RealNetworks not the only loser in DVD flap

Last week, RealNetworks got all the press after it officially lost the first round of its long-running fight against the Hollywood movie studios and the association that governs and controls the DVD standard. The upshot for Real is that its RealDVD product will remain in limbo for now -- and possibly forever -- unless it can work out a deal with Hollywood (unlikely) or prevail in court (somewhat less so, but still a longshot).

But Real wasn't the only company that lost in this legal arena last week. Another company, Kaleidescape, also suffered a serious legal setback that could be hugely problematic for the company going forward.

Kaleidescape is the maker of enormously expensive video jukeboxes designed for the ultra-rich and the obsessive videophile: You pop in a DVD and the hardware rips it to a bank of hard drives for viewing at your convenience. A Kaleidescape box can store hundreds of movies and serve them up on demand, even skipping the FBI warning and all that junk. (I've seen the hardware firsthand and it's mightily impressive.)

Since Kaleidescape's hardware requires a DVD to be ripped, it has to bypass the DVD copy control system -- and that's what landed Kaleidescape in a similar situation as Real a couple of years ago. But Kaleidescape won that case, setting a precedent that everyone who has followed -- including Real -- has cited as a reason why their DVD-copying product should also be perfectly legal.

But now that case has been overturned, following an appeal by the DVD CCA filed earlier this summer, and the ruling orders a new trial of the original case. Kaleidescape says it hopes to take the case to the California Supreme Court eventually.

The legal minutiae of the ruling is complicated and probably not worth exploring in detail here. (Suffice it to say that the DVD Copy Control Association had additional rules separate from its formal contract regarding DVD copying that Kaleidescape says it didn't know about when it signed that contract, but which the appeals court says should be enforced.)

Kaleidescape has a lengthy FAQ on the topic available if you're interested. For now, it's worth noting that Kaleidescape is still claiming its hardware and business are "100% legal" and that they will continue to be sold and supported on the market.

More news as it develops.

Via Technologizer.