RealNetwork Settles DVD Copying Suit

TechFlash reports: RealNetworks settled litigation over RealDVD, its software for making copies of DVDs on PC hard drives, agreeing to a permanent injunction against sales of the product and paying $4.5 million in legal costs and other fees to six major Hollywood studios and others that challenged the technology.

It's the latest step in the company's effort to narrow its focus to its core businesses, said Bob Kimball, the company's president and acting chief executive, in a news release announcing the settlement.

"Until this dispute, Real had always enjoyed a productive working relationship with Hollywood," Kimball said. "With this litigation resolved, I hope that in the future we can find mutually beneficial ways to use Real technology to bring Hollywood's great work to consumers."

The company says it will offer full refunds to the 2,700 existing RealDVD customers. RealNetworks introduced RealDVD in September 2008 at an introductory price of $29.99, planning to ultimately charge $49.99, but distribution of RealDVD was halted a few days later as a result of the litigation.

RealDVD was an example of RealNetworks' willingness to challenge industry norms under the leadership of Rob Glaser, its founder and chairman, who stepped down as chief executive in January. RealNetworks argued that it was within its rights to offer consumers a technology to make copies of DVDs that they own. But movie studios said RealDVD would be used to copy movies rented or borrowed from their friends, contending that it circumvented the Content Scramble System (CSS) and violated the Digital Millennium Copyright Act.

RealNetworks suffered a series of setbacks in the case, including a blistering ruling from U.S. District Judge Marilyn Hall Patel, who said the company's interpretation of its CSS license would lead to "absurd results," and amounted to a "failed coverup" of its actions.

Under its new strategy, the company is focusing on its RealPlayer software and its infrastructure for delivering ringtones, music, video and other content to wireless carriers. In the news release, interim CEO Kimball made it clear that RealNetworks wants to smooth over its relationship with the studios: "With this litigation resolved, I hope that in the future we can find mutually beneficial ways to use Real technology to bring Hollywood's great work to consumers," he said.