Tentative ruling in landmark DVD-copying case suggests Kaleidescape knew its movie servers might be in violation of DVD CCA licensing agreement. Case has broad implication for media-server market.
Kaleidescape, a prominent manufacturer of high-end movies servers, has lost a major battle in its eight-year war against the DVD Copy Control Association, the organization that licenses the Content Scramble System (CSS) for DVD players.
The DVD CCA sued Kaleidescape in 2004, arguing that its products violate a licensing agreement that expressly prohibits the copying (ripping, archiving) of DVDs.
Judge William J. Monahan of the Santa Clara County Superior Court in California issued a tentative judgment favoring the DVD CCA on Jan. 9, 2012. The ruling is subject to revision pending input from the two parties. If it stands as written, the DVD CCA can permanently prohibit Kaleidescape from selling its DVD movie servers, unless the manufacturer adds some kind of authentication mechanism, such a carousel that stores the physical discs. The DVD CCA also can collect court costs.
This landmark case could set a precedent that would make virtually all current DVD movie servers illegal – that is, all servers whose makers have a license with the DVD CCA.
“We are very disappointed by the tentative decision,” Kaleidescape CEO Michael Malcolm tells CE Pro. "The DVD CCA is controlled by the six large movie studios in concert with some of Kaleidescape’s competitors. They object to the innovations of the Kaleidescape System, and want new Kaleidescape Systems to require the presence of the DVD in a disc vault, as with Blu-ray Discs today. Despite the evidence presented at trial, Judge Monahan has tentatively adopted a statement of decision that was drafted by the DVD CCA, which goes far beyond anything in the license."
Malcolm adds that Kaleidescape has filed objections to the order "and if those objections are not successful, we plan to appeal."
Background of DVD CCA v Kaleidescape
CE Pro has been following this lawsuit and related cases since 2004, and a history of DVD-ripping legality can be found here.
Briefly, the DVD CCA licenses the CSS digital rights management (DRM) technology required for all (legal) DVD players to play copy-protected content.
Kaleidescape, a DVD CCA licensee, makes high-end movie servers that are populated with movies copied to the device. The DVD CCA has claimed that its CSS licensing agreement bars such copying.
Kaleidescape has maintained that the contract says no such thing; in any case, archiving DVDs is legal under the “fair use” doctrine and Kaleidescape servers make bit-for-bit copies so that the DRM provisions of CSS are preserved.
RELATED OPINION: What the ruling means for innovation and future of media servers
After several appeals and counterclaims, Judge Monahan ruled that the CSS licensing agreement does in fact require a disc to be present in a DVD player for playback. Kaleidescape servers – and countless similar products from other manufacturers – skirt this requirement, which is the “law of the case and thus is binding on this Court,” Monahan asserts.
At the heart of the matter is Section 1.5 of the General Specifications that states CSS is “intended to prevent casual users from unauthorized copying of copyrighted materials recorded in [DVDs].”
The DVD CCA, as well as content owners represented by the Motion Pictures Association of America (MPAA), have argued that even bit-for-bit DVD transfers don’t prevent users from renting a movie and copying it for their permanent use, the so-called rent-rip-return practice.
To thwart this practice, the CSS agreement requires disc authentication including bus encryption and bus decryption, which does not occur in the case of Kaleidescape servers “because the DVD disc is eliminated from the playback process….” Monahan notes. “Instead, they [discs] are intercepted and diverted to the Kaleidescape System’s server.
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