RealNetworks sued by MPAA

Studios claim DVD software circumvents copyright

RealNetworks could be in a real jam.

The digital entertainment service was sued Tuesday by the MPAA in Los Angeles federal court over its RealDVD software, which went on sale to the public on the same day.

The studios, including Fox, Sony, Disney, Paramount, Warner Bros. and Universal, claim the software circumvents the copyright protections on DVDs, allowing users to make multiple copies and distribute them to others. The MPAA claims such software is a violation of the federal Digital Millennium Copyright Act and seeks a temporary restraining order to stop RealDVD from distributing the software.

Meanwhile, RealNetworks filed suit in federal court in Northern California, asking it to rule that Real is in full compliance with the DVD Copy Control Assn.'s license agreement.

When RealDVD was announced in early September, the studios appeared receptive to the idea, largely because of RealNetworks' claim that the software would leave Content Scramble System encryption intact and that it was targeting consumers with large DVD collections who were looking for a way to store and access purchased content without the hassle of "constantly removing and inserting new discs," the company said.

Three high-ranking home entertainment executives from the studios expressed interest, with one saying he "might consider" a licensing deal should the copy-protection turn out to be rock solid.

RealNetworks vp Jeff Chasen at the time called RealDVD "one of the first mainstream PC applications that do this (rip DVDs) in a legal framework. It's taking the DVD you purchased and giving it additional flexibility."

But the MPAA claims that the CSS built into DVDs to prevent illegal reproduction and distribution is circumvented by the RealDVD players.SOFTWARE?

"Real admits that what RealDVD is doing 'has been done illegally for a while' with other software products, a long line of which have been shut down by the federal courts," the MPAA suit states. "Real, however, claims that RealDVD differs from its predecessors and that when RealDVD circumvents the DVD protection measures, it is 'legal' and '100% legit.' There is nothing legal or legitimate about it."

The software allegedly allows users to engage in a practice known as "rent, rip and return," in which someone can rent a DVD, make an illegal copy and return the original.

The MPAA claims the license obtained by Real from the DVD Copy Control Assn. in August 2007 to distribute RealDVD only authorized the company to make DVD players and that instead, it used the license to hack the MPAA's encryption software.

"RealDVD should be called 'Steal DVD,' " MPAA executive vp and general counsel Greg Goeckner said. "RealNetworks knows its product violates the law and undermines the hard-won trust that has been growing between America's movie makers and the technology community."

RealNetworks disagrees, saying its playerSOFTWARE? "allows consumers to securely store, manage and play their DVDs on their computers."

"It does not enable users to distribute copies of their DVDs," the company said. "RealDVD not only maintains the DVD's native CSS encryption intact, it adds another layer of digital rights management encryption that effectively locks the DVD copy to the owner's computer to ensure that the content can not be improperly copied or shared."

The company points to a recent state court case in California in which the judge ruled against DVD CCA and allowed the distribution of a product by Kaleidescape that is similar to RealDVD.

Real alleges that because the studios lost in that case, it is going to the federal court to try to get a different result.

The MPAA is appealing the Kaleidescape case, which involved the contract between Kaleidescape and DVD CCA rather than violations of the DMCA.

The MPAA also said that RealDVD threatens alternate means of digital distribution, including VOD, such Internet download services as the iTunes Store and Amazon's Unbox and digital download DVDs.

The MPAA is seeking damages, including all profits derived from Real in connection to the DVD software.

Thomas K. Arnold contributed to this report.