Judge's Injunction Hits Streambox.com Real Hard

The latest skirmish in the battle between streaming giant RealNetworks Inc. and upstart Streambox.com has left both companies claiming victory.

In the first full hearing of what promises to be a major test of the Digital Millennium Copyright Act, a U.S. District Court judge yesterday issued a preliminary injunction against the sale or distribution of two Streambox products, its VCR and Ferret utilities.

But the judge lifted a temporary restraining order on the firm's most popular product, Ripper, causing celebration in the office of the small Redmond, Washington-based startup.

"It's great news for consumers and copyright owners," gushed Streambox Chief Executive Officer Bob Hildeman, moments after reading the text of U.S. District Court Judge Marsha Pecham's decision.

For its part, RealNetworks also claimed victory and vowed to pursue Ripper when the companies meet again in court, perhaps as early as this summer.

"We are very pleased with the outcome of the case," said Alex Alben, head of government affairs for RealNetworks. "We intend to pursue our claim against the Ripper because we think it allows the distribution of files in a manner not authorized by the copyright owner."

Last month, Judge Pecham issued the order against three Streambox software products. That order prompted Hildeman to speculate that, with nothing to sell, he would have to shutter his startup within a month. The injunction allows the sale of Ripper. In addition, while prohibiting the distribution of Streambox's beta-stage VCR, it allows its continued development.

"The ruling will help our ability to attract capital," Hildeman said. "Now our main focus is to educate content owners and consumers on Streambox VCR."

RealNetworks brought its suit late last year, alleging that Streambox's products violated the Digital Millennium Copyright Act, or DMCA, which prohibits technologies whose primary purpose is to defeat copyright protections. RealNetworks provides software tools that allow owners of audio and video to make it available on the Internet without losing control of its use. 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.

The three Streambox products in question circumvent those protections. The Streambox Ripper product can "rip" open RealAudio files and convert them into MP3 or WAV formats, which can be copied. Another product, called Streambox VCR, hijacks video streams purportedly intended to be played solely with RealPlayer G2. The third product, Streambox Ferret, allegedly changes RealPlayer's appearance and swaps out the Snap.com search engine and logo for Streambox's.

By allowing the Ripper's sale, Judge Pecham is allowing end-users to convert RealAudio streams into other file formats once they are saved to a user's hard drive.

"The judge saw the Ripper as a legitimate converting tool," Streambox's Hildeman said. "Real cannot lock consumers into one file format".

But Judge Pecham found the Streambox VCR more problematic, because it interferes with streams intended for the RealPlayer. Numerous companies that stream media on the Web, as well as the Recording Industry Association of America (RIAA), supported RealNetworks in its complaint.

"This is good for the Internet, because it means more and more companies will have confidence that their content can be securely streamed to end-users," RealNetworks' Alben said of the injunction. Alben began his career as a lawyer on the losing side of the Sony Betamax case in which the U.S. Supreme Court ruled consumers could legally record copyrighted programming for personal use.

Ironically, Streambox invoked this case as a defense of their product, which they liken to a recording device similar to a VCR. Hildeman says consumers should have the tools and the right to record and copy media streams for use in any format they want.

The difference, Alben says, is that digital recording allows the creation infinite copies with no deterioration of sound or video quality. The DMCA addresses this by acknowledging the difference between a digital and analog copy.

By issuing the injunction, Judge Pecham acknowledges that RealNetworks is likely to prevail in the parts of its case addressing Streambox's VCR and Ferret products.

No trial date has been set.

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