RealNetworks Bows To Hollywood In RealDVD Copyright Case

RealNetworks Inc. has agreed to pay $4.5 million and squash its appeal of a court order that prohibits the sale of its RealDVD DVD copying software, putting to bed a lawsuit filed by a host of Hollywood movie studios that claimed RealDVD violates copyright protection laws.

As part of the settlement with the six major Hollywood movie studios, Viacom Inc. and the DVD Copy Control Association, RealNetworks also plans to refund nearly 3,000 customers who plunked down $30 on RealDVD.

RealNetworks has also agreed to withdraw its pending appeal of the District Court's preliminary injunction and has agreed to the terms of a permanent injunction that prohibits RealNetworks from distributing or supporting RealDVD or other technology that enables the duplication of copyrighted content.

RealDVD software was released in September 2008. RealNetworks billed the software as an application that lets users save DVDs to their hard drives for backup or playback.

RealDVD quickly came under fire from Hollywood studios as it bypassed copy protection mechanisms on some discs and, according to critics, opened the door for illegal copying and sharing of DVD movies and content. Within hours of RealNetworks launching RealDVD, the San Diego software maker took a preemptive strike to protect itself from lawsuits, filing an action for a declaratory judgment in the U.S. District Court of the Northern District of California, a move that RealNetworks hoped would thwart a group of Hollywood studios and the Motion Picture Association of America (MPAA) from being able to sue.

Instead, the film industry battled back, filing a federal suit and quickly winning a judgment to temporarily halt the sales of RealDVD.

What followed was a several month-long Tinsletown showdown during which a San Francisco judge ruled in August that RealDVD circumvents copyright protection laws and granted Hollywood's request to permanently ban the sale of RealDVD.

"We are pleased to put this litigation behind us," Bob Kimball, acting CEO for RealNetworks said of the settlement in a statement. "Until this dispute, Real had always enjoyed a productive working relationship with Hollywood. With this litigation resolved, I hope we can find mutually beneficial ways to use Real technology to bring Hollywood's great work to consumers."

According to RealNetworks, the $4.5 million settlement to the studios, which covers costs and attorney fees, will be reflected in RealNetworks' financial results for the quarter ending December 31, 2009.

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