US Court order could force online DVD distributor to shut down

A California district court ruled to award the MPAA, the trade group which represents the six major Hollywood film studios, a preliminary injunction against Zediva. Under the terms of the court ruling the parties must meet on or before 8 August to attempt to agree the terms of the injunction.

Zediva’s service allows customers to "rent" recently released DVDs over the internet. Zediva purchases copies of DVDs, plays them in DVD players and uses technology to stream the films to customers over the internet. The company gives customers control over when the DVD starts and stops. The copies of the DVDs never physically leave Zediva's premises.

The MPAA argues that Zediva’s service should be shut down and is seeking $150,000 from Zediva for each work it alleges has been infringed. The outcome of the case will be determined in a full trial.
The court ruled to impose a preliminary injunction against Zediva after determining that the company is in breach of the MPAA’s copyright.

"In this case, [Zediva] are violating [the MPAA's] exclusive right to publicly perform their Copyrighted Works by transmitting those Copyrighted Works to the public over the internet, without a license or [the MPAA's] permission, through the use of [Zediva's] service," the judge said in his ruling (12-page / 49KB PDF).

Zediva had argued that its service offers "DVD rentals" rather than the transmission of films, meaning that once it had bought a lawfully made DVD it was allowed to rent it out to its customers and was not breaching the US Copyright Act. The judge disagreed and ruled that Zediva's service amounts to "transmission of performances".

In the US for an injunction to be granted the party seeking the order must establish that its case is likely to succeed, that it would suffer irreparable harm if the injunction is not granted, that the hardship it would suffer in the absence of the injunction would be greater than that suffered by the opposing party if the injunction were granted and that the injunction is in the public's interest. The judge held that the MPAA had established all four grounds.

The judge's decision was described by a MPAA spokesman as "a great victory for more than 2 million American men and women whose livelihoods depend on a thriving film and television industry," according to a report by CNET news.

Zediva has vowed to continue its fight and described the ruling as "a setback for the hundreds of thousands of consumers looking for an alternative to Hollywood-controlled online movie services."

"Zediva intends to appeal, and will keep fighting for consumers' rights to watch a DVD they've rented, whether that rental is at the corner store or by mail or over the Internet," a Zediva spokesman said, according to CNET.

Last month the High Court of England and Wales granted an injunction against the UK's largest internet service provider, BT, forcing it to block access to Newzbin 2. The Newzbin 2 website aggregates links to illegally-copied films, music and computer games.

The Newzbin 2 decision has been widely criticised and the judgment was described as setting "a worrying precedent for internet censorship," by Loz Kaye the leader of the Pirate Party UK.

Technology law news is also available from Bootlaw, a free resource for technology start-ups, with regular events hosted by Pinsent Masons.