DVD Copy Control Files Lawsuit Against Kaleidescape's Servers

WATERLOO, ONTARIO — The CEO of Kaleidescape, a marketer of DVD home video server systems, based here, said he was stunned to receive a lawsuit Dec. 7 filed by the DVD Copy Control Association (DCCA), a group that controls DVD copy-protection technology, for selling products that rip DVD movies to hard drives.

Kaleidescape's CEO Michael Malcolm said his company worked with the DCCA and the DVD Forum for a long while to develop a system that would break the Content Scramble System (CSS) placed on DVD movies in order to make copies on the hard drives in Kaleidescape products.

He said the company went to great lengths to ensure its system would not violate copyrights of content holders, while delivering a system that would give end-users greater flexibility and convenience in using the movies they had purchased.

“We have licensed [CSS] from the DCCA. We have read and followed their rules scrupulously,” said Malcolm. “But they are claiming that we have breached the licensing agreement by not following the rules, basically. We have not had time to thoroughly examine their claims, but our cursory examination gives us no cause for concern. We believe [the lawsuit] is wrong.”

Kaleidescape offers expensive video servers designed to make bit-for-bit copies of up to 500 DVD movies on internal hard drives. The movies can be played back on television sets distributed throughout a home. A product capable of storing 150 movies was launched at $27,000 suggested retail price and Kaleidescape targets users that don't need to pirate DVDs, the company said.

Malcolm said Kaleidescape technology prevents making further generational copies from hard drives and requires owners to sign legal agreements vowing not to rip DVD movies that are borrowed or rented.

Malcolm said his company has even gone as far as to notify a customer, who tried to rip a disposable limited-viewing DVD, that duplicating such content was illegal and would not be supported by the Kaleidescape metadata library system.

The Kaleidescape system allows the company to remotely monitor “anything that is amiss in our metadata system, and to proactively get the data in the database,” Malcolm explained.

He said that was “the only case out of over 100,000 DVDs that have been loaded.”

Malcolm said Kaleidescape will fight the action “very vigorously and prove that we are fully in compliance with the DCCA license.” He said Kaleidescape plans to file counter suits shortly.

“We don't fully understand what is driving this,” Malcolm said. “They are asking the court to put us out of business, basically. This is a suit that will take a long time to resolve. We are not going anywhere. It will be business as usual as we continue to fight this.”

Malcolm said that Kaleidescape has found that a number of its customers use its servers for content that has nothing to do with CSS, including high-definition material, “so in the very unlikely event that we fail, we will still be in business and we will still be supporting our customers,” Malcolm said.

Kaleidescape will be showing its products at CES with Zoran and D-Box (booth 25212).