How the RealDVD ruling could reshape copyright law

By Eriq Gardner

Hollywood studios got a huge win yesterday when Judge Marilyn Hall Patel of the Northern District of California issued a preliminary injunction against the release of a technology produced by RealNetworks that lets consumers save copies of DVDs to their computer hard drive.

The 58-page decision is long, complicated, and likely to be very important in the copyright battles ahead.

This case between studios and Real has more at stake than just a singular product the movie industry fears will make it easier for folks to trade copyrighted materials online. More than 10 years ago, Congress passed the Digital Millennium Copyright Act with a key provision —"1201" — that prohibited circumvention of access controls on copyrighted material. Since its passage, there's been a lot of confusion about the boundaries preventing circumvention. For example, if a company licenses use of a technology and makes an application that falls within "fair use," is the company still liable for violating the DMCA?

In issuing the injunction yesterday, Judge Patel says yes. Even though RealNetworks licensed the CSS encryption technology used to protect DVDs, the court finds that RealNetworks didn't license the technology from the studios themselves and further acted outside the scope of its license. Judge Patel also takes a broad view of the 1201 statute, ruling that it is "aimed at circumvention tools that control access to protected works...not, as Real asserts, solely intended to thwart hackers."

That brings the discussion to Real's claim that it was giving consumers a fair use of the DVD product--that consumers have a right to make backup copies. And here, Judge Patel, famous for her ruling against Napster nearly 10 years ago, makes a startling declaration that has the potential to reshape copyright law.

In 1984, in the famous "Sony/Betamax case," the Supreme Court outlined various fair uses of copyrighted material and gave a safe haven to technological innovators. In yesterday's decision, Judge Patel writes:

• "The court begins its analysis by noting that Sony came down before the DMCA was enacted and, thus, is superceded to the extent that the DMCA broadened copyright owners' rights beyond the Sony holding."

Judge Patel accepts the theory that the DMCA, to large extent, overruled Sony. "So while it may well be fair use for an individual consumer to store a backup copy of a personally-owned DVD on that individual's computer, a federal law has nonetheless made it illegal to manufacture or traffic in a device or tool that permits a consumer to make such copies," she writes.

We think this is a very important decision that may get some review at the appeals circuit. In the meantime, it could not only shape how companies deal with DVDs, but also how application developers treat a range of other products, from videogames to iPhones. Stay tuned.