RealNetworks Battles MPAA: A Case to Watch

| About: RealNetworks, Inc. (RNWK)

Tuesday, the Motion Picture Association of America and RealNetworks (NASDAQ:RNWK) went at it head on, taking each other to court in separate lawsuits. There may have been an effort at behind the scenes diplomacy but there was no shot across the bow, no public warning. The fight came quick and fast with preemptive and counter strikes. 

The battleground is RealNetworks' newly released realDVD software, a software program designed to copy DVDs. The question is whether it’s legal and how copyright law should be applied to its use.

The undisputed fact is that RealDVD enables consumers to create digital to digital archival copies of DVDs. These files are then stored on a computer and available for viewing without the need of the disc.

In an homage to “Fair Use,” RealNetworks says this software is a way to “protect your discs from scratches and damage.” Playback is handled on a proprietary player. The whole package is being sold for an introductory price of $29.99 a copy ($49.99 retail). Their advertising copy says you can “save your movies legally, and with confidence.”  Their filing cites supporting case law.

The collection of studios and content owners jointly represented by the MPAA vehemently disagrees. The MPAA alleges the software is a violation of the Digital Millennium Copyright Act which explicitly prohibits the circumvention of a digital copyright mechanism. They also claim that RealNetworks “misuses a limited license [Real Networks] obtained to make authorized DVD products.” 

RealNetworks, which filed its suit first to seek a preemptive judicial ruling, counters that the software doesn’t break, or bypass, encryption. In fact, it copies and maintains the CSS encryption. From the filing: “When RealDVD software is used to make a personal copy of a DVD, it not only preserves the Content Scramble System [CSS] encryption the Studio Defendants use to encrypt DVDs, but also incorporates additional levels of protection.”

The courts could be chewing on this for a while. In the occasional quagmire that is copyright law, the outcome could set some interesting precedents. This will be a case to watch.

The representative case filings are available in PDF here (Real Networks as Plaintiff) and here (MPAA as Plaintiff).