DVD technology faces legal test

The DVD Copy Control Association, the group that owns the copy-protection technology contained on DVDs, said a company called Kaleidescape is offering products that illegally make copies of DVDs. The company, which has won several recent consumer electronics awards, said it has worked closely with the DVD CCA for more than a year, and will fight the suit, filed on Tuesday.

Kaleidescape creates expensive consumer electronics networks that upload the full contents of as many as 500 DVDs to a home server, and allow the owner to browse through the movies without later using the DVDs themselves. That's exactly what the copy-protection technology on DVDs, called Content Scramble System (CSS) was meant to prevent, the Hollywood-backed group said.

"The express intent and purpose of the contract and CSS are to prevent copying of copyrighted materials such as DVD motion pictures," Bill Coats, a DVD CCA attorney, said in a statement. "While Kaleidescape obtained a licence to use CSS, the company has built a system to do precisely what the licence and CSS are designed to prevent -- the wholesale copying of protected DVDs."

The DVD technology group has stepped up its efforts in recent months to control hardware that it believes isn't abiding by the rules of DVD copy protection, suing several chip companies. The Kaleidescape lawsuit in particular could help put legal boundaries around the burgeoning home theatre market.

The company sells a high-capacity home movie server, which can store hundreds of movies at a time, allowing access from different places in a networked home to as many as seven films at once. Putting the movies on the server requires copying them from the original DVDs, however.

The products don't come cheap. A basic system, storing 160 movies, sold for about $27,000 earlier in the year.

Technology companies including Microsoft have envisioned doing much the same thing with computers such as a Windows Media Centre PC. Movies recorded from television or downloaded from a video-on-demand service can be played throughout a networked home using a Media Centre Extender.

Kaleidescape Chief Executive Officer Michael Malcolm said his company had designed its products specifically to the terms of a licence from the DVD CCA, and that he had repeatedly updated the group on product plans.

"We are flabbergasted by this lawsuit," Malcolm said. "We have gone to great pains to make our system comply 100 percent with licences and all the associated technical procedures and requirements."

The company will fight the lawsuit and is likely to countersue the DVD CCA, Malcolm added.

The suit was filed in California state court in Santa Clara County. The group is asking the court for unspecified damages and to stop Kaleidescape from further sales of its products.