RealNetworks' copyright lawsuit against Streambox took another step forward Friday when a judge refused to lift a temporary restraining order preventing Streambox from offering several products.
Federal Judge Marsha J. Pechman ruled that Streambox must stop offering its Streambox VCR, Ripper and Ferret products for 10 more days. When the two sides meet in court again on January 17th, the judge will rule on whether to issue a preliminary injunction against Streambox until a trial begins.
The action kept in place a temporary restraining order issued in December. A trial date has not been scheduled.
RealNetworks is suing Streambox under the Digital Millennium Copyright Act. The suit alleges Streambox products, which allow users to record RealVideo and RealAudio files and then convert those files to other streaming formats like MP3 and Windows Media, infringe on RealNetworks' copyrights.
The suit further alleges that the Streambox Ferret program, which grafts a search tool on to the Real Player software, undermines RealNetworks' agreement with Snap, an Internet portal for the NBC television network. Snap has the exclusive right to conduct searches through the Real Player and pays RealNetworks a fee whenever a search is performed.
At the heart of the case is Real's belief that this suit is necessary to protect the intellectual property of its content partners -- the companies that offer video and audio offerings using RealNetworks' technologies. Real contends that by creating and distributing products that allow users to copy and change file formats without the author's permission, Streambox is jeopardising the future of streaming media. "Consumers should be concerned. If this kind of product became widespread, content owners would stop putting their content in streaming form," said Alex Alben, vice president of government affairs for RealNetworks.
Bob Hildeman, CEO of Streambox, sees things differently. He believes his Streambox VCR product is at the forefront of an entirely new business for the online media industry, similar to the home video rental business that sprang up with the advent of television-based VCR's.
Hildeman says the Streambox VCR has a built-in digital rights management system that would allow content owners to charge users for watching a recorded file. He claims RealNetworks is simply trying to bully its way into controlling what could be a lucrative revenue stream.
"If (RealNetworks) is the only gateway to the content owners, they hold the key," said Hildeman. "That means they're the only one that can sell the key and there can't be any competition."
It might not be that simple. As the battle for industry dominance between Microsoft's Windows Media streaming format and RealNetworks continues to heat up, Gary Schultz, president of the Multimedia Research Group in Sunnyvale, Calif., believes RealNetworks may have filed suit simply to protect itself from future lawsuits. "I don't think Real wants to get sued by content developers who say 'you could have done something about this,'" said Schultz. "In a sense this is a preemptive strike to avoid liability."
Marc Bernstein, a San Francisco-based lawyer specialising in Internet-related issues, agrees with Schultz's assessment. "Real has an interest in content providers being comfortable having content distributed through Real's products."
In addition to asking for a permanent halt to the sale and distribution of Streambox's VCR, Ferret and Ripper products, RealNetworks' suit also asks for the award of compensatory and punitive damages in an amount to be determined during the trial. The company also wants restitution for profit or other advantages Streambox derived from its products.
Hildeman says only a "couple thousand" copies of the $35 Ripper software were downloaded and "less than one thousand" people downloaded the free "Ferret" search tool. The VCR, which Streambox had planned to give away for free, has not yet been released.
Streambox continues to offer a version of its Ripper software which does not include the ability to convert RealAudio files.