Judge cites 'transmit' clause and windows breach

Hollywood studios have won an important legal victory in their effort to shut down the Web service Zediva, a tech startup that buys up recently released DVDs, plays them from its own banks of disc players and streams them on demand to customers.

U.S. District Judge John F. Walter granted a preliminary injunction against Zediva in a ruling on Monday, concluding that the company violated the studios’ right of public performance. Even though Zediva argued that its service was no different from a brick-and-mortar video rental business, in which owners do not obtain studio permission to rent DVDs to customers, Walter concluded that Zediva violated the “transmit” clause in the Copyright Act, in that the copyrighted works were sent “to the public over the Internet.”

He also sided with the studios’ arguments that Zediva threatened the “windows,” or the timeline in which releases are made available to various media because Zediva was able to stream movies into homes earlier than they were licensed to services like Netflix or to on-demand cable customers.

“Judge Walter rejected Zediva’s argument that it was ‘renting’ movies to its users, and ruled, by contrast, that Zediva violated the studios’ exclusive rights to publicly perform their movies, such as through authorized video-on-demand services,” said Dan Robbins, senior VP and associate general counsel for the MPAA.

The case now will proceed to a final resolution.

Zediva, which launched in March, allowed customers to choose a recently released DVD and control things like start, stop and pause. But the company’s machines were playing the disc.

Zediva said in a statement that it will continue its fight and the ruling “represents a setback for the hundreds of thousands of consumers looking for an alternative to Hollywood-controlled online movie services. Zediva intends to appeal, and will keep fighting for consumers’ right to watch a DVD they’ve rented, whether that rental is at the corner store or by mail or over the Internet.”

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