Cellphones and DVDs: Usage Restriction Similarities

Speaking of backwards-looking content owners who refuse to accept the reality of evolving business models, a longstanding saga between RealNetworks and the MPAA (Motion Picture Association of America) came to an end several weeks ago. And as Glenn Fleishman rightly pointed out in retrospect, consumers effectively lost precious fair use rights in the process.

In early September of 2008, RealNetworks announced RealDVD (originally code-named ‘Vegas’), after having previously obtained a CSS (Content Scramble System) license from the DVD Copy Control Association. RealDVD enabled no-disc playback of DVDs on Windows systems, but it wasn’t a DVD ‘ripper’ per se. In fact, according to RealNetworks it didn’t circumvent the CSS encryption algorithm at all; instead it built a second layer of encryption on top of CSS that allowed for playback of the DVD image (which itself could not be copied) on a maximum of five computers running RealDVD.

RealDVD was onerous enough in and of itself to the movie studios, notably because it didn’t (more accurately couldn’t) differentiate between purchased and rented DVDs, and because then-CEO Rob Glaser subsequently had the gall to put the onus on the studios to solve this problem by changing the encryption algorithm used on rental discs. But what really got the studios’ ire was Facet, a Linux-based hardware appliance then under development by RealNetworks, whose code the company subsequently hoped to license to CE manufacturers.

Facet copied DVDs to its internal HDD and as such acted as a video jukebox. RealNetworks likely felt it was on safe ground at the time it was developing Facet; after all, conceptually similar albeit much more expensive products from Kaleidescape had been sanctioned by the California Superior Court in March of 2007. Nonetheless, six movie studios sued RealNetworks in late September 2008 (RealNetworks had preemptively filed a request for declaratory judgment shortly beforehand), the same day RealDVD was available for purchase. The studios convinced the presiding judge to issue a temporary restraining order freezing product sales and shipments, and the case went to trial the following spring.

Several weeks after the trial against it began, RealNetworks filed another lawsuit, this time against the DVD Copy Control Association and all major studios claiming both that they were a price-fixing illegal cartel and that its CSS license allowed it to develop and sell both RealDVD and Facet. Unfortunately, although RealNetworks may have won in the court of public opinion, it lost in the only court that mattered. U.S. District Judge Marilyn Hall Patel, who ominously had decided against Napster in a prior ‘fair use’-testing case, ruled against the company in mid-August 2009. She determined that regardless of whether or not RealDVD circumvented the CSS encryption algorithm itself, by virtue of the fact that RealDVD did not employ an optical disc as its playback media, it didn’t encompass the full range of CSS copy protection mechanisms:

Real has violated section 1201(a) of the DMCA by trafficking in RealDVD products for the purpose of circumventing CSS technology. Specifically, RealDVD’s ‘play and save’ feature, which allows the user to view the DVD content while RealDVD makes a copy of the content on the device’s hard drive, or its ’save’ feature, which commands RealDVD to simply copy the content from the DVD onto the device’s hard drive so that it can be played later, both circumvent CSS technology by permitting RealDVD to access DVD content from the hard drive without going through most of the CSS protection steps, such as DVD drive-locking, CSS authentication and CSS bus encryption. Once RealDVD has copied a DVD, it does not authenticate the DVD drive or receive encrypted keys at that time. The record shows that CSS technology requires that a DVD drive ‘lock’ upon insertion of a CSS-protected DVD and prevent access to its contents until an CSS authorized player engages in an authentication procedure, none of which RealDVD does when it reads back DVD content from its hard drive. The process of authentication with the DVD drive, and subsequent content decryption, is thereby circumvented by the RealDVD products.

Further DMCA (Digital Millenium Copyright Act) violations by RealNetworks, according to the judge, came from the fact that RealDVD and Facet circumvented the intentional sector and file structure errors placed on DVDs by second-level copy protection schemes such as ArccOS and RipGuard. In her DMCA-focused decision, Judge Patel conveniently dodged ruling on whether or not consumers have a Fair Use right to make copies of discs they own. Ironically, one day later, Kaleidescape lost an appeal ruling, too, in a separate court case. And in mid-January of this year, Judge Patel again ruled against RealNetworks, vigorously dismissing the company’s antitrust allegations. Commensurate with the court decisions, Telestream quietly shelved its conceptually similar, Mac-targeted Drive-In product, which was not co-named in the MPAA actions against RealNetworks but clearly was next in line for legal roughing up.

About those second-level copy protection schemes…why are they even in existence? There’s the irony; CSS was surmounted way back in October of 1999. By now, a host of DVD ripping products exists, some of them freeware developed by enthusiasts and others sold by companies based outside the United States (and therefore not subject to U.S. court jurisdiction). As such, the fundamental question remains; do consumers have the right to make copies of their legally purchased DVDs, HD DVDs and Blu-ray discs in order to protect the originals from the ravages of daily use; scratches, beer-can disc-as-coaster rings, kids’ peanut butter and jelly fingerprints, and the like? The MPAA claims that the answer is ‘no’; that "one copy is a violation of the DMCA." Ridiculously, the MPAA also suggests that teachers should real-time ’copy’ DVD content by means of a camcorder pointed at a television screen:

Judge Patel, however, left Fair Use in the gray zone, commenting in her mid-August 2009 ruling:

While it may well be fair use for an individual consumer to store a backup copy of a personally owned DVD on that individual’s computer, a federal law has nonetheless made it illegal to manufacture or traffic in a device or tool that permits a consumer to make such copies.

So apparently optical discs are just like cellphones, in a situation which I’ve written about before. Consumers can carrier-unlock ‘em via a DMCA exemption (at least for the moment), but development and distribution of the requisite hardware and software is illegal under the DMCA. In reviewing this legal mess, I can’t help but think back to the RIAA’s October 1998 lawsuit against Diamond Multimedia Systems regarding the Rio portable MP3 player. What would have happened to this now-vibrant segment of the consumer electronics industry if the California-based Federal Court had ruled that the Rio was an infringing device by virtue of the fact that it might be used to store and play back copyright-infringing content? And by analogy, how might the CE industry be different both now and in the future if Judge Patel had ruled differently late last summer?

I guess we’ll never know.