[opendtv] Trial could test digital media rights

  • From: "Manfredi, Albert E" <albert.e.manfredi@xxxxxxxxxx>
  • To: <opendtv@xxxxxxxxxxxxx>
  • Date: Mon, 19 Mar 2007 10:34:24 -0400

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

"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

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

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.

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