via Wired

A federal judge on Tuesday upheld an earlier decision and banned RealNetworks from selling its DVD-copying software.

The suit was brought by the Motion Picture Association of America, which claimed (.pdf) the $30 RealDVD product was a violation of the Digital Millennium Copyright Act because it circumvented copy controls – in this case the content-scramble system license granted by the DVD Copy Control Association.

U.S. District Judge Marilyn Hall Patel, who previously presided over the original Napster litigation, issued a tentative decision in the case on Friday requiring that sales be halted pending a hearing Tuesday. Seattle-based RealNetworks complied, informing customers on its website that, "Due to recent legal action taken by the Hollywood movie studios against us, RealDVD is temporarily unavailable."

After a three-hour hearing Tuesday, she kept her decision intact so she could have aditional time to learn for sure whether RealDVD circumvents encryption software in violation of the DMCA. RealNetworks claimed that it did not violate any content-scramble system license and that its software, while allowing users to store copies of movies on their hard drives, does not circumvent the content-scramble system on DVDs.

Still, Patel suggested there was enough evidence, at least for now, of a DMCA violation. So she continued her order blocking the sale of RealDVD, which has sold about 3,000 copies following its Sept. 30 debut. It is not likely to resume in the marketplace before the coveted holiday season.

"I'm not satisfied that in fact this technology is not in violation of the DMCA," Patel ruled from the bench.

RealNetworks attorney James DiBoise countered: "This is literally a bit for bit copy of the dvd. "This is literally a bit-for-bit copy of the DVD." He said consumers had a "fair use right" to copy DVDs for personal use.

Bart Williams, an attorney for the MPAA, said the RealDVD technology circumvents copy controls, that consumers have no right to copy DVDs, and that fair use is not a defense to DMCA circumvention violations. "You are not allowed to copy it, your honor," Williams told Patel

The lawsuit represents Hollywood's worries that RealDVD and other fledgling DVD-copying services will ruing the market for DVDs. The studios don't want to go the way of the music industry, which years ago lost much control of its CD, which is not encrypted, to peer-to-peer file-sharing services and technology allowing CDs to be burned easily -- even by the technologically unsophisticated.

Still, Hollywood is already reeling from open-source DVD decryption software that is free on the internet. It also says it's losing billions in sales because of BitTorrent tracking services like The Pirate Bay that allow users to upload and download decrypted movies and other content for free.

A central dispute in the case concerns whether it is a circumvention violation for RealDVD to copy the DVD encryption into a computer hard drive that allows playback of the movie at any time absent the original disc. The MPAA says the content-scramble license requires that the keys to the encryption code must be read from the DVD while it is inside the computer.

"We are gratified that the court recognized the harm of RealDVD to the motion picture industry and the strength of our arguments that their product circumvents the copyright protection built into DVDs," said Seth Oster, an MPAA spokesman.