Real CEO acknowledges RealDVD will copy rentals

Update 9 p.m.: To include more on Glaser's comments about efforts to prevent RealDVD from being used to pirate movies.

SAN FRANCISCO--Rob Glaser, founder and CEO of RealNetworks, acknowledged in federal court on Tuesday that his company's software, RealDVD, could be used to make unauthorized copies of DVD rentals.

But Glaser said that the company does all that it can to "steer people away from that," including limiting playback of copies to five separate machines. Moreover, he said the problem could be eliminated if the major movie studios helped create a way to identify a movie as a rental.

"We would need cooperation from the studios to mark (DVDs) some way differently so we would then operate on (the discs) in a different way," Glaser testified.

Glaser's testimony promises to be the dramatic highpoint in the dispute between Real and the Motion Pictures Association of America over RealDVD. The two parties presented their cases before U.S. District Judge Marilyn Patel.

RealDVD enables consumers to create copies of DVDs and store them on hard drives. The largest film studios filed a lawsuit last fall accusing Real of copyright violations and breach of contract. Real argues that the studios are using litigation to derail a potential competitor. The MPAA says Real is trying to make money off of the studios content without paying for it.

At stake in the trial is Real's efforts to replace DVD players with its own player, called Facet, which is equipped with a hard drive. For the studios, a Real victory in the case could mean Hollywood would lose at least some control over who creates copies of films.

'Just say no'
Under questioning by Real's lawyers, Glaser tried to dispel MPAA assertions that RealDVD was created to help people pirate films. The studios have often cited an Associated Press report in which Glaser allegedly was "winking" to those who illegally download movies.

"If you want to steal," Glaser was quoted by the AP, "we remind you what the rules are and we discourage you from doing it, but we're not your nanny."

Glaser denied that quote was insincere. He noted that the company's FAQ on RealDVD has strong language that warns consumers not to copy movies that they don't own.

At this point, the judge got some in the courtroom to snickering when she said: "Do you think this will be more effective than 'Don't Say No?'"

The judge was apparently referring to the anti-drug campaign launched by the Reagan administration that was often ridiculed by skeptics who called it halfhearted and ineffective.

Glaser explained to the judge that the situations weren't the same. Real wasn't trying to convince teenagers not to experiment with drugs. The product was designed to appeal to responsible adults.

As far as those who don't have any compunction about obtaining unauthorized content , they wouldn't be interested in the $30 RealDVD because there's lots of illegal software available on the Web that offers more features for free.

Glaser is set to again take the stand when the hearing resumes Wednesday morning.