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Kaleidescape Updates Dealers on Lawsuit with DVD CCA

CEO Michael Malcolm tells dealers, "The Kaleidescape movie server is not the first innovative technology the studios have tried to stifle in the courts."

Kaleidescape founder and CEO Michael Malcolm
Julie Jacobson · January 30, 2012

When CE Pro broke the news about the DVD CCA’s latest triumph over Kaleidescape, the manufacturer of movie servers was not prepared to comment. The decision, handed down by Judge William J. Monahan of the Santa Clara County Superior Court in California, was only tentative. For that reason, neither party had mentioned it publicly (CE Pro was tipped to the court document by a diligent dealer).

Both the DVD CCA and Kaleidescape have submitted their comments to the judge, and a final judgment is likely to be published soon. Kaleidescape vows to appeal if that decision does not meet its approval.

Now that the word is out, Kaleidescape has reached out to dealers (and CE Pro as well) about the case. Kaleidescape CEO Michael Malcolm sent this message to dealers shortly after we published the story:

Earlier today, CEPro posted a story about the latest chapter of the DVD CCA’s legal proceedings against Kaleidescape. The story is based on a copy of the tentative statement of decision by Judge William J. Monahan of the California Superior Court. As the statement of decision is still tentative, we do not know exactly what the final decision will be or when the Court will issue it.

The DVD CCA, controlled by the six large movie studios in concert with some of Kaleidescape’s competitors, objects to the convenience and innovation of the movie server, and claims that their license prohibits playback of DVDs from hard disk unless the DVD is present. Kaleidescape won its first trial in 2007 when Judge Leslie C. Nichols of the California Superior Court found that our products comply with the CSS license agreement. This matter was sent back to the California Superior Court by the California Court of Appeal in 2009 for a second trial.

Over the course of the 2011 trial, Kaleidescape again presented evidence that its products fully comply with the DVD CCA license agreement, have caused no damage to the DVD CCA or the motion picture industry, and accelerate the purchase of DVDs by making movies easier to enjoy and more entertaining. Judge Monahan tentatively disagreed. We were surprised, because when Judge Nichols considered the evidence four years ago, he found that Kaleidescape was in full compliance with the agreement. Moreover, in his statement of decision, Judge Nichols noted our good faith efforts to ensure that our products were fully compliant.

Kaleidescape operates with a very high degree of integrity. We work meticulously to comply with each and every agreement that we sign. In light of this, the tentative ruling is extremely disappointing. We have always believed, and continue to believe, that our products comply with the CSS license agreement, and in court we will continue to fight the DVD CCA’s allegations to the contrary.

The Kaleidescape movie server is not the first innovative technology the studios have tried to stifle in the courts. When Sony developed the VCR in the 1970s, Hollywood was afraid that it would keep people away from the theaters and sued to keep it off the market. In 1981, the US Court of Appeals for the Ninth Circuit ruled in favor of Hollywood and suggested damages and an injunction. Sony appealed that ruling to the US Supreme Court. Fortunately for us all, the US Supreme Court ultimately ruled against Hollywood and in favor of Sony, and for the protection of the consumer’s fair use rights. This ruling ushered in the era of home video entertainment. Ironically, the sale of movies on VHS and later DVD would drive an era of unprecedented prosperity for Hollywood.

Kaleidescape has filed objections to the tentative decision and if those objections are not successful, we plan to appeal.

It is very important to us that our dealers have the latest information about this matter. When a final decision is handed down, we will provide you with another update.


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 julie.jacobson@emeraldexpo.com

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  Article Topics

News · DVD CCA · Kaleidescape · All Topics
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