Founder and CEO, Kaleidescape

How he’s innovating: Michael Malcolm’s Mountain View, Calif., company makes a home digital media server system favored by an upscale clientele that includes plenty of Hollywood elites.

With an entry-level price of about $13,000, users can upload all of their DVDs onto their Kaleidescape server and access them via an elegant onscreen catalog from any room in their house with a flat-panel screen — no more fuss with physical discs.

Malcolm’s real innovation, however, has come in the courtroom, where he has taken it to the studios and the Digital Millennium Copyright Act.

In copying DVDs to the servers Kaleidescape provides clients, the studios have complained it has violated the copy protection on these discs — and by extrapolation, the DMCA.

Kaleidescape has successfully claimed that it pays licensing fees for the DVD’s copy protection scheme, and that copying movies so users can enjoy them on other devices besides disc players is not in violation of that license. A court has agreed.

In essence, the court ruled — much to the delight of fair-use advocates everywhere — that the DMCA should protect studios against stealing content, not using legally purchased content in a way that better suits the customer.

“The DMCA is an insidious law,” Malcolm says. “On the surface, it seems quite reasonable. It went right through Congress, and the problem with the law is pretty subtle. It took years for the courts to figure out this problem and for them to realize the law was being used to suppress creativity.”

For Malcolm and Kaleidescape — which received recognition for technical innovation at CES in January — the fight goes on, with the studios appealing the San Jose Superior Court ruling.

Take: “We would have a lot more ways to enjoy the fantastic entertainment that’s produced by the studios and a lot of other creative people if the government hadn’t handed the studios a big gun to protect their business model,” Malcolm says. “The studios are so reluctant to see any change in that model that they’ll use this weapon to prevent it.”

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