Kaleidescape Tells Dealers Injunction ‘May Never Go Into Effect’

In letter to Kaleidescape dealers, CEO Michael Malcolm says injunction on DVD movie servers is greatly 'sensationalized' by the press; in any case, dealers would not be subject to the order brought by the DVD CCA.

Julie Jacobson · March 15, 2012

Kaleidescape CEO Michael Malcolm sent a memo to dealers today, saying that they will not be party to an injunction against the sale of Kaleidescape’s DVD movie servers.

He reiterates that the company believes the injunction, requested by the DVD CCA and issued recently by the Santa Clara County court in California, will be stayed pending the outcome of an appeal. The appeal could take up to two years, Malcolm says.

RELATED: Take That, DVD CCA: 12 Ways to Rip DVDs

Kaleidescape is working furiously to gather more intelligence on the injunction, but in the meantime the company is continuing business as usual.

Here is the entire memo from Malcolm:

Dear Kaleidescape Dealer,

Many of our dealers are confused by the sensationalized headlines about the injunction, some of which say falsely that we can no longer ship products or that Kaleidescape dealers have been enjoined from selling Kaleidescape Systems. This reporting is wrong. The injunction is dated April 8, 2012, and is not effective before that date. In fact, it may never go into effect. Even if the injunction goes into effect, we believe our dealers will not be subject to the injunction because they act independently and outside of Kaleidescape’s control.

We believe the injunction issued by Judge Monahan is a mandatory injunction. Under California law, a mandatory injunction is automatically stayed (i.e., suspended) pending an appeal. Kaleidescape filed notice of its appeal on March 9. Therefore, the injunction should not go into effect unless, after hearing our appeal, the Court of Appeal affirms Judge Monahan’s ruling. It will likely be some time, perhaps one and one-half to two years, before the appeal is decided.

We are taking steps to seek immediate confirmation from the courts that the injunction is stayed pending the resolution of the appeal. We will let you know the outcome of that process, which we hope will occur before April 8, 2012. Even if the courts disagree with our position that the injunction is stayed, the injunction would not go into effect until Sunday, April 8, 2012 at the earliest.

If the injunction were to take effect, Kaleidescape would promptly comply with all of its terms. In that case, new Kaleidescape Systems sold after the effective date would:

—Not import DVDs to hard disk.
—Only play DVDs directly from the tray, just as rental movies are played today.
—Import and playback Blu-ray Discs and CDs from hard disk, just as they do today.

All systems shipped prior to the effective date would continue to import and play back DVDs from hard disk, just as they do today. We will continue to provide service and support for all systems in the form of hardware repairs, movie and music guide updates, Kaleidescape alerts, and software updates with new user-experience features.

So for now we are shipping Kaleidescape Systems that import DVDs, and we will continue to do so unless the injunction goes into effect.

As in the past, I will keep you apprised of important developments in this ongoing legal battle.

Michael Malcolm
Chairman, Founder and CEO
Kaleidescape, Inc.

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  About the Author

Julie Jacobson is founding editor of CE Pro, the leading media brand for the home-technology channel. She has covered the smart-home industry since 1994, long before there was much of an Internet, let alone an Internet of things. Currently she studies, speaks, writes and rabble-rouses in the areas of home automation, security, networked A/V, wellness-related technology, biophilic design, and the business of home technology. Julie majored in Economics at the University of Michigan, spent a year abroad at Cambridge University, and earned an MBA from the University of Texas at Austin. She is a recipient of the annual CTA TechHome Leadership Award, and a CEDIA Fellows honoree. A washed-up Ultimate Frisbee player, Julie currently resides in San Antonio, Texas and sometimes St. Paul, Minn. Follow on Twitter: @juliejacobson Email Julie at

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  Article Topics

News · DVD CCA · Kaleidescape · Michael Malcolm · All Topics
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