[Infowarrior] - Hollywood Control of DVD-Copying at Crossroads

[Richard Forno]

Hollywood Control of DVD-Copying at Crossroads
By David Kravets EmailSeptember 16, 2008 | 5:24:30 PMCategories:  
Intellectual Property

http://blog.wired.com/27bstroke6/2008/09/hollywoods-grip.html

RealNetworks caught Hollywood by surprise when it privately informed  
the studios two weeks ago that it was releasing, by month's end, a $30  
application called RealDVD allowing movie fans to easily make copies  
of their DVDs with their computer.

As expected, heads spun as executives began to wonder whether the  
studios were losing even more control of the coveted DVD and its $16  
billion in annual sales.

Hollywood is already reeling from open source DVD decryption software  
that is free on the internet. It also says it's losing billions in  
sales because of BitTorrent tracking services like The Pirate Bay that  
allow users to upload and download decrypted movies and other content  
for free.

With RealDVD, Kaleidescape and other services, Hollywood's already  
loosening grip on the DVD is at a crossroads.

The music industry years ago lost much control of its CD, which is not  
encrypted, to peer-to-peer file sharing services and technology  
allowing CDs to be burned easily -- even by the technologically  
unsophisticated.

That is among the reasons legitimate DVDs are encrypted with the  
content-scramble system licensed by the DVD Copy Control Association.  
The association is a group consisting of electronics and computer  
manufacturers, and Hollywood studios.

But the association seems to be losing its grip on the DVD -- at least  
for now. It is suing, so far unsuccessfully, Silicon Valley  
electronics company Kaleidescape for breach of contract for producing  
a $10,000 machine allowing users to copy and store up to 1,360 of  
their DVDs. Is RealDVD next on the lawsuit block?

"We're studying it closely," said Elizabeth Kaltman, a spokeswoman for  
the Motion Picture Association of America.

All of which begs the question of whether it is legal to copy an  
encrypted DVD for personal use. The courts have not squarely decided  
the issue as applied to CDs or DVDs, although the music and movie  
industry oppose copying.

"The law is deeply unclear. The reality, as far as I know, nobody has  
ever been sued for making a personal use DVD or CD," said Fred von  
Lohmann, an Electronic Frontier Foundation attorney.

Still, more than 30,000 people have been sued for Copyright Act  
violations for sharing music online. Rarely, if ever, are people sued  
for decrypting DVDs and uploading them or downloading them from  
illicit torrent-tracking services, largely because many torrent  
services usually provide users more anonymity than music-sharing  
services.

At least for now, the movie studios are attacking DVD copying services  
and, in some instances, putting them out of business -- like Studio  
321 that sold a DVD decryption program.

The Digital Millennium Copyright Act says descrambling or  
circumventing encryption is a violation of up to $2,500 per DVD. But  
RealDVD and Kaleidescape allow users to make a persistent copy still  
in its original encrypted form stored in the comfort of one's home.  
They and other similar services say their wares prevent the movies  
from being uploaded to torrent trackers.

But the Copy Control Association maintains that part of the CSS  
license granted to Kaleidescape, for example, requires that the DVD  
must be in the machine for the movie to play -- all for the obvious  
reason of disallowing the copying of DVDs and to prevent the so-called  
"rent, rip and return" concept.

But a judge ruled (.pdf) in Kaleidescape's favor last year, a decision  
that is now on appeal. A Santa Clara County, California judge said the  
CSS license did not have such a requirement – a decision that paved  
the way for the RealDVD application and one allowing Kaleidescape to  
remain on the market.

The Copy Control Association appealed to the 6th District Court of  
Appeal in San Jose, California. In court documents, the association  
said the lower court "reached the absurd result of reading out of the  
license agreement provisions that are essential to the agreement's  
central purpose of preventing the unauthorized copying of copyrighted  
DVD content."

Kaleidescape's attorney, Keith Slenkovich, maintains in court  
documents (.pdf) that the contract does not include so-called "phantom  
provisions" claiming a duty by licensees "to prevent the creation of  
persistent digital copies of DVD content" and "to implement  
architectures in which the user must have the physical DVD disc in the  
drive during authentication and playback."

The appeal is pending.

Despite the conflicting opinions regarding the CSS playback contract,  
the Copy Control Association, which has issued more than 350 similar  
licenses, has not clarified the contract's language to clearly spell  
out its terms.

Whether it has the political will or legal muscle to do so is an open  
question.

The association's board consists of members from Warner Brothers, Fox,  
Universal, Sony Pictures, Paramount, Disney, Sony Electronics,  
Pioneer, Toshiba, Hewlett Packard, Intel, and Microsoft.

Insiders said the group faces potential antitrust issues if it amends  
its contracts to exclude a competitor's product, especially a  
competitor who already has a license. Publicly, however, the group  
says the playback licensing agreement remains unchanged because of the  
board's divergent interests.

"This is a fairly robust organization," said association spokesman  
Greg Larsen. "It represents individuals from three major industries."