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RealNetworks surrenders in RealDVD case

Federal judge issues a permanent injunction against RealDVD sales and Real agrees to pay $4.5 million to reimburse Hollywood studios for legal fees in copyright suit.

U.S. District Judge Marilyn Hall Patel has issued a permanent injunction that bars RealNetworks from selling RealDVD, the DVD-copying software that Hollywood claimed in a lawsuit violated copyright law.

Say goodbye to Facet, the RealDVD player that would have copied DVDs and stored about 70 digital copies. Under Real's new agreement with the studios, Facet is dead. Greg Sandoval/CNET

Real and the Motion Picture Association of America reached a settlement, according to statements issued by both companies, that called for Real to stop selling RealDVD or any similar products and to pay $4.5 million to reimburse the studios for legal fees.

"We are gratified by the successful conclusion of this important matter," said Daniel Mandil, the MPAA's general counsel. "Judge Patel's rulings and this settlement affirm what we have said from the very start of this litigation: it is illegal to bypass the copyright protections built into DVDs designed to protect movies against theft."

It appears that Real, the maker of the RealPlayer and other media software, has suffered total defeat in the court battle with the MPAA, the trade group representing the six largest Hollywood film studios, which began in 2008.

The MPAA filed suit to stop the sale of RealDVD, a software that hands users the ability to copy and store films to a hard drive.

From the outset of Real's struggle, the company appeared to be on shaky ground. Real argued that consumers possessed the right to backup their DVDs, just as they have a right to make a copy of their songs for personal use. Real told the court the company was just trying to offer consumers the means to do that and that they had a fair use right to do that.

"The message this sends is if you get into the business of enabling consumers to do with DVDs what they've long done with CDs, you'll get sued out of the business."
--Fred von Lohmann, EFF attorney

But after hearing initial arguments from Real and the studios, Patel quickly slapped a preliminary injunction that prevented sales of RealDVD. Things went down hill from there.

Fred von Lohmann, senior staff attorney with the Electronic Frontier Foundation, a group that advocates for tech companies and Internet users, defended Real's pursuit of the case. He said Real could have provided real benefit to consumers, if not with RealDVD, then eventually with a DVD player that would have incorporated some of the software's copying abilities. Real was working on a player, codenamed Facet, which would have created copies of DVDs and stored more than 70 films on its hard drive.

"(Real's testimony) made it clear that Real was out to deliver to consumers a product that people wanted to see," von Lohmann said. "I think the message this sends is if you get into the business of enabling consumers to do with DVDs what they've long done with CDs, you'll get sued out of the business. I think that's bad news for consumers. What that means is that if you want to create a digital back-up of your movies, you have to pay for that a second time on iTunes."

Judging from statements made by Real previously, pursuing the case will end up costing it well over $10 million. This is part of Rob Glaser's legacy.

Glaser founded the company and oversaw operations as CEO for a decade before being eased out by Real's board last year. He remains at the company as chairman.

He led Real to a huge court victory against Microsoft after accusing the company of illegally using its Windows monopoly to hurt digital media rivals. Since then, critics have accused Glaser of being too focused on trying to litigate Real into becoming a successful company.

While interest in streaming media skyrocketed, an area that Real should have dominated, the company under Glaser's leadership sat on the sidelines.