The legality of media servers
Kaleidescape’s brand of movie servers are widely regarded by installers as the best in the industry, allowing consumers to store copies of their DVDs on a hard drive and watch them in any room in their home, maintaining 1080p quality.
However, because the system allows video to be played without the disc being present, the company has come under fire from the DVD Copy Control Association (DVD CCA) – a corporation controlled by the six major motion picture studios and several large consumer electronics and computer companies. The DVD CCA also licences the Copy Scramble System (CSS) used on DVDs.
After a widely publicised eight-year lawsuit, Kaleidescape has had an injunction order issued against it by the California Superior Court, ruling that the company is in breach of the CSS Licence Agreement. Kaleidescape has appealed the decision, causing the injunction to be ‘stayed’ pending the outcome of the appeal.
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However, the court’s decision has come as a surprise to many, as the company won its first trial in 2007 when the same Court found that Kaleidescape’s products comply with the CSS Licence Agreement.
So what does this injunction mean for the custom installation industry?
“If and when it goes into effect it could disrupt dealers’ businesses – new customers who want the convenience of the Kaleidescape System would be forced to migrate to Blu-ray and would be prevented from getting more enjoyment from their existing collection of DVDs,” says Kaleidescape chief executive Michael Malcolm.
“In the longer term this court decision will stifl e future innovation. Other innovators will be discouraged, and without innovative products, custom installers will be limited to installing mundane components such as ordinary DVD players. Exciting products that offer compelling value will be more difficult to find.”
For now, though, it seems that it is business as usual for Kaleidescape dealers. Mark Nettleson is part of the solutions team at Recluse AV, a Kaleidescape dealer based in Melbourne, and he believes the court’s ruling is not just negative for Kaleidescape, but could be equally detrimental for the DVD CCA and the Hollywood studios.
“In the first trial in 2007, Kaleidescape proved that it had caused no damage and no loss of revenue to the DVD CCA or any of the connected parties. In fact, it is the complete opposite; it is promoting the sale of DVDs.”
When a DVD is copied to the Kaleidescape system’s server, the copy retains all the DVD CCA’s scrambling and adds more encryption. DVDs cannot be copied to the internet, to writable DVDs, or to computers or mobile devices. Additionally, you can’t download a pirated movie from the internet to a Kaleidescape system. The system also identifies rental discs and prevents them from being imported.
Mark notes that the sheer fact clients have opted for a high-end system such as Kaleidescape illustrates that they are mindful of high quality viewing and in a strong financial position so they don’t need to pirate movies.
“Our clients are savvy, if they wanted to they could download movies illegally and play them on low-level movie servers. However, we educate clients about the legalities and the difference in quality when using an environment such as Kaleidescape.
“Often, people are looking at a Kaleidescape system that could cost $25,000 – $30,000, when they could illegally download movies and watch them through a box for $200.”
Much of the industry’s confusion has come because Kaleidescape has always been honest with its intentions and has aimed to be fully compliant.
“They’re just being targeted because they’re the big boys in town. They’re the only company that has come to market and openly said it can allow you to archive your DVD library and play movies without the disc. Kaleidescape has been completely open and legitimate about its intentions, they’re not trying to get around the rules, they are trying to support the movie industry and do it legitimately. And they believe their clients have the right to create an archive backup of their discs so that they can play it in a better environment and not lose the media if the disc was to get damaged.”
For the time being, dealers are still allowed to sell Kaleidescape products pending a decision on the appeal, which could take up to two years.
“The injunction applies to Kaleidescape manufacturing and selling new systems that play back DVDs from hard disk drives,” Michael says.
“It has no bearing on the Kaleidescape System for Blu-ray Discs and CDs. Bluray offers fantastic audio fidelity and video quality, and is quickly replacing the ageing DVD format. Regardless of whether the injunction ever goes into effect, we will continue to provide the best movie viewing experience for the home.”
Unlike DVDs, when playing Blu-rays, the Kaleidescape system requires the disc to be physically present in its ‘vault’. This may also be the case for DVDs if the appeal is unsuccessful and the injunction comes into full effect.
“Kaleidescape is confident that when the Court of Appeal reviews the facts of this case, particularly in light of the complete absence of any harm to the DVD CCA or its members, it will reverse the trial court decision.”
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