MPAA v. Zediva Is Shaping Up To Be Quite The Legal Showdown

Zediva is a quirky online movie rental business, launched in March. By using only physical DVDs-one per customer at a time-Zediva hopes to be able to create a video-on-demand business without getting licensing deals from the owners of the movies it streams. That wasn’t going to work for the MPAA, which sued Zediva a few weeks after it launched. But now Zediva has lawyered up in a big way, hiring a team of IP lawyers from Durie Tangri, an elite San Francisco IP law firm that has given the entertainment industry a run for its money before.

Zediva’s business model immediately captured the interest of some copyright scholars, who wondered publicly how it would fare in court. But the whole exercise may have been academic, since it wasn’t clear if Zediva-a tiny Palo Alto startup with five employees-would be able to stand up to the legal resources that a group like the MPAA has at its disposal.

Now it’s clear the Zediva showdown is going to be more “clash of the titans” than “quiz for your law school class.” The movie studio plaintiffs are asking for a preliminary injunction to shut the service down right away; that is being briefed and will be argued in late July, in the Los Angeles federal court where they filed suit.

Zediva’s lawyers will likely be arguing that their client doesn’t do any copying at all; it just plays back the DVD you choose, but from a different location. It’s simply “place shifting,” a business strategy that has already been ratified by a federal appeals court in New York, which ruled in favor of Cablevision’s remote-DVR service back in 2009.

The studios have said Zediva’s strategy for getting around copyright is “disingenuous,” and their lawyers are likely to argue that Zediva’s streaming over the internet constitutes a “public performance” that requires permission under copyright law. They will likely look to case law that has forced hotels to get permission from copyright holders to set up their own closed VOD systems to show in rooms.

This is definitely going to be one to watch. Not since the 2009 trial over RealDVD has Hollywood faced off with a tech company so directly over a new product that pushed the boundaries of copyright.

For The Defense
Zediva’s team consists of three lawyers from Durie Tangri, a small law firm that has helped many technology companies get out of tough IP jams. The firm handles some of the toughest cases for Google (NSDQ: GOOG) and Comcast; (NSDQ: CMCSA) its lawyers have helped Quantcast defend against privacy lawsuits and recently worked with Rovi to launch a patent lawsuit against IMDb.

The team working the Zediva case includes Joe Gratz, who recently helped a small music re-seller beat Universal Music Group on appeal, a case that broke apart UMG’s whole licensing scheme for promotional CDs. Also working for Zediva is Michael Page, who successfully defended the Grokster file-sharing service against legal attacks from the entertainment industry, winning victories in both district and appeals courts. (Grokster ultimately lost at the U.S. Supreme Court.) Page also has an undefeated record defending Google from various trademark owners who have brought lawsuits complaining about the search engine’s sale of trademarked keyword advertising.

The team is rounded out by Mark Lemley, a Stanford Professor and all-around IP guru who has testified before Congress several times on intellectual property issues.

For The Plaintiffs
The movie studios have hired a crack team of lawyers from Munger, Tolles & Olson, a Los Angeles law firm with deep roots in the entertainment industry.

The team includes Glenn Pomerantz and Kelly Klaus, the lawyers who have been dishing out the pain to the Limewire file-sharing service for some time now. In fact, for the past week, Pomerantz has been in front of a New York jury making his case for big damages against Limewire.

These MTO lawyers have shown they know how to hit the “off switch” on new tech products that push up against the boundaries of copyright law. Limewire has been shuttered since October-thanks in part to the legal work done by Klaus and Pomerantz. Asked RealNetworks (NSDQ: RNWK) how well RealDVD is doing these days? That case ended with the product never being launched, and RealNetworks ended up paying the studios’ $4.5 million legal bill. Klaus was on that team, as well as another lawyer now working on the Zediva case, Rohit Singla. Ever heard of music search engine Seeqpod? The company went bankrupt, unable to litigate against MTO lawyers, including Klaus and Pomerantz.

Klaus is also representing Universal Music Group in the “dancing baby” case over YouTube and fair use; in that case, he’s fighting a mom-blogger who got together with pro bono lawyers from the Electronic Frontier Foundation and sued UMG over a copyright takedown notice.

Two MPAA lawyers are also listed as counsel of record on the case. One of them is Ben Sheffner, formerly an attorney for NBC Universal, who became well-known as a blogger on copyright issues. In a blogosphere full of copyright skeptics, Sheffner was a respected voice in favor of strong copyright. Sheffner’s blog, Copyrights and Campaigns, has been inactive since he joined the MPAA as an anti-piracy litigator in February of this year.