MPAA Kills RealDVD for Good: The End of DVD Copying?

Real Networks (RNWK) caved to the studios yesterday.

Instead of appealing a decision that deemed its $30 RealDVD ripping software illegal, the company is paying the studios $4.5 million as reimbursement for legal fees.

Under the auspices of the Motion Picture Association of America (MPAA), the studios sued Real in September 2008, claiming violations under the Digital Millennium Copyright Act (DMCA). The company also was sued for a breach of contract with the DVD CCA (Copy Control Association), which licenses the Content Scramble System (CSS) decryption software.

An injunction was imposed – and never lifted -- on sales of RealDVD.

In August 2009, the MPAA prevailed in its case against Real, which promised to appeal the decision.

Yesterday, Real gave up.

In addition to coughing up $4.5 million, Real agreed to abandon its claims against the studios and shut off metadata to the 2,700 users who managed to buy the software before the injunction was ordered.

After yesterday’s decision, MPAA general counsel Daniel Mandil said that the court’s “rulings and this settlement affirm what we have said from the very start of this litigation: It is illegal to bypass the copyright protections built into DVDs.”

He added, “We will continue to vigorously pursue companies that attempt to bring these illegal circumvention products and devices to market.”

Death Knell for DVD Copying?

CE pros are probably asking: What does this mean for Kaleidescape?

Kaleidescape was sued in 2004, not for violations under the DMCA but for breach of contract with the DVD CCA.

The DVD CCA maintains that its licensing agreement prohibits the sale of products that enable users to copy DVDs – even if the copies are bit-for-bit, with CSS intact.

Kaleidescape servers – with their five-digit price tags -- perform such bit-for-bit copying, which is one reason the company has always maintained that it complies with the DVD CCA licensing agreement and the DMCA.

Kaleidescape prevailed against the DVD CCA over a secondary contract-related issue. That decision was overturned on appeal. Now the real case heads to trial.

Even if Kaleidescape wins that case, however, the company is still vulnerable to lawsuits under the DMCA. The Real verdict seems to set a precedent that it is illegal to make DVD-copying products; however, that is only a single court’s opinion.

Fred von Lohmann, senior staff attorney for the Electronic Frontier Foundation tells CE Pro:

The RealDVD ruling is not a binding precedent on anyone. Other judges can ignore it. However, it is likely to be persuasive to any judge evaluating a similar case. This is particularly true where there are relatively few precedents to draw on (which is true for the DMCA).

The Alternatives

Many manufacturers of DVD movie servers are playing it safe.

There’s a nifty “My Movies” tab for Windows Media Center, for example, but the customer must bring their own (probably illegal) DVD-ripping software to the party.

Companies like Crestron (ADMS), Imerge and Envive won’t let you copy DVDs directly to their hard drives. But as long as the consumer can find a way to get a ripped DVD onto the network, then it’s fair game.

Wink, wink, nudge, nudge.

Dealers typically tell their customers: Do a Google search.

So consumers are encouraged – by the MPAA and DVD CCA, essentially – to buy their DVD-ripping software offshore from companies that don’t care about preserving CSS. Perhaps that is one of von Lohmann's "Unintended Consequences" of the DMCA (below).

Interestingly, it’s not entirely clear about the ramifications for consumers who copy their DVDs. The Real decision only applies to “manufacturers or traffickers” of DVD copying devices, not to individuals that use the stuff.

EFF’s Required Reading

The same day (yesterday) that the RealDVD case was closed, the EFF’s von Lohmann issued the report, "Unintended Consequences: 12 Years Under the DMCA" (pdf).

This is the sixth update to the report, which “aims to catalog all the reported instances where the DMCA's ban on tampering with DRM have been abused to stymie fair use, free speech, and competition, rather than to attack ‘piracy.’”

Von Lohmann writes:

Although in many cases the DMCA abuser backs down or is beaten in court, the abuses and resulting chilling effect on legitimate activities continues. And even though the U.S. Copyright Office is considering proposed exemptions to the DMCA, that proceeding won't prevent more abuses in the future.

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