May 3, 2002 1:00 PM PDT

Sonicblue ordered to track subscribers

In response to a lawsuit filed by a slew of heavyweight entertainment companies, a federal magistrate has ordered Sonicblue to monitor customers' activities to find out what TV programming they record, duplicate or send to others--a situation the company says is tantamount to forced spying.

"We're being ordered to spy on our customers; that's the most direct way of looking at it," said Ken Potashner, chief executive of the digital video recorder company.

Privacy advocates were also concerned.

"A fair analogy would be for record companies to be allowed to force Microsoft to use Outlook to look for MP3 files that were being sent as attachments," said David Martin, a principal investigator at the Privacy Foundation.

Central District Court Magistrate Charles F. Eick last week ordered the Santa Clara, Calif.-based company to determine "what works are copied, stored, viewed with commercials omitted, or distributed" and to turn that information over to the entertainment companies. The San Jose Mercury News first reported the order Friday.

Disney, one of the plaintiffs in the case, said Sonicblue is "completely misleading (the) characterization of the court's order."

Sonicblue "must provide only anonymous data about how the plaintiffs' copyrighted works are being copied and used," Disney spokeswoman Michelle Bergman said in a statement. The order, she said, is consistent with Sonicblue's privacy policy.

"None of the data the plaintiffs are seeking identifies any individuals...We are simply protecting our copyrighted content and all whose livelihoods are dependent on it," she said.


Company plans to appeal request to track subscribers
Ken Potashner, CEO, Sonicblue

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Sonicblue attorney Laurence Pulgram, of law firm Fenwick & West, called the Disney statement a "patent falsehood" and said that according to the court order, Sonicblue is required, as the plaintiffs have requested, to provide individualized data on its subscribers.

At the heart of the Los Angeles-based lawsuit, filed in October by several major TV networks and movie studios, are several features unique to digital video recorder, or DVR, services.

DVRs are similar to video recorders, but instead of recording shows to tape, DVRs store them on a hard drive. Among other things, this lets people "pause" live broadcasts and resume play without missing any material; they can fast-forward to catch up with the live feed.

But the more controversial features offered by Sonicblue's ReplayTV machines and service include the ability to remove commercials during recording and to send copies of recorded programs to other ReplayTV recorders over the Internet.

Fearing a Napster-like situation, media powerhouses like Disney, AOL Time Warner, MGM and Vivendi Universal have banded together, claiming Sonicblue's service adds up to copyright infringement.

"The plaintiffs may have a case against Sonicblue for contributory copyright infringement," said independent Internet security consultant Richard Smith, "but dragging consumers into the dispute is way over the line."

Collecting data on DVR subscribers is an ongoing privacy issue. In March of last year, the Privacy Foundation released a report accusing TiVo of gathering more information about its subscribers' viewing habits than the company had been disclosing. The report caused a stir among subscribers. TiVo representatives said the company collects data anonymously; it determines what's being watched, but not who's watching.

Potashner said that since Sonicblue acquired ReplayTV in August of last year, the company has not done anything to collect data on its subscribers.

Sonicblue introduced its ReplayTV 4000 DVR in September and had been selling the device from its Web site, but in late March the company announced a deal with online retailer Amazon.com to sell the recorders.

The company hasn't broken out the number of ReplayTV units that it has sold but has said demand has outstripped supply. Analysts have estimated that Sonicblue sold between 3,000 and 5,000 DVRs during the fourth quarter. The company plans to launch new models of the recorder in May and views DVRs as future significant contributors to the company's revenue.

Sonicblue attorney Pulgram said the company is seeking a review of Eick's order but will comply if it is not reversed.

 

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