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Kaleidescape legal update

I'm adding this latest info from Kaleidescape to this thread as well as another in the forum. It will hopefully clear up some misinformation about K's status regarding the possible Injunction.


Jim


Dear Kaleidescape Dealer,

Many of our dealers are confused by the sensationalized headlines about the injunction, some of which say falsely that we can no longer ship products or that Kaleidescape dealers have been enjoined from selling Kaleidescape Systems. This reporting is wrong. The injunction is dated April 8, 2012, and is not effective before that date. In fact, it may never go into effect. Even if the injunction goes into effect, we believe our dealers will not be subject to the injunction because they act independently and outside of Kaleidescape's control.

We believe the injunction issued by Judge Monahan is a mandatory injunction. Under California law, a mandatory injunction is automatically stayed (i.e., suspended) pending an appeal. Kaleidescape filed notice of its appeal on March 9. Therefore, the injunction should not go into effect unless, after hearing our appeal, the Court of Appeal affirms Judge Monahan's ruling. It will likely be some time, perhaps one and one-half to two years, before the appeal is decided.

We are taking steps to seek immediate confirmation from the courts that the injunction is stayed pending the resolution of the appeal. We will let you know the outcome of that process, which we hope will occur before April 8, 2012. Even if the courts disagree with our position that the injunction is stayed, the injunction would not go into effect until Sunday, April 8, 2012 at the earliest.

If the injunction were to take effect, Kaleidescape would promptly comply with all of its terms. In that case, new Kaleidescape Systems sold after the effective date would:
Not import DVDs to hard disk.
Only play DVDs directly from the tray, just as rental movies are played today.
Import and playback Blu-ray Discs and CDs from hard disk, just as they do today.


All systems shipped prior to the effective date would continue to import and play back DVDs from hard disk, just as they do today. We will continue to provide service and support for all systems in the form of hardware repairs, movie and music guide updates, Kaleidescape alerts, and software updates with new user-experience features.

So for now we are shipping Kaleidescape Systems that import DVDs, and we will continue to do so unless the injunction goes into effect.

As in the past, I will keep you apprised of important developments in this ongoing legal battle.

Sincerely,

Michael Malcolm
Chairman, Founder and CEO
Kaleidescape, Inc
 
This sounds like it could get very messy if the injunction isn't stayed... What happens if parts of your DVD-import enabled system has to go back to Kal to be fixed? I would have thought under the injunction terms they might be prevented from shipping it back to you without first disabling DVD library functions?
 
videofile said:
This sounds like it could get very messy if the injunction isn't stayed... What happens if parts of your DVD-import enabled system has to go back to Kal to be fixed? I would have thought under the injunction terms they might be prevented from shipping it back to you without first disabling DVD library functions?
Click to expand...


I'm confident that "grandfathered" systems would be supported as they are now, but that's a fair question.


Jim
 
cinelife said:
I'm confident that "grandfathered" systems would be supported as they are now, but that's a fair question.


Jim
Click to expand...
Hope it won't come to it, but the injunction seems to imply "transferring any DVD playback product" would be forbidden unless it was compliant with the "New World Order". I guess it is a question of whether a unit being sent in to Kal, and then sent back to customer repaired, had been "transferred" or not.
 
That would be my biggest concern... Once my server is out of warranty and someday eventually fails, will a replacement server prohibit me from watching all the dvd's I previously loaded? What about all the homemade videos I have on there (wedding video, kids graduation, school plays, etc) will those be prohibited from being imported too just because they are in dvd format?
 
What I want to hear from Kaleidescape...........

First, I am an unqualified rabid fan of Kaleidescape technology.

I respect what this company has achieved in providing a exceptional best movie experience unmatched by any other industry player.

I admire the courage and perseverance to keep this company focused against a ton of legal adversity that most companies don't see or experience in several lifetimes.

I want to see this company succeed and prosper with continuing engineering and innovative product development that is not diluted with legal distractions.

I have to say that the odds are stacking up against a positive outcome. The legal system is now driving the business and will inevitably determine the outcome.......NOT Kaleidescape. No amount of loyalty, heart or emotion is going to turn this around. Any lingering notions of defeating the consequence of this legal process is frankly, wishful thinking at best.

What I want to hear from the owner stakeholders is a strategy to not only absorb the full impact of the current reality but to present a viable business strategy. Don't wait to be told........lead! Kaleidescape needs to get in front of this thing. I firmly believe there is a path through this mine field but a definite change in management tone and behaviour is critical to success. Telling me that 'maybe' things can be delayed for a year or two does NOT inspire confidence.

I have a substantial investment in this technology and I want to do more but I need to see a future. Time and Apple are gaining the advantage so I wouldn't take a long time to think about it before acting.

Peter
 
I agree its dark days. But courts make mistakes all the time. That's why theres an appellate process.
 
I'm not too familiar with the US legal system... Is a decision which is itself the result of an appeal likely to be successfully "won back"? I would have thought it rare? Otherwise these things could go on and on forever and ever. Then again, you guys do seem to have a lot of lawyers...! :)

I've also seen a few posts where it is believed that this is a "mandatory" versus a "prohibitory" injunction (admittedly all originating from Kal press releases I think). I would have thought it should be obvious which kind of injunction this is (like, in a logical world, it would be written into the injunction itself?!?!)

The first info I could find via google was as follows:
http://www.kinseylaw.com/clientserv2/civillitigationserv/injunction/injunction.html

"Mandatory And Prohibitory Injunctions

There are two main classifications of injunctions. One classification, mandatory versus prohibitory, depends on the type of conduct affected by the injunction. A mandatory injunction, which is a form of specific relief [see Civ. Code ?3367(2)], requires someone to do something affirmative and tends to change the status quo. A prohibitory injunction, which is a form of preventive relief, restrains specified behavior, by prohibiting a party from doing that which ought not to be done. [Civ. Code ?3368]"

Gobledigook to me; but it surely seems this injunction is seeking to prohibit that which ought not to be done?
 
videofile said:
I'm not too familiar with the US legal system... Is a decision which is itself the result of an appeal likely to be successfully "won back"? I would have thought it rare? Otherwise these things could go on and on forever and ever. Then again, you guys do seem to have a lot of lawyers...! :)

I've also seen a few posts where it is believed that this is a "mandatory" versus a "prohibitory" injunction (admittedly all originating from Kal press releases I think). I would have thought it should be obvious which kind of injunction this is (like, in a logical world, it would be written into the injunction itself?!?!)

The first info I could find via google was as follows:
http://www.kinseylaw.com/clientserv2/civillitigationserv/injunction/injunction.html

"Mandatory And Prohibitory Injunctions

There are two main classifications of injunctions. One classification, mandatory versus prohibitory, depends on the type of conduct affected by the injunction. A mandatory injunction, which is a form of specific relief [see Civ. Code ?3367(2)], requires someone to do something affirmative and tends to change the status quo. A prohibitory injunction, which is a form of preventive relief, restrains specified behavior, by prohibiting a party from doing that which ought not to be done. [Civ. Code ?3368]"

Gobledigook to me; but it surely seems this injunction is seeking to prohibit that which ought not to be done?
Click to expand...


While language is certainly important, there are times when the "intent" behind the language may carry more weight, if it can be determined. In this case, K will seek to clarify the trial Judge's "intent" regards to the Injunction, and that intent will control. This clarification will happen at some point between now and April 8, 2012.


Appeals take many forms, some coming during trial, some coming after trial. The most recent trial related appeal came after the first trial and this resulted in a second trial on the issues. Litigating this second trial may cause new appealable issues to arise. An appeal is not fully exhausted in the U.S. legal system until it is heard by the highest court having jurisdiction over the appeal. In K's case, the first appeal was heard at the intermediate level, and this resulted in the second trial. K elected to not appeal to a higher court at that time. This second trial, and the resulting Injunction, created new issues for appeal, and K filed this appeal on March 9, 2012. The most recent letter from K's CEO explains quite clearly what the potential outcomes are regarding the Injunction, and what K will do based on a particular outcome. Now we wait.....


Jim
 
Should the outcome finally be determined against Kaleidescape, would any restrictions contrary to which we currently enjoy only be applicable to systems sold within the United States?

I'm not too worried by the present state of affairs, as long as whatever the outcome doesn't affect the long-term viability of the Company to continue to operate. If my grandfathered system remains immune to the outcome, and I can continue to enjoy all the capability which I currently have, then I'll be happy.
 
It is being reported that the application for the stay of the injunction has been denied.... Mr M says the battle will go on.
 
Can we be sure that Kaleidescape can fix our broken systems and send them back out with DVD functions intact? I've not seen any clear statement as to how that would work.
 
iansilv said:
So worst case scenario- new systems are not allowed to import DVD disks?
Click to expand...

Sounds like that's the best case right now. Worst case is that Kaleidescape issues a software update for all systems in use (whenever sold) stopping us from playing back imported dvds when the dvd itself is not present. We can't stop the updates coming (unless we take away net access).
 
videofile said:
Can we be sure that Kaleidescape can fix our broken systems and send them back out with DVD functions intact? I've not seen any clear statement as to how that would work.
Click to expand...

I guess if they stay in business they will be around to fix broken systems but there's no guarantee that our systems won't update themselves to prevent dvd playback without the disc present.
 
None of this can be said to be unexpected to the management of this company. What I think is reasonable is for the company to dust off it's 'Plan B' for existing and prospective customers. I really hope they are not sitting around waiting for a fairy godmother to pull this one out of the fire.

Peter
 
videofile said:
Can we be sure that Kaleidescape can fix our broken systems and send them back out with DVD functions intact? I've not seen any clear statement as to how that would work.
Click to expand...

...nor how it work work if you grouped a pre-injunction server with a post-injunction server....would the system import DVD to the old server, or not at all?
 
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