RealNetworks Filing Says Studio Conspiracy Has Killed RealDVD
RealNetworks declared its RealDVD technology for copying discs as good as dead. It’s the victim of what the company called a conspiracy by the big Hollywood studios to exploit for themselves consumers’ desire for virtual copies of the discs they've bought, the company said in an antitrust countersuit filed Wednesday.
Sign up for a free preview to unlock the rest of this article
Export Compliance Daily combines U.S. export control news, foreign border import regulation and policy developments into a single daily information service that reliably informs its trade professional readers about important current issues affecting their operations.
Even if the studios and the DVD Copy Control Association fail in court efforts to keep RealDVD off the market, “RealNetworks will most certainly not be able to successfully execute a ’third’ publicly acclaimed launch of RealDVD after having been tainted with the mislabel of an illegal product following two aborted launches,” said the filing in U.S. District Court in San Francisco.
“The collective conduct of the Studios and the DVD CCA will foreclose RealNetworks from competing in the market for technology that enables consumers to (a) create or otherwise obtain digital copies of movies and TV shows that they own on DVDs and (b) store and manage those copies electronically (e.g., on a hard drive) for subsequent playback,” the countersuit said. The allegations that studios and the licensor illegally cooperated to keep Real out of the market -- to profit from their own “managed” and “digital copy” products -- are made under the federal Sherman and Clayton Acts and California’s unfair business practices statute.
Saying the countersuit calls RealDVD doomed is “reading too much into these paragraphs,” Bill Hankes, Real’s vice president of corporate communications, said by e-mail. “It says we won’t be able to effect a third splashy launch of realdvd even if we get the PI [preliminary injunction] lifted.” The following passage “explains how the anticompetitive conduct hurts consumers and how it has delayed our ability to offer realdvd while allowing the studios to get a jump on us with their ‘digital copy’ products.” He said he couldn’t account specifically for the statement about Real’s being foreclosed from the market.
The antitrust allegations seem “based on significant factual and legal errors” and appear to be “an attempt to distract attention away from the issue of RealNetworks’ misconduct and the injunction issue pending before the Court,” an attorney for the studios said in a written statement. He didn’t give details. The claims were filed in connection with Real’s formal initial answer to a complaint by the DVD Copy Control Association alleging breach of contract and of the covenant of good faith in Real’s effort to commercialize RealDVD. The answer acknowledges some of the facts alleged by the association but denies crucial ones. It also asserts legal defenses based on what it called improprieties in its agreement with the association and in the association’s behavior.
Real was ready to sell RealDVD as a $30 download for use on PC hard drives, and had developed a prototype DVD player using it, when the studios and licensors persuaded Judge Marilyn Patel in October to issue a temporary restraining order against sales of the technology. The abortive launches that the company referred to were a planned Sept. 30 introduction, put off from Sept. 8 as Real tried to deal with studio objections, the counterclaim said. It seeks an unspecified damages award and an injunction against the studios and the copy-control association, which licenses the Copy Scramble System DRM on DVDs.
The association contends that RealDVD would violate Real’s licensing agreement for the Copy Scramble System DRM on DVDs. The studios allege that the software would infringe copyright. Closing arguments are scheduled Thursday in a marathon hearing over whether Patel should cancel the temporary ban or issue a preliminary injunction, which would last until a trial or settlement.