Judge Rules Against DVD Copy System

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Sunnyvale, Calif. - Home entertainment server developer


has filed an appeal of a California Superior Court judge's ruling on March 8 that Kaleidescape's allegedly secure system of digitally copying DVD movies onto its home entertainment servers violates the licensing agreement for CSS copy protection.

Judge William J. Monahan of the California Superior Court ruled

in favor of the DVD CCA, the CSS licensing agent, and placed an injunction on Kaleiscape from further marketing the offending equipment. The ruling completed "the third chapter" of the consortium's legal proceedings against Kaleidescape.

In filing its appeal, Kaleidescape said it believes that "under California law the injunction order should not come into effect unless the California Court of Appeal affirms Judge Monahan's decision."

Kaleidescape said in a statement on the ruling that it is "confident that when the Court of Appeal reviews the facts of this case, particularly in light of the complete absence of any harm to the DVD CCA or its members, that it will reverse the trial court decision."

The company said the appeal process "may take one to two years," by which time DVDs will be a much smaller factor in the home entertainment market.

Kaleidescape CEO and founder Michael Malcolm said the ruling was "extremely disappointing," adding that "we have always believed, and continue to believe, that our products comply with the CSS license agreement, and in court we will continue to fight the DVD CCA's allegations to the contrary."

The DVD CCA, which licenses the DVD copy control technology called CSS, is a corporation controlled by the six major motion picture studios in concert with the largest consumer electronics and computer companies.

Eleven-year-old Kaleidescape has been fighting its battle to place full and exact digital copies of DVD content on its servers with copy protection intact. The capability is said to deliver convenience to users in distributing that content through in-home networks and making movies easier to find and playback.

Kaleidescape has carefully designed its products to protect the rights of content owners. The hard-disk copy of each DVD retains all of the DVD CCA's scrambling and adds more encryption. The Kaleidescape System is a closed system that prevents DVDs from being copied to the Internet, to writeable DVDs, or to computers or mobile devices.

The company said that every Kaleidescape customer must agree to copy only the DVDs that he rightfully owns, and must reaffirm this agreement upon copying each DVD.

Kaleidescape Systems identify rental discs and prevents them from being imported, the company said.

It has developed a different system for Blu-ray Discs that requires a physical copy of the disc be placed in the server's disc vault before the digital copy can be played. This approached has yet to be challenged by movie studios.

"For the past eight years, we've been baffled about why this lawsuit ever happened, since our products don't encourage piracy, but do increase sales of movies. Maybe it's because the large CE companies in Japan and the big computer companies in the USA, on the board of the DVD CCA, are afraid that Kaleidescape is building a better way to enjoy DVDs and Blu-ray Discs than they are," observed Malcolm. "Imagine a world where Apple wasn't allowed to build the iPod because Sony wanted a 'level playing field' for the Walkman."

The average Kaleidescape family owns 506 movies on Blu-ray and DVD, the company said.

Kaleidescape won its first trial in 2007 when Judge Leslie C. Nichols of the California Superior Court found that Kaleidescape's products comply with the CSS license agreement. The DVD CCA appealed to the California Court of Appeal, who in 2009 sent the matter back to the California Superior Court for a second trial.


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