DVD software called 'patently illegal'

The MPAA and RealNetworks filed dueling lawsuits Tuesday over software that allows users to copy protected DVD content onto a computer hard drive.

The MPAA says the RealDVD software, released Tuesday, is “patently illegal” and should really be called StealDVD, while RealNetworks charged the Big Six studios with trying to strangle “fair use” of copyrighted material.

The studios sued in federal court in Los Angeles, alleging violations of the Digital Millennium Copyright Act, which prevents the circumvention of copyright protection software. The studios also allege breach of contract because it claims the prohibited copying violates RealNetworks’ DVD-CCA license agreements. The plaintiffs seek statutory damages under the DMCA and damages under the license agreement, including attorney’s fees up to $2 million.

The studios also are seeking a temporary restraining order to prevent distribution of RealDVD (priced at $30). They allege irreparable harm to the DVD sales and rental biz, which they rely upon to offset theatrical costs, and fret that the software will impede the growth of video on demand and digital distribution.

Earlier in the morning, RealNetworks sued in federal court in Northern California seeking a declaration that the software complies with the DVD-CCA license agreement.

The MPAA says that the software allows users to illegally “rent, rip and return” discs from Blockbuster or Netflix without compensation to the studios, who make most of their home entertainment coin from disc sales.

Both cases are likely to come down to the legal interpretation of a single word — “circumvention.”

Like other DVD-ripping software, RealDVD copies the entire disc down to accompanying artwork, but it also preserves existing digital rights management. Moreover, according to RealNetworks, the software does not enable users to distribute copies of their DVDs. RealDVD maintains the DVD’s native (Content Scramble System) encryption intact, while adding another layer of digital rights management encryption that effectively locks the DVD copy to the owner’s computer to ensure that the content cannot be improperly copied or shared.

“Irrelevant,” said MPAA attorneys in a press briefing. The studios’ lawsuit focuses on a provision in the DMCA that prohibits ‘circumvention’ of protection technology. A fair use defense doesn’t apply, MPAA said, because “whatever the end use (of copying) is, the point is you can’t circumvent encryption technology.”

The legal battle over DVD copying has been raging since 2000, when a New York court rejected First Amendment arguments and held that hackers who posted the code to descramble DVD encryption violated the DMCA. Last year, the DVD-Copy Control Assn. lost a lawsuit against Kaleidescape, which manufactures a server that makes and stores digital copies of up to 500 films. Decided under California contract law, the ruling is now on appeal.

Also troublesome to the studios is the recent Cablevision case. In August, the 2nd Circuit reversed the lower court and held that Cablevision’s remote DVRs don’t infringe on studio and network copyrights.

Both Kaleidescape and RealDVD make DVD copies that retain the original encryption. These safeguards, they say, keep them from running afoul of the DMCA because they haven’t descrambled the encryption.

A question that may decide the case: Is it really “circumvention” if the copy that is made cannot be mass distributed?

“Even if CSS remains on the copied copy, the CSS on the original copy was intended to prevent any new copies. Thus, the very act of making a copy requires bypassing CSS,” said Patrick Ross, exec director of the Copyright Alliance, a group of companies and organizations that includes the MPAA as well as Daily Variety‘s corporate parent, Reed Elsevier.

Studios themselves began releasing discs with embedded digital copies last year in an attempt to forestall piracy and meet consumer demand for portability. It’s not clear how many consumers will go to the trouble of renting movies for the sake of copying them when movies and TV skeins are so readily available in other ways; after all, illegal DVD ripping software has been available for some time, and pirated movies regularly pop up for downloading on BitTorrent, without seriously denting the homevid biz. But the last thing studios want to do is lose a legal challenge on fair use.

(Diane Garrett in Hollywood contributed to this report.)

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