Kaleidescape leaves Hollywood blu in the face

Well, here we go again. With its five-year litigation with the DVD Copy Control Association over its original DVD jukebox still not resolved, Kaleidescape Systems on Tuesday announced plans to roll out a new disc player that will import high-def movies from Blu-ray Discs onto Kaleidescape home media servers, along with conventional DVDs and CDs. The new player, the M500, won’t actually ship until May 18, which gives the studios (or the Advanced Access Content System Licensing Administrator, the Blu-ray equivalent of DVD-CCA) a week to try to file a new suit and persuade a court to issue a temporary restraining order preventing the M500 from shipping.

Assuming they decide to sue, that is. On the face of it, Tuesday’s announcement by Kaleidescape would seem to invite a very similar lawsuit as the one DVD-CCA filed against the company back in 2004. As it did with its original DVD system, Kaleidescape secured all the necessary technology licenses needed to build a Blu-ray player, including a license for the AACS copy-protection system. Also as with the CSS copyright protection system for DVDs, Kaleidescape maintains the AACS license does not, as a legal matter, prohibit the copying of Blu-ray discs, at least not in the manner by which Kaleidescape creates a hard-drive copy of the movie.

In the case of DVDs, of course, the DVD-CCA, which oversees the CSS license, had a very different interpretation of what was and was not permitted under the license agreement, and sued Kaleidescape in California state court for breach of contract on grounds that the Kaleidescape player violated the provisions in the license agreement that prohibit copying.

In April 2007, however, the trial court found that the rules purporting to prohibit copying were not actually part of the CSS license because they were contained in a separate document that was not incorporated by reference into the main license agreement. That finding rendered the question of whether Kaleidescape had actually violated the rules moot — you can’t be in breach of what’s not in the contract — so the court never decided the question.

DVD-CCA appealed the decision and in August, the California Court of Appeal overruled the lower court, declaring that the rules regarding copying were, in fact, properly part of the contract. Since that was the only question before it, however, the appeals court also reached no decision on whether Kaleidescape had actually violated the rules. Instead, the case was sent back for a new trial to determine whether in fact the rules prohibit copying and whether in fact Kaleidescape is not in compliance with those rules. Read More »