Kaleidescape, ‘Agents’ Enjoined from Selling, Supporting Movie Servers

In DVD CCA vs. Kaleidescape, judge issues injunction that prohibits the sale and support of existing DVD movie servers. Kaleidescape has appealed.

By Julie Jacobson
March 12, 2012
UPDATE: All parties including dealers are enjoined from selling Kaleidescape DVD servers; only Kaleidescape is enjoined from supporting the servers, and only support related to CSS, according to Kaleidescape. Read updated article: Kaleidescape CEO ‘Shocked’ at Extreme Injunction Against DVD Movie Servers

The DVD Copy Control Association (DVD CCA) has prevailed in a final decision against Kaleidescape, a manufacturer of high-end movie servers.

Judge Willliam J. Monahan has affirmed the temporary decision he issued earlier this year in the Superior Court of California, Santa Clara County. To that, he added a permanent injunction against the sale and support of Kaleidescape's current DVD servers.

The far-reaching injunction touches not just Kaleidescape, but its agents, franchisees and "those acting in concert with them or at their direction," all of which are “permanently restrained and enjoined from directly or indirectly making, having made, selling, offering to sell, marketing, importing or otherwise transferring any DVD Playback Product” that does not have a physical disk present during playback, the court ordered.

As part of the injunction, Kaleidescape can no longer offer technical support for products that are already in the field, meaning existing servers can receive no updates or repairs (for clarification, read article update).

Related: Walmart, Vudu Ripping DVDs to the Cloud

Kaleidescape has filed an appeal and the company “believes that under California law the injunction order should not come into effect unless the California Court of Appeal affirms Judge Monahan's decision,” according to a statement issued today.

The company is confident that the injunction will be overturned in an appeals process that could take up to two years.

---------------
UPDATE: Exclusive interview with Kaleidescape CEO Michael Malcolm
Kaleidescape CEO ‘Shocked’ at Extreme Injunction Against DVD Movie Servers
DVD CCA surprises Kaleidescape with severe injunction order, CEO Michael Malcolm tells CE Pro. He believes stay will be granted until appeal is exhausted
---------------

The DVD CCA licenses the Content Scramble System (CSS) copy-protection scheme required of all (legitimate) DVD players. The organization sued Kaleidescape in 2004, arguing that its servers violate a licensing agreement that expressly prohibits the copying (ripping, archiving) of DVDs.

Kaleidescape has maintained all along that its servers abide by the licensing agreement and, furthermore, that the DVD CCA is so secretive and its contracts so confusing that a licensee cannot precisely interpret them.

In the Kaleidescape statement issued today, CEO Michael Malcolm explains:

For the past 8 years, we've been baffled about why this lawsuit ever happened, since our products don't encourage piracy, but do increase sales of movies. Maybe it's because the large CE companies in Japan and the big computer companies in the USA, on the board of the DVD CCA, are afraid that Kaleidescape is building a better way to enjoy DVDs and Blu-ray Discs than they are. Imagine a world where Apple wasn't allowed to build the iPod because Sony wanted a 'level playing field' for the Walkman.

Stay tuned for an exclusive interview with Malcolm later today, along with a discussion on the implications for Kaleidescape dealers and their clients. (Kaleidescape CEO ‘Shocked’ at Extreme Injunction Against DVD Movie Servers

Next page: order of permanent injunction


Transcript: Permanent Injunction Order, DVD CCA vs. Kaleidescape

SUPERIOR COURT OF THE STATE OF CALIFORNIA
IN AND FOR THE COUNTY OF SANTA CLARA
(UNLIMITED JURISDICTION)

DVD COPY CONTROL ASSOCIATION INC., a Delaware corporation, Plaintiff

v.

KALEIDESCAPE, INC., a Delaware corporation, Defendant

PERMANENT INJUNCTION ORDER

Case no. 1-04-CV-031829

Complaint filed: December 7, 2004
Trial date: November 14, 2011
Dept.: 16
Judge: Hon. William J. Monahan

The above-captioned Action between Plaintiff DVD Copy Control Association, Inc. and Defendant Kaleidescape, Inc. (“Kaleidescape”) (collectively “the Parties”) having been tried to the court, and having determined that Kaleidescape is in breach of the CSS License Agreement, the Court hereby enters the following Permanent Injunction pursuant to its Statement of Decision dated April 8, 2012, and Judgment entered April 8, 2012:

IT IS ORDERED THAT:
1. Capitalized terms in this Order shall be defined in accordance with the CSS Procedural Specifications (PRX 9) unless otherwise defined herein.
a. The term “DVD Playback Product” means any device or combination of components, or software that is capable of decrypting a Disc Key, decrypting a Title Key or descrambling a Title using CSS, including without limitation any such device or combination of components or software that also performs Authentication.
b. The term “Authentication” means any application of CSS that utilizes the CSS Authentication Algorithm and Authentication Key.
c. The term “persistent copy” (of a Disc Key or Title Key(s)) means a copy that remains when playback of the Title(s) associated with such Disc Key or Title Key(s) is not occurring.
d. The term “persistent copy” (of a Title) means a copy of a Title that remains when playback of the Title is not occurring.
e. The term “playable copy” means a copy of a Title from a DVD Disc made for purposes of allowing playback of the Title without obtaining the title from the DVD Disc.

2. Pursuant to California Code of Civil Procedure Section 526, and California Civil Code Section 3384, to prevent casual users from making unauthorized copies of copyrighted materials recorded on CSS-protected DVD Discs, Kaleidescape, its subsidiaries and affiliated companies, including but not limited to Kaleidescape Canada, Inc., and their agents, servants, directors, officers, principals, employees, representatives, assigns, franchisees, and those acting in concert with them or at their direction, are hereby permanently restrained and enjoined from directly or indirectly making, having made, selling, offering to sell, marketing, importing or otherwise transferring any DVD Playback Product unless such DVD Playback Product:
a. obtains the Disc Key and Title Key(s) from a DVD Disc each time one or more Titles is to be played back;
b. ensures that the DVD Disc is physically present in the DVD Playback Product when playback of one or more Titles from such DVD Disc is occurring;
c. does not make a persistent copy of any encrypted or unencrypted Disc Key or Title Key(s); and
d. does not make any persistent playable copy of any Title.

Any DVD Playback Product that does not satisfy subsections 2(a) – (d) is referred to herein as “Prohibited Technology.”

3. IT IS FURTHER ORDERED that Kaleidescape is enjoined from:
a. directly or indirectly transferring to third parties any intellectual property or know-how incorporating Prohibited Technology;
b. facilitating third parties in developing, designing, manufacturing, distributing, importing, selling, or offering to sell any Prohibited Technology;
c. using or implementing CSS to develop, design, manufacture, distribute, import, sell, or offer to sell products that make persistent playable copies of CSS-protected Titles; and
d. directly or indirectly providing any support services that include Prohibited Technology to third parties, including but not limited to the provision of the updates and upgrades to software and hardware.

4. This Court retains continuing jurisdiction over the Parties and the Actions for purposes of enforcing this Permanent Injunction.

IT IS SO ORDERED.

Dated: April 8, 2012

[signed] Hon. William J. Monahan
Judge of the Superior Court


Return to full story:
http://www.cepro.com/article/kaleidescape_dealers_enjoined_from_selling_supporting_dvd_movie_servers/