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Kaleidescape: Here we go again - October 26, 2007

Members of DVD-CCA may not have to wait to Nov. 7 to weigh the results of passing a proposed amendment to the CSS license aimed at overturning the verdict in the Kaleidescape case. They may hear from Kaleidescape's lawyers before they have a chance to vote.

"We may send another letter before the meeting," Kaleidescape CEO Michael Malcolm told Media Wonk Friday. "We haven't decided yet but it's one of the things we're considering."

The purpose of the letter, he said, would be to reiterate Kaleidescape's earlier warning to the CSS licensing agency that it risks "substantial antitrust liability," if it's Copy Protection Advisory Council (CPAC) were to approve the amendment.

Although the proposed amendment does not refer to Kaleidescape by name, it would explicitly prohibit the playback of DVD content by licensed devices unless the original DVD is present in the drive.That would strike at the heart of Kaleidescape's server design, which are built to let users dispense with the original disc by playing back encrypted DVD content directly from a hard drive. 

In fact, both amendments up for consideration at the next CPAC meeting could land the group in legal trouble, Malcolm warned, including one meant to spell out the procedures for so-called managed-copy.

According to Malcolm, the latest version of the managed-copy amendment--circulated last week--includes a new paragraph not contained in earlier versions that would have same effect on Kaleidescape as requiring the original disc to be in the tray during playback.

The paragraph reads:

(6) No Other Playable Copies.                                                                                                                  
Other than as set forth in this Section 6.2.9.3, DVD Products shall not
be designed to make or direct the making of a playable, persistent
copy of CSS Data.

Even within an overall managed-copy scheme, Malcolm said, the new paragraph would make it impossible to design a server that stored playable copies on a hard drive.

"We were frankly surprised to see these two amendments," he said, with a bit of a wry chuckle. "They're just asking for an antitrust suit."

Interestingly, though Kaleidescape has become a target of the studios, Malcolm isn't completely unsympathetic to their position.

"Maybe the way to handle this is with some kind of tax, or fee on recorders that could be distributed to the copyright owners, the way they did with digital audio tape a few years back," he said (actually 1988). "That way, anyone who was willing to pay the fees could design innovative products without having to go through what we've gone through."

Meanwhile, Kaleidescape's business continues to expand, he said. When he spoke with Media Wonk, Malcolm was just back from the National Business Aircraft Assn., convention in Atlanta, where he was in talks with the makers of corporate jets interested in installing in-flight entertainment systems.

"I think it could be a very good business for us," he said. "We're already the de facto standard on really big yachts, so it's sort of a natural extension to get into aircraft."

UPDATE: A knowledgeable reader assures Media Wonk that the new paragraph in the proposed managed-copy amendment would not prevent servers from being designed to store playable copies of DVDs on a hard drive. Rather, servers would simply have to be capable of connecting to a managed-copy authorizing service to get "permission" to make a copy, after which the copy could be played from the hard drive.

Noted.
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