Judge Denies Injunction Stay in DVD CCA Case Vs. Kaleidescape

The Santa Clara County Superior Court of California has denied Kaleidescape’s request for a stay of a permanent injunction on the company’s DVD server that was issued earlier this month (CED March 13 p1). Judge William Monahan ordered the injunction on March 8, asserting that the DVD Movie Server breached Kaleidescape’s contract with the DVD Copy Control Association (DVD CCA) by selling a product that makes a copy of protected DVD content on a server and allows it to be played back without the presence of the disc. The court had issued a tentative judgment in January in support of DVD CCA claims that Kaleidescape’s DVD servers violated the agreement (CED Feb 1 p4).

Following the final decision earlier this month, Steven M. Zager of Akin Gump, counsel to DVD CCA, said “After a lengthy trial, the Court determined Kaleidescape had agreed to a contract with clear requirements for using the Content Scramble System (CSS) and knowingly violated these terms when it created and sold its DVD movie server system. For nearly 8 years since litigation began, the company has continued to sell and profit from this product. It is time for the decision of the Court and the terms of the contract to be enforced.” Kaleidescape didn’t respond to our request for comment by our deadline.

According to documents, a permanent injunction due to go into effect April 8 said Kaleidescape and its franchisees, and those acting in concert with them or at their direction, “are hereby permanently restrained and enjoined from directly or indirectly making, having made, offering to sell, marketing, importing or otherwise transferring any DVD Playback Product unless that playback product a) obtains the Disc Key and Title Key(s) from a DVD Disc each time one or more Titles is to be played back; b) ensures that the DVD Disc is physically present in the DVD Playback Product when playback of one or more Titles from such DVD Disc is occurring; c) does not make a persistent copy of any encrypted or unencrypted Disc Key or Title Key(s); and d) does not make any persistent playable copy of any Title."

Kaleidescape told us earlier this month it believes that “under California law, the injunction should be automatically stayed and we are operating under this belief,” a Kaleidescape spokesman told us. The company will appeal the most recent decision, he said. Under the legal update on Kaleidescape’s website, company CEO Michael Malcolm said, “Kaleidescape operates with a very high degree of integrity, and we work meticulously to comply with each and every agreement that we sign, so this ruling is extremely disappointing.” The company has “always believed, and continue to believe, that our products comply with the CSS license agreement, and in court we will continue to fight the DVD CCA’s allegations to the contrary,” Malcolm said.

The March 8 decision is on an appeal of a decision that ruled in favor of Kaleidescape in 2007. Neither Kaleidescape nor DVD CCA responded to our request for comment on the latest ruling by our deadline.