Real Trouble for

Software and media portal is finding itself in some Real trouble.

A U.S. District Court judge refused to lift a temporary restraining order barring the sale or distribution of most of Streambox's product line, an order spurred by a lawsuit from streaming media giant RealNetworks.

In more than two hours of arguments Friday from lawyers representing Real and six-month-old competitor Streambox, Judge Marsha Pecham decided to continue the case until next week to give her more time for review.

"We were looking for some portion of the [restraining order] to be lifted," says Streambox CEO Bob Hildeman. "But we understand this is a landmark case. It will impact consumers and industry for years to come."

Pecham will make a decision Jan. 17 that will either lift the restraining order, or turn it into a preliminary injunction that will remain in place until the trial date. No trial date has yet been set.

The complaint by RealNetworks against Streambox has wide-ranging implications for the future of streaming content on the Web. It is expected to be the first major test of the Digital Millennium Copyright Act.

RealNetworks provides software tools that allow owners of audio and video to make it available on the Internet without losing control of its use.

RealNetworks' RealPlayer, which has been downloaded 92 million times, allows Net users to watch or listen to content. Content owners can decide whether to allow RealPlayer users to copy and keep the content for their own enjoyment.

Several Streambox software products circumvent those protections. One utility, Streambox Ripper, can "rip" open RealAudio files and convert them into MP3 and WAV formats, which can be copied. Another product, called the Streambox VCR, hijacks video streams purportedly intended solely to be played with RealPlayer G2. Another product addressed by the lawsuit, Streambox Ferret, allegedly changes the appearance of the RealPlayer and swaps out the search engine and logo for Streambox's. The suit also accuses Streambox of tampering with RealNetworks' contract with

While the restraining order is in place, Streambox is offering a version of the Ripper that has its RealAudio capabilities disabled. Even without the feature, Hildeman says his Ripper is "the fastest MP3 decoder on the market today."

Attorneys for RealNetworks argue that the Streambox products violate the Digital Millennium Copyright Act because their primary purpose is to defeat copyright protections.

"That behavior is specifically targeted under the DMCA," says RealNetworks attorney Alex Alben.

But Hildeman compares his products to a VCR, which individuals can use to record television programs and movies for their own private use. If RealNetworks prevails, he claims, it would prevent the manufacture of media recorders.

Attorneys for Streambox argue that content owners should have the right and the tools to change media formats if they desire. Imagine, Hildeman says, if you received an e-mail with a Microsoft Word document, which you converted into WordPerfect. "It would be like Microsoft suing you for allowing the conversion," he says.

Alben dismisses the VCR analogy, likening the Streambox products to cable theft. "A cable signal is encoded," he says. "It does not play on your TV set unless you have the key to turn it on. If RealNetworks prevails, it will validate that content owners have a powerful set of tools to enforce copy protection and the way they wish to distribute their medium."

He notes there are three levels of copy protection between where the copyrighted material resides (on proprietary servers) and where it is played (on the RealPlayer G2). "The Streambox VCR is designed to trick Real's server into thinking it has authority to receive the stream," he adds.

Judge Pecham conceded during the hearing that there is very little case law interpreting the DMCA.

Even though Hildeman believes his allies are "consumers and content owners who want to have a choice," he concedes his small startup may not see the case through: "I think we will last through the month."

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