in regards to rightful ownership and the withholding of the keys from individuals who have legally purchased the content.
Withholding the key and restricting you from exercising your government guaranteed rights should be one of the prime issues.
For downloads, I would agree that the instant gratification is that far off, and the sooner they get there the sooner they can dictate your fair use. This is why owning the physical content is so important.
It’s pretty simple from where I stand- it’s a 25 Billion $$ per year industry, where rights can be bought and sold, judges and lawmakers alike. IMNSHO 
@ joel says: Fortunately, we have a Government, who in this case guaranteed us the right to make a back up copy.
I don’t believe that’s the case.
Joel,
What? What case are you basing this claim on? I agree with Julie on this one. The Government does not give us the right to make a back up under Fair Use. Take a look again. There are instances allowed but not for a everyday consumer.
Further, if this were the case Judge Patel would have to have agreed with Real. Real broke the encryption and she found it illegal. End of story.
Side note: Anyone know what is going on Axonix/MediaMax? Their web site shows expansion, but there is no voicemail and rumor has it from dealers in Florida they are out of business. Another one bites the dust or may be someone will swoop in and buy them like vNet (Not likely, only real product is Blu-ray and you have to have Slysoft for it to work).
So from this can we assume Kaleidescape is next? From what Patel ruled on this anyone who circumvents will be breaking the law.
What about vendors like Axonix and others that do not ship with decrypting software but make us, the dealer or our customer install Slysoft AnyDVD? How can anyone sell a media server including Crestron’s new piece if it is illegal to circumvent the copy protection schemes?