Kaleidescape back in court in May 2011?

[JerryL]

Thats a nice ride you have there. I'd drive right past the store and keep driving!

We all probably should do it "before the motor law"... (pulling a line from some of your fellow Canadians)

 

[sipester]

Not the outcome anyone was hoping for . .

http://www.cepro.com/article/kaleidescape_vs_dvd_cca_judge_rules_against_movie_servers/

 

[josh]

ummm ... yes, that doesn't sound good.

Any of our legal gurus hear have any opinions on what this may mean for us and for the company?

 

[cinelife]

Well....when I asked about this tentative ruling a few days ago, no one at K seems concerned.

First, it is a "tentative" ruling. It may in fact be the final ruling at the trial court level, but that has not been issued yet. I'm not saying K can influence what may be a loss at trial level, but it doesn't end at that level. K still has the right to appeal, and by all accounts they will. In the end, we will be back in the Appeals court.

Second, and this is important to all "current" owners. MM's statement more than implies any affect will be on "new" Servers. While I do not know this for sure, it is logical that if K does in fact lose in the end, the only affect will be to modify the way they do business going forward (i.e. meet the disc must be present requirement as we currently do with BR).

I doubt there would be any impact on the collections of current owners (it would be unusual in these types of cases), but of course you never know.

If that is the worst case scenario, more vaults, I can live with that.


Jim

 

[Mr.Poindexter]

What this means for us and what it means for the company are two different things.

First, would there be any way to grandfather in existing systems? The whole "just add a vault" doesn't necessarily work if you are installing it in an aviation system where there might not be room for one or even in a yacht where a single 3U server with 2TB drives could require as many as 12 vaults. That is a stack of vaults 105" tall. With 3TB drives, that stack grows to 2 stacks 78.75" tall or TWO 45U racks!!

If they grandfather in existing systems, then it affects new users and the company greatly but existing users not so much.

If they don't grandfather in existing systems, well I can see myself selling off a tremendous number of DVDs to pare my collection down. Titles that make sense to own might not make sense to own if I have to tie up 1 of 320 slots in a $5k vault. Cost-wise, that is like buying my entire collection again.

It would be cheaper to pay for a digital download at DVD quality. Hmm, I wonder if that is Hollywood's solution - stick every Kaleidescape owner for an extra $15 per movie in their collection. Even then, I would probably just prefer to eliminate half my collection and upgrade the other half to Blu-Ray.

I don't see a way to spin this as a positive thing for anybody. The best I can do would be to minimize the negative.

 

[cinelife]

All good points Mike, especially the comment about impact on the company. I guess we'll see.


Jim

 

[juliejacobson]

I doubt there would be any impact on the collections of current owners (it would be unusual in these types of cases), but of course you never know.
Jim

No impact at all. The jury is still out on the legality of DVD ripping by consumers (under DMCA), but this ruling has no impact. Further, any Kscape server in the field will remain there and will remain functional. My guess is that DVD CCA will give kscape several months to comply, so the question is: Will they care to?

The bigger question: What about all those other movie servers.

Here's the companion piece where I pose that question (and others):
http://www.cepro.com/article/kaleidescape_ruling_on_dvd_copying_could_quash_innovation/

My email is juliejac1@gmail.com if any of you would like to contact me with your feedback, either on or off the record. Would love to hear from the users.

thanks.

 

[cinelife]

I (all dealer's) received the following from Mike Malcolm:


Earlier today, CEPro posted a story about the latest chapter of the DVD CCA's legal proceedings against Kaleidescape. The story is based on a copy of the tentative statement of decision by Judge William J. Monahan of the California Superior Court. As the statement of decision is still tentative, we do not know exactly what the final decision will be or when the Court will issue it.

The DVD CCA, controlled by the six large movie studios in concert with some of Kaleidescape's competitors, objects to the convenience and innovation of the movie server, and claims that their license prohibits playback of DVDs from hard disk unless the DVD is present. Kaleidescape won its first trial in 2007 when Judge Leslie C. Nichols of the California Superior Court found that our products comply with the CSS license agreement. This matter was sent back to the California Superior Court by the California Court of Appeal in 2009 for a second trial.

Over the course of the 2011 trial, Kaleidescape again presented evidence that its products fully comply with the DVD CCA license agreement, have caused no damage to the DVD CCA or the motion picture industry, and accelerate the purchase of DVDs by making movies easier to enjoy and more entertaining. Judge Monahan tentatively disagreed. We were surprised, because when Judge Nichols considered the evidence four years ago, he found that Kaleidescape was in full compliance with the agreement. Moreover, in his statement of decision, Judge Nichols noted our good faith efforts to ensure that our products were fully compliant.

Kaleidescape operates with a very high degree of integrity. We work meticulously to comply with each and every agreement that we sign. In light of this, the tentative ruling is extremely disappointing. We have always believed, and continue to believe, that our products comply with the CSS license agreement, and in court we will continue to fight the DVD CCA's allegations to the contrary.

The Kaleidescape movie server is not the first innovative technology the studios have tried to stifle in the courts. When Sony developed the VCR in the 1970s, Hollywood was afraid that it would keep people away from the theaters and sued to keep it off the market. In 1981, the US Court of Appeals for the Ninth Circuit ruled in favor of Hollywood and suggested damages and an injunction. Sony appealed that ruling to the US Supreme Court. Fortunately for us all, the US Supreme Court ultimately ruled against Hollywood and in favor of Sony, and for the protection of the consumer's fair use rights. This ruling ushered in the era of home video entertainment. Ironically, the sale of movies on VHS and later DVD would drive an era of unprecedented prosperity for Hollywood.

Kaleidescape has filed objections to the tentative decision and if those objections are not successful, we plan to appeal.

It is very important to us that our dealers have the latest information about this matter. When a final decision is handed down, we will provide you with another update.

Sincerely,

Michael Malcolm
Chairman, Founder and CEO
Kaleidescape, Inc.



Copyright ? 2012 Kaleidescape, Inc. All rights reserved.

Kaleidescape and the Kaleidescape Logo are trademarks of Kaleidescape, Inc.; they are registered in the United States and certain other jurisdictions. Other trademarks and trade names are owned by third parties and may be registered in some jurisdictions.

 

[carajo]

Seems to me that k needs to speed up their download service of DVD. This should eliminate the need for vaults as long as they can prove lockdown of the movie onthe server which they have already. My guess is they are close with this technology and it's not quite ready and by the time the appeals are over this will be the result for new purchAses.

 

[AnOutsider]

Seems to me that k needs to speed up their download service of DVD. This should eliminate the need for vaults as long as they can prove lockdown of the movie onthe server which they have already. My guess is they are close with this technology and it's not quite ready and by the time the appeals are over this will be the result for new purchAses.

To be honest, at that point, I'd just stick with an Apple TV.

 

[carajo]

To be honest, at that point, I'd just stick with an Apple TV.

Yeah but the whole point of the kaleidescape is the ability to watch movies without losing any of the dvd quality as well as the kaleidescap interface. Apple tv interface is not at all like kaleidescape.

 

[AnOutsider]

Yeah but the whole point of the kaleidescape is the ability to watch movies without losing any of the dvd quality as well as the kaleidescap interface. Apple tv interface is not at all like kaleidescape.

For some, and likely the enthusiasts here, yes. For me though, it was about maintaining my music and DVD collections. DVD quality is fine for, though I do enjoy bluray, and I find the video quality from other solutions more than acceptable. The kscape interface (cover view) is very nice, but it's eye candy I rarely use unless showing someone the system for the first time. Skipping the intros and indexing episodes of TV shows is another feature I like. Services like Amazon and Apple TV offer this already.

A drive died in my system recently and it was out of warranty. I told my integrator i did not want to replace it and dump more into the system. He agreed with me. I switched integrators for my new home and he also recommended I put no more into kaleidescape and focus on products like TiVo and apple tv for movie collections and TV and simply use savant to integrate my iTunes library and pull in spotify, Sirius, amazon cloud etc for music.

For me, personally, the kscape "experience" was great for when we got it 5 years ago, but these days there are better options (again, for my uses).

That said, they did offer a great product and I hope they win the case. It's ridiculous to think they are under attack after how many DVDs the system encouraged me to buy. Meanwhile companies that spend much less time keeping the products above-board are just skating by.

 

[ktrdsl23]

First post.

I was reading about the Kaleidescape decision and found this site. I'm not an owner.

How significant would court costs be if Kaleidescape had to pay them for the for the DVD CCA? Would it have a meaningful impact on their ability to run their business?

 

[cinelife]

First post.

I was reading about the Kaleidescape decision and found this site. I'm not an owner.

How significant would court costs be if Kaleidescape had to pay them for the for the DVD CCA? Would it have a meaningful impact on their ability to run their business?

Not only is that not a factor for K, they have stated that any unfavorable ruling would result in further appeals. K is a financially sound company, fully capable of funding their legal arguments, both at the trial level, and any resulting appeals.


Jim

 

[ktrdsl23]

Not only is that not a factor for K, they have stated that any unfavorable ruling would result in further appeals. K is a financially sound company, fully capable of funding their legal arguments, both at the trial level, and any resulting appeals.


Jim

But it isn't just their legal argument but also the costs of the DVD CCA, which of course goes up with the appeal.

I'd guess that the total costs of the DVD CCA legal team over an 8-10 year period (assuming a few years on appeal) could be in the range of $2-4MM. I had no idea what type of profits Kaleidescape ran.

 

[Mr.Poindexter]

Given their annual sales, I think they can afford that kind of hit without being upside down even in the short term.

 

[cinelife]

But it isn't just their legal argument but also the costs of the DVD CCA, which of course goes up with the appeal.

I'd guess that the total costs of the DVD CCA legal team over an 8-10 year period (assuming a few years on appeal) could be in the range of $2-4MM. I had no idea what type of profits Kaleidescape ran.

You're right, I was too narrow in my statement.

I of course have no access to K's financials, so my comments are my own opinion based on what I know of their business model, apparent sales, and statements from the company.

I agree with Mike's statement, but would also add a personal note that K's owner's are committed to the success of the company, and they certainly have the personal financial ability to spend a lot more than those numbers if the chose to do so.


Jim

 

[Janthkin]

Please note that "court costs" are not the same as "attorneys' fees." I'd be surprised if the court costs in this case have exceeded $50k.

 

[Mr.Poindexter]

Ooh, good catch on that one. There is a world of difference between court costs and attorneys fees for certain.

 

[lgimene]

I guess nothing will change until a "definitive" (and binding) Court ruling is issued; as opposed to the "tentative" one just issued.
That this means that we will need to retrofit disc vaults into our existing outlays?
This may be a problem for some of us with limited space available in our home A/V racks...
Could K appeal all the way to the Supreme Court also?. (See Michael Malcom's letter to Dealers as posted by Jim two days ago).