Kaleidescape, the leading supplier of high-end home media servers, has lost its case brought by the DVD Copy Control Association. After a four-week trial that commenced on 14 November 2011, a California judge ruled that the company violated the terms of its DVD licensing agreement by allowing consumers to rip DVDs.

The rule-setting DVD Copy Control Association, made up of six major studios, CE manufacturers and computer companies, objected to the DVD-ripping functionality of Kaleidescape's products and went to court to force them off the market. Last Thursday, Judge William Monahan issued a broad injunction barring Kaleidescape from selling its DVD-streaming products.

Ars Technica, an online information source that followed closely the developments, says "the case is a useful reminder that, thanks to the Digital Millennium Copyright Act [DMCA], major content companies continue to enjoy veto power over the design of digital media devices. Include a digital lock in your spec and the DMCA keeps anyone from bypassing it, even if the intended use might well be legal. Hollywood is using this power to prevent "DVD jukebox" products from reaching consumers."

Kaleidescape's DVD devices allow users to rip their DVD collections and later stream them to a variety of devices around their homes. The problem is that DVDs are encrypted and the 1988 DMCA gives content owners the power to ban firms from circumventing copy protection.

Ars Technical reminds that, to get permission, suppliers of such equipment must comply with an elaborate set of technical requirements, the exact rules being secret. "Anyone who makes a DVD player without the DVD CCA's blessing to decrypt the discs (and, therefore, without following its many rules) could be found guilty of "trafficking" in a circumvention device, a felony that can lead to fines of up to a million dollars and up to 10 years in prison."

Kaleidescape claims it has gone a long way to satisfy the rules. It signed the DVD CCA's licensing agreement. It also pointed out that ripped content is stored in an encrypted format on the Kaleidescape hard drive to prevent further copying and the configuration does not allow users to download infringing content from the Internet.

Although, in court, the DVD CCA admitted it had no evidence of harm to the studios, Judge Monahan ruled that Kaleidescape had failed to follow the rules of the DVD CCA's licensing agreement, and as a consequence "had done irreparable harm to the integrity of that regime [...] so that injunctive relief is warranted."

Kaleidescape says it is confident that when the Court of Appeal reviews the facts of this case, particularly in light of the complete absence of any harm to the DVD CCA or its members, that it will reverse the trial court decision. The appeal process may take one to two years.

"Over the years, Americans have amassed over 13 billion DVDs and Blu-ray Discs - about 110 per household. This means that many American families have a few thousand dollars tied up in a library of movies they hoped to enjoy over and over. However, with collections that size, families soon realize that it takes so long to find what they're looking for that it just isn't worth buying more discs," argues Kaleidescape CEO Michael Malcolm.

"The Kaleidescape System eliminates that frustration. Because it's so easy and fun for Kaleidescape customers - who own 506 movies on Blu-ray and DVD - to enjoy their movies, they start buying movies again, and with a bigger appetite," Malcolm adds. "The Kaleidescape movie server makes digital copies of DVDs and Blu-ray Discs to hard disk drives so families can play back their movies instantly from any room of their home."

Some observers have found some irony that Walmart's newly-launched Disc-to-Digital service does just that, at an extra cost to the consumer, legally. And UltraViolet is moving these files in the cloud, with the studios blessing ...

Story filed 14.03.12