Understanding the Kaleidescape, RealDVD Cases

What are the RealDVD and Kaleidescape lawsuits really about? Who is suing them for their DVD ripping products? And what will the cases mean once they have finally been settled?

There has been much confusion about these lawsuits. Here, we try to clarify them. (Note: while EH Publishing strives for accuracy, this article should not be construed as legal advice; please consult your own attorneys.)

First, as we write in our ongoing article, "DVD Ripping: The Latest on the Legal Front," those companies that make products that copy DVDs to a hard drive are prone to lawsuits on two fronts:

• DVD Copy Control Association (DVD CCA)
  This organization licenses the Content Scramble System (CSS) for decrypting DVDs. To make legal DVD players that play copyright-protected DVDs, manufacturers must license CSS from the DVD CCA.
  
  The DVD CCA has claimed (in the cases of Kaleidescape and Real Networks) that it is a violation of its licensing agreement to make products that enable the copying of encrypted DVDs -- even if the copies are made bit-for-bit, i.e., if the decryption "wrapper" remains intact.
  
  Kaleidescape won round one of the DVD CCA's lawsuit. The courts ruled that a part of the DVD CCA's rules that may have prohibited DVD copying, was not part of the official licensing agreement that Kaleidescape signed. That ruling was overturned and now a court must decide if Kaleidescape does actually violate the CSS licensing agreement.
  
  The RealDVD software from RealNetworks, on the other hand, was found (preliminarily) to have violated Real's CSS license agreement with the DVD CCA.
  
  
• Digital Millennium Copyright Act (DMCA)
  In its "circumvention" provisions, the DMCA prohibits the manufacturing or trafficking of products designed to circumvent measures that protect copyrighted titles.
  
  Most fair-use-loving authorities will concede that DVD rippers that chuck the CSS schemes don't pass muster with the DMCA.
  
  
  
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  But is it circumvention if the manufacturer makes bit-for-bit copies of copyrighted DVDs? The big studios think it is. Under the auspices of the Motion Picture Association of America (MPAA), they sued RealNetworks for its RealDVD ripping software, claiming violations under the DMCA.
  
  In the most recent decision, Judge Marilyn Hall Patel upheld her original preliminary injunction against Real (complete ruling here), prohibiting the company from disctributing RealDVD until the case concludes. The court concluded that Real violated both contract with the DVD CCA, as well as the DMCA provisions that prohibit the trafficking of anti-circumvention devices.

Myths & Misconceptions about the Kaleidescape and RealDVD Cases

• Kaleidescape is being sued for copyright infringement
  Not true. The current dispute is only about breach of contract, and the company has not been targeted on copyright-infringement grounds. The current status is that a key portion of Kaleidescape's CSS licensing agreement that may possibly suggest breach of contract is now allowed to be considered by the courts. Whether or not Kaleidescape actually breached won't be known probably for a couple of years.


• A Kaleidescape victory means it's legal to rip DVDs
  Not exactly. If Kaleidescape wins, it means the company has complied with its DVD CCA licensing agreement, i.e., that it is not circumventing CSS copyright-protection schemes. If it is not circumventing, then it is not liable under the DMCA; however, not all licensed manufacturers of DVD ripping products have the same CSS licensing agreement that Kaleidescape has, so a win for Kaleidescape is not necessarily a win for all DVD CCA licensees.
  
  Prospects for Kaleidescape could be grim if you consider the Real ruling. It suggests that, if all of the DVD CCA license agreements are binding on Kaleidescape, then making copies of protected DVDs is prohibited: "That Real is a licensee to the CSS License Agreement is irrelevant to this analysis because the CSS License Agreement does not give license to copy DVD content to a hard drive permanently."
  
  And, of course, a positive ruling for Kaleidescape does not OK DVD-ripping products from companies that don't have a license with the DVD CCA. Such products are almost certainly illegal under the DMCA.


• RealDVD was deemed illegal
  Sort of, but not really. If the most recent decision was the be-all end-all, then yes RealDVD would be illegal as would virtually any other DVD-ripping device. But this one court -- namely one Judge Marilyn Hall Patel -- does not have the final say, and she ruled only that Real Networks cannot sell the product for now, pending a full trial.
  
  Fred von Lohmann, senior staff attorney for the Electronic Frontier Foundation explains:
  
  

  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).



• DVD-ripping products are legal if they "lock" content in a single box
  No. At least according to the Real ruling: "The fact that RealDVD 'locks' the DVD content to a computer’s hard drive is irrelevant for the purposes of license compliance, because the 'locking' has little to do with CSS."


• Products that enable copying a DVD for back-up purposes are legal under the "fair use doctrine."
  Wrong, at least for now. Real (and others) rely on the so-called fair use doctrine (section 107) of copyright law (title 17, U.S. Code) that grants the "fair use" of copyrighted work. Surely making a back-up copy is fair use? Judge Patel shot down this argument of Real's, reiterating that the DMCA prohibits the "circumvention of access controls in ways that facilitate copyright infringement and for trafficking in circumvention devices that facilitate copyright infringement." As ruled, RealDVD does just that.


• Real and Kaleidescape are legal because of the Sony Betamax precedent
  No. The landmark Betamax case gave Sony and others the right to sell TV-recording devices because such products had substantial non-infringing uses. That argument doesn't fly here, according to Judge Patel in the Real ruling, because the DMCA superseded Betamax: "Real’s persistence in arguing this point is both bumptious and futile. There is no grounding in law for Real to assert a 'fair use' defense based on RealDVD being capable of substantial noninfringing use."


• It is illegal for consumers to make back-up copies of their DVDs
  Maybe not. The Real ruling applies only to manufacturers of DVD-ripping products, not necessarily to those who use such devices. "[T]he court appreciates Real’s argument that a consumer has a right to make a backup copy of a DVD for their own personal use. Whether this is a 'fair use' copy is not at issue, because while the DMCA provides for a limited 'fair use' exception for certain end users of copyrighted works, the exception does not apply to manufacturers or traffickers of the devices."
  
  Therefore, it seems, consumers are encouraged to purchase and use non-licensed DVD-ripping products from offshore companies like Slysoft that are untouchable.
  
  UPDATE 2:06 pm 17 Fred von Lohmann, senior staff attorney at the Electronic Frontier Foundation, clarifies some of the murky waters of consumer liability for DVD ripping:
  
  

  Judge Patel appears to say that fair use is never a defense to circumventing an access control, but that it can be a defense where a copy control is concerned (the DMCA treats "access control" differently from "copy control"). So it's not clear what she means on page 39, where you got the quote from. Because there is no way to make and play a back-up copy of a DVD without circumventing the "access control" of CSS. So I'm left a bit puzzled by the discussion. ...
  
  Here is what we know: the MPAA and the Copyright Office take the position that ripping a DVD using the usual decryptor tools (Handbrake, etc) always violates the DMCA. Whether that would hold up in court in every case is hard to know. And whether other DVD copying tools might be treated differently (e.g., screen capture utilities like SnapZ) is also hard to know, because it's not clear those tools do any "circumventing."

Stay up-to-date on DVD copying: DVD Ripping: The Latest on the Legal Front