Zediva, a start-up that tried to exploit what it considered was a loophole in copyright law to build an online video service, has received a death blow.
U.S. District Judge John Walter issued a permanent injunction against Zediva's operators that will force them to shut down the service for good.
According to a statement from the Motion Picture Association of America, the trade group representing the six major film studios, Zediva's operators have also agreed to a payment of $1.8 million to the studios.
The MPAA accused Zediva of copyright violations in a lawsuit filed in April. The start-up billed itself as a DVD-rental service just like Blockbuster or Hollywood Video. The twist was that it would enable users to rent DVDs as well as DVD players, both of which would never leave the company's facilities.
Because it enabled people to watch movies played on disc players, Zediva argued that it was really a disc-renting service. "It's just like a DVD player with a really long cable attached," was how the company described itself.
Under the law, anyone who buys a DVD can do what they want with their disc, including rent it. But to distribute movies electronically or over the Internet, requires licenses from copyright owners. This was a goofy attempt to circumvent copyright law and avoid paying licensing fees.
The judge didn't buy it and the MPAA made quick work of Zediva, winning a temporary injunction in August.