RealNetworks Could Be in Real Trouble Over DVD Lawsuit—Consumers Beware

10/6/08Follow @gthuang

[Addendum, 10/6/08: RealDVD has been offline as of this weekend---the result of a restraining order requested by the Hollywood studios and granted by a federal judge. The RealDVD site says, "Due to recent legal action taken by the Hollywood movie studios against us, RealDVD is temporarily unavailable. Rest assured, we will continue to work diligently to provide you with software that allows you to make a legal copy of your DVDs for your own use."]

Last week, we reported on the lawsuit filed by the big Hollywood studios against Seattle-based RealNetworks—and Real’s countersuit against Viacom and the DVD Copy Control Association. At issue is whether Real’s new DVD-copying software, RealDVD, violates digital copyright law, as the Motion Picture Association of America contends. The software, which has been on sale since last Tuesday, enables users to copy DVDs to their computer’s hard drive and a limited number of other computers.

For some informed local reaction, I reached Seattle-based Cozi’s chief technology officer, Bill Baxter. He knows a thing or two about digital rights management, having been the founder of Snaptune, which some described as “TiVo for the radio.” True to form, Baxter had some compelling thoughts on the impending court case, and on the interpretation of copyright laws for digital media.

“Real has a rich history of pushing ‘fair use’ to the limit,” Baxter writes in an e-mail. “Real Jukebox was the industry’s leading tool for enabling illegal file sharing to reach massive scale. Real Jukebox made ripping CDs very easy and, hence, accelerated the illegal file sharing revolution. But, were there substantial non-infringing uses of it? Yes. Hence, they could not get in trouble. Here, I think they have a similar opportunity. At least in this case, they do not allow ripping to non-DRM’d movie formats. Therefore, it is highly unlikely this could result in a legal way to power illegal file sharing networks.”

Here’s the problem: “I think there are two questionable features of RealDVD,” says Baxter. “First, and this has nothing to do with copyrights, per se, did they violate the DRM protections on DVDs meant to allow copyright holders to control their content? If so, they are in violation of the DMCA [Digital Millenium Copyright Act]. I think it is clear that they have. Second, they seem to be gaining monetary advantage by enabling multiple PCs to view these ripped DVDs, for which they have circumvented copy protections. I think the studios would rather set the rules for how many PCs and for how long can a user watch a DVD. You see this in legal alternatives like iTunes and now, more recently, TiVo. I think this may expose them to liability. Real is going to argue… ‘fair use.’ The MPAA is going to argue that it violates the DMCA. Fair use is not an argument you can use to defend against the DMCA. Real is in trouble.”

But the case strikes at the heart of an even deeper issue: what constitutes “fair use” of digital media? “In my mind the biggest problem is that U.S. copyright laws and the DMCA are so antiquated or are so inflexible in protecting legitimate technologies that the only recourse is to litigate,” says Baxter. “Ignoring the alleged DMCA violation for the moment, it is clearly the case that anyone who uses RealDVD is violating U.S. copyright laws. The question that must be asked is whether the copyright infringement constitutes a ‘fair use’ infringement. There are four tests that were established by the Supreme Court that must be applied in order to determine if the infringement is fair use. These tests are vague at best and require a court to address and, most likely unless there is a negotiated settlement, it will land in the Supreme Court. A company like RealNetworks has deep enough pockets to fight this battle. Because of this cost, small technology companies are squashed because they cannot afford it.”

“If the substantial application of RealDVD is deemed to not fall under the fair use doctrine, then RealNetworks could be found to be a contributory copyright infringer which makes it liable for all the infringements of its users,” Baxter continues. “I hope it goes to the Supreme Court. I hope consumers win by being given more control over their content. If I buy a DVD, I should be able to rip it and watch it anywhere, on any device and any time I want to. I should not be limited to watching that movie on a DVD, which the MPAA hopes will get scratched, lost, etc., which implies I will have to pay for again the content I’ve already purchased.”

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and the Editor of Xconomy Boston. You can e-mail him at gthuang@xconomy.com. Follow @gthuang

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