Realnetworks, Inc. v. Dvd Copy Control Ass'n
| Decision Date | 11 August 2009 |
| Docket Number | No. C 08-04719 MHP.,No. C 08-04548 MHP.,C 08-04548 MHP.,C 08-04719 MHP. |
| Citation | 641 F.Supp.2d 913 |
| Parties | REALNETWORKS, INC., a Washington Corporation; and Realnetworks Home Entertainment, Inc., a Delaware Corporation, Plaintiffs and Counter-defendants, v. DVD COPY CONTROL ASSOCIATION, Inc., a Delaware nonprofit corporation, Disney Enterprises, Inc., a Delaware corporation; Paramount Pictures Corp., a Delaware corporation; Sony Pictures Enter., Inc., a Delaware corporation; Twentieth Century Fox Film Corp., a Delaware corporation; NBC Universal, Inc., a Delaware corporation; Warner Bros. Enter. Inc., a Delaware corporation; and Viacom, Inc., a Delaware Corporation, Defendants and Counter-complainants. Universal City Studios Productions L.L.L.P., Universal City Studios L.L.L.P., Paramount Pictures Corporation, Twentieth Century Fox Film Corp., Sony Pictures Television Inc., Columbia Pictures Industries, Inc., Sony Pictures Entertainment Inc., Disney Enterprises, Inc., Walt Disney Pictures and Warner Bros. Enter. Inc., Plaintiffs, v. Realnetworks, Inc., a Washington Corporation; and Realnetworks Home Entertainment, Inc., a Delaware Corporation, Defendants. |
| Court | U.S. District Court — Northern District of California |
Michael A. Berta, Tracy Tosh Lane, Esq., Colleen Bal, James A. Diboise, Wilson Sonsini Goodrich & Rosati Professional Corporation, San Francisco, CA, Alan E. Littmann, Bartlit Beck Herman Palenchar & Scott, Chicago, IL, Donald E. Scott, Karma Micaela Giulianelli, Bartlit Beck Herman Palenchar & Scott LLP, Denver, CO, Leo Patrick Cunningham, Wilson Sonsini Goodrich & Rosati, Palo Alto, CA, for Plaintiffs and Counter-defendants/Defendants.
Maria Ellinikos, Reginald David Steer, Teresa Wen Chia Wang, Akin Gump Strauss Hauer & Feld LLP, Jonathan Hugh Blavin, Attorney at Law, Rebecca G. Lynch, Rohit K. Singla, Munger, Tolles & Olson, LLP, San Francisco, CA, Mark Frederick Lambert, Mark R. Weinstein, William Sloan Coats, III, White & Case LLP, Palo Alto, CA, Michael Craig Small, Stephen Roy Mick, Esq., Akin Gump Strauss Hauer & Feld LLP, Bart Harper Williams, Glenn Douglas Pomerantz, Kelly Max Klaus, Laura Ashley Aull, Munger Tolles & Olson LLP, Eric James German, Mitchell Silberberg et al., Robert Henry Rotstein, Mitchell Silberberg & Knupp LLP, Los Angeles, CA, Daniel Ernest Robbins, Motion Picture Association of America Inc., Encino, CA, Gregory Paul Goeckner, Sherman Oaks, CA, for Defendants and Counter-complainants/Plaintiffs.
On September 30, 2008, RealNetworks, Inc. and RealNetworks Home Entertainment, Inc. (together, "Real") brought action in this court against the DVD Copy Control Association, Inc. ("DVD CCA") and several major motion picture studios, seeking a declaratory judgment that Real has neither breached its license agreement with DVD CCA nor violated the Digital Millennium Copyright Act, 17 U.S.C. sections 1201 et seq. ("DMCA") by manufacturing and distributing its "RealDVD" product. That same day, several major motion picture studios brought action in the United States District Court for the Central District of California to enjoin Real from manufacturing, distributing or otherwise trafficking in RealDVD, in alleged violation of the DMCA and as a breach of contract. The Central District case was transferred to this court, where the cases were related and consolidated.
Following an October 3, 2008 hearing, the court granted the motion picture studios' requested Temporary Restraining Order ("TRO") to restrain and enjoin Real from manufacturing, distributing or otherwise trafficking in RealDVD or any products substantially similar. The TRO has been extended several times at the consent of all parties pending the completion of the motion picture studios' and the DVD CCA's motions for a preliminary injunction, which is now before the court. The hearing on this matter was held over five days in April and May 2009.
Having considered the parties' submissions, arguments of counsel, and the case file, the court rules as follows on the preliminary injunction motion. The court makes the following Findings of Fact and Conclusions of Law to support its ruling. To the extent that any findings of fact are included in the Conclusions of Law section, they shall be deemed findings of fact, and to the extent that any conclusions of law are included in the Findings of Fact section they shall be deemed conclusions of law.
1. RealNetworks, Inc. is a company incorporated and based in Seattle, Washington, that develops, manufactures and sells platforms for the delivery of digital media. See Amended Complaint for Declaratory Relief, Docket No. 62, ¶ 10, Exh. A ("Compl.").1 RealNetworks Home Entertainment, Inc. is a subsidiary of RealNetworks, Inc. and is incorporated in Delaware, with its principal place of business in Seattle, Washington. Id. ¶ 11.
2. Real started fifteen years ago as a pioneer in the market for technology that relates to the delivery of audio and video content over the Internet. See Hearing Tr. (Glaser) at 440:8-9, 440:21-441:19. Today, Real sells several popular product lines that deliver streaming audio and video of copyrighted content online, which Real licenses from content owners in the film, television, music and electronic gaming industry. Id. at 442:7-14.
3. Real has never been accused of copyright infringement from a major content provider. Id. at 443:17-23. Real has brought and prevailed on DMCA claims for circumvention of Real's access control and copy protection measures it affords to content owners. See RealNetworks, Inc. v. Streambox, Inc., 2000 WL 127311, *8 (W.D.Wash. Jan.18, 2000).
4. The motion picture studios involved in this consolidated action, as either plaintiffs and counter-defendants or declaratory relief claim defendants, are: Disney Enterprises, Inc., Paramount Pictures Corp., Sony Pictures Entertainment, Inc., Twentieth Century Fox Film Corp., NBC Universal, Inc., Warner Bros. Entertainment, Inc., Viacom, Inc., Universal City Studios Productions L.L.L.P., Universal City Studios L.L.L.P., Sony Pictures Television, Inc., Columbia Pictures Industries, Inc., and Walt Disney Pictures (collectively, "Studios").
5. The Studios are content owners of copyrighted works, including movies and recorded television programs. The Studios or their subsidiaries distribute their movies on Digital Versatile Disks ("DVDs"). See Studios' Answer, Docket No. 59, ¶ 20.
6. DVD CCA is a not-for-profit corporation that consists of companies in the motion picture, consumer electronics and computer (hardware and software) industries. Compl. ¶ 4. These three industry groups represent the content providers, the consumer electronics manufacturers and the information technology companies. See Nelson Dec., Docket No. 217, Exh. 7 (Parsons Dep.) at 23:2-6. Certain of the Studios in this action, namely, Walt Disney Pictures, Paramount Pictures Corp., Sony Pictures Entertainment, Inc., Twentieth Century Fox Film Corp., Universal City Studios L.L.L.P. and Warner Bros. Entertainment, Inc., are members of the DVD CCA. See Studios' Answer ¶ 4.
7. DVD CCA is governed by a twelve-member Board of Directors. DVD CCA's Certificate of Incorporation provides for five "Motion Picture Company Directors," three "Consumer Electronics Manufacturer Directors," three "Computer Manufacturer Directors," and one "At Large" director. Suppl. Pak Dec., Docket No. 249, ¶ 2 & Exh. A 8. The purpose of DVD CCA is to license technology relating to content protection for DVDs. Nelson Dec., Exh. 7 (Parsons Dep.) at 22:1-3. Specifically, DVD CCA licenses Content Scramble System ("CSS") technology to manufacturers of DVD devices and software pursuant to a standard license agreement ("CSS License Agreement"). Compl. ¶ 4; Pak Dec., Docket No. 199, ¶ 2.
9. The CSS License Agreement confers third-party beneficiary rights on any "Eligible Content Provider," as defined in Section 9.5 of that agreement. Id. As such, these Studios are Eligible Content Providers and third-party beneficiaries with standing to assert claims for breach of contract of the CSS License Agreement. See Counter-Complaint, Docket No. 15, ¶¶ 34-50, Studios' Answer ¶ 4.
10. The CSS technology grew out of a series of meetings of a group known as the Copy Protection Technical Working Group ("CPTWG"). Parsons Dec., Docket No. 199, ¶ 4; Hearing Tr. (King) at 75:14-76:5. During a series of CPTWG meetings that began in approximately the mid-1990s, representatives from the motion picture, consumer electronics and computer industries all recognized the common benefit to be gained in adopting a single and standard format, the DVD, for delivering digital content to the public. Id. However, the motion picture companies were concerned about the possible distribution of their copyrighted content on DVDs without a system to prevent the high-quality digital format from being copied by consumers. Hearing Tr. (King) at 73:20-74:12; 91:19-92:2. The consumer electronics and information technology companies, for their part, wanted a content protection system that could be implemented without adding significantly to the cost of their products. Parsons Dec. ¶ 4.
11. Following many meetings, the DVD video format was adopted as the standard digital medium for home distribution of movies and the three industries, through the CPTWG, endorsed CSS as an encryption scheme to protect movies on DVDs from being copied. The CSS technology was specifically developed to create a secure system for the dissemination and playback of copyrighted content on DVDs, while preventing copying, so that consumers would be able to play all DVDs on all players. Hearing Tr. (King) at 79:22-82:12; see also, Universal City Studios, Inc. v. Reimerdes, 111 F.Supp.2d 294, 309-311 (S.D.N.Y.2...
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