Court dismisses RealNetworks' antitrust counterclaims against studios in RealDVD suit

A federal judge has rejected RealNetworks' claims that the major movie studios violated antitrust law by banding together to prevent the sale of RealDVD, a software product that enables copying of DRM-protected DVDs. Last August, Judge Marilyn Hall Patel preliminarily enjoined Real from selling RealDVD, finding that the studios were likely to prevail in their argument that the software violates the anti-circumvention provisions of the DMCA. In the middle of the preliminary injunction hearing last spring, Real asserted antitrust counterclaims, which Judge Patel today dismissed without leave to amend.
RealDVD Antitrust Order

Given that a subsidiary of my current employer is a party to this suit, I'm not going to comment in any detail, other than to note the court's holdings that: 1) any injury Real allegedly suffered resulted from its decision to distribute a product in likely violation of the law; and 2) the studios had every right under the Noerr-Pennington doctrine to work together in their litigation against Real:

Real did not believe a license was required and indeed launched its product without having obtained any license. The distribution of its product has been disrupted only by the entry of a TRO, and later a preliminary injunction, by this court. Real’s injury resulted from that relief, which was necessitated by Real’s own possibly unlawful conduct. To the extent the Studios cooperated with one another and the DVD CCA to petition this court for relief, such cooperation unambiguously falls within the Noerr-Pennington exception to liability under the antitrust statutes. See generally Theme Promotions, Inc. v. News Am. Mktg. FSI, 546 F.3d 991, 1006 (9th Cir. 2008).

Here is a Bloomberg story about today's decision.

Viacom GC speaks on copyright and fair use

I just came across this very interesting lecture Viacom General Counsel Mike Fricklas recently gave at Yale College. Fricklas touches on such issues as why his company views piracy as a threat; what he sees as the biggest current problems (I anticipate a lot of action regarding "cyberlockers" like Rapidshare.com over the next couple years); how DRM (done right) enables business models; and how companies like Viacom rely on and indeed celebrate fair use. It's about 37 minutes long and definitely worth watching:



(Corrected to indicate that the lecture occurred at Yale College, not the law school.)

IP Colloquium: Can content survive online?

UCLA Law School professor Doug Lichtman has posted another edition of his IP Colloquium podcast, this one featuring a conversation among 3 in-house counsel at top technology and entertainment companies: Brad Smith of Microsoft, Scott Martin of Paramount Pictures, and Dan Cooper of MySpace. They touch on topics ranging from copyright enforcement on UGC sites, to the economics of online advertising, to the question whether new business models like Hulu's and Redbox's can support the creation of motion pictures. Definitely worth listening to, to get a sense of how these companies think about the legal, business, and technical issues being debated across the media world. CLE credit is available in CA, NH, TN, IL, NY, and WA.

Continuing my dialogue with Bill Patry: Is the customer always right?

Bill Patry and I are continuing our debate on his new blog. We tackle such issues as whether the customer is always right (I take the ever-popular "no" side), and whether there is an appropriate place for DRM. Please go to Bill's blog to read the whole thing.

California Court of Appeal reverses Kaleidescape decision; another blow to DVD copying

This has been a bad, bad week for those who want to copy DVDs. Yesterday, a federal judge in San Francisco enjoined RealNetworks from distributing its RealDVD software.

And today, a California appellate court reversed a decision by a Santa Clara County Superior Court judge, who had ruled that Kaleidescape, Inc. was not bound by language in a document called the "General Specifications" that prohibited making permanent copies of DVDs. The trial court's ruling had effectively legalized the selling of Kaleidescape's high-end "DVD jukeboxes." Today's ruling by the Court of Appeal held that the "General Specifications" were indeed part of the DVD CCA's CSS license entered into by Kaleidescape, and remanded to the Superior Court for further proceedings to determine whether Kaleidescape is actually in breach.

It's important to remember that this case involved only a purely state-law contract issue; there were no DMCA or traditional copyright claims in the Kaleidescape case.

Kaleidescape Decision

Court issues preliminary injunction in RealDVD case; solid victory for studios and DVD CCA

The major movie studios and the body that licenses the main DRM technology on DVDs have won another major legal victory in their fight against DVD ripping. In a 58-page opinion, Judge Marilyn Hall Patel -- famous for shutting down Napster a decade ago -- issued a preliminary injunction that keeps in place her temporary ban on RealNetworks' $29.99 RealDVD program, which enables consumers to copy DVDs. Judge Patel concluded that RealDVD violates the provisions of the DMCA that prohibit trafficking in software that circumvents DRM, as well as the license agreement it had obtained from the DVD CCA. Among the significant rulings in her opinion was her conclusion that there is no fair use exception to the DMCA's prohibition on trafficking in anti-circumvention devices -- a position that Real itself had embraced, and on which it had prevailed, in an earlier suit.
RealDVD Preliminary Injunction Order

Judge Patel's opinion appears, at least on the surface, to conflict with a 2007 decision from a California state court on the issue whether the CSS license issued by the DVD CCA permits the licensee to facilitate making permanent copies of DVDs. In a case brought by the DVD CCA against Kaleidescape, the maker of a high-end DVD server, a Santa Clara County Superior Court judge held that a document called the "General Specifications," which include a requirement that the DVD be present in the device during playback, is not part of the CSS license. (That decision is now on appeal.) But Judge Patel ruled that the General Specifications are part of the CSS license (see p. 44). Her opinion says that she "does not deem this finding in conflict with the
Kaleidescape holding, which involved different facts and a different party." Perhaps I'm missing something, but I simply don't see how the two decisions are reconcilable on this point.

While today's decision involved only the issuance of a preliminary injunction, and theoretically Real could achieve a different result at trial, Judge Patel's opinions were definitive and strongly-stated, and it seems unlikely that new evidence or arguments would emerge that could persuade her to change her mind. Real has asserted affirmative antitrust claims, which remain pending.

The MPAA issued a statement through its Chairman and CEO Dan Glickman praising today's decision:

We are very pleased with the court’s decision. This is a victory for the creators and producers of motion pictures and television shows and for the rule of law in our digital economy. Judge Patel’s ruling affirms what we have known all along: RealNetworks took a license to build a DVD-player and instead made an illegal DVD-copier. Throughout the development of RealDVD, RealNetworks demonstrated that it was willing to break the law at the expense of those who create entertainment content.

The creative community has been teaming for years with an array of technology partners to expand consumer choices for enjoying movies, TV shows and other content in diverse ways. This includes free streaming, on demand rentals, purchased downloads, as well as DVD bonus digital copies of entire TV shows, series and feature films. We are committed to advancing the consumer experience through technology while sustaining the creative community that makes the movies and TV shows we love. This will continue to be our member companies’ focus, and we look forward to continuing to make constructive progress in those areas.

Predictably, Real was not pleased:

We are disappointed that a preliminary injunction has been placed on the sale of RealDVD. We have just received the Judge’s detailed ruling and are reviewing it. After we have done so fully, we’ll determine our course of action and will have more to say at that time.

Here's an op-ed piece I wrote back in April for the San Jose Mercury News, explaining why this case is important to the studios. And here's my previous coverage, which includes links to many of the briefs.

Studios: Withheld patent applications contradict RealNetworks' position in RealDVD case

It's been over a month since the preliminary injunction hearing in the studios' case against RealNetworks over the "RealDVD" ripper, and still no decision from Judge Marilyn Hall Patel. But, as Greg Sandoval reports in CNET, the attorneys are still hard at work, and yesterday filed some very interesting papers that appear to directly contradict Real's litigation positions regarding ripping software known as ARccOS and RipGuard:

The Motion Picture Association of America has accused Real of misleading the court about the company's attempts to circumvent ARccOS and RipGuard and whether the technologies are actually copy protection measures.

Despite arguing the contrary in court, Real wrote in patent applications filed with the Patent and Trademark Office in 2007 and 2008, that the two software were indeed copy protections, MPAA alleges. Those applications were published by the patent office two weeks ago.

***

"Real and its witnesses have told the court that ARccOS and RipGuard are not copy protection technologies and that Real's engineers did not know how ARccOS and RipGuard worked," wrote MPAA lawyers in documents filed with U.S. District Court in San Francisco. "Yet Real simultaneously has told the PTO that RipGuard' and ArccOS are 'copy protection mechanisms' and then described specific techniques used by ARccOS and RipGuard."

The MPAA attorneys also said "Real has told the court, through witnesses and proposed findings, that ARccOS and RipGuard can only delay but cannot prevent a 'linear copy' of DVDs. But Real is insisting to the (patent office) that ARccOS and RipGuard can 'cause an archiving process to fail' or 'never complete'--exactly contrary to its representations to this court.

Studios request for judicial notice re patents applications

And for any true geeks, here are the patent applications themselves.

One interesting side note: Real's attorneys offered to stipulate to the admission into evidence of the patent applications -- but only if the studios refrained from accompanying them with any briefing explaining their significance. I wonder why...

UPDATE: Real has given a statement to Video Business:

The studios' motion is nothing more than a regurgitated argument of the same issues that have already been submitted to the court for decision, this time using misleading sound bites from patent applications of which the studios admit they have long been aware.... Hollywood is once again trying to use a sleight of hand to distract the court and the press from the real issue in this case: whether the studios should be allowed to take away consumers’ fair use rights only to sell it back to them.

Lots of rhetoric; zero substantive response to the studios' motion.

RealNetworks asserts antitrust claims against studios; claims CSS license is vehicle for group boycott

Press reports suggest that things are going pretty well for the major movie studios in their effort to convince federal judge Marilyn Hall Patel to enjoin the sale of RealNetworks' RealDVD ripping software. But Real isn't waiting for a ruling to hit back -- hard -- against the studios and the DVDCCA. Real is now seeking to broaden the case considerably and put its opponents on the defensive, charging that the studios violated federal and state antitrust law by allegedly engaging in a prohibited group boycott against Real.

Real's theory is that the studios agreed among themselves that none of them would enter into licenses with Real to allow their movies to be transferred to users' computers through RealDVD. Charges Real:

48. Any individual Studio could have decided not to enter into an agreement with RealNetworks and to sue to prevent its customers from using RealDVD to make copies of that Studio’s titles. Doing so individually, however, risked the possibility that another Studio might reach an agreement with RealNetworks to promote its titles in connection with the release of apopular new product. The litigating Studio then would face what could be a legal and public relations nightmare.

49. The Studio Defendants agreed that they would claim that they cannot enter into individual agreements with RealNetworks – in other words, they agreed collectively not to deal with RealNetworks. So, for example, they claim that, because of the CSS Agreement, Paramount cannot grant a license to make an archival copy of its own Iron Man DVD without the permission of Fox, Disney, and the rest. This is a horizontal group boycott, and it is a horizontal group boycott even though the Studios in fact have no right to grant or withhold authority to make fair use copies and RealNetworks does not need their consent.

RealNetworks Proposed Second Amended Complaint

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Real's antitrust allegations put before the court a number of difficult legal issues that are of vital importance to the studios, most prominently: 1) the extent to which the studios are protected by the Noerr-Pennington doctrine in their anti-piracy and related activities; and 2) whether a consumer has a fair use "right" to copy a DVD to his computer or other device.

Procedurally, things are a bit complicated. Real directly filed its counterclaims against the DVDCCA, but is required to seek leave of the court to file its proposed Second Amended Complaint against the studios. Today's filings by Real should not have any direct effect on the ongoing preliminary injunction hearing; testimony has concluded, and closing arguments are set for May 21. But Real's new allegations almost certainly mean that the case is far from over.

(h/t NY Times)

UPDATE: The studios have issued the following statement through their outside counsel:

Last evening, RealNetworks served the motion picture studios with a motion to add antitrust claims to the lawsuit filed over six months ago to stop RealNetworks from distributing its illegal DVD-copying product. The Court is scheduled to take the studios’ request for a preliminary injunction under consideration one week from today. While we have not yet had a chance to examine RealNetworks’ new antitrust allegations fully, they appear to be based on significant factual and legal errors, and to be an attempt to distract attention away from the issue of RealNetworks’ misconduct and the injunction issue pending before the Court.

RealNetworks sanctioned for spoliation of notebooks

Video Business is reporting that a federal judge has sanctioned RealNetworks for destroying the notebooks of Nicole Hamilton, a former Real employee involved in creating the "RealDVD" ripping software that the major movie studios and DVDCCA are attempting to get the court to ban:

In granting part of the motion filed by the major studios, Marilyn Hall Patel on Tuesday ordered RealNetworks to pay studio legal fees related to its claims that RealNetworks destroyed the notebooks of one of its former program managers. The notebooks contain a timeline and details of RealNetworks' plans for the DVD-ripping software and Facets, a DVD player that would allow consumers to rip movies from discs and save them to the player’s hard drive for later playback.

Background here. I'll try to obtain additional information.

UPDATE: I've uploaded the order here. The court actually bought much of Real's argument that it wasn't on notice of potential litigation until September 2008, and thus under no obligation to preserve documents before then. Here's the meat of the order:

Defendants’ motions are granted insofar as: (1) the court instructs the parties to negotiate and file a stipulated proposed Preservation Order for all existing and future documents relating to all products at issue in this litigation, including RealDVD, or Vegas, and Facet; (2) the court imposes monetary sanctions for Real’s failure to preserve Hamilton’s notebooks; (3) the court awards reasonable attorneys’ fees and related costs for pursuing the evidence of spoliation of Hamilton’s notebooks and for bringing this part of the sanctions motion; (4) the court will draw an adverse inference as to Real’s knowledge of ARccOS and Ripguard.

Defendants’ remaining motions for sanctions are denied.

Defendants are granted leave to file an application and declaration(s) for a monetary award(and a proposed order) including attorneys’ fees and costs in accordance with the preceding paragraph within thirty (30) days of the filing of this order. Real may respond as to reasonableness of the fees only and shall do so within thirty (30) days of the filing of the application.

RealDVD Spoliation Order

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Mercury News Op-ed: Hollywood innovates — and litigates when it must

For the latest news on the RealDVD preliminary injunction hearing, read Greg Sandoval's report in CNET. (In sum, things seem to be going well for the studios and the DVDCCA.) And for a dose of opinion, I have written the following op-ed piece, which will appear in tomorrow's San Jose Mercury News:

Hollywood innovates -- and litigates when it must

Special to the Mercury News

Major movie studios are battling software maker RealNetworks in a San Francisco federal court in a case testing the legality of Real's "RealDVD," a "ripper" that enables the copying of prerecorded DVDs.

RealNetworks and its allies on the "copyleft" portray this fight as yet another attempt by Big Content to crush any "innovative" new technology that challenges the way the "dinosaurs" in Hollywood do business.

But that facile description ignores what has actually been happening in computer labs and negotiating sessions from Silicon Valley to Santa Monica: Entertainment and technology companies are realizing that the long-term solution to their rivalry lies in licensing, not litigation.

The evidence abounds. Studios now offer their works on more than 275 legal web sites, almost all of which didn't exist a decade ago, including Hulu, YouTube, Amazon's streaming and download services, and Netflix.

And then there's RealDVD, which last fall became the first mainstream product to evade digital locks on DVDs, enabling consumers to "rip" movies to their computer — or a friend's. A court blocked sales shortly after RealDVD's premiere, and now must decide whether the ban should remain.

Other DVD-rippers have existed for years, but they are either "open source" creations with limited appeal, or are peddled by obscure foreign operators who can't get their boxes onto the shelves of well-known retailers.

RealDVD threatens to bring DVD ripping out of the shadows. Advertised as "legal" and "100 percent legit" — though "trafficking" in ripping tools is illegal under the 1998 Digital Millennium Copyright Act — RealDVD threatens to mainstream DVD copying.

What's wrong with that? At least three things. First, RealDVD enables "casual copying" of DVDs that will harm the market for all the legitimate services, as well as new ones like special DVDs that include an authorized "digital copy" that one can transfer to a computer or iPod — not to mention new business models that no one has dreamed up.

Second, RealDVD invites users to rent a movie, and then copy the DVD for one's permanent home library (or one's friend's). But by facilitating "rent, rip and return," RealDVD menaces a revenue stream that finances those very films.

Finally, the availability of a DVD-ripping tool from a "real" company like Real would signal to consumers that copying DVDs is OK — a message that is contrary to the law and that will undermine the market for legal content. Despite pleas from Real and its allies on the copyleft, no court has ever held that it is "fair use" to copy a prerecorded DVD.

What does Real say about all this? When in 1999 a company called Streambox launched a product that evaded Real's own digital locks, Real ran to court, argued against fair use — and won. When a customer wants an additional copy of RealDVD, Real demands another $19.99. But when the studios assert their rights and argue that RealDVD enables unauthorized copying of their movies, Real CEO Rob Glaser sniffs that it's not his job to stop digital theft, even as he enables it: "If you want to steal, we remind you what the rules are and we discourage you from doing it, but we're not your nanny." The studios don't expect Real to play nanny, but they do insist that it not sell digital lock picks to break into their most valuable products, and take them for free.

So, yes, Hollywood will litigate when it must, against companies like Real that won't respect creators and the law. It does so not for the sake of "crushing technology," but to ensure that real, legal innovations have the space to thrive.

Ben Sheffner is a copyright attorney in Los Angeles who has represented movie studios, television networks, and record companies. He blogs at http://copyrightsandcampaigns.blogspot.com. He wrote this article for the Mercury News.

RealDVD preliminary injunction hearing gets under way; NPR explores important DMCA case

The preliminary injunction hearing in the studios efforts to keep in place the ban on RealNetwork's "RealDVD" ripping software got under way in San Francisco today before Judge Marilyn Hall Patel -- the same judge who shut down Napster almost a decade ago. Good summaries from the New York Times and Wall Street Journal.

For those who prefer to listen rather than read all about it, earlier today I discussed the case on "The Conversation" on Seattle's NPR affiliate KUOW; my pro-DRM arguments are followed by a rebuttal from EFF's Fred von Lohmann. The audio is available here (including through RealAudio).

My earlier coverage is here. Many of the important documents have been collected by EFF here. The hearing is expected to continue through the middle of next week.

'Everyone Hates DRM'; podcast explains why, and why they shouldn't

There's a new podcast up at the "Intellectual Property Colloquium," the series of podcasts hosted by UCLA Law School professor Doug Lichtman. The topic: "Everyone Hates DRM."

This podcast features interviews with two leading DRM experts, Princeton computer scientist Ed Felten, and the University of Chicago Law School's Randy Picker. Felten, a prominent DRM critic, describes some of the technical details behind DRM techniques including watermarking and fingerprinting, and highlights some of the main anti-DRM arguments, such as concerns about privacy and computer security. And Felten's arguments are bolstered by exerpts of testimony before the Federal Trade Commission by DRM opponents including EFF's Corynne McSherry and Boalt's Jason Schultz.

Lichtman's interview with Picker focuses on a topic that gets much less attention than it deserves: how DRM enables pro-consumer business models. The discussion of how the Microsoft Xbox gaming console's business model -- artificially low console subsidized by a Microsoft-only games -- is particularly interesting. And Picker takes the public's dislike of DRM head-on: "They hate it, but that doesn't mean anything." Picker explains that much of the "hatred" comes from looking only at the downsides of DRM, but ignoring the benefits: fostering business models that would be either more expensive or nonexistent if not for DRM. Listen to the whole thing.

CLE credit is available in California, Texas, Illinois, Washington, and reciprocating states.

Real Networks says it didn't anticipate litigation over DVD-ripping software

The studios and RealNetworks squared off in federal court Monday over Real's alleged spolitation of evidence in advance of the studios' lawsuit over the RealDVD ripping software. Real's defense to the alleged document destruction? It didn't expect to get sued, and thus didn't think it had to preserve potential evidence, reports Wired:

"We didn't think litigation was probable," Leo Cunningham, a RealNetworks attorney, told U.S. District Judge Marilyn Hall Patel during a brief hearing.

Not probable??? Real set out to develop software that enables the copying of DVDs and was not aware of Universal v. Corley? Of 321 Studios? Of Kaleidescape? If there is one ironclad rule of life, it is that if you run a business that gives off even a whiff of CSS circumvention, litigation is not just "probable" -- it is virtually certain. Real may have other viable arguments to stave off the studios' request for sanctions -- it's a bit hard to tell given all the redactions in the briefs -- but the "we-didn't-think-litigation-was-probable" defense doesn't pass my personal laugh test. What's next? A claim that the sun will rise tomorrow in the east is "speculative" and "uncertain"? More on the spolitation issue here.

The main event -- the hearing on the studios' motion for a preliminary injunction -- is set for April 1. Studios' brief here. Real's here. Again, redactions spoil all the fun.

Bob Barr takes on RealDVD case; ignores the real issues

Former Republican Congressman and 2008 Libertarian Party Presidential Candidate Bob Barr has a new issue: copyright law. And he's dived right in by taking on the battle between the studios and RealNetworks over the software company's "RealDVD" ripping software. Barr, now practicing law in Jasper, Georgia, comes down firmly on Real's side in an op-ed in the San Francisco Chronicle:

While the industry lawsuit relies in part on the "Digital Millennium Copyright Act of 1998," federal legislation that was designed to thwart the development and sale of products that allow individuals to distribute their own versions of copyrighted material such as movies, the clear fact is that RealDVD software does not circumvent any technology, and does not permit a user to distribute a DVD. The product does nothing more than permit the purchaser to copy a DVD onto his or her own PC or laptop. In other words, the product simply enables the private viewer to watch the DVD they'd already purchased directly from their computer's hard drive rather than rely on the sometimes-cumbersome process of inserting the DVD itself into a player.

Well. This is a complicated case, and no one can do justice to all the issues in a single blog post (or op-ed). But a few of Barr's assertions (and they are mere assertions, not arguments) deserve a response.

Barr says, "the clear fact is that RealDVD software does not circumvent any technology." "Clear fact"? Saying it doesn't make it so. The studios argue (see esp. pages 11-20) that the software does, in fact, circumvent DVDs' CSS DRM technology, in numerous ways. Moreover, Real's own primary argument does not appear to be that it "does not circumvent any technology." Rather, Real argues that -- whether its actions count as "circumvention" under the DMCA -- its release of the RealDVD software is authorized under a license it has from the DVD Copy Control Association (“DVD CCA”). In any event, the facts were not so "clear[ly]" on Real's side to the federal judge hearing the case, who appears to have been persuaded -- at least preliminarily -- by the studios' arguments that RealDVD does indeed circumvent DRM.

Barr claims RealDVD "does not permit a user to distribute a DVD." That's a broad statement, and it's not exactly clear what he means. But if he's saying that studios' concern about RealDVD is that individuals will all of the sudden start stamping out multiple copies of DVDs and "distributing" them, then he's set up a classic straw man. The studios haven't said that. But they have set forth in considerable detail the nature of the harm that they believe RealDVD threatens. See here at pages 20-24. In sum, the studios are concerned that RealDVD -- by enabling the making of permanent copies from a DVD -- will undermine their ability to sell various services where the consumer pays to enjoy a film for a limited period of time. To take one obvious example, with RealDVD, a consumer would be able to easily "rent, rip, and return" a DVD he has rented from Blockbuster or Netflix -- thus obtaining a permanent copy for much less than the price of buying a DVD. As the studios put it in their TRO motion:

The incentive for the consumer is obvious, and all but overwhelming. "Why," he or she may ask, "should I pay $18.50 to purchase a DVD, when I can rent it for $3.25 and make a permanent copy?" "Why Even rent it for $3.25, if I can just borrow it from a friend and make a copy?" Or, "Now that I've spent $29.99 on this RealDVD program, why don't I copy my friend's whole DVD collection?"

Yes, it's true that DVD-ripping software software has existed for some time, and has already enabled such illegal activity. But there is a vast difference between the open-source software and versions sold by shady Antigua-based operators, and a product offered by a "real" US-based company that already offers legitimate products used by millions. Real threatens to mainstream, legitimize, and vastly increase the amount of DVD ripping, and the studios are entirely within their rights to try and stop it.

One last thing to emphasize when thinking about this litigation. It will, inevitably, be portrayed as being "about" copyright, the DMCA, DRM, fair use, and technology. And this case may in fact affect the development of law and policy in those areas. But the outcome of this case may well turn not on interpretations of the DMCA's anti-circumvention provisions, but instead on boring old California contract law. Specifically, the parties will argue about whether a document called the "CSS General Specifications" is part of the CSS license that binds Real -- an issue currently being considered by the California Court of Appeal in a separate case involving a company called Kaleidescape. Not quite as sexy as arguments about DRM and fair use and the future of technology, but it could well be the issue that determines who wins here.

Barr concludes by saying that "Defendant RealNetworks has the law, the facts and common sense on its side. The industry has money and hubris in its corner." Seems to me that the real hubris is in making unsupported assertions about a legal case, failing even to acknowledge the other side's arguments, and ignoring the big legal issue that may well determine the outcome.

Studios allege RealNetworks execs and attorneys 'sanitized' evidence in DVD-ripper case; seek sanctions for spoliation

The fight between the major movie studios and RealNetworks over the RealDVD ripping software has not received much attention since last fall, when Real released the software, only to pull it from the market a few days later after an order from a federal court.

The studios have moved for a preliminary injunction, which is set for a hearing April 1 (no joke). In the meantime, the parties have been engaging in expedited discovery. And it's been ugly. Today, via Wired, we learned a bit -- but not nearly enough! (more on that later) -- about just how ugly.

On Feb. 25, the studios moved for sanctions, charging that Real executives and attorneys "took active steps to sanitize the discovery record" by actively and willfully destroying relevant documents that should have been turned over in discovery. The juciest allegations involve a former Real Senior Program Manager named Nicole Hamilton, who was working on a RealDVD-related project and who was apparently terminated a few days before Real initiated this litigation by seeking a declaration that RealDVD is legal. Hamilton says that, before leaving Real, she turned over 3 or 4 spiral notebooks to 2 execs there. (See page 20 of this document). But Real now says it doesn't have them. (See page 19). Where did the notebooks go? Inquiring bloggers want to know!

It's very hard to evaluate the merits of the studios' claims, because much of their motion is redacted. Thus we get to read tantalizing sentences like, "Even more alarming, [REDACTED]..." (page 1) and "To take another egregious example, [REDACTED]...." (page 2). Torture! The studios seek an order for Real to preserve evidence, and a variety of evidentiary sanctions. Though they claim that Real's alleged spoliation "irreparably impaired the integrity of the judicial process," they have not gone all the way and asked for the judicial death penalty (i.e., terminating sanctions).

Real has not yet filed a true opposition to the sanctions motion so we don't know exactly what its substantive  response will be; what it has filed so far is simply a brief opposing the studios efforts to have their sanctions motion heard on shortened time. What I found most striking about Real's brief is its oddly measured tone. Usually, a party accused of spoliation reacts with righteous indignation (feigned or...real), but this brief seems to lack a certain fire in the belly. Instead we get very carefully crafted sentences like "Real is currently maintaining all documents related to this case." "[C]urrently"? (my emphasis). What about prior to "currently"?

But my favorite part of Real's brief is the label its attorneys at Wilson Sonsini came up with to describe Hamilton: "vindictive former employee." I've heard about lots of "disgruntled former employees" ("DFE"s in the trade), but Hamilton must have some very interesting things to say to earn the "vindictive" award. (We are again tortured in footnote 3 of the studios' brief, which tells us, "It is now clear why Real wished to avoid Ms. Hamilton's deposition. She testified, inter alia, that [REDACTED]...." Footnote 1 of Real's brief does reveal that Hamilton testified that someone "directed the deletion of email," which Real disputes.)

The studios want a hearing date of March 16 on the sanctions motion, but it's unclear whether that will happen, given Real's opposition to the expedited schedule. Should be an interesting one.

To get a sense of what the underlying dispute is about, I suggest reading the studios' TRO motion and Real's opposition. Much more on the substance of this case later.