Trial could test digital media rights Rick Merritt (03/16/2007 5:03 PM EDT) URL: http://www.eetimes.com/showArticle.jhtml?articleID=198001672 SAN JOSE, Calif. - Trial begins Monday here for a civil suit that could become a test case on questions about what fair use rights systems makers and end users have with their digital media. The DVD Copy Control Association (DVD CCA) is suing Kaleidescape Inc. (Mountain View, Calif.), claiming the company's home servers violate in several ways a contract designed to protect DVDs from being copied. Kaleidescape's high-end servers can store and back up hundreds of DVD and CD music and movie files on hard disks and send the digital files over a wired Ethernet home network to Kaleidescape players in the house. The systems also have an Internet connection to gather metadata about the music and movies and download software updates from the company. Lawyers for the DVD CCA say the case will have a narrow focus on the specifics of Kaleidescape's contract with their consortium. The group of studios and systems companies administers the Content Scramble System (CSS) designed to protect DVD content from unauthorized copying. "There won't be any fair-use issues coming up, this is just a breech of contract case. It's not about copyright infringement. It's very narrow and simple," said Bill Coats, an attorney with White & Case LLP (Palo Alto, Calif.) representing the DVD CCA. A lawyer with the Electronic Frontier Foundation who has been following the case since it was filed in December 2004 disagreed. The EFF does not represent Kaleidescape. "This is a case where what is essentially a cartel is stifling legitimate innovation where there is clear market demand and a technical capability," said Fred von Lohmann, a senior staff attorney with the EFF. "The DVD CCA is misusing the copyright law to take away people's fair use rights," said Michael Malcolm, founder and chief executive of Kaleidescape in an interview with EE Times. The company has filed a written brief to that effect, he added. For its part, the DVD CCA is likely to allege the Kaleidescape system can be used to make copies of rental DVDs for indefinite viewing. Malcolm said his company has had about four examples of such activity in the course of selling about 3,000 systems to date. "We have had tech support calls from people with a problem importing a disk, and it turned out the problem was it was a scratched disk because it was a rental. We had our legal counsel call and advise them such use is not authorized," said Malcolm. Kaleidescape sells packages of DVDs such as a collection of all movies that have won an Academy Award. The company made about $750,000 on DVD sales last year and expects to make more than $1 million in 2007. "Most of our customers will go out and buy 200-300 DVDs when they buy a system," said Malcolm. "The Kaleidescape product is not focused on enabling file sharing over the Net," von Lohmann said. "If you can afford $10,000 for a home server, you can afford $10 for a DVD," he added. On Monday, the DVD CCA may try to maintain the case should be heard behind closed doors due to the sensitive nature of its CSS encryption scheme. Kaleidescape wants a public trial. "There's nothing secret about CSS since it was broken by a 15-year-old Norwegian in 1999. It's widely available on the Web," said Malcolm. The two sides failed to settle the case at a meeting last week. The jury trial is expected to take about two weeks. Whatever decision emerges from the jury trial is likely to be appealed. If the appeal is published as part of case law it could become a test case in digital media rights, added Malcolm, a former professor of computer science who founded several companies including Network Appliance. Kaleidescape essentially sells a network of media servers and players that can rip and store content from hundreds of DVDs or CDs and make it available for streaming over 100 Mbit or Gbit wired Ethernet connections. The systems, which support up to 25 simultaneous streams, originally sold for as much as $32,000, but the latest entry-level networks now sell for as little as $10,000. "This is a small market, but a very real one," said von Lohmann of the EFF. Much of the testimony in the case is expected to focus on expert witnesses who will testify about how the Kaleidescape system works and the details of the DVD CCA contract. Kaleidescape contends the DVD CCA violated provisions of the contract under which parties must turn to an ombudsman to resolve any disputes. The system uses both CSS and 256-bit AES encryption on any content traveling over its Ethernet links. Kaleidescape players link to TVs over an HDMI interconnect that includes industry-standard copy protection. "The source material is more secure on our home Ethernet lines than on their disks," Malcolm quipped. "It's a very well designed closed system. There is no access to the content on a system from a home PC or the Internet," he added. In proceedings a year ago, the DVD CCA said it would not seek monetary damages from Kaleidescape. However, as part of a cross-complaint the company is seeking monetary damages from the DVD CCA, according to information from Kaleidescape's Web site. Malcolm founded Kaleidescape based on an opportunity that "emerged in part from my own problems being able to find my own movies," he said. All material on this site Copyright 2007 CMP Media LLC. 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