Hollywood vs Kaleidescape

Adhering to all the rules imposed by the DVD Copy Control Association apparently isn't enough to keep high-end startups out of court.

On December 7, attorneys for Kaleidescape, Inc. appeared in Santa Clara County Superior Court in response to a breach-of-contract lawsuit brought by the DVD Copy Control Association, a trade group of Hollywood film studios dedicated to stamping out piracy.

The Mountain View, CA–based technology company debuted its "Movie Player" home theater servers last January at the Consumer Electronics Show (CES). The systems, which start at $27,000, can store approximately 160 DVD movies—"imported bit-for-bit in native MPEG-2 format, including copy protection," according to an announcement made at the time. The systems can be linked together for larger storage, and allow access to the movie library from anywhere in the home. Many executives in the film industry reportedly own Movie Player systems.

Kaleidescape launched its products after careful review by the DVD Copy Control Association and Macrovision, Inc., and was fully licensed by them. Almost a year later, the association charged that Kaleidescape products make illegal copies of DVDs, and has sought an injunction against the company to stop sales of its products.

At issue is Kaleidescape's use of Content Scramble System (CSS), DVD's proprietary copy-prevention technology. "We've scrupulously followed every one of their requirements," Kaleidescape founder and CEO Michael Malcolm told the Associated Press. "They seem to think their license prevents the loading of movies onto hard drives, but they're simply wrong." The company plans to countersue.