Kaleidescape Suffers Partial Legal Setback
By Joseph Palenchar -- TWICE, 8/13/2009
San Jose, Calif. - A California appeals court partially reversed a lower court ruling that upheld the legality of Kaleidescape's residential movie servers, which store copied DVDs on internal hard drives.
In its decision, California's sixth district appellate court reversed a superior court decision to find that Kaleidescape is contractually bound by the terms of a technical document called the CSS (Content Scramble System) General Specifications, which were developed by the DVD Copy Control Association to protect DVD copyrights. The appellate court ordered the lower court to determine if Kaleidescape's products conform to the copy-protection specifications and, if not, determine the appropriate penalties.
| The California court's decision in the Kaleidescape case |
In the appellate court's opinion, the lower court erroneously ruled that the "General Specifications was not part of the agreement between the parties because it had not been incorporated by reference into the written agreement Kaleidescape executed (License Agreement)." The appellate court contended that "... Kaleidescape was bound by the terms contained in General Specifications" and that ... the trial court must decide what those terms require and whether Kaleidescape has breached them."
"On remand, should the trial court conclude that Kaleidescape has breached the License Agreement, the court shall determine the nature and extent of the harm DVDCCA would suffer as a result of a continuing breach and shall determine the appropriate remedy."
The court, nonetheless, did not rule on whether Kaleidecape's DVD-copying servers adhere to the specifications in the CSS document. "Our holding should not be read as interpreting the precise requirements of General Specifications or whether they actually apply to the Kaleidescape system. That is part of the breach analysis upon which we express no opinion."
The California appellate judge, nonetheless, also hinted at a violation of the CSS specifications. In disagreeing with the lower court's finding that a key section, Section 2.1.2, of the specifications is vague, the appellate court said, "... section 2.1.2, as clarified by the undisputed extrinsic evidence, is not so vague that the court cannot tell what it requires--it requires that playback of DVD content by a Drive plus Decryption device be performed utilizing the physical DVD."
In a separate but related case, a federal judge concluded that a Kaleidescape-type device likely would violate the terms of the DVDCA's license. In issuing a preliminary injunction Tuesday against the sale of Real's RealDVD PC software, the federal judge concluded that the CSS license agreement "does not give license to copy DVD content to a hard drive permanently" and that the only authorized copying "is temporary copying, i.e. buffering or caching, because it is a necessary part of the playback process in all DVD players." The federal judge also found the software to violate the Digital Millenium Copyright Act (DMCA).
The appellate court decision was hailed by the movie industry. In a statement yesterday, the Motion Picture Association of America (MPAA) said, "Both the Kaleidescape decision today and yesterday's RealDVD decision affirm an important principle of law: that all parties that sign the CSS License are bound by all of its terms and that they may not selectively pick and choose what terms of the license to honor." The MPAA was not a plaintiff in the Kaleidescape dispute but is a plaintiff in the RealNetwork's dispute.
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I do not get the math. I can do NetFlix for ~11/month, Amazon Unbox to my TiVo for $3.99 per movie, or (while I do not) many can on demand movies from Comcast or Verizon for a few dollars. But for those that like the physical dics and pay a big preimum of $10, $15, $20, the studios say no, no, no to their best customers. Seems like $20 in the bank for a disc in 2009 dollars is better than $3.99 in 2012 for a movie I might download again from Amazon. I have ~1,200 DVDs in changers but have not bought a single one in 2 years because of this.
John Greble - 2009-14-8 10:09:02 EDT -
When will the movie companies realize that the easier they make it to handle and organize their software that they will sell more of it. A specific exemption needs to be developed for dedicated library devices with a level of security that can keep the studios happy. The units may require some sort of security that will allow for import and playback only with no way to copy to another device. Then the movie studios can set up their own sites and sell directly to the public as a secure download without physical media. The percentage of the population that wants to pirate software is currently doing it, the legal users want simple to use, library storage for all of their media. If the studios don't work quickly at finding a solution then can live with the point will become moot. Didn't they see what happened to the music business?
Joe Hart - 2009-14-8 09:11:50 EDT
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