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Q&A: Kaleidescape Responds to Lawsuit

The DVD Copy Control Association, the group that owns the copy-protection technology contained on DVDs, is suing Kaleidescape, contending that the company's media server technology is illegal.

New York, NY–The DVD Copy Control Association, the group that owns the copy-protection technology contained on DVDs, is suing Kaleidescape, contending that the company’s media server technology is illegal.

Kaleidescape CEO Michael Malcolm, who says that his company has taken every effort to comply with the DVD CCA agreement, plans to fight the suit, which was filed Tuesday.

In a statement, DVD CCA attorney Bill Coats explained the lawsuit. “The express intent and purpose of the contract and CSS are to prevent copying of copyrighted materials such as DVD motion pictures. While Kaleidescape obtained a license to use CSS, the company has built a system to do precisely what the license and CSS are designed to prevent–the wholesale copying of protected DVDs.”

In response to this charge, Malcolm spoke with Residential Systems editor Jeremy Glowacki, explaining his company’s legal position.

Did you have any warning that this lawsuit was going to be issued?
Not really. We have had conversations with DVD CCA in the past, but we haven’t talked to them for many months.

So there was no conversation where they told you were in breach of some part of their agreement?
No, they never made any demands on us. In the past they’ve raised questions about how it is that we’re compliant with the license, but we’ve explained clearly how we’ve done it.

What about your technology are they now saying goes against terms set in the agreement?
It’s a little early for us to know and to answer that exactly; their filing was pretty brief. They apparently think that their licensing agreement has some restrictions that we can’t find in it, such as a restriction to prohibit copying a DVD onto a hard drive and a restriction that they allege prohibits viewing of a movie without having a DVD in the machine. There really are no such restrictions in this license agreement. We are quite puzzled about why they think there are.

Are you technically copying the content or storing the content? Is it perhaps the terminology of what your product does that is so contentious?
Well, I don’t know that it’s a terminology issue. We, in fact, make a bit-for-bit copy of everything that’s on the DVD onto a hard drive in the machine, but we require the customer to retain ownership of the DVD as long as they have it on their Kaleidescape system.

We didn’t take their agreement lightly. As a company we’ve probably studied that agreement more than anyone else in this country, and we have filed a patent application to cover the method by which we are able to make a movie server that complies with the DVD CCA license agreement.

Is the DVD CCA essentially a good faith agreement or do have to reveal engineering plans to the association?
It’s good faith. The DVD CCA is just some attorneys that administer the license agreements, collect the money and launch lawsuits. They don’t do any testing.

Has anything from your initial product launch more than a year ago changed that may have drawn the ire of the DVD CCA.
We have not made any changes to the product that would be material as far as that DVD CCA agreement goes. We’ve improved the user interface, but that’s about it.

Do you have any theories about the timing of this lawsuit?
I think we’ve been very successful selling it, and I think maybe that maybe that helped provoke the lawsuit. There are some other companies that are selling DVD servers, but they’re not nearly as successful in the marketplace as we are.

What is your next step in dealing with the lawsuit and what will change for dealers and customers of your product?
We’re considering a countersuit. Otherwise, we’re just carrying on business as usual. We’re not sure how it’s going to impact business, but so far all we’ve heard are expressions of support and surprise. We’ve received a lot of calls from dealers who are telling us that they are just going to continue selling and installing the system.