Real Networks drops an A-bomb on studios

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Real Networks drops an A-bomb on studios

Thu May 14, 2009 @ 04:38PM PST

By Eriq Gardner

We don't find it surprising that Real Networks has lobbed allegations of an antitrust conspiracy in its war with Hollywood over a technology that allows consumers to break copy protections to back up DVDs on a computer hard drive. 

The big question is: Why now, in the midst of an ongoing trial, has Real waited to ask U.S. District Judge Marilyn Patel for permission to file an amended second complaint against the studios?

Skeptics will undoubtedly read the new complaint and see it as some sort of Hail Mary on Real's part to save a game that isn't going so well. 

Hollywood makes a juicy target for this sort of thing, as the major players typically work in close proximity to each other, and actions can appear confounding to outsiders. Napster, Kazaa, and many file-sharers also spewed the A-word against Hollywood after copyright arguments weren't working. 

Antitrust allegations go back much further. Wasn't the modern-day entertainment industry built in part on the back of the 1948 Supreme Court decision in United States v. Paramount, a landmark antitrust case that helped bring down the old studio system?

Today, Real Networks is charging that the studios all agreed that they wouldn't enter into licenses with Real to allow movies to be subject to Real's new technology. The allegation raises the question, essentially, of whether the studios can form an industry group to create technology standards for the DVD industry that would impede piracy.

Real's new allegations brings to mind the case against Rambus over charges the memory chip maker violated antitrust laws by using an industry standards group and its patents to extract big royalty payments from Samsung, Toshiba, and others. 

The issue of technology standards, patents, and antitrust behavior has been a big topic thanks to the Rambus case. Coincidentally, Real's allegations may expand the debate over what standards groups like the DVD Copy Control Association are allowed to do on the very same day that the Federal Trade Commission announced it was dropping its antitrust claim against Rambus.

The FTC may have dropped that case, but the government is looking for more antitrust actions to pursue. Earlier this week, Obama's top antitrust official gave a "fair warning" speech saying the administration would be much more aggressive in enforcing policy against corporations that use market dominance to elbow out competitors.

We wonder if the timing of this speech and Real's new complaint are merely coincidental. It's been known that a new Democratic administration would get serious on antitrust activity since Obama's election. Now seems the right time for anybody (hello?) with an antitrust gripe against Hollywood to come out of the shadows.

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The Hollywood Reporter
The Hollywood Reporter, Esq. blog focuses on how the entertainment and media industries are impacted and influenced by the law. It is edited by Matthew Belloni with contributions from veteran legal reporter Eriq Gardner and others. Before joining The Hollywood Reporter, Belloni was a lawyer at an entertainment litigation firm in Los Angeles. He writes a column for THR devoted to entertainment law. Gardner is a New York-based writer and legal journalist. Send tips or comments to [email protected]

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