RealNetworks vs. Hollywood in DVD 'Ripping' Case Starts

— -- RealNetworks and Hollywood studios are squaring off today in a U.S. District Court in San Francisco where Judge Marilyn Hall Patel will determine if the program RealDVD violates laws created to prevent the copying of DVDs that use digital-rights-management technology. RealDVD is a $30 software program that allowed you to copy DVDs onto your computer. Last year a judge halted the sale of the program.

RealNetworks maintains its RealDVD software is a convenience to consumers who can copy DVDs to a laptop for easy disc-free playback. The software, RealNetworks points out, doesn't strip any copy protection from the DVD.

Leading movie studios, represented by the Motion Pictures Association of America, counter RealNetworks software violates the terms of a licensing agreement covering the digital-rights-management protocols used by DVDs. It asserts RealDVD violates the Digital Millennium Copyright Act (DMCA) because it bypasses the copy protection built into DVDs.

Late last year seven major Hollywood studios filed a lawsuit against RealNetworks seeking a permanent ban on sales of RealDVD. The court granted lead plaintiff Universal Pictures a temporary ban on sales of RealDVD until at least this month's court proceedings. In a suit filed the same week last year RealNetworks also submitted a lawsuit to the San Francisco court seeking a declaratory judgment permitting it to sell RealDVD.

The chief concern Hollywood has with RealDVD is that the software will allow people to "rent, rip, and return" DVDs from services such as Netflix without actually paying for a movies they keep. Hollywood sees services like RealDVD as a major threat to the billions in revenue earned through DVD sales.

RealNetworks refutes the MPAA's chief complaint that it bypasses, or cracks, DVD copy protection called CSS. It also denies any violation of the DMCA because RealNetworks licenses the CSS encryption. RealNetworks adds it preserves the DVD's CSS copy protection because its RealDVD program makes an exact copy of the DVD, placing an exact image of the disc on the customer's computer hard drive -- CSS protection and all.

RealNetworks claims RealDVD was designed to maintain a DVD's copy protection with personal use and travelers in mind rather than promote piracy. And as the company rightfully points out, those who really want to rip a DVD will have to turn to illegal free software that doesn't maintain any copy protection. (See related: DVD Ripping Flourishes)

Observers point out that Hollywood has a vested interest in nipping DVD copying technology at the bud for several reasons. One reason is to protect the sales of DVDs, which was estimated at $13.45 billion last year, according to Adams Media Research. Another is to crimp technological innovation when it comes to movie distribution and sales. Hollywood's tight ownership of movie distribution chain is already being threatened by the likes of Apple's iTunes Store and Amazon that sell digital downloads of movies.

Studios have innovated and addressed its customers' cries for disc-free convenience when it comes to movies. Recently leading Hollywood studios released premium DVDs that come with a built-in digital copy that can be transferred from a DVD to a computer. The DVDs, called iTunes Digital Copy, has a catch. The digital copy of the movie can only playback on iTunes software. iTunes Digital Copy is not widely available.

Judge Patel will hear testimony from each side's witnesses today. The case is scheduled to last three days.

(PC World's Tom Spring contributed to this report)