RealNetworks’ Antitrust Claims Over RealDVD Dismissed

Back in 2008, Real Networks promised to usher in a new era in digital entertainment with RealDVD, which claimed to offer 100 percent legal copying of DVDs for personal use so owners could enjoy them on their PCs, portable media devices, and other digital technology. Of course, it took Hollywood—in the form of the MPAA—only a short time to slam a lawsuit on RealNetworks claiming RealDVD amounted to little more than “StealDVD,” and a court quickly granted and upheld an injunction preventing the software from being sold. RealNetworks has been continuing to pursue the case in court, and had filed counterclaims that, by preventing RealDVD from getting to market, the MPAA had engaged in anticompetitive practices. Last week, Judge Marilyn Patel dismissed that claim, saying Real Networks had no one to blame but itself for the studios coming after the product, and that Hollywood studios had every right to join forces to fight it.

In a nutshell, RealDVD purported to work by not only copying a DVD’s digital content, but also by preserving the CSS encryption used to protect a DVD from clandestine copying—and adding another level of protection on top of that to be even more secure. Real Networks had hoped to skate through the complex DVD Copy Control Association licensing on a loophole opened by Kaliedescape, which enabled their high-end home theater products to make a copy of a DVD (with CSS encryption) for storage on a local hard drive. When the studios sued to block sales of RealDVD, Real Networks countersued, arguing the studios working together to suppress RealDVD amounted to an illegal cartel and a violation of antitrust law.

Instead, Judge Patel ruled that the studios had the right to work together towards a common legal outcome under the Noerr-Pennington doctrine, established by the Supreme Court in the late 1960s and early 1970s—the doctrine holds that companies working to advocate enforcement of passage of legislation are immune from antitrust violations, even if those laws would have anticompetitive effects. Patel also ruled that the only damages Real Networks has suffered from the RealDVD effort have been as the result of its own actions: first trying to publish illegal software, then protracting the dispute through legal action.

At this point,Real Networks might choose to engage in further appeals, but the company is still barred from selling RealDVD and apparently cannot argue that the software is legal, or that Hollywood studios engaged in illegal conduct to keep it from market. It appears Real Networks’ efforts to bring RealDVD to market are at an end.