Studios to Consider 'Managed Copy' Provisions Disabling DVD Copying

Last July, an agreement was reached between Kaleidescape - a manufacturer of a hard-drive-based DVD content copying device for consumers - and a group representing the rights holders for key DVD copy protection provisions. That agreement presumably enabled licensed copies to be burned through services such as Kaleidescape, which themselves would require licenses.

Despite that agreement, and despite a California court decision last April in Kaleidescape's favor, the DVD Copy Control Association will meet tomorrow with representatives of three movie studios to debate whether to amend their existing licenses in such a way that Kaleidescape's service would be disallowed by other means.

One key provision under consideration is technically - if not euphemistically - called managed copy. Proposed by 20th Century-Fox, Disney, and Warner Bros., it would actually prohibit a copied video DVD from being playable in DVD players without the original DVD also being present in the machine.

"DVD Products, alone or in combination with other DVD Products, shall not be designed to descramble scrambled CSS Data when the DVD Disc containing such CSS Data and associated CSS Keys is not physically present in the DVD Player or DVD Drive (as applicable)," reads the new managed copy clause advanced by the three studios on October 16.

It's a safe estimate that most DVD players in use today only have one tray.

Kaleidescape's key consumer product is a hard drive-based video playback system, onto which DVD owners can copy their existing discs. To prevent copied content from being used in any other way, the company actually adds a layer of content protection to the copy on the hard disk, theoretically disabling its use in any other format or on any other device. However, to comply with the law, the re-protected copy contains an image of the original video which contains the original CSS copy protection.

In an open letter to the DVD CCA's Content Protection Advisory Council (CPAC) last Thursday (PDF available here), Kaleidescape CEO Michael Malcolm noted Judge Leslie Nichols' April decision, which found that the interest holders in DVD CCA felt no ill effects from consumers' use of Kaleidescape equipment. Despite that decision, Malcolm argued that the studios appear to be carefully manipulating the definition of that elusive phrase "managed copy," specifically to thwart the interests of anyone who might want to technologically leverage what they perceive as their intellectual property.

"The current 'Managed Copy Amendment' contains no requirement that any studio make even a single movie available for managed copying," Malcolm wrote. "Thus, even if managed copying technologies are approved and computer or consumer electronics companies build products incorporating managed copying, there is no requirement that the studios make any movies at all available for managed copying. The only mandatory feature of the current 'Managed Copy Amendment' is the final provision...the prohibition on the making of persistent copies...All the rest is illusory and is nothing more than another shameless attempt by certain members of the DVD CCA to put Kaleidescape out of business."

But last September, the DVD CCA proudly announced its members had reached an agreement on how to implement the very technology Malcolm says it's now working to drive out of existence. As a result of the agreement, the group said, retailers could produce licensed DVD copies in-store with CSS protection intact, and consumers could benefit from being able to make licensed copies themselves.

As DVD CCA Board Chairman Chris Cookson said at the time, "This important change is in direct response to industry and consumer demand for new legal alternatives for the creation and digital distribution of secure DVD content. Now that the process needed to enable this exciting capability is complete, we anticipate that new products and services will quickly appear in the marketplace."

A similar attempt to amend the managed copy rules was made last June, but was tabled after an earlier letter from Kaleidescape's Malcolm helped cast doubt upon the concept. As he reminded the DVD CCA in his November 1 letter, and as the judge found in April, it is actually illegal to leverage one's copyright holdings for anti-competitive purposes.

"Here, the studios sponsoring these amendments are attempting to wrongfully extend their copyrights beyond what the law grants them in two directions," he wrote. "First, by proposing these amendments, they are attempting to use the combined leverage of their copyrights to restrict innovation and competition in the market for DVD playback devices and technologies. Because their copyrights give them no right to control this separate market, this is an extension of their copyrights beyond their lawful limits."

The DVD CCA's purview is limited to red-laser video discs, and not high-definition blue-laser discs such as HD DVD or Blu-ray.

Judge Nichols' decision is currently under appeal by the DVD CCA. In the meantime, Kaleidescape says if the CPAC votes in favor of the studios' proposed licensing adjustment tomorrow, the company's response would likely result in more "years of litigation."