RealNetworks, most popularly known for digital music service Rhapsody and digital media player software, RealPlayer, didn’t get much of a chance to celebrate the launch of its latest digi-coup, RealDVD. That is because the company was promptly sued by Walt Disney Co., Warner Brothers, Columbia Pictures, Paramount Pictures, Sony, Twentieth Century Fox, and Universal Studios — basically all of Hollywood. Sounds familiar?
High-end media server manufacturer Kaleidescape is probably in Silicon Valley feeling RealNetworks’ pain. Last year, after a long battle with the DVD Copy Control Association (DVD CCA) in which it was accused of illegally bypassing the organization’s encryption measures (the Content Scramble System), Kaleidescape emerged victorious, setting a precedent that most likely influenced RealNetworks to go ahead with the development of RealDVD.
At the time of its victory, Kaleidescape’s CEO Michael Malcolm, in addressing the DVD CCA’s reactionary ploy to create an amendment to its own rules, said in a letter to the organization: “There is no valid business justification for the proposed amendment. If enacted, [it] will harm consumers because it will suppress competition in the market for DVD playback devices, block the development of new and innovative products that will give consumers new ways to enjoy the DVDs they own, and interfere with the ability of consumers to exercise their fair use rights under copyright law.”
Malcolm’s plea apparently has done little to widen the myopic view — that consumers will rent, copy, and return DVDs, therefore killing their DVD business sales — of Hollywood big-wigs, however. Upon suing RealNetworks yesterday, Greg Goeckner, executive VP and general counsel for the Motion Picture Association of America referred to RealDVD as “StealDVD” and accused RealNetworks of purposely violating the 1998 Digital Millennium Copyright Act, which forbids the bypassing of the digital rights management often found on DVDs, CDs, and certain MP3 downloads.
For its part, RealNetworks is fighting back hard. The company argues that RealDVD’s technology is in line with the law as it adds another layer of encryption to the digital copies that prevents file sharing. To underscore the point, Rob Glaser, CEO and chairman of RealNetworks, noted in a rare blog post on his company’s web site, that RealDVD “is clearly legal. Over a year ago in the Kaleidescape case the court ruled that a hardware product with very similar functionality was legal.”
Glaser also indicated that RealNetworks and the studios were in talks right up until the night before RealDVD’s Tuesday launch, and seemed surprised and disappointed by the lawsuit. RealNetworks has filed a countersuit in San Francisco hoping to get approval for its software from the bench.