The U.S. movie studios achieved a major victory on August 11, 2009 when a federal District Court in California issued a preliminary injunction against RealNetworks (Real) prohibiting its sale of technology allowing consumers to save copies of DVDs to their computer hard drives. The court concluded that Real's RealDVD products violated provisions of the Digital Millennium Copyright Act (DMCA) that prohibit producing or trading in technology or products designed to circumvent technological measures that effectively control access to, or protect the rights of copyright owner in, works subject to copyright protection. The ruling has broad implications for product and application developers.
The U.S. studios employ standardized DVD encryption-based, anti-copying technology (CSS) through a non-profit called the DVD Copy Control Association (the CCA). Real had signed a license agreement with the CCA allowing it to produce consumer products that implement the CSS technology and interact with CSS-protected DVDs. That agreement required the licensee and each DVD product to comply with the CSS Specifications, including to not produce or sell devices designed to circumvent CSS.
Section 1201 of the DMCA provides that no person shall manufacture, import, offer to the public, provide, or otherwise traffic in any technology, product, service, device, component, or part thereof, that- (a) is primarily designed or produced for the purpose of circumventing a technological measure that effectively controls access to a work protected under the U.S. Copyright Act; or (b) is primarily designed or produced for the purpose of circumventing protection afforded by a technological measure that effectively protects a right of copyright owner in the work.
The court concluded that by designing and producing its RealDVD products for the purpose of removing CSS protections, which effectively control access to a copyrighted work by scrambling DVD content and rendering it unusable and unplayable by the user, Real violated Section 1201(a). The court also found that the CSS technology was an effective technological measure to prevent copying of copyrighted DVD content by the average consumer and, therefore, was protected by the copy-control provision of Section 1201(b). The court concluded that RealDVD violated that copy-control provision by removing or deactivating layers of CSS protections to copy the content to a hard drive.
The court rejected Real's "fair use" defense that the studios and CCA do not have the legal right to prevent consumers from making personal or "backup" copies of DVD's using the RealDVD products. Real relied on the seminal 1984 U.S. Supreme Court decision in the Sony Betamax case in arguing that creating a personal backup copy of a purchased DVD is a fair use. The court concluded that because the DMCA was enacted after the Sony decision, Sony is superseded to the extent the DMCA broadened the rights of copyright owners beyond the Sony holding. The court noted that Sony involved video cassette recorders and copyrighted television broadcasts in a pre-digital era and its "substantial non-infringing use" reasoning has no application to DMCA claims.
The court went on to say that, while fair use is prohibited in the access-control provision of Section 1201(a) of the DMCA, it is not prohibited under the copy-control provision of Section 1201(b). The court said that copying of a work may be a fair use under appropriate circumstances, and section 1201 does not prohibit the act of circumventing a technological measure that prevents copying. In other words, fair use applies to section 1201(b) because it does not speak to, and thus does not prohibit, appropriate individual uses of circumvention devices. That fair use exception does not apply to manufacturers or traffickers of devices prohibited by Section 1201.
In enacting the DMCA, Congress chose to strike a balance to combat piracy and maintain economic incentives to create. The court cited the Reimerdes case (S.D.N.Y. 2000) for the proposition that the fact that Congress, in enacting the DMCA, elected to leave technologically unsophisticated persons who wish to make fair use of encrypted copyrighted works without the technical means of doing so is a matter for Congress, not the courts. Real said it is considering the ruling to determine its course of action.