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Friday, August 17, 2007
No movement yet on DVD-CCA amendment

The ongoing legal skirmish between the DVD Copy Control Assn. and home media server marketer Kaleidescape Systems flared again last week.

The CSS licensing agent issued its first formal response to Kaleidescape?s earlier threat to bring an anti-trust action against the group if it proceeded with a proposed amendment to the specifications governing the design of DVD drives.

In a letter to Kaleidescape?s attorneys dated Aug. 6, DVD-CCA attorney Perry Johnson called the threat ?unfounded? and accused Kaleidescape of attempting to ?derail DVD-CCA?s fair and open amendment process.?

But the letter stopped short of declaring whether DVD-CCA would go ahead with considering the amendment.

The group?s next meeting is tentatively scheduled for late September, and no agenda has been issued.

In an interview, Johnson said the decision would be up the amendment?s sponsors.

The letter was sent in response to an earlier missive from Kaleidescape CEO Michael Malcolm to members of DVD-CCA?s Copy Protection Advisory Committee and copied to the U.S. Department of Justice and the Federal Trade Commission. In that letter, Malcolm warned of ?substantial anti-trust liability? if the group adopted the proposed change to the CSS license.

The amendment, originally sponsored by Warner Bros., The Walt Disney Co. and two companies each from the consumer electronics and IT industries, would moot a judgment in favor of Kaleidescape by a California state court in a breach-of-contract claim brought against Kaleidescape by DVD-CCA.

The litigation accused Kaleidescape of violating the CSS license by designing its home media servers to allow DVDs to be copied permanently onto the device?s hard drive for streaming over a home network.

Earlier this year, the judge in the case ruled that, as written, the CSS license did not legally prohibit Kaleidescape?s design.

That ruling is now under appeal.

In the meantime, the proposed amendment would have effectively reversed the trial court?s ruling by explicitly requiring that all licensed devices be designed such that a movie could not be played back unless the original disc was present in the DVD drive during playback. It would also have clearly banned the creation of ?persistent copies? of CSS-protected DVDs.

A vote on the amendment by CPAC, the first step in DVD-CCA?s extensive review process, was scheduled to take place at the committee?s meeting on June 25.

But on June 15, Malcolm sent his letter to the committee alleging that the ?real purpose? of the proposed amendment was ?to put Kaleidescape out of business? and threatened anti-trust action.

The planned vote was postponed while DVD-CCA considered its options. The earliest a vote could take place is at the September meeting.

In an interview this week, Malcolm said he stood by his original threat and that nothing in DVD-CCA?s response had changed his view.

?They would like to think that if enough big companies get together, they can just do whatever they want to the little guy, but that?s not what the law says,? Malcolm said.

Much of the DVD-CCA?s letter is addressed to challenging Kaleidescape?s specific legal arguments and refuted its interpretation of the case law cited by Malcolm.

Perry said DVD-CCA had provided copies of its letter to the FTC and Justice Department as a courtesy.

?Part of our concern in sending the letter was to make sure that anyone who might have seen Kaleidescape?s letter understood that there?s a lot more to the story,? Perry said. ?That?s also why we went to such lengths to spell out our procedures for amending the license, so that anyone reading it would understand that we followed a careful and legal process.?

A former FTC attorney, Perry said DVD-CCA has had no contact with any government agency about the case apart from providing copies of its letter to Kaleidescape.

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