Appeals Court Rules Against Kaleidescape’s DVD Copying

A day after a court upheld a preliminary injunction on sales of RealDVD, an appeals court has overturned a decision that let Kaleidescape's media servers copy DVDs to hard drive storage.

A day after a court upheld a preliminary injunction barring sales of RealNetworks’ RealDVD DVD-copying software, a federal appeals court in Los Angeles has reversed (PDF) an earlier trail court victory by Kaleidescape that had found the company’s high-end media servers systems did not violate the CSS license agreement in copying DVDs to hard drive-based storage.

The Kaleidescape case has been wending through the courts sine 2004, and a 2007 trial court ruling had found that Kaleidescape had not violated contracts with the DVD Copy Control Association by creating high-end media servers that could copy a DVD’s contents to a hard drive-based media server. Yesterday, an appeals court overturned that ruling, finding that Kaleidescape had breached the CSS contract and acted in bad faith in creating its DVD-copying feature.

The appeals court cannot issue an injunction on the sales of Kaleidescape’s media servers; that can only be done by the original trial court. In the meantime, Kaleidescape says it plans to appeal the decision to the California Supreme Court, meaning it may be years before this case is finally resolved one way or another.

Unlike RealNetworks’ case, Kaleidescape’s case is primarily a contract dispute, with the company arguing a set of CSS specifications cannot be incorporated into its contract with the DVD Copy Control Association by reference because that would, in effect, later bind the company to terms it did not agree to when it signed the contract. RealNetworks had cited the Kaleidescape case as a precedent; however, Real Networks’ case centers around the Digital Millennium Copyright Act, not contact law.