Kaleidescape loses, DVD copying falls again

[DigitalStudioWerks]

California appeals court overturn the ruling handed to Kaleidescape in March 2007.

Read HERE

Article from CE PRO

 

[TivoSloth]

Here's the decision. Concurring opinion is interesting. After a quick read of the 53 page decision, the trial court appears to have discretion to reject the stipulation involving breach of the agreement - the remedy of injunction. This might end up being a bad decision for copyright holders, as it gives a great example of how perverse the DMCA is, possibly providing fuel for Congress to strike down the DMCA or amend it sufficiently enough to allow consumers to exercise their fair use rights (with the help of technology provided by third party companies). Of course I'm biased.

http://www.courtinfo.ca.gov/opinions/documents/H031631.PDF

Jay

 

[ptrubey]

After reading the opinion, I am worried. Frankly, I always thought the reason for the initial Kaleidescape win was weak - a rather pedantic interpretation of the license agreement that ignored a bunch of other, equally persuasive, stuff.

While the case goes back to the trial court, it seems that the CSS agreement requires a physical disk be present when the content is displayed, if only for CSS key verification.

The question is my mind, does K have enough political allies (in Congress and in Hollywood) to save its bacon, since the DVDCCA are a bunch of unreasonable idiot lawyers? If not, this company is toast. Well, almost toast. It is possible Kaleidescape could quickly pirouette into a managed copy blu-ray device, and ink a deal with Netflix, Vudu, or Apple TV, to allow secure downloadable movies. But without access to DVDs, this would still probably kill Kaleidescape.

OR, Kaleidescape could update its software to eliminate its ability to even read CSS encrypted DVDs. That would presumably put it beyond the reach of the DVDCCA.

Then K owners could just use an easy to use free, easily downloadable program (NOT WRITTEN BY Kaleidescape or in any way associated with them) that would read in a CSS encrypted DVD, strip out CSS and write out an unencrypted DVD. I'm sure such a program already exists. Heck, the appeal court concurring opinion went out of its way to point out the absurdity of this case wrt such available software.

In any case, I think I'll upgrade my system to the new 3U servers now if they still have that 5U to 3U upgrade program available since I have a feeling we'll be using our systems without Kaleidescape being around in a year or so...

 

[josh]

Wow... not good at all. Will be interesting to see what happens now, but it's not a good day for any of us that have invested much in this system. Amazing that a system that has caused me to buy so many hundreds of movies is thought to be such a threat to the studios.

 

[rgbyhkr]

After reading the opinion, I am worried. Frankly, I always thought the reason for the initial Kaleidescape win was weak - a rather pedantic interpretation of the license agreement that ignored a bunch of other, equally persuasive, stuff.

While the case goes back to the trial court, it seems that the CSS agreement requires a physical disk be present when the content is displayed, if only for CSS key verification.

The question is my mind, does K have enough political allies (in Congress and in Hollywood) to save its bacon, since the DVDCCA are a bunch of unreasonable idiot lawyers? If not, this company is toast. Well, almost toast. It is possible Kaleidescape could quickly pirouette into a managed copy blu-ray device, and ink a deal with Netflix, Vudu, or Apple TV, to allow secure downloadable movies. But without access to DVDs, this would still probably kill Kaleidescape.

OR, Kaleidescape could update its software to eliminate its ability to even read CSS encrypted DVDs. That would presumably put it beyond the reach of the DVDCCA.

Then K owners could just use an easy to use free, easily downloadable program (NOT WRITTEN BY Kaleidescape or in any way associated with them) that would read in a CSS encrypted DVD, strip out CSS and write out an unencrypted DVD. I'm sure such a program already exists. Heck, the appeal court concurring opinion went out of its way to point out the absurdity of this case wrt such available software.

In any case, I think I'll upgrade my system to the new 3U servers now if they still have that 5U to 3U upgrade program available since I have a feeling we'll be using our systems without Kaleidescape being around in a year or so...

These sentiments are similar to my own (though I am optimistic about an alternate solution) posted in an AVS forum thread in the same topic here:

http://www.avsforum.com/avs-vb/showthread.php?p=16992172#post16992172

There are a variety of options for K here. As long as the legal case drags out, they have a variety of plan B avenues they could take that include BR, downloadable/streaming solutions, etc. Rewriting their software to have users BYO tools like DeCSS to me is the last option, but still a very viable one. If they wanted to, they could even write a software app that makes it dead easy to apply the 3rd party software. Nothing would change save for that and there are multiple movie server systems on the market who do exactly that. The onus then is upon the users and, IMO, the studios will NEVER go after users for rips of their own legally purchased content. It's still undesirable, but it does give them a way to continue on.

Jeff

 

[rgbyhkr]

K's statement on yesterday's decision:

http://www.kaleidescape.com/news/pr/legal-update.php

"We are surprised and disappointed by the Court of Appeal's decision and by their rejection of existing California contract law.

In the 2007 trial, the DVD CCA claimed that Kaleidescape breached the CSS License Agreement and in particular, a document called the "General Specifications". Kaleidescape successfully argued at trial that this document was not part of the contract since it was never referenced in the CSS License and was not provided to Kaleidescape until after the CSS License had been entered into. Kaleidescape also presented evidence at trial that, even if the General Specifications were part of the CSS License, Kaleidescape complied with it. In 2007, the trial court determined that the General Specifications were not part of the contract, but the trial court did not clearly rule on whether we complied with it. The Court of Appeal has now ruled that the document is part of the contract, but said nothing about whether or not Kaleidescape complies with it and has left that determination to the new trial court. The Court of Appeal did not issue an injunction against the sale of our products. The second trial will take place probably in a year or two, unless the California Supreme Court agrees to review the Court of Appeal's decision. We will continue to fight, and we expect to prevail.

In the meantime, Kaleidescape Systems remain 100% licensed and legal. We will continue selling Kaleidescape Systems, developing innovative products, and providing excellent service to our customers, including Movie Guide, Music Guide, automatic software updates, and automatic service alerts. The Blue-Laser Player is still on schedule for release in 2009."

 

[ptrubey]

Yes, that's my interpretation of the appeal court decision too - a new trial court needs to determine whether Kaleidescape complies with the General Specifications. So this will drag on for a couple of years yet. Hopefully by then, this will all be moot.

I do like that Kaleidescape reaffirmed their blu-ray release for 2009.

 

[wdpvideo]

Wow this can't be good... I have had my system less than 3 months and forked over a pretty pennies for it...Does this mean I need to hurry and buy another mini player and more drives before everything goes to hell in a hand basket? Will my system still work after "k" goes bye bye? :[ ok who is going to repair the system when the drive fails? Oh man this can not be good....DUH

 

[ptrubey]

Don't Panic

I wouldn't worry. The lawsuit will take another 1-2 years to work out. Kaleidescape will continue to be in business - the blu-ray reader/player will be snapped up by the thousands by their existing customer base. They'll be around for a while yet.

 

[rgbyhkr]

Wow this can't be good... I have had my system less than 3 months and forked over a pretty pennies for it...Does this mean I need to hurry and buy another mini player and more drives before everything goes to hell in a hand basket? Will my system still work after "k" goes bye bye? :[ ok who is going to repair the system when the drive fails? Oh man this can not be good....DUH

Like ptrubey said, I wouldn't worry. There are a number of scenarios that I see which would allow K to continue operating even if they ultimately lost the case with no further possibility of appeal. While it's fashionable to speculate after a news item like this about how long a company has left, I don't think we have anything to worry about with K. Their real challenge is to make it through the recession and in the meantime, figure out the best long term strategy to implement BR and downloadable content both for high dollar installations as well as more entry level systems like the Mini (and below, if possible).

Jeff

 

[wdpvideo]

I wish the studios would leave "K" alone. I bought the movie so screw them. I mean they chase "K" but we have people right here in my community that steal logos and use them and then sell them on their products and no one does anything...THIS IS WRONG AND I AM GOING TO KEEP DOWNLOADING MY MOVIES I OWN!! SO THE HECK WITH THE STUDIOS IF THEY KEEP MESSING WITH ME I WILL STOP SPENDING MY 20.00 DOLLARS ON MOVIES...I'LL SHOW THEM!!! LOL

 

[Mars]

The Studios are morons and truly don't have a concept about what drives their revenue (apologies to any fine, upstanding individuals on this forum who work for the Studios). I have had my K for about 10 months and have probably bought at least 60 movies in that time which is approximately 60 more movies than I bought in the previous 5 years. As Josh mentioned, they are trying to stop something that is actually INCREASING their revenues.

Piracy takes money out of their pockets, I get it, but people are not using K and creating thousands of copies of their movies and selling them out of a blanket in Times Square. I used to work for a media conglomerate so I understand the value of your content asset, but we also know that efforts to clamp down on piracy can, in many ways, HURT your revenues (see: Music industry in the late 1990's). Rather than spending all their time trying to be the police on all this stuff and spend millions in legal fees trying to stop, they should be part of the solution and be partners in the process. Why don't people learn from the iTunes business model that people want to be legit and will pay for content as long as it is at a fair price and, if you do that, everyone wins?

 

[Mr.Poindexter]

Well, technically it is the DVD CCA that is suing Kaleidescape and not the studios. The film studios are only 1/3 of the DVD CCA, I think. With regards to the iTunes reference, downloadbale films are probably not going to use CSS so that is actually something the DVD CCA would not like to see.

As for Kaleidescape, this will take more years to finish and even then from the comments of the judge, it seems as though an injunction against Kaleidescape shutting down existing systems isn't going to happen no matter what the outcome is. By the time this is resolved, it should be about as relevant as finding out who won the DVD-Audio vs SACD audio format war.

 

[cinelife]

Just got back from a cruise to Alaska and read the news. Can't say it wasn't a possibility (the remand), but this is a long way from being decided, and as already noted by others here, there are a lot of options for K going forward.

Frankly, I'm unconcerned.


Jim

 

[Mars]

Well, technically it is the DVD CCA that is suing Kaleidescape and not the studios. The film studios are only 1/3 of the DVD CCA, I think.

Thanks for the info, Mr. P - I actually fired that one off late night and off-the-cuff after I read about this ruling....I actually didn't know the makeup of the DVD CCA, but had always assumed it was studio driven, but upon reading your post Mr. P, I did a little research and learned it is studios, consumer electronic manufacturers and PC makers (maybe stating the obvious to the long-time members of the forum), so now I get it a little better that although the studios are driving some of this behavior, the "competition" in the playback and server categories are probably driving it a little more. Appears to be a little "you do this better than us, so we don't want you to do it" Maybe I'm interpreting it wrong

With regards to the iTunes reference, downloadbale films are probably not going to use CSS so that is actually something the DVD CCA would not like to see.

Actually I was correlating between iTunes and Music sales, more getting to the point that the Music industry went on fighting this kind of thing, their sales tanked and then iTunes led the charge to provide legal downloadable music content at the time after making deals with the labels to sell songs for $0.99 and saw that it was a legitimate business model that didn't make the industry as a whole grow their business per say, but stopped the rapid slide that they faced when they said, "buy these overpriced physical CD's or nothing at all." Just trying to say that at least from a studio perspective, they should be taking a partnership approach in these types of innovative products.

I know that everybody seems confident that this will drag on to the point of irrelevance, and I hope you are right and hope that it is just a little bit of anxiousness on my part, but it is only natural after making a significant investment in the product. No doubt K will fight tooth and nail because it is their business, but it just adds uncertainty.

thanks for letting me rant a little...

 

[Transepoch]

so now I get it a little better that although the studios are driving some of this behavior, the "competition" in the playback and server categories are probably driving it a little more. Appears to be a little "you do this better than us, so we don't want you to do it"

That seems like an even worse position to fight from than their current one.

Assume they win. Is K's last resort to all but tell folks how to defeat CSS and keep using their systems? Maybe. However, I think a more likely solution is they transition to becoming a media management software company. Drop all the hardware upkeep (goodbye $900 HDD ... woohoo!) and charge for the guide, content, playback features, etc., and let folks rip on their own on with their own systems.

Congrats! You have moved K into being a direct competitor to your services, instead of just being some monolithic integrated solution that the general public would find too expensive.

 

[JerryL]

I just read that the next version of iTunes might support DVD ripping and Apple may be ready to get into selling flat screen televisions............

 

[iansilv]

My movies 3.0 starts beta sep 1. This slution uses anydvdhd to rip movies. It's all slot of people can afford... And if k were driven out of business I bet we would see more high end installers pick up more diy systems that are windows media center based.

Either way, I have tolaugh at the idea of all of the big Hollywood studio guys having their k systems shut down. I do t think it will happen just for that reason. I personally remeber a conversationi have with k's president a few ces shows ago- he said something like 'we are instAlled on too many oil billionaires' yachts to go away...'

 

[JerryL]

And like you say I am sure many movie moguls' systems as well. They are not going away.

 

[rgbyhkr]

I just read that the next version of iTunes might support DVD ripping and Apple may be ready to get into selling flat screen televisions............

I saw those same screenshots and was conflicted. Apple pushing DVD rips with iTunes would be the inertia we need to get the DMCA changed, but I'll have to see it actually released before I believe that they would do it. Honestly, even if they introduced ripping that wouldn't allow for commercial rips, that might be enough. Consumers would try to rip a movie they bought, they'd get a message saying that they aren't allowed to and the ground swell could get going. It would actually be a very interesting vehicle to get things going - introduce the feature but with a sever limitation. When people ask, Apple puts out a statement saying that they can't remove the limitation because of the DMCA. Again though, I am going to have to see it before I believe it.

Jeff