RealNetworks calls Hollywood studios an 'illegal cartel'

RealNetworks is now pointing an accusatory finger at Hollywood, and yesterday filed a countersuit in the U.S. District court of Northern California calling the DVD Copy Control Association and its related Hollywood studios an "illegal cartel."

The suit originated late last year when Real's DVD archiving software RealDVD was taken to court, and then temporarily banned for violation of the Digital Millennium Copyright Act. The hearings continued, but it turned out that RealDVD wasn't the main reason for the litigation after all. The true threat, as RealNetworks would reveal, was a product known as "Facet" -- a set-top box that allows CSS-protected DVDs to be copied, stored, and recalled at any time, like a much cheaper Kalidescape (the product upon which Real based its initial defense.)

Real's latest suit accuses the DVD Copy Control Association and Studio defendants (Disney, Paramount Pictures, Sony Pictures, 20th Century Fox, NBC Universal, Warner Bros., and Viacom.) of a horizontal conspiracy, and antitrust violations regarding CSS control.

The suit reads, "If one major Studio had entered into a deal with Real...it would have made it difficult for the rest of the Studios to charge consumers supra-competitive prices for their own 'managed copy' products, and so eventually many would likely have entered into their own agreements with Real. Such a deal also would have demonstrated the clear lack of irreparable harm required for an injunction. Because of the significance of one Studio entering into a deal with Real, the Studios decided that they could not break ranks. Instead, hiding under the umbrella of an organization that they control -- the DVD CCA -- the Studio Defendants jointly campaigned to eliminate the possibility of any entity other than themselves competing in this market."

Real says it almost signed a deal with Paramount, but at the last minute, that studio said it would require a huge payment to deal with Real individually. "There is no place under the antitrust laws of the United States for competitors to agree with one another that they will not enter into individual business deals with another potential competitor, for fear that such a deal would undermine their collective position in the Courts or in the marketplace," the complaint reads.

RealNetworks has repeatedly taken the stance that it is looking out for the consumer, claiming that Hollywood studios want to charge DVD owners to exercise their "fair use" rights:

"Whether or not customers have a fair-use right to make backup copies of the DVDs they already have purchased, the Studios' collective agreement not to negotiate individual licenses for their content with RealNetworks...is nothing more than an illegal price fixing scheme between horizontal competitors. The harm to consumers from such a scheme is obvious -- they will pay higher prices for the privilege of making digital copies of their DVDs."