What to expect from the RealDVD decision

Judge is known for delivering relatively speedy decisions. But, even if Real loses in this preceding, company could still prevail at trial. We have a long way to go yet.

The future of RealDVD, and possibly a consumer's right to create backup copies of their DVDs, now rests in the hands of Marilyn Hall Patel.

Bart Williams, the attorney who helped lead the MPAA's case. Munger, Tolles & Olson

On Thursday, the U.S. district judge wrapped up a preliminary injunction hearing in the RealDVD case. Last fall, RealNetworks began selling RealDVD, the software that duplicates DVDs and stores copies to a hard drive. The Motion Picture Association of America, the trade group representing the six largest film studios, filed a lawsuit claiming RealDVD violated copyright law.

In September, Patel placed a temporary restraining order on sales of RealDVD, saying she had serious questions about the software's potential to be used to pirate films. Now, she must decide whether to continue to keep the software off shelves. Even if she does, a final decision about whether RealDVD is legal or not would be decided later by a jury (Here are the reasons I think Patel will rule against Real ).

Patel's ruling on the injunction will have serious consequences on the case. Real CEO Rob Glaser testified during the hearing that delaying sales of RealDVD and Facet, the DVD player from Real that copies as well as plays DVDs, could be disastrous for the development of the products. Glaser told Patel that it's very expensive to keep engineering teams together. The company has already spent nearly $6 million, mostly on legal fees, developing the products.

He also noted that it would put Real behind in offering the public a means to backup their DVDs. The studios already offer digital copies of films that they tuck into purchases of DVDs, although consumers must pay extra.

Patel must now determine whether the studios have demonstrated a probability to win in a trial based on the merits of its arguments and has proven the possibility it could suffer irreparable harm. The injunction hearing acts as a preview of the trial. It is possible, however, for one side to lose in the hearing and win the overall trial.

If Real loses, the company can appeal Patel's decision to the U.S Court of Appeals for the Ninth Circuit. That's what the original Napster did when Patel sided with the recording industry in 2000 and placed an injunction on the peer-to-peer service. In that case, the appeals court agreed with Patel and ruled against Napster.

Besides the possible impact to Real's business model, the case could, if Real wins, set a landmark decision that could free consumers to copy their DVDs. Real has said it believes consumers have a fair-use right to backup their movie discs. A Real victory would also enable technology companies to create new DVD copying and storage devices.

Here's what is at stake, according to two well-known attorneys with opposing views:

On the issue of fair use, Fred von Lohmann of the Electronic Frontier Foundation said:

"The important question is will consumers have the same kind of personal use rights that they have had for their compact discs? Will we have the same kind of innovation for DVDs that we've seen for digital music? Obviously, consumers have gotten used to the idea of putting music on computers and listening to it on devices like iPods. Consumers are now facing the possibility that those same kind of actions will be declared illegal if the MPAA has its way."

Ben Sheffner is a former copyright attorney for 20th Century Fox and is an outspoken proponent of copyright. According to him, a loss in this case could deal Hollywood a significant financial setback. He said:

"The studios feel that it's very important to make clear that copying DVDs is not permitted by the law. They believe that's the law now--and judging from how things went at the hearing--it appears that is how the law will remain. If it goes against the studios that would be a major blow and would open up the door to a lot more copying of DVDs and to more products that would facilitate copying. A victory won't really improve their situation but a loss would be very bad."

The good news about all this is that we may not have to wait too long for a ruling. Patel has a reputation for delivering relatively speedy decisions.

Reporter's notes: Real has hired some very able attorneys from the firm Wilson Sonsini to represent it. But should it go to trial, Real would do well to hire a lawyer with the same kind of charisma and courtroom presence as Bart Williams. He's the lawyer from Munger, Tolles & Olson who is representing the MPAA. I'm no legal expert, but I've got eyes and the judge appeared to be more engaged when Williams addressed her. He didn't drone on. He was well prepared and he simplified complex issues and technologies. Cases are supposed to be judged on facts but I'm guessing every advantage helps.

 

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