Here is the executive summary:

Fighting a slump in DVD revenues and a rapidly changing marketplace, the motion picture studios recently filed a lawsuit to ban RealDVD, new software that allows consumers to make a single backup copy of DVDs they have legally purchased to the hard-drive of their computer. While doing little to quell illegal DVD piracy (one cannot use RealDVD to burn movies onto a disc or load movies onto the web), banning new products will impose substantial new limitations on consumers and their use of the DVDs they purchase.

Should the motion picture industry succeed with their lawsuit, which will be heard later this week in a Federal courtroom in San Francisco, consumers will lose fair use rights that have been carefully defined and protected by the courts. Banning new products such as RealDVD will also hamper competition and technological innovation in one of the most dynamic sectors of the economy.

The report makes the case that RealDVD is:

• legal
• something consumers want
• not intended for nor useful for piracy
• would likely lead to increased demand for DVDs at a time when demand is slowing

They also make clear that this is not simply an industry protecting their legal rights and fighting illegal piracy:

The studios, in essence, are asserting an exclusive claim not just to the creative content they provide, but to the technologies used by consumers to view DVDs, something that goes far beyond their copyright protection to spur innovation. More accurately, the major studios are in a struggle to protect fading revenue streams and are failing to embrace new revenue streams being created through innovation.

As one commenter noted, “Effectively, the Big Content players believe that they own their industries, and innovation should come from the top down through the paths that they choose. Thus, these sorts of lawsuits will continue until the management of these firms recognize that innovation is a bottom-up phenomenon. Or, the big firms go out of business. Whichever comes first.”

As I have noted before, if you care about innovation and consumer access to technology you should be watching this case.  Hearings opened Friday in San Fransisco.

The big Hollywood studios, however, successfully blocked the release and the case will be heard before a U.S. District Court judge in San Francisco on the 24th of this month.

Not surprisingly this is in marked contrast to what consumers expect and want.   Instead, consumers strongly believe that they should have the right to use their DVDs in the way RealDVD envisions.  According to a new survey released today by the National Consumers League Americans are overwhelmingly interested in the ability to copy or back up their DVDs to their computers and laptops.

For example:

• 90% of respondents (93% with kids in the house) believe that as owners they should be able to copy a DVD to their computer in the same way that they save music from a CD.
• 51% of those surveyed (67% of 25-34 year-olds) were bothered about their inability to save most DVDs to their hard drives without cracking the encryption or purchasing an expanded version.
• 46% of those who said they should be able to save a copy of a DVD onto their hard drive have had to repurchase DVDs due to loss or damage.

So we have consumers who believe that they should have the same rights and abilities to manage their DVDs as they do with other media and who have legitimate reasons to do so.  And we have a likely growing group of consumers who are frustrated with those blocking this ability.  Does this sound like a winning sales strategy in a trouble economy?

I don’t think so.

Hollywood studios would be wise to find ways to give consumers the flexibility and convenience they want instead of blocking innovation with heavy-handed legal tactics.

But given their history, I won’t hold my breath.

When it comes to movies, however, the choices are much more limited. Sure, some online services have developed that allow for viewing movies and TV shows. But the freedom and flexibility that comes with digital music just isn’t there for DVDs.

Seeing this need RealNetworks developed software, called RealDVD, to solve this problem. RealDVD allows users to: keep a backup copy in case a DVD gets scratched or lost; watch movies on a laptop without carrying a bunch of DVDs; bookmark your place in a film and pick up exactly where you left off; and keep children from inappropriate content with helpful parental controls.

Sounds like another example of entrepreneurs meeting market demand. Who wouldn’t like more flexibility and control when it comes to when, where, and how you watch movies, right?

Only one small problem: RealDVD’s release is tied up in court thanks to legal action by media interests who prefer to control your entertainment choices while insisting on an upfront cut.

When RealNetworks developed RealDVD they were intent on complying with the law. They acquired a license from the DVD Copy Control Association (DVD-CCA) and, relying on earlier court cases, believed the software was within the scope of that license and the law. But in September 2008, when the software was made available, The Motion Picture Association of America (MPAA) successfully sued to block its release.

The studios claim that RealDVD presents a threat of “massive theft” and have labeled the software “StealDVD.” The irony is that RealDVD was an attempt to offer legal software to consumers in contrast to the host of options available on the internet for those intent on making illegal copies.

RealNetworks sought to insure that the software was legal and to discourage illegal use. RealDVD only allows you to make one digital copy on your hard drive and doesn’t allow you to rip it to a DVD. Even with an additional license fee it only allows five copies and the encryption codes always remain unaltered.

“The application is actually akin to a license — very similar to what happens with iTunes,” Chris Renk, an attorney and shareholder with Chicago-based law firm Banner and Witcoff, told TechNewsWorld. “It doesn’t give you the right to rip [the movie] onto a DVD itself,” he said.

“By buying the software, you’re actually paying a royalty for the use of the movies, and the rights that you get are limited by the encryption software,” Renk explained. “There shouldn’t be any real concern by the movie industry whatsoever.”

So what is behind such heavy handed action by the MPAA? You don’t have to be particularly cynical to see this as an attempt to force innovative developers to work with the studios prior to launching new products so that the industry gets a cut. The Electronic Frontier Foundation makes just this point:

So why unleash all the expensive lawyers to kill RealDVD? Answer: to send a message about what happens to those who innovate without permission in a post-DMCA world.

As we’ve said for years, DRM systems like the Content Scramble System (CSS) used on DVDs are not principally about preventing piracy. Rather, DRM is the legal “hook” that forces technology companies to enter into license agreements before they build products that can play movies (Hollywood lawyers candidly admit this “hook IP” strategy). Those license agreements, in turn, define what the devices can and can’t do, thereby protecting Hollywood business models from disruptive innovation.

This rings all too true given the history of anti-innovation strategies pursued by so many in the entertainment world.

What is sad is that this legal harassment is anti-consumer at a time when entertainment companies should be embracing choice and innovation. These actions always add another layer of cost and inconvenience for the consumer.

Instead of going after a legitimate attempt to provide flexibility to consumers Hollywood should be going out of their way to work with companies like RealNetworks. Doing so would send a strong message that the industry is pro-consumer instead of prone to heavy handed legal action.

Unfortunately consumers have little leverage in this battle and must rely on the courts. One hopes in this case the court sides with consumers and gives them the right to manage and use their DVDs without paying yet another fee to the studios.

Maybe with the resulting free time Hollywood could think about making high quality family friendly movies for a change . . .

When it comes to movies, however, the choices are much more limited. Sure, some online services have developed that allow for viewing movies and TV shows. But the freedom and flexibility that comes with digital music just isn’t there for DVDs.

Seeing this need RealNetworks developed software, called RealDVD, to solve this problem. RealDVD allows users to: keep a backup copy in case a DVD gets scratched or lost; watch movies on a laptop without carrying a bunch of DVDs; bookmark your place in a film and pick up exactly where you left off; and keep children from inappropriate content with helpful parental controls.

Sounds like another example of entrepreneurs meeting market demand. Who wouldn’t like more flexibility and control when it comes to when, where, and how you watch movies, right?

Only one small problem: RealDVD’s release is tied up in court thanks to legal action by media interests who prefer to control your entertainment choices while insisting on an upfront cut.

When RealNetworks developed RealDVD they were intent on complying with the law. They acquired a license from the DVD Copy Control Association (DVD-CCA) and, relying on earlier court cases, believed the software was within the scope of that license and the law. But in September 2008, when the software was made available, The Motion Picture Association of America (MPAA) successfully sued to block its release.

The studios claim that RealDVD presents a threat of “massive theft” and have labeled the software “StealDVD.” The irony is that RealDVD was an attempt to offer legal software to consumers in contrast to the host of options available on the internet for those intent on making illegal copies.

RealNetworks sought to insure that the software was legal and to discourage illegal use. RealDVD only allows you to make one digital copy on your hard drive and doesn’t allow you to rip it to a DVD. Even with an additional license fee it only allows five copies and the encryption codes always remain unaltered.

“The application is actually akin to a license — very similar to what happens with iTunes,” Chris Renk, an attorney and shareholder with Chicago-based law firm Banner and Witcoff, told TechNewsWorld. “It doesn’t give you the right to rip [the movie] onto a DVD itself,” he said.

“By buying the software, you’re actually paying a royalty for the use of the movies, and the rights that you get are limited by the encryption software,” Renk explained. “There shouldn’t be any real concern by the movie industry whatsoever.”

So what is behind such heavy handed action by the MPAA? You don’t have to be particularly cynical to see this as an attempt to force innovative developers to work with the studios prior to launching new products so that the industry gets a cut. The Electronic Frontier Foundation makes just this point:

So why unleash all the expensive lawyers to kill RealDVD? Answer: to send a message about what happens to those who innovate without permission in a post-DMCA world.

As we’ve said for years, DRM systems like the Content Scramble System (CSS) used on DVDs are not principally about preventing piracy. Rather, DRM is the legal “hook” that forces technology companies to enter into license agreements before they build products that can play movies (Hollywood lawyers candidly admit this “hook IP” strategy). Those license agreements, in turn, define what the devices can and can’t do, thereby protecting Hollywood business models from disruptive innovation.

This rings all too true given the history of anti-innovation strategies pursued by so many in the entertainment world.

What is sad is that this legal harassment is anti-consumer at a time when entertainment companies should be embracing choice and innovation. These actions always add another layer of cost and inconvenience for the consumer.

Instead of going after a legitimate attempt to provide flexibility to consumers Hollywood should be going out of their way to work with companies like RealNetworks. Doing so would send a strong message that the industry is pro-consumer instead of prone to heavy handed legal action.

Unfortunately consumers have little leverage in this battle and must rely on the courts. One hopes in this case the court sides with consumers and gives them the right to manage and use their DVDs without paying yet another fee to the studios.

Maybe with the resulting free time Hollywood could think about making high quality family friendly movies for a change . . .