RealNetworks halts sale of ‘RealDVD’

Real also agreed to stop the production of its new RealDVD player, codenamed ‘Facet,’ having the ability to create copies of DVDs and store over 70 films on its hard drive.

Bob Kimball, the acting chief executive officer of RealNetworks, said in a statement on Wednesday: “We are please to put this litigation behind us. Until this dispute, Real had always enjoyed a productive working relationship with Hollywood. With this litigation resolved, I hope we can find mutually beneficial ways to use Real technology to bring Hollywood’s great work to consumers.”

Real will also be paying $4.5 million to the Hollywood studios and will be refunding purchases of around 2,700 customers of its product.

Daniel Mandil, general counsel and chief content protection officer for the MPAA, said that the studios are satisfied with the settlement.

The lawsuit between Real and MPAA
In September 2008, Sony Corp.’s Sony Pictures, Walt Disney Co.’s Disney Studio and several others in collaboration filed a lawsuit against RealNetworks alleging copyright infringement.

According to the studios, Real’s RealDVD technology is similar to an illegal pirating tool that, in long run, could dissuade customers from buying movies on DVD, when they could cheaply copy, rent, and return.

In defense, RealNetworks lawyers argued that the software had piracy protections and only allows owner to make a single copy and provides its users a legitimate way to back up copies of movies legally purchased.

In October 2008, the U.S. District Court Judge Marilyn Hall Patel ordered a halt to the sales of RealDVD temporarily, though a few days after the company started selling the $30 software.

But in August, the judge ruled in favor of Hollywood studios and granted a preliminary injunction against RealDVD that prevented Real from distributing the software any further.

Real also filed antitrust violations suit against the studios, but in January, the judge dismissed its counterclaim.

Bad news for the customers?
A senior staff attorney at the Electronic Frontier Foundations (that advocates for the tech companies and Internet users), Fred von Lohmann, who defended Real’s case, believes that Real could have provided real benefit to consumers.

"(Real's testimony) made it clear that Real was out to deliver to consumers a product that people wanted to see. I think the message this sends is if you get into the business of enabling consumers to do with DVDs what they've long done with CDs, you'll get sued out of the business. I think that's bad news for consumers," said Lohmann.