Digital Media

The Seattle area is going to get another jobless jolt Thursday, with RealNetworks planning to lay off 4 percent of its workforce, sources said.

That's a small number--just about 70 people out of its 1,700-person staff--but the move comes on the heels of layoffs of another 800 employees at nearby Microsoft on Wednesday. The software giant has cut thousands of jobs over the last year, part of a move to eliminate 5,000 positions by mid-2010.

While the dismissals--which are likely to be announced to affected RealNetworks employees sometime Thursday morning by managers--will be global, both RealNetworks and Microsoft are tech leaders with headquarters in the Pacific Northwest.

According to sources, the reasons for the layoffs at RealNetworks are, as was the case at Microsoft, to realign the work force after the recent economic downturn and to control costs.

But RealNetworks could also hire back some of the laid-off employees, as other parts of the company are expanding.

The company had signaled the possibility of staff cuts previously, but had not been specific.

The last staff cuts at the company, which makes digital media software and tools, were larger, with about 130 employees sacked about a year ago.

RealNetworks announced better-than-expected third-quarter earnings last week, barely returning to profitability by cutting costs to make up for weaker revenue.

(Digital Daily's John Paczkowski contributed to this report.)

Story Copyright (c) 2009 AllThingsD. All rights reserved.

RealNetworks has been having a bit of a bad run lately, but its Rhapsody streaming service continues to offer unparalleled selection at pricing levels that seem both fair to users and rights-owners--including the ability to stream 25 songs per month at no charge. Plus, I've got to give them credit for introducing me to the idea of on-demand music--you don't know you're missing it until you live with it for a while--even if their business has been hurt by a plethora of free competitors like Grooveshark, Spotify, and Imeem.

So I was glad to see that Rhapsody has added some simple functionality that will let users share full-length songs on their Facebook profiles and Twitter feeds. Every Rhapsody page now has a Facebook and Twitter icon. Click either of them, and Rhapsody will let you post the song you're currently playing to either service. It's not a new concept--iLike has had full-song sharing on Facebook for almost a year--but it's a simple step that should keep current subscribers happy while introducing the service to people on social networks who may never have heard of it.

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Update 4:15 p.m.: To include comments from Kaleidescape.

For the second time in two days, Hollywood has racked up another major legal victory over DVD-copying devices the studios charge are illegal.

Kaleidescape, which had won a rare court victory over the film industry two years ago, saw a California appeals court overturn the ruling on Wednesday. The decision comes a day after a federal court placed a preliminary injunction on the sale of RealDVD. Both Kaleidescape and RealDVD enable users to make digital copies of movies and store them to a hard drive.

In 2004, Kaleidescape was accused in a lawsuit by the DVD Copy Control Association (DVD CCA), of agreeing to abide by the terms of the Content Scramble System (CSS) license, which it said forbade the copying of DVDs.

Kaleidescape argued there was nothing in the license that banned copying and Judge Leslie C. Nichols agreed in a ruling issued in March 2007. RealNetworks, which makes RealDVD, also argued that there was nothing in the DVD CSS license that prevented them from designing a DVD-copying feature.

"We're obviously disappointed by the court's decision"" said Michael Malcolm, Kaleidescape's CEO. "Our plan is to go to the Supreme Court of California. We're confident that were not in breach of our contract with the DVDCCA and until then our products remain fully legal and licensed."

The film industry has always maintained that the Digital Millennium Copyright Act of 1998 was designed to protect innovation as well as the rights of content creators. A balance was sought and in pursuit of that, provisions were made to protect antipiracy controls, such as DVD CSS, from being circumvented.

"This is yet another example of the way the DMCA harms innovation without doing anything to stop what the studios call piracy. This enables the studios to take consumers' fair use rights and sell them back to them one DVD at a time."

-- Fred von Lohmann, senior attorney, Electronic Frontier Foundation

Apparently, the only good news to come out of this for those in favor of fair use is that U.S. District Judge Marilyn Hall Patel, in her RealDVD decision, did leave open the question of whether consumers have the legal right to make copies of their DVDs for their own personal use.

"It may well be fair use for an individual consumer to store a backup copy of a personally owned DVD on that individual's computer," Patel wrote, "a federal law (the DMCA) has nonetheless made it illegal to manufacture or traffic in a device or tool that permits a consumer to make such copies."

What this says to consumers is that if you want to make a digital backup of a DVD, no problem. Go ahead. But beware if you build a tool that actually helps people make those copies. In that case you're breaking the law.

The one-two punch in the courts is likely to rock the technology community. Techies had already begun bitterly criticizing the decision by Patel to halt sales of RealDVD and the Kaleidescape-like player from Real, code named Facet.

Fred von Lohmann, senior attorney for the Electronic Frontier Foundation, an advocacy group for Internet users and technology firms, said late Tuesday evening that Patel's decision is a setback for innovators and consumers.

"This is yet another example of the way the DMCA harms innovation without doing anything to stop what the studios call piracy," von Lohmann said. "This enables the studios to take consumers' fair use rights and sell them back to them one DVD at a time.

"And if you're an innovator," he continued, "where DVDs are concerned, it's very dangerous to innovate without asking the studios' permission first."

In a statement, the DVD CCA said: "The Appellate Court recognized what we have maintained all along, Kaleidescape had agreed to a complete contract that mandated certain requirements with which devices must conform in order to be Content Scramble System (CSS) compliant. We look forward to returning to the trial court to obtain an injunction requiring Kaleidescape to comply with its contractual obligations under the CSS License Agreement and Specifications."

A federal court has found enough evidence to decide that RealDVD, the software that enables users to copy DVDs and store digital duplicates on a hard drive, violates U.S. copyright law.

U.S. District Court Judge Marilyn Patel on Tuesday issued a preliminary injunction that will prevent RealNetworks from selling the $30 software until a jury can decide the issue. That will undoubtedly keep RealDVD and Facet, Real's prototype DVD player, off store shelves for an indefinite period. Facet also makes digital copies and stores them to a built in hard drive.

The decision represents a major victory for the film studios, which had accused Real of violating the Digital Millennium Copyright Act (DMCA) and breach of contract in a lawsuit filed last fall. Had the decision gone against the film studios and its trade group, the Motion Picture Association of America (MPAA), it would have been an affirmation that consumers have the right to copy their DVDs for personal use. Right now, when a DVD owner loses or breaks a disc, they conceivably must purchase another copy. RealDVD and Facet eliminate the need for discs once copies are made.

But the MPAA argued that Facet and RealDVD are pirate tools that enabled users to copy and redistribute movies and could cost the industry billions. The MPAA has maintained that under the DMCA, consumers do not have the right to copy films--ever.

"We are very pleased with the court's decision," MPAA Chairman and CEO Dan Glickman said in a statement. "This is a victory for the creators and producers of motion pictures and television shows and for the rule of law in our digital economy. Judge Patel's ruling affirms what we have known all along: Real took a license to build a DVD-player and instead made an illegal DVD-copier."

"We are disappointed that a preliminary injunction has been placed on the sale of RealDVD," Real said in a statement. The company that makes entertainment software said it would have more to say after it had reviewed Patel's decision.

The big question for Real is whether it has the stomach to continue the fight. The legal fees have already set Real back more than $6 million.

"RealDVD makes a permanent copy of copyrighted DVD content," Patel wrote in her decision, "and by doing so breaches its (Content Scramble System) License Agreement with the (DVD Copy Control Association, the group that oversees the protection of DVDs for the major Hollywood studios) and circumvents a technological measure that effectively controls access to or copying of the Studios' copyrighted content on DVDs."

In her decision, Patel made a play on words using Vegas--Real's code name for RealDVD--to illustrate how the software could lead to the mass pirating of movies.

"Had Real's products been manufactured differently, i.e., if what happened in Vegas really did stay in Vegas," Patel continued, "this might have been a different case. But, it is what it is. Once the distributive nature of the copying process takes hold, like the spread of gossip after a weekend in Vegas, what's done cannot be undone."

Patel's decision is unlikely to surprise anyone who followed the case. During last year's hearings on a temporary injunction and last spring's proceedings on the preliminary injunction, Patel appeared highly skeptical of Real's arguments.

In her questions to both sides' attorneys, Patel seemed concerned about the potential for people to use RealDVD and Facet, to copy rented discs without compensating the creators, a practice known as "rent, rip, and return."

One glaring hole in Real's argument was its assertions that RealDVD didn't circumvent ARccOS and RipGuard because they really aren't anticopying software; and that Real had licensed CSS, the technology designed to prevent unauthorized copying of DVDs, so it was essentially authorized to do what it wanted with it.

The MPAA crushed these arguments in proceedings. The studios showed that both ARccOS and RipGuard are anticopying technologies used by some of the major film studios as a layer of piracy protection in addition to CSS. The studios' lawyers produced documents that revealed ARccOS and RipGuard were effective enough copy protections to stymie Real's engineers, as well as a group of "Ukranian hackers," from cracking them.

One other important detail: ARccOS and RipGuard are not included in the CSS license. By circumventing the technology, Real had risked violating the DMCA, which prohibits the cracking of antipiracy technologies. And that's exactly what happened.

"Real was aware of ARccOS and RipGuard during the development of the RealDVD products," Patel wrote in her 58-page decision. "Real software engineers identified ARccOS and RipGuard as both copy protection systems and barriers to their development of a DVD copying device from the outset of the RealDVD project."

While the courtroom showdown was first billed as a fight over RealDVD, it soon became clear that what was really at stake for Real was Facet.

Real CEO Rob Glaser demonstrated the device in court last spring and showed how an owner could move between films--it holds more than 70--in a way similar to how someone scrolls through an iTunes playlist. I wrote that the device could have helped spur flagging DVD sales and given DVD collectors, such as myself, a way to revitalize their movie collections.

Hollywood, however, is working on its own programs to give consumers access to digital copies after buying a CD. But the studios typically want additional money for the digital copy.

So, now we wait to hear whether Real will carry on the fight. However it turns out, the company has earned kudos from anticopyright proponents for waging the campaign. The question is whether carrying the flag for the free-content crowd is enough of a payoff.

The film industry fired another legal broadside at RealNetworks and RealDVD.

The Motion Picture Association of America has accused Real of misleading the court about the company's attempts to circumvent ARccOS and RipGuard and about whether the technologies are true copy-protection measures.

Real wrote in patent applications filed with the Patent and Trademark Office in 2007 and 2008 that the two software were indeed copy protections, despite arguing the opposite in court, the MPAA alleged in a document filed with the court on Wednesday. The patent applications were published by the patent office two weeks ago.

The MPAA has taken Real to court to try to stop the company from selling RealDVD, a software that enables users to copy DVDs to a hard drive, as well as Facet, a DVD player that can also create digital copies of DVDs and store them as well. U.S. District Judge Marilyn Patel is due soon to decide whether to continue banning sales of RealDVD until a full trial decides whether the technology violates copyright law.

A Real spokesperson was not immediately available for comment Thursday morning.

An important point of contention in the case is whether RealDVD circumvents copy protections placed on DVDs. If Patel decides it does, then Real is violating the Digital Millennium Copyright Act, which outlaws the circumvention of anti-piracy measures.

Real maintains it has a license with the DVD Copy Control Association, the group that oversees DVD security, to use the copy protections the studios place on DVDs, so there's no circumvention. As for ARccos and RipGuard, technologies that are not included under the DVD-CCA licensing, Real has argued throughout the court fight that these aren't security measures.

"Real and its witnesses have told the court that ARccOS and RipGuard are not copy protection technologies and that Real's engineers did not know how ARccOS and RipGuard worked," wrote MPAA lawyers in documents filed with U.S. District Court in San Francisco. "Yet Real simultaneously has told the PTO that RipGuard' and ArccOS are 'copy protection mechanisms' and then described specific techniques used by ARccOS and RipGuard."

The MPAA attorneys also said "Real has told the court, through witnesses and proposed findings, that ARccOS and RipGuard can only delay but cannot prevent a 'linear copy' of DVDs. But Real is insisting to the (patent office) that ARccOS and RipGuard can 'cause an archiving process to fail' or 'never complete'--exactly contrary to its representations to this court."

The studios asked Patel to consider the three patent applications before making her decision. While it's late to be entering evidence, the MPAA alleges that it has the right to do it because Real did not turn over the patent applications in discovery.

"Judicial notice is warranted here because the applications have been in Real's possession and control but unavailable to the studios," the MPAA said in its court filing, "(And) because the applications so directly contradict Real's contentions before this court."

The language in the patent applications does appear to contradict what Real's lawyers and witnesses have said in court.

Nonetheless, the motion filed by the MPAA may be overkill. Real's story about ARccos and RipGuard was already the weakest part of its case. Real has alleged that the two software types were ineffective in securing DVD content, yet the MPAA produced documents that show Real's attempt to crack them failed. The company then tried to hire an outside firm, which the MPAA alleges is a group of Ukrainian hackers, and they couldn't do it either.

The MPAA said that Real's patent applications are U.S.Patent Application Publication No. US 2009/0148125 A1 (Watson, Bielman, and Barrett); U.S. Provisional App. No. 61/095,249 (Chasen, Buzzard, et al.); and U.S. Provisional App. No. 61/012,500 (Barrett, Hamilton, et al.).

RealNetworks began public beta-testing version 12 of its venerable RealPlayer today. Like the last version, the free RealPlayer SP (which stands for "social and portable") lets you rip streaming Flash videos from the Web to your hard drive. What's new: you can also transcode them into appropriate formats for playback on portable devices. If you're using an iPod or iPhone, the RealPlayer will even generously insert the transcoded version directly into your iTunes library.

CNET's John Falcone has already done a rundown of the RealPlayer SP beta, but I was intrigued enough to try it myself. My first thought was to rip YouTube videos, but then I realized that it's much more convenient simply to use the built-in YouTube icon on my iPhone to stream them directly to the phone (as long as I've got a wireless connection, which I usually do).

Then I remembered that one of the best features of Microsoft's new Bing search engine, which launched earlier this month, is its video search. (The predecessor to Bing, Live Search, had most of the same video search features as well.) There's nothing wrong with Google's video search, but I personally prefer the Bing interface, and I like the way the video is previewed right in the search results.

Using them together was a breeze--once installed, the RealPlayer automatically adds a small pop-up message to any embedded video in your browser (I tested it with both Internet Explorer and Firefox), asking you if you want to download the video. Transcoding takes a few minutes, particularly for long videos, but in the last half-hour I've managed to rip the new Grizzly Bear video, the reunited Pink Floyd's entire Live 8 performance, and a live version of Ozzy's "Crazy Train" with Randy Rhoads into iTunes in both video (H.264) and audio-only (MP3) formats. All came from different original sources, but all were available through Bing.

I'm particularly impressed with the RealPlayer's video-to-audio transcoder--my 8GB iPhone is way too small to fit a lot of videos on it, and transcoding video to audio files has been a bit of a hassle in the past. Now I can do it on the fly, as I download them. Kudos to RealNetworks on a nice piece of software.

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The future of RealDVD, and possibly a consumer's right to create backup copies of their DVDs, now rests in the hands of Marilyn Hall Patel.

On Thursday, the U.S. district judge wrapped up a preliminary injunction hearing in the RealDVD case. Last fall, RealNetworks began selling RealDVD, the software that duplicates DVDs and stores copies to a hard drive. The Motion Picture Association of America, the trade group representing the six largest film studios, filed a lawsuit claiming RealDVD violated copyright law.

In September, Patel placed a temporary restraining order on sales of RealDVD, saying she had serious questions about the software's potential to be used to pirate films. Now, she must decide whether to continue to keep the software off shelves. Even if she does, a final decision about whether RealDVD is legal or not would be decided later by a jury (Here are the reasons I think Patel will rule against Real).

Patel's ruling on the injunction will have serious consequences on the case. Real CEO Rob Glaser testified during the hearing that delaying sales of RealDVD and Facet, the DVD player from Real that copies as well as plays DVDs, could be disastrous for the development of the products. Glaser told Patel that it's very expensive to keep engineering teams together. The company has already spent nearly $6 million, mostly on legal fees, developing the products.

He also noted that it would put Real behind in offering the public a means to backup their DVDs. The studios already offer digital copies of films that they tuck into purchases of DVDs, although consumers must pay extra.

Patel must now determine whether the studios have demonstrated a probability to win in a trial based on the merits of its arguments and has proven the possibility it could suffer irreparable harm. The injunction hearing acts as a preview of the trial. It is possible, however, for one side to lose in the hearing and win the overall trial.

If Real loses, the company can appeal Patel's decision to the U.S Court of Appeals for the Ninth Circuit. That's what the original Napster did when Patel sided with the recording industry in 2000 and placed an injunction on the peer-to-peer service. In that case, the appeals court agreed with Patel and ruled against Napster.

Besides the possible impact to Real's business model, the case could, if Real wins, set a landmark decision that could free consumers to copy their DVDs. Real has said it believes consumers have a fair-use right to backup their movie discs. A Real victory would also enable technology companies to create new DVD copying and storage devices.

Here's what is at stake, according to two well-known attorneys with opposing views:

On the issue of fair use, Fred von Lohmann of the Electronic Frontier Foundation said:

"The important question is will consumers have the same kind of personal use rights that they have had for their compact discs? Will we have the same kind of innovation for DVDs that we've seen for digital music? Obviously, consumers have gotten used to the idea of putting music on computers and listening to it on devices like iPods. Consumers are now facing the possibility that those same kind of actions will be declared illegal if the MPAA has its way."

Ben Sheffner is a former copyright attorney for 20th Century Fox and is an outspoken proponent of copyright. According to him, a loss in this case could deal Hollywood a significant financial setback. He said:

"The studios feel that it's very important to make clear that copying DVDs is not permitted by the law. They believe that's the law now--and judging from how things went at the hearing--it appears that is how the law will remain. If it goes against the studios that would be a major blow and would open up the door to a lot more copying of DVDs and to more products that would facilitate copying. A victory won't really improve their situation but a loss would be very bad."

The good news about all this is that we may not have to wait too long for a ruling. Patel has a reputation for delivering relatively speedy decisions.

Reporter's notes: Real has hired some very able attorneys from the firm Wilson Sonsini to represent it. But should it go to trial, Real would do well to hire a lawyer with the same kind of charisma and courtroom presence as Bart Williams. He's the lawyer from Munger, Tolles & Olson who is representing the MPAA. I'm no legal expert, but I've got eyes and the judge appeared to be more engaged when Williams addressed her. He didn't drone on. He was well prepared and he simplified complex issues and technologies. Cases are supposed to be judged on facts but I'm guessing every advantage helps.

Updates are noted at the bottom of this story.

SAN FRANCISCO--Attorneys for the Motion Picture Association of America attacked fair use during a hearing in the RealDVD case here on Thursday, claiming it is not a defense for violating the Digital Millennium Copyright Act. To prove its point, the MPAA relied on RealNetworks' own testimony in a prior case.

U.S. District Judge Marilyn Patel is due to decide whether Real can once again start selling RealDVD, the software enables users to duplicate DVDs and store copies on their computers. The MPAA filed suit last September and accused Real of violating copyright law and breach of contract. Patel temporarily banned sales until hearing from both sides.

The case potentially could go a long way to determining whether it's lawful for a consumer to make backup copies of their DVDs and is being closely watched by fair use proponents.

Patel raised a crucial question during the MPAA's closing arguments. She asked Bart Williams, one of the MPAA's attorneys, whether a consumer possesses the right to copy a DVD he or she purchased for personal use.

"Not for the purposes under the DMCA," Williams said. "One copy is a violation of the DMCA."

Then Patel tried again. This time she asked about a hypothetical device that sounded very much like Facet, the DVD player that Real is planning to release that copies as well as plays DVDs. Real says that the copies of movies made by Facet are locked in the box and can not be distributed illegally.

"What if Real or someone made a device that allowed for making a copy only to the hard drive that is on that machine?" Patel asked Williams. "And you can't make another copy from that. Would that be circumvention of the DMCA? Would it in fact mean that it really was sufficient fair use under the DMCA?"

"Yes it would be circumvention," Williams replied, "and no it would not be fair use. The only backup copy Congress envisioned was archival, that you would never use until such time when your main computer wasn't working...Congress would not have gone through the process or have this process if you're going to say there is some fair use rights that allows you to circumvent."

Real once argued against fair use
Williams then told the judge that Real had argued against fair use in a legal case the company brought against Streambox nearly 10 years ago. Real filed suit against Streambox for creating the Streambox VCR, a system that enabled users to copy Real's streaming music and video. Streambox argued that users were making fair use copies. Real sought a temporary restraining order, just as the studios have in the current case, which was granted.

"There is no fair use defense (for Streambox against the DMCA)," Real argued in that case, court documents show. "The DMCA does not have a fair use exception allowing individuals to circumvent access and copy protection measures.

"In enacting the DMCA," Real continued, "(Congress) expressly outlawed products such as the (Streambox VCR) that serve to promote the unauthorized copying and distribution of copyrighted works."

For this reason, Williams asked the judge for an estoppel ruling against Real. This is a legal doctrine that would bar Real from arguing for fair use because it had made a counter argument--and prevailed--in a prior case.

Real is vulnerable to DMCA violation claims. The copyright law prohibits anyone from cracking copy protections.

Even if Patel rules that Real did not circumvent Content Scramble System, the studios encryption technology, which the MPAA claims it has, Real has to prove that it did not circumvent ARccOS and RipGuard. These are copy protections measures some of the studios use as an added layer of protection and are not covered in the CSS license Real obtained from the studios.

In previous court proceedings, MPAA lawyers presented e-mails and testimony that showed Real worked hard to find a way to get past ARccOS and RipGuard, including the hiring of an overseas company that the MPAA alleges is run by "Ukranian hackers."

Williams wrapped up and then it was Real's turn.

Case is about stifling competition
Don Scott, one of Real's attorneys told Patel that security wasn't an issue in the case because the copy protection, AES-128, that Real uses to protect the copies RealDVD makes is better than CSS. He said the case was really about the studios' attempt to stifle competition.

He said Real needs to make a copy to the hard drive in order for consumers to enjoy the many features that RealDVD and Facet offer.

As for the studios' claims that RealDVD and Facet can be used to copy rented or borrowed films without compensating the studios, Scott said Real could block copying of rentals if the studios cooperated by including some kind of identifying marks or "serial number" on the discs, but Hollywood has refused.

As for fair use, Scott said the MPAA was wrong.

"We believe the buyer has that right to play a DVD as many times as they want," Scott told Patel. "We think he also has the right to make a copy, this fair use copy."

Scott compared DVDs to music and pointed out that the music industry allows users to make copies. "This is the experience that has been recognized as lawful fair use," Scott said. "These same studios have talked about CDs. A purchased CD can be copied to a computer and then transferred to an iPod without any charge to the consumer."

Before breaking for lunch, Patel wanted to discuss Real's request to hear testimony from Peter Biddle, a former Microsoft employee who helped draft the CSS license and who came forward on Wednesday evening, after the court had finished hearing witness testimony.

Real told Patel that they were unable to find Biddle, who if allowed to testify would contradict the studios claim that the CSS license was intended to always forbid the copying of DVDs.

Patel denied Real's request. "Your inability to find him I find inexplicable," she told Real's lawyers. "I found him on Google in three minutes. I don't buy it."

Both sides completed their closing arguments and the hearing adjourned without any decision from Patel. There is no telling how long she will take to issue a ruling.

Update 12:50 p.m. PDT: To include more on MPAA's request that Real be barred from arguing for fair use.

Update 1:20 p.m. PDT: To include Real's arguments about fair use.

Update 3:11 p.m. PDT: To include Patel's denial of a request to hear testimony from Peter Biddle.

Update 6:20 a.m. Thursday: To include more background on new witness.

RealNetworks introduced a new witness in the RealDVD case on Wednesday, a move that comes late in the court proceedings that could decide the software's fate.

Real is locked in a court battle with the major movie studios over RealDVD, a software that enables owners to copy DVDs and store them to a hard drive. The Motion Picture Association of America filed suit against Real last fall, accusing the company of violating copyright law and breach of contract. U.S. District Judge Marilyn Patel could rule on whether to remove a ban on the sale of RealDVD as early as Thursday.

Real on Wednesday filed with U.S. District Court for the Northern District of California a written declaration from Peter Biddle, an Intel executive who had dealings with the movie industry over a decade ago while employed for Microsoft. He disputes Hollywood's claims that the industry included in a license for its DVD-encryption technology a ban on copying DVDs while in a computer hard drive.

Real argues that because it possesses a license to use CSS and because the license doesn't prohibit the copying of DVDs in all cases, Real isn't guilty of breaching its contract.

What Biddle focuses on in his statement is the license for DVD Content Scramble System (CSS), the encryption technology designed to prevent copying of DVDs. Companies need the license to make DVD players. In his declaration, Biddle says that he was part of the "standards-setting" group that helped draft the CSS license between 1996 and 1998. According to court documents, he has not been compensated by Real. It is not yet clear whether Patel will allow Biddle to testify in court.

He confirmed that the film industry was initially against allowing the copying of DVDs under any circumstances. But he said eventually the studios relaxed their position.

"I repeatedly explained that such a prohibition would be extremely difficult to implement," said Biddle in his declaration, recalling what he said during negotiations on what language the CSS license should include. "Because computer and software products rapidly evolve, the CSS license was designed to enable computer manufacturers to have significant freedom."

He says it was never agreed to that the CSS license would ban all copying.

Marsha King, a retired vice president at Warner Bros., testified during the hearing that the entire reason for the CSS license was to prevent consumers from creating copies.

"The studios were adamant that no copy be placed on the (computer) hard drive," King told the court. "The only thing we authorized was playback of the movies...no copies were to be made...it was a mantra."

In the past week, Real has introduced Biddle and filed new allegations against the film industry, accusing them of antitrust violations. The question is whether these moves are just 12th-hour legal wrangling or will have legitimate impact on the case.

In a letter to Patel, Real's attorneys said that they were unable to locate Biddle until May 6, and weren't clear about what he would testify to until Wednesday. This makes little sense as Biddle, the man behind Microsoft's BitLocker technology and Darknet, is pretty high profile and a Google search quickly reveals he is Director of the Google Program Office at Intel and lives in the Seattle area.

Patel is scheduled to hear closing arguments on Thursday morning. There's no telling when she will issue a decision, but she has a history of ruling from the bench.