SAN FRANCISCO – Hollywood calls it "rent, rip and return" and contends it's one of the biggest technological threats to the movie industry's annual $20 billion DVD market — software that allows you to copy a film without paying for it.
On Friday, industry lawyers urged a federal judge to bar RealNetworks Inc. from selling software that allows consumers to copy their DVDs to computer hard drives, arguing that the Seattle-based company's product is an illegal pirating tool.
RealNetworks' lawyers countered later in the morning that its $29.99 RealDVD product is equipped with piracy protections that limits a DVD owner to making a single copy and a legitimate way to back up copies of movies legally purchased.
The same federal judge who shut down the music-swapping site Napster in 2000 because of copyright violations is presiding over the three-day trial, which is expected to cut to the heart of the same technological upheaval roiling Hollywood that forever changed the face of the music business.
The studios fear that if RealNetworks is allowed to sell its RealDVD software, consumers will quickly lose interest in paying retail for movies on DVD that can be rented cheaply, copied and returned.
Their lawyers argue the software violates a federal law known as the Digital Millennium Copyright Act that makes software and other tools that enable digital piracy illegal. They also contend shoppers will widely condone such illegal behavior if RealNetworks' product is allowed on the market.
Bart Williams, a lawyer representing the studios, told the judge that evidence uncovered in the litigation shows RealNetworks engineers purchased copying software illegal in the United States from a company in Ukraine.
"One is not supposed to copy DVDs and that's in fact what RealDVD does," Williams said. "Real's objective in all of this is to make money off the studios' investments without paying for it."
The company argues that the contract it signed with the DVD Copy Control Association, which equips DVD player manufacturers with the keys to unscrambling DVDs, allows RealDVD because the software doesn't alter or remove anti-piracy encryption like illicit software that is easily obtained for free online.
RealNetworks says its product legally fills growing consumer demand to convert their DVDs to digital form for convenient storage and viewing.
"RealNetworks saw there was an unmet consumer need," said company lawyer Leo Cunningham. "RealNetworks is a company that respects copyrights."
In October, U.S. District Judge Marilyn Hall Patel temporarily barred sales of RealDVD after the product was on the market for a few days. At the time, the judge said it appeared the software did violate federal law against digital piracy, but ordered detailed court filings and the trial to better understand how RealDVD works.
The lawsuit has incurred widespread wrath from bloggers, digital rights advocates and groups on both sides of the political spectrum, including former Republican congressman and Libertarian presidential candidate Bob Barr and the left-leaning Electronic Frontier Foundation.
Critics accuse the studios of stifling innovation as they attempt to develop their own copying software.
"It's all about control," said Cato Institute scholar Timothy Lee. "No one is allowed to innovate in the DVD space without industry permission."
The industry, through the Motion Picture Association of America, counters that its goal is to stamp out piracy. It says it welcomes legitimate attempts at innovation.
"RealNetworks acted in bad faith by taking a license to build a DVD player and instead built a copier that violates the circumvention rules of the Digital Millennium Copyright Act by enabling consumers to copy DVDs illegally," said Greg Goeckner, the MPAA's top lawyer before Friday's hearings began. "Our objective is to get the illegal choices out of the marketplace and instead focus constructively with the technology community on bringing in more innovative and flexible legal options for consumers to enjoy movies."
Regardless of the trial's outcome — and the judge isn't expected to rule immediately — some predict that Hollywood control over digital copies will continue to wane because of the proliferation of illegal software online.
"If Hollywood wins, I don't think much changes in the real world," said Fred von Lohmann, an attorney at the Electronic Frontier Foundation. "Anybody who wants DVDs copied can download software for free in 10 minutes."