DVD Copy Control Assn., Inc. v. Kaleidescape, Inc.

The Content Scramble System (CSS) is the standard technology used to prevent unauthorized copying of movies and other copyrighted content stored on DVD’s. Defendant Kaleidescape, Inc. (Kaleidescape), licensed CSS from plaintiff DVD Copy Control Association, Inc. (DVDCCA), in order to develop a home entertainment system for viewing movies distributed on DVD. 1 The system Kaleidescape developed is capable of storing and organizing content from thousands of DVD’s. Once stored in the Kaleidescape system, the DVD content may be played back at any time, without the need to reinsert the physical DVD. This feature of the system simplifies the storage and organization of very large DVD collections. It also allows users to make *702 permanent copies of borrowed or rented DVD’s so that a user could amass a sizeable DVD library without purchasing a single DVD.

DVDCCA sued Kaleidescape for breach of contract and breach of the covenant of good faith and fair dealing. DVDCCA alleged, among other things, that, because the Kaleidescape system allowed users to make persistent copies of DVD’s and did not require the physical DVD for playback, it did not comply with specifications contained…

I write separately from my esteemed colleagues to make several points. First, I wish to distance myself from any sense of moral opprobrium that may be directed toward Kaleidescape. In my *728 view, its product was clearly not designed or intended to facilitate the theft of intellectual property; nobody buys it for that purpose; and if it has that incidental effect, it is no worse in most respects—and better in others—than an ordinary personal computer with freely available DVD-copying software.

Second, while I agree that the trial court’s incorporation-by-reference rationale cannot be sustained even under the rules traditionally governing such an issue, I do not think those rules should apply where, as here, the parties have expressly and advertently agreed that one of them will be bound by terms that, for reasons of commercial security, will only be disclosed after that party has executed the agreement. Under traditional incorporation-by-reference analysis, such after-disclosed requirements could never be enforced, because they are never known or available to the licensee until after he has entered the contract. Indeed, Kaleidescape neglects this powerful argument in favor of a…

The Content Scramble System (CSS) is the standard technology used to prevent unauthorized copying of movies and other copyrighted content stored on DVD's. Defendant Kaleidescape, Inc. (Kaleidescape), licensed CSS from plaintiff DVD Copy Control Association, Inc. (DVDCCA), in order to develop a home entertainment system for viewing movies distributed on DVD. [1] The system Kaleidescape developed is capable of storing and organizing content from thousands of DVD's. Once stored in the Kaleidescape system, the DVD content may be played back at any time, without the need to reinsert the physical DVD. This feature of the system simplifies the storage and organization of very large DVD collections. It also allows users to make permanent copies of borrowed or rented DVD's so that a user could amass a sizeable DVD library without purchasing a single DVD.

DVDCCA sued Kaleidescape for breach of contract and breach of the covenant of good faith and fair dealing. DVDCCA alleged, among other things, that, because the Kaleidescape system allowed users to make persistent copies of DVD's and did not require the physical DVD for playback, it did not comply with specifications…