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Court to RealNetworks: Stop Whining About RealDVD, It’s All Your Fault

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Judge Marilyn Hall Patel from the California Northern District Court dismissed RealNetworks’ (s RNWK) antitrust lawsuit against Hollywood, providing another blow to the company’s plans to provide consumers with software that would make it possible to copy DVDs to a computer’s hard drive. RealNetworks had sued a number of major movie studios as well as the DVD Copy Control Association (DVD CCA), which is in charge of licensing the widely used CSS copy protection technology for DVDs, alleging that they conspired to prevent the company from selling its software.

Patel disagreed and found that Real brought the damages alleged in the lawsuit onto itself by selling a product that is “almost certainly illegal under the DMCA.” The decision published late last week echoed sentiment of a preliminary injunction issued last August against RealNetworks, but it also offered an interesting recommendation to consumers that want to be able to store digital copies of DVDs on their computers. The court’s suggestion, in short: Just buy another copy from iTunes or Amazon.

The spat between Hollywood and RealNetworks started when Real began to sell a software called RealDVD in September of 2008 that made it possible to rip DVDs to your computer’s hard drive. Software like that has been around for a while, but it’s considered illegal under the U.S. Digital Millennium Copyright Act, which forbids you to circumvent copy protection mechanisms. Real tried to find middle ground with Hollywood by adding DRM to the copying process to prevent users from swapping movies via file sharing networks. The studio’s weren’t buying it, and filed for a temporary restraining order, followed by a preliminary injunction, bringing any plans to sell RealDVD to a standstill.

RealNetworks shot back with an anti-competition lawsuit, essentially alleging that the DVD CCA and its studio members violated a number of anti-trust laws by not licensing its technology for RealDVD. Problem is, Real previously argued that it didn’t even need a license to copy DVDs, only to change its argument further down the line. The court wasn’t convinced, and called that line of reasoning circular.

Real also alleged that the studios prevented consumers from “(creating) or otherwise (obtaining) digital copies of movies and TV shows that they own on DVDs,” to which the court answered: Sure they can. iTunes sells them for $9.99. Real could have just licensed the right to sell digital copies of movie titles on its own, and found that the company can’t claim anti-competitive behavior if there’s a functioning market for digital copies in place.

There’s one other interesting tidbit in the court decision: RealNetworks apparently negotiated with Paramount (s VIA) to have RealDVD included on the studio’s DVD releases. However, the deal fell through when Paramount asked for huge up-front fees, or as Real put it: “At the last minute, however, Paramount indicated that it was not prepared to break with the Studio cartel without substantial compensation for doing so.” Patel however didn’t buy it, noting that a botched up deal deal isn’t enough proof that the world, or even Hollywood, is conspiring against you.

RealNetwork told us that it wasn’t available for comment on the decision at this point.

3 Responses to “Court to RealNetworks: Stop Whining About RealDVD, It’s All Your Fault”

  1. The Marketing Intern

    Oh well. I guess it’s back to obtaining digital copies of movies the old-fashioned way. (Yar!)

    Seriously, though, as a studio, wouldn’t you embrace the online proliferation of your content? The movie model can’t be far away from the music model; at some point the focus has to move away from ticketing and digital sales and toward events and merchandising.

    I think this is essentially what Disney is starting to do better: to own all of a movie’s (or TV show’s) assets (including the actors and musicians) and turn them into cute little profit generators, repurposing and repackaging them for every new idea that comes across Mickey’s desk. I’m amazed that this kind of thing isn’t done more often.