Kaleidescape Mulls Possible Outcomes in DVD CCA Suit

Kaleidescape would not likely be required to shut down DVD servers already in the market if the tentative judgment issued last month by a California appeals court in DVD CCA’s lawsuit against Kaleidescape becomes final, said Stephen Watson, chief technology officer of Kaleidescape. “It would be very unusual for anybody to do anything to systems out there belonging to customers,” Watson told us.

Customers already bought those systems and “how could it possibly be that we would have to do something to those systems?” he said, referring to dealer concerns that the networked devices in the market would be rendered inoperable as part of the final decision in the movie studio-backed suit. “I don’t think that’s going to happen,” Watson said, saying “it wouldn’t be right. I don’t know for any precedent for that."

Asked what reassurance the company can give to dealers who are anxiously awaiting the outcome of the trial following published reports that the judge in the case issued a tentative decision in favor of the DVD CCA, Watson said: “We can give the reassurance that we will continue to fight.” Kaleidescape plans to appeal the decision when it comes, “but so far we just have this tentative decision so we're not even in that position yet,” he said.

The suit concerns Kaleidescape’s DVD servers and not its Blu-ray servers, which meet licensing requirements set forth by the Blu-ray Disc Association. The Blu-ray license allows consumers to make an “authorized move,” which allows either the Blu-ray disc or a copy of the disc on a server to be playable “but not both,” Watson said. Kaleidescape has met those conditions by having consumers either store a disc in the tray of the player or in one of its 320-disc “vaults” which allows consumers to have all the instantaneous features of a server to go through scenes or bookmarks without having to wait for a disc to cue up in a carousel. “If you take the disc out, you don’t get to play the copy on the server anymore,” Watson said.

Watson said it’s possible that the same kind of scenario could be required for DVDs as a result of the impending decision. “What could happen, although it’s just speculation at this point, would be that systems sold in the future may be required to have a DVD involved just as we do today with Blu-ray,” he theorized. Theoretically, “at some point, a date will come when it’s required that not only Blu-ray discs will be required to be present for playback but DVD as well,” he said. Currently, a DVD doesn’t have to be present in Kaleidescape’s Blu-ray players for access from the vault, he said.

While the Blu-ray player/server solution presents a pricey proposition for consumers, Watson said “it’s unfortunate that it has to be that way but I can understand why the studios would be concerned. They don’t want proliferation of their content, and that makes sense."

But Watson emphasized the company is still in a “state of uncertainty. We actually don’t have a decision and don’t know what the impact of a decision may be.” Meantime, the company is “doing everything we can to support existing customers and we continue to make a product that’s attractive to the market and exciting and fun to have,” he said.

Regarding whether the company plans to address end users who are concerned over news reports about Kaleidescape systems and the company in general, Watson said, “the story came out through this tentative decision that was leaked by DVD CCA. We feel that it’s inappropriate for us to comment until we have a real decision.” Citing a lot of “legal back and forth,” Watson said, “We've been forced into the position of talking about a something that we don’t know about, so all we can say is we'll do our best and keep fighting and make great products."

DVD CCA told us last week it is “very pleased with the tentative decision, but it is tentative, and we prefer to refrain from further comment until a final decision is issued” (CED Feb 1 p4).