RealNetworks, Inc. v. DVD Copy Control Ass'n (641 F. Supp. 2d 913, 2009)

MEMORANDUM & ORDER

MARILYN HALL PATEL, District Judge.

BACKGROUND

On September 30, 2008, RealNetworks, Inc. and RealNetworks Home Entertainment, Inc. (together, “Real”) brought action in this court against the DVD Copy Control Association, Inc. (“DVD CCA”) and several major motion picture studios, seeking a declaratory judgment that Real has neither breached its license agreement with DVD CCA nor violated the Digital Millennium Copyright Act, 17 U.S.C. sections 1201 et seq. (“DMCA”) by manufacturing and distributing its “RealDVD” product. That same day, several major motion picture studios brought action in the United States District Court for the Central District of California to enjoin Real from manufacturing, distributing or otherwise trafficking in RealDVD, in alleged violation of the DMCA and as a breach of contract. The Central District case was transferred to this court, where the cases were related and consolidated.

Following an October 3, 2008 hearing, the court granted the motion picture studios’ requested Temporary Restraining Order (“TRO”) to restrain and enjoin Real from manufacturing, distributing or otherwise trafficking in RealDVD or any products substantially similar. The TRO has been extended several times at the consent of all parties pending the completion of the motion picture studios’ and the DVD CCA’s motions for a preliminary injunction, which is now before the court. The hearing on this matter was held over five days in April and May 2009.

Having considered the parties’ submissions, arguments of counsel, and the case file, the court rules as follows on the preliminary injunction motion. The court makes the following Findings of Fact and Conclusions of Law to support its ruling. To the extent that any findings of fact are included in the Conclusions of Law section, they shall be deemed findings of fact, and to the extent that any conclusions of law are included in the Findings of Fact section, they shall be deemed conclusions of law.

FINDINGS OF FACT

I.Parties

A. RealNetworks, Inc.

1. RealNetworks, Inc. is a company incorporated and based in Seattle, Washington, that develops, manufactures and sells platforms for the delivery of digital media. See Amended Complaint for Declaratory Relief, Docket No. 62, ¶ 10, Exh. A (“Compl.”). RealNetworks Home Entertainment, Inc. is a subsidiary of RealNetworks, Inc. and is incorporated in Delaware, with its principal place of business in Seattle, Washington. Id. ¶ 11.

2. Real started fifteen years ago as a pioneer in the market for technology that relates to the delivery of audio and video content over the Internet. See Hearing Tr. (Glaser) at 440:8-9, 440:21-441:19. Today, Real sells several popular product lines that deliver streaming audio and video of copyrighted content online, which Real licenses from content owners in the film, television, music and electronic gaming industry. Id. at 442:7-14.

3. Real has never been accused of copyright infringement from a major content provider. Id. at 443:17-23. Real has brought and prevailed on DMCA claims for circumvention of Real’s access control and copy protection measures it affords to content owners. See RealNetworks, Inc. v. Streambox, Inc., 2000 WL 127311, *8 (W.D.Wash. Jan.18, 2000).

B. Motion Picture Studios

4. The motion picture studios involved in this consolidated action, as either plaintiffs and counter-defendants or declaratory relief claim defendants, are: Disney Enterprises, Inc., Paramount Pictures Corp., Sony Pictures Entertainment, Inc., Twentieth Century Fox Film Corp., NBC Universal, Inc., Warner Bros. Entertainment, Inc., Viacom, Inc., Universal City Studios Productions L.L.L.P., Universal City Studios L.L.L.P., Sony Pictures Television, Inc., Columbia Pictures Industries, Inc., and Walt Disney Pictures (collectively, “Studios”).

5. The Studios are content owners of copyrighted works, including movies and recorded television programs. The Studios or their subsidiaries distribute their movies on Digital Versatile Disks (“DVDs”). See Studios’ Answer, Docket No. 59, ¶ 20.

C.DVD CCA

6. DVD CCA is a not-for-profit corporation that consists of companies in the motion picture, consumer electronics and computer (hardware and software) industries. Compl. ¶4. These three industry groups represent the content providers, the consumer electronics manufacturers and the information technology companies. See Nelson Dec., Docket No. 217, Exh. 7 (Parsons Dep.) at 23:2-6. Certain of the Studios in this action, namely, Walt Disney Pictures, Paramount Pictures Corp., Sony Pictures Entertainment, Inc., Twentieth Century Fox Film Corp., Universal City Studios L.L.L.P. and Warner Bros. Entertainment, Inc., are members of the DVD CCA. See Studios’ Answer ¶ 4.

7. DVD CCA is governed by a twelve-member Board of Directors. DVD CCA’s Certificate of Incorporation provides for five “Motion Picture Company Directors,” three “Consumer Electronics Manufacturer Directors,” three “Computer Manufacturer Directors,” and one “At Large” director. Suppl. Pak Dec., Docket No. 249, ¶ 2 & Exh. A.

8. The purpose of DVD CCA is to license technology relating to content protection for DVDs. Nelson Dec., Exh. 7 (Parsons Dep.) at 22:1-3. Specifically, DVD CCA licenses Content Scramble System (“CSS”) technology to manufacturers of DVD devices and software pursuant to a standard license agreement (“CSS License Agreement”). Compl. ¶ 4; Pak Dec., Docket No. 199, ¶ 2.

9. The CSS License Agreement confers third-party beneficiary rights on any “Eligible Content Provider,” as defined in Section 9.5 of that agreement. Id. As such, these Studios are Eligible Content Providers and third-party beneficiaries with standing to assert claims for breach of contract of the CSS License Agreement. See Counter-Complaint, Docket No. 15, ¶¶ 34-50, Studios’ Answer ¶ 4.

II. CSS Technology

10. The CSS technology grew out of a series of meetings of a group known as the Copy Protection Technical Working Group (“CPTWG”). Parsons Dec., Docket No. 199, ¶ 4; Hearing Tr. (King) at 75:14-76:5. During a series of CPTWG meetings that began in approximately the mid-1990s, representatives from the motion picture, consumer electronics and computer industries all recognized the common benefit to be gained in adopting a single and standard format, the DVD, for delivering digital content to the public. Id. However, the motion picture companies were concerned about the possible distribution of then-copyrighted content on DVDs without a system to prevent the high-quality digital format from being copied by consumers. Hearing Tr. (King) at 73:20-74:12; 91:19— 92:2. The consumer electronics and information technology companies, for then-part, wanted a content protection system that could be implemented without adding significantly to the cost of their products. Parsons Dec. ¶ 4.

11. Following many meetings, the DVD video format was adopted as the standard digital medium for home distribution of movies and the three industries, through the CPTWG, endorsed CSS as an encryption scheme to protect movies on DVDs from being copied. The CSS technology was specifically developed to create a secure system for the dissemination and playback of copyrighted content on DVDs, while preventing copying, so that consumers would be able to play all DVDs on all players. Hearing Tr. (King) at 79:22-82:12; see also, Universal City Studios, Inc. v. Reimerdes, 111 F.Supp.2d 294, 309-311 (S.D.N.Y.2000)(describing history and development of CSS), aff'd, Universal City Studios, Inc. v. Corley, 273 F.3d 429, 436-37 (2d Cir.2001)(same).

12. The CSS technology is, at its core, an encryption-based system that employs an algorithm configured by a set of security “keys” to encrypt a DVD’s contents. CSS encrypts the content on DVDs, scrambles the video content and renders it unusable and unplayable to the user, unless and until the content is decrypted with CSS keys. Kelly Dec., Docket No. 365, ¶ 19; Hearing Tr. (Schumann) at 285:22-286:5. A DVD that has been CSS-protected requires the algorithm configured by a set of CSS keys to perform a series of steps, which results in unlocking the protected content and unscrambling and playing back a motion picture or other content that has been CSS-protected on a DVD. Kelly Dec. ¶¶ 16-17.

13. The CSS system combines multiple layers of encryption with an authentication process to protect a DVD’s (typically-copyrighted) video content from unauthorized access or unauthorized consumer copying. Pak Dec. ¶ 3; Parsons Dec. ¶ 3; Hearing Tr. (Kelly) at 151:21-23; Hearing Tr. (Bishop) at 755:3-5; see also, Pak Dec., Exh. J (Recital A). The CSS system’s set of protections includes DVD drive-locking, secure storage of keys on a DVD, CSS authentication, CSS bus encryption, and CSS content encryption. Schumann Dec., Docket No. 204, Exh. A, ¶¶ 22-33; Hearing Tr. (Bishop) at 755:16-756:8.

14. CSS technology requires that a DVD drive “lock” upon insertion of a CSS-protected DVD and prevent access to its contents until an CSS-authorized player engages in an authentication procedure, akin to a secret handshake, to establish mutual “trust.” Hearing Tr. (Schumann) at 272:17-25; Schumann Dec., Exh. A, ¶¶ 25, 28-30; Hearing Tr. (Bishop) 786:21-24. Upon the insertion of a CSS-protected DVD, a DVD drive recognizes that a disc is present, that the DVD has CSS protection technology on it, and that the DVD content cannot be released before an authentication process occurs. Hearing Tr. (Schumann) at 274:2-15.

15. CSS technology requires that players authenticate themselves to DVD drives to establish mutual trust, both to “unlock” the DVD and gain access to its protected video contents and also separately to gain access to keys stored in secure areas of the DVD, which then decrypt and descramble the DVD content. Hearing Tr. (Schumann) at 276:17-23; 277:9-11; 278:4-11; 281:4-13; Hearing Tr. (Bishop) at 755:25-756:5; Schumann Dec., Exh. A, ¶¶ 25-30. The drive-locking and authentication steps of the CSS technology thus tie the playback of the DVD content to the DVD itself in an authorized DVD drive. Id. The process of authentication with the DVD drive, and subsequent content decryption, will fail if a DVD is not in the DVD drive. Hearing Tr. (Schumann) at 277:9-11; Schumann Dec., Exh. A., ¶ 28.

16. The CSS technology creates a system whereby a movie or other video content on a DVD may only be played back in decrypted and unscrambled form from the physical DVD and not any other source, such as a computer hard drive. Schumann Dec., Exh. A, ¶¶ 28-30. This same system ensures that “playable,” i.e., decrypted and descrambled, copies of the DVD’s video content cannot be made. Id. ¶ 22.

17. As DVD content owners and DVD distributors, the Studios rely on CSS protection to garner profits from their copyrighted works. In the aggregate, the Studios received revenues of approximately $12.5 billion from the sale of DVDs (net of returns) in 2007. Dunn Dec. ISO PL’s Application for TRO, Sept. 29, 2008, ¶ 4. In addition, the Studios received aggregate revenues of approximately $2 billion from outlets that rent DVDs in 2007, Id. ¶ 12; over $200 million from Internet downloads of DVD content in 2007, Id. ¶ 14; and approximately $600 million from video-on-demand and pay-per-view services in 2007, Id. ¶ 16.

III. CSS License Agreement

18. Following the development and the CPTWG’s endorsement of CSS technology, an interim license agreement was developed so that companies wishing to use the CSS technology to distribute copyrighted content on DVDs or to manufacture and sell devices that playback DVDs could license CSS technology. Hearing Tr. (King) at 81:19-82:12; 85:13-86:9. Representatives of the three main industries that comprised the CPTWG, i.e., the motion picture, consumer electronics and computer industries, engaged in the negotiation of the interim license agreement. Id. at 77:13-20; 82:4-12.

19. Matsushita Electric Industrial Company Ltd. (“Matsushita”) and Toshiba Corporation (“Toshiba”) owned the underlying intellectual property for CSS. Id. at 86:12-87:7; 89-9-90-1; Pak Dec., Exh. J (Recital A). Counsel for Matsushita served as the primary drafter of the agreement, and Matsushita handled the initial licensing of CSS prior to the formation of the DVD CCA. Id. at 86:24-87:7; 89:16-17; 93:11-12.

20. When the DVD CCA was formed in 1999, Matsushita and Toshiba granted the DVD CCA a royalty-free license in CSS technology and the DVD CCA became the sole licensor and administrator of CSS technology under the CSS License Agreement. Hearing Tr. (King) at 89:13-18; 98:10-99:17; Pak Dec. ¶ 2.

21. Manufacturers of authorized DVD players utilize CSS technology obtained pursuant to the CSS License Agreement to build licensed player devices. Still today, DVD CCA remains the sole entity responsible for licensing CSS to manufacturers of DVD hardware, discs, and related products. Pak Dec. ¶ 2.

22. More than 300 companies have licensed CSS from DVD CCA. Parsons Dec. ¶ 5. CSS licensees include the owners and manufacturers of the content distributed on CSS-protected DVDs, creators of encryption engines, hardware and software decrypters, and manufacturers of DVD players and DVD-ROM drives. Pak Dec. ¶ 2. CSS has been implemented in millions of DVD players and computers worldwide and is used to protect the content on hundreds of millions of DVDs. Parsons Dec. ¶ 5.

23. Each company that obtains a license from DVD CCA agrees to comply with the uniform set of rules set forth in the CSS license that are intended to safeguard CSS-protected content and to prevent copying of DVD content. Id. ¶ 6; see also Pak Dec., Exh. J, § 4.2.1 (“Licensee shall comply with the CSS Specifications as may be amended from time to time by Licensor in accordance with the By-Laws. Each DVD Product [made by Licensee] shall comply with the version of the CSS Specifications which is in effect at the time such DVD Product is manufactured.... ”).

24. DVD CCA retains the ability to enforce the CSS License Agreement and to force licensees to remove non-compliant products from the market. The CSS License Agreement specifically authorizes DVD CCA to obtain preliminary or permanent injunctive relief for a breach of the agreement for the sale of non-compliant products or for otherwise “making available the means for widespread unauthorized copying of copyrighted content intended to be protected using CSS,”. Pak Dec., Exh. J (§ 9.2); Parsons Dec. ¶ 5. The Agreement also states the injury to a party arising from a breach of the agreement “will be irreparable.” Id.

A. The Licensing Process and the CSS License Agreement with Real

25. Any company, including Real, is required to obtain a CSS license in order to build a product that implements CSS technology, and a CSS license is required to interact with CSS-protected DVDs. Nelson Dec., Exh. 6 (Pak Dep.) at 49:11-20.

26. The CSS License Agreement is a standard form agreement. Nelson Dec., Exh. 6 (Pak Dep.) at 14:2-15:3; Pak Dec., Exh. J. It is accompanied by a set of specifications called the Procedural Specifications, which are freely available on the DVD CCA website, to provide prospective licensees additional detail about the terms and conditions of use of the CSS technology. Nelson Dec., Exh. 6 (Pak Dep.) at 73:12-20; Pak Dec., Exh. P.

27. To become a CSS licensee, an interested party must submit a properly executed license application, select a category of membership (the available categories are listed in Exhibit C to the License Agreement), and pay the requisite fee. Nelson Dec., Exh. 6 (Pak Dep.) at 62:5-14; Pak Dec., Exh. J. These procedures are set forth step by step on the DVD CCA website, along with links to explain the licensing process, CSS technology, and its purpose, along with downloadable documents, a “Frequently Asked Questions” page, and other information on CSS membership categories. Pak Dec. ¶¶ 7-8.

28. The CSS webpage of the DVD CCA website provides an overview of the licensing process and specifically directs prospective licensees how to proceed, depending on what type of implementation the prospective licensee has in its plans. Prospective licensees are guided through the application process step by step and a flowchart of the process is provided, which includes a step whereby DVD CCA verifies the completeness and validity of the information provided and gives the prospective licensee feedback on its status. Id. ¶¶ 9-16.

29. Prospective licensees are not permitted to negotiate any aspect of the CSS License or Procedural Specifications. Id. at 72:10-15. Nor does DVD CCA offer prospective licensees any legal advice about the License Agreement or the Procedural Specifications at any time — whether the advice concerns specific terms, membership categories, or more general questions about compliance. Nelson Dec., Exh. 6 (Pak Dep.) at 68:1-6; 70:1-73:20; 77:10-78:11; 83:11-84:4; Nelson Dec., Exh. 7 (Parsons Dep.) at 204:2-22; 205:2-4.

30. In or about August 2007, Real executed Version 1.2 of the CSS License Agreement and became one of approximately 300 CSS licensees. Nelson Dec., Exh. 6 (Pak Dep.) at 39:20-23; 47:2-5; Pak Dec., Exh. J. Real paid approximately $30,000 to become a CSS Licensee. Pak Dec., Exh. J at C-l.

31. The process whereby Real became a CSS licensee was by following the standard operating procedure and licensing procedure set forth on the DVD CCA website and as described above. DVD CCA licensing administrators assisted with the process and provided documentation and feedback in accordance with DVD CCA’s standard licensing practice. Pak Dec. ¶¶ 18-21. Real selected its membership category by identifying the types of technology for which it sought a license, e.g., DVD Player, DVD Drive, Descrambler, Authenticator, etc. Id. ¶ 14.

32. The CSS specifications that Real received after it executed the CSS License Agreement were the following technical specifications: CSS General Specifications (Pak Dec., Exh. L), Authenticator Module for CSS Decryption Module (Pak Dec., Exh. N); DVD-Video Descrambler (Pak Dec., Exh. M); and Authenticator Module for DVD Drive (Pak. Dec., Exh. O). Hearing Tr. (Bielman) at 1044:15-21; 1052:7-20. These specifications are never provided to prospective licensees prior to execution of the CSS License, and thus were not provided to Real prior to August 2007. Nelson Dec., Exh. 6 (Pak Dep.) at 73:25-74:3.

33. Together, the CSS License Agreement (Pak Dec., Exh. J), along with the CSS Procedural Specifications (Pak Dec., Exh. P), and the above-enumerated technical specifications that Real received from DVD CCA after it executed the License Agreement (Pak Dec., Exhs. L-O), make up the “Agreement” between Real and DVD CCA. Pak Dec. ¶24. The CSS License Agreement requires CSS licensees and “each DVD product” to “comply with the CSS Specifications” relevant to the appropriate membership category for each licensee, wherein the confidential CSS Specifications are delivered upon selection of the appropriate category and are “in effect at the time such DVD product is manufactured.” Pak Dec., Exh J, §§ 4.1 & 4.2.1.

B. Language of the Agreement

34. The CSS License Agreement states on its first page that CSS was developed to “provide reasonable security to the contents of DVD discs” and to “provide protection for copyrighted content against unauthorized consumer copying.” Pak Dec., Exh. J (Recital A).

35. The term “unauthorized copy” (and similar usages such as “unauthorized copying” and “unauthorized consumer copying”) as used in the CSS License Agreement means a copy of a copyrighted work made without the authority of the copyright owner, or in any event a copy of a CSS-protected copyrighted work made or facilitated through a use or an implementation of CSS not permitted under the Agreement. Pak Dec., Exh. J (Recital A; §§ 9.2 & 9.5).

36. The reference to the word “unauthorized” prior to copying was inserted during the drafting process to address concerns from representatives of the computer industry that a blanket prohibition on all copying would be technically unworkable, because the playback of a DVD on a computer requires making a temporary copy of a few seconds of DVD content in the computer’s memory. Hearing Tr. (King) at 79:10-21. This temporary copying, sometimes referred to as “buffering” or “caching,” is authorized because it is a necessary part of the playback process of a DVD in all DVD playback devices. Hearing Tr. (Schumann) at 290:13-23; Schumann Dec., Exh. B, ¶¶ 6-9.

37. The CSS Procedural Specifications bar circumvention of CSS technology, stating: “No Circumvention. Licensee shall not produce or sell devices or software (a) under color of this Agreement, or (b) using CSS Confidential or Highly Confidential Information, where such devices or software are designed to circumvent the requirements of this Section 6.2 [section entitled ‘Copy Protection’].” Pak Dec., Exh. P (§ 6.2.12). That section sets forth the “conditions that must be observed by CSS licensees with respect to access to, playback of and transmission of CSS Data ...” to promote “Copy Protection.” Id. (§ 6.2).

38. The CSS Procedural Specifications define “Copy Protection Functions” as “(1) the regional playback control, recordable media playback control, and digital and analog output restrictions and protections required by Section 6.2 of the CSS Procedural Specifications to be performed by and/or contained in the CSS Compliant Products and (2) the internal data and signal restrictions and protections required by [other sections].” Id. (§ 1.8)

39. The CSS General Specifications set forth the following two objectives of CSS: “(1) To make playback of copyrighted material on a DVD-ROM disc possible only on devices subject to license terms that protect certain rights of the copyright owner of that material; and (2) To prevent digital-to-digital copying in a personal computer environment.” Pak Dec., Exh. L (§ 1.2).

40. The CSS General Specifications set forth the general security requirements of CSS: “(1) [CSS] is intended to prevent casual users from the unauthorized copying of copyrighted materials recorded on DVD-Video/Audio Discs” and “(2) The security of the [CSS system] depends on the secrecy of its Keys and Algorithms.” Pak Dec., Exh. L (§ 1.5).

41. The CSS General Specifications logically require that the keys and the DVD’s video content be obtained directly from the physical DVD, at which time the keys are decrypted and the video data is descrambled and sent to the display device, without any opportunity for interception of the data and creation of a digital copy of the content. Pak Dec., Exh. L (§ 2.1.2); Kelly Dec. ¶¶ 41-42.

42. The purpose of this mandated process is to require a direct path whereby the video content is transmitted, thus preventing unauthorized interception and the creation of a copy of the keys and DVD video content on a storage device for future playback without the DVD, such as a computer hard drive. Hearing Tr. (Kelly) at 175:18-176:17; Kelly Dec. ¶ 41.

43. The Authenticator Module for CSS Decryption Module sets forth the objectives of the authentication and decryption processes so as to “prevent digital-to-digital copying in a personal computer environment” and “to prevent the unauthorized interception of data after mutual authentication,” respectively. Pak Dec., Exh. N (§ 1.1).

44. The CSS License Agreement bars licensees from “us[ing] Confidential Information or Highly Confidential Information or any mentally retained recollections thereof to circumvent or copy the methods disclosed in Proprietary Information, Confidential Information, or Highly Confidential information or to circumvent any obligations under this Agreement.” Pak Dec., Exh. J (§ 5.2(a)).

45. The CSS License agreement expressly disclaims the grant of implied licenses, by stating: “licenses granted herein are the only licenses granted to Licensee, and that no other licenses are granted, expressly, by implication or by estoppel, now or in the future” and “all rights not expressly granted to Licensee under this Agreement in and to CSS and the Proprietary Information are reserved and retained by Licensor.” Pak Dec., Exh. J (§ 2.5).

IV. RealDVD Products

46. Prior to the TRO in this action, Real sold and distributed a software product known as RealDVD. Compl. ¶ 2. Real viewed RealDVD as a way to enter the digital video market. Hearing Tr. (Glaser) at 444:14-445:2. The RealDVD software that was briefly available on the market was referred to internally as “Vegas.” It was designed to be downloaded onto a personal computer with a Microsoft Windows operating system. Hearing Tr. (Kelly) at 149:5-7; Hearing Tr. (Bishop) at 745:6-7. The name Vegas was chosen for the software product because, according to Real’s Senior Vice President, Phillip Barrett, “What happens in Vegas stays in Vegas.” Blavin Dec., Docket No. 206, Exh. 1 (Barrett Dep.) at 64:25.

47. RealDVD or Vegas has a variety of different functions, such as playing back DVDs placed into the computer’s DVD drive, looking up information about the DVD from Internet databases, providing links to various information websites relevant to the chosen DVD and storing an image of the copy-protected DVD to a computer hard drive for safekeeping and later playback purposes. Compl. ¶ 2.

48. When a user inserts a CSS-protected DVD into the DVD Drive of a device running RealDVD software, the user is presented with options to (1) “play” the DVD without copying it onto the device’s hard drive, (2) “play and save” the DVD, which allows the user to view the content while RealDVD makes a copy of the content on the device’s hard drive, or (3) “save” the DVD, which commands RealDVD to simply copy the content from the DVD onto the device’s hard drive so that it can be played later, without the DVD. Hearing Tr. (Kelly) at 191:6-192:14; Hearing Tr. (Bielman) at 1103:14-1104:12; Kelly Dec. ¶¶48, 51, 67-74.

49. According to Real’s Chief Executive Officer, Robert Glaser, Real was aware of a number of products on the market that allow consumers to make personal copies of DVDs, including: (1) a product by AMX that allows consumers to record DVDs onto a hard drive; (2) a product by Telestream, Inc., that allows consumers to make a secure copy of a DVD to the hard drive of a Macintosh computer; and (3) a product by Kaleidescape, Inc. (“Kaleidescape”), that allows consumers to make secure copies of CSS-encrypted DVDs to a proprietary collection of hard drives. Hearing Tr. (Glaser) at 445:16^46:16; 448:9-21; Nelson Dec., Exhs.18,19, 20.

50. Real began its own effort to build a similar, competing product that allowed consumers to backup DVDs, after a California state trial court refused to enjoin distribution of Kaleidescape’s product, ruling that the declaratory judgment plaintiff DVD CCA failed to establish that Kaleidescape had violated its CSS License Agreement with the DVD CCA. See DVD CCA v. Kaleidescape, Inc., No. 1:04 CV 031829 (Cal.Sup.Ct., March 29, 2007); Nelson Dec., Exh. 5 (Transcript of Statement of Decision); Exh. 43 (copy of Addendum to Statement of Decision).

In addressing the breach of contract claim only, the court held that a portion of the Agreement distributed to Kaleidescape as a licensee after the CSS License Agreement was executed, namely, the CSS General Specifications, were not binding as part of the contract between the DVD CCA and Kaleidescape as a matter of state contract law. Id. at 2. This decision led Real’s CEO to believe the Kaleidescape product was legal, and Real treated that device as a “blueprint” for the design and development of RealDVD products. Hearing Tr. (Glaser) at 598:12-13; 444:12-445:2. At no time during the design and development of RealDVD, however, did Real communicate to DVD CCA that it intended to construe the Kaleidescape decision as authorizing it to manufacture RealDVD.

51. Real’s Senior Vice President, Phillip Barrett, said the following in an internal November 7, 2007 email to Real colleagues: “the statement ‘Kaleidescape is the only company to have obtained a license from the [DVD CCA] to remove the [CSS] from the DVD to rip and play back from the hard drive’ is a complete lie. There is no license for that. It’s just the CSS license that failed to state that the disk must be present in the drive.” Blavin Dec., Exh. 25.

52. Real’s Vegas software, in addition to permitting storage of DVD content on a hard drive, also allows for portability of the DVD content by allowing users to create and save personal copies of DVDs onto a laptop computer or portable hard drive. Id. ¶ 24; Nelson Exh. 3 (Glaser Dep.) at 14:25-16:4; Chasen Dec., Docket No. 211, ¶ 7. The Vegas software provides a limit of five software licenses per user, so as to allow an individual licensee of the Vegas software to store and play back copies of DVDs on up to five computers that contain Vegas and are registered to the same user’s aceount/unique license key. Chasen Dec. ¶¶ 12-13; Hearing Tr. (Bishop) at 773:24-774:3-6; Hearing Tr. (Schumann) at 299:25-300:7; 344:8-12.

53. Vegas was on the market from September 30, 2008, until the court issued its TRO on October 3, 2008. Real sold Vegas for $29.99, and charged $19.99 for each software license for the additional four (4) computers that can play back DVDs copied with Vegas. Suppl. Blavin Dec., Docket No. 246, Exh. 12.

54. Real also has a new product which it refers to as “New Platform” or “Facet.” Id. ¶ 2. Facet was designed to be an improved stand-alone DVD player; a “next generation” DVD player that would add value to consumers’ existing DVD collections by allowing them to archive, organize, and playback their movies without the need to keep track of physical DVDs. Hearing Tr. (Glaser) at 445:3-15.

55. Facet has not been finalized as a product, but is intended to be a standalone hardware device that is capable of, among other things, playing DVDs, saving DVDs to its internal hard drive, and organizing and presenting saved content by-means of an intuitive user interface, as commonly found on a DVD player. Brennan Dec., Docket No. 210, ¶¶ 3 & 4; Hearing Tr. (Glaser) at 445:6-446:16, 448:3-8. Facet is designed to run on the Linux computer operating system. Ellinikos Dec., Docket No. 199, Exh. H (Hamilton Dep.) at 139:4-15; Hearing Tr. (Kelly) at 178:1 — 4.

56. The Facet software, including the CSS authentication and decryption algorithms, was based on the versions developed for Vegas. Hearing Tr. (Bielman) at 1064:3-16. While the Facet and Vegas versions of RealDVD are designed to run on different computer operating systems, the software functions essentially the same way on both systems, and the parties refer to both Facet and Vegas interchangeably as RealDVD. Hearing Tr. (Kelly) at 177:18-178:4; 193:14-21; Hearing Tr. (Bishop) at 745:6-748:8; Kelly Dec. ¶¶ 7, 67.

57. Unlike with Vegas, Real limits the playback of copies of DVD content made with a Facet box to that stand-alone box to which the DVD was originally saved. The Facet hard drive is not portable, in that it cannot be removed and used in a different Facet system, and the stored DVDs cannot be shared between Facet devices or any other devices. Hearing Tr. (Glaser) at 451:9-12; Suppl. Brennan Dec. ¶ 6.

58. There is nothing that limits the number of times a physical DVD can be copied using either Vegas or Facet, however. A DVD could be passed around a dormitory, office, or neighborhood and copied on any Facet box or any computer using Vegas. Hearing Tr. (Schumann) at 344:17-346:2; Hearing Tr. (Bishop) at 776:24-777:23.

59. The RealDVD products are marketed exclusively for use with DVDs that a consumer owns, and Real marketed Vegas to law-abiding users who wish to make backup copies of DVDs that they own. Hearing Tr. (Glaser) at 445:19 — 446:16; 518:5-15. For example, Real tells its potential users that the product is legal only if “you are the owner of the original DVD and you use your saved copy solely for your personal use[.]” Hearing Tr. (Glaser) at 458:5-10.

60. The RealDVD End User License Agreement provides the following restriction: “You may use the saving functionality of the Software only with DVDs that you own. You may not use the Software to save DVDs that you do not own, such as rental or borrowed DVDs.” Nelson Dec., Exh. 22(§ 2b).

61. Both Vegas and Facet are able to copy DVDs that are not owned by the licensed user of RealDVD; the DVDs can be borrowed or rented from stores, copied and returned. Hearing Tr. (Glaser) at 455:19-22, 505:6-13. There is simply no way for RealDVD to detect whether a DVD is a rental DVD, in the absence of having the DVDs sold to the rental channel manufactured with markings to indicate they are rentals. Hearing Tr. (Glaser) at 455:23-25.

62. Once a copy is made with RealDVD, the consumer no longer needs the physical DVD to watch the content. This was Real’s intent upon initial development — to create a software product that copies DVDs to hard drives so that the user does not have to find the physical DVD to watch the content. Suppl. Brennan Dec. ¶ 4; Ellinikos Dec., Exh. C (Brennan Dep.) at 291:2-292:24; Exh. D (Chasen Dep.) at 296:19-297:11. Accordingly, RealDVD’s DVD drive also plays no role in the playback of copied DVD content. Hearing Tr. (Bishop) at 769:25-770:7, 786:11-17; Hearing Tr. (Bielman) at 1136:19-21; Kelly Dec. ¶¶ 61-66, 80-84, 88-90.

63. The storage of DVD content on RealDVD also provides protection from scratches or other damage. Hearing Tr. (Glaser) at 592:23-593:10.

64. The copies of DVD content made by RealDVD, using Vegas or Facet, do not include most of the protection provided by CSS, namely, DVD drive-locking, secure storage of keys on a DVD, CSS authentication or CSS bus encryption. Schumann Dec., Exh. A, ¶¶ 55-82. Once a DVD has been saved to a hard drive, RealDVD plays the movie from the hard drive and thus does not authenticate the DVD drive or receive encrypted keys at that time. Suppl. Brennan Dec. ¶ 12. Real’s own expert, Dr. Bishop, agreed that these layers of CSS protection — drive-locking, authentication, bus encryption, secure storage of content keys — are not present and do not occur when RealDVD is playing back copied DVD content from its hard drive. Hearing Tr. (Bishop) at 770:4-6; 786:16-788:1; 788:18-789:8.

65. The copies of DVD content made by RealDVD contain content encryption. RealDVD preserves CSS content encryption and it additionally encrypts the saved copies of DVDs it makes with Advanced Encryption System 128 (“AES”) encryption. Hearing Tr. (Glaser) at 449:14-24; Hearing Tr. (Kelly) at 201:3-12; Hearing Tr. (Schumann) at 280:3-14; Hearing Tr. (Bishop) at 711:8-712:2, 720:6-13. AES encryption is far more secure and difficult to crack than CSS. Suppl. Brennan Dec. ¶ 7; Hearing Tr. (Bishop) at 720:4-13, 733:15-16. The master keys to that AES encryption are held by Real. Hearing Tr. (Schumann) at 391:8-19. Copies of DVDs made by the RealDVD products can, thus, only be played back by Real software. Hearing Tr. (Glaser) at 588:13-18; 589:6-11; Hearing Tr. (Bishop) at 282:15-22.

V. ARccOS and RipGuard Technologies

66. The Studios employ supplementary technologies that provide a level of copy protection in addition to that provided by CSS for their commercially-released DVDs. Hearing Tr. (Schumann) at 306:23-307:3; 307:14-17; Schumann Dec., Exh. A, ¶ 84; Hollar Dec., Docket No. 203, Exh. A, ¶ 11; Miller Dec., Docket No. 205, ¶¶ 4-5. These technologies include ARccOS, a copy-protection system developed and marketed by Sony DADC, and RipGuard, a similar copy-protection system developed and marketed by Macrovision, Inc. Schumann Dec., Exh. A, ¶ 85; Hollar Dec. ¶ 11.

67. ARccOS and RipGuard are marketed as copy protection systems that are intended to interfere with the ability of certain DVD “ripping” software to make a copy of a DVD, while at the same time not affecting the ability of DVD players to access and playback DVD content. Hearing Tr. (Dixon) at 871:14-17; 880:8-22; 900:21-903:3; Hearing Tr. (Schumann) at 307:21-308:13; 311:2-3; 360:9-23; Hollar Dec. ¶¶ 32-34. Accordingly, manufacturers of both software and standard DVD players do not need a license or any special knowledge of ARccOS or RipGuard in order to play DVDs protected with those technologies. Hearing Tr. (Schumann) at 309:14-310:1.

68. ARccOS and RipGuard are designed to be transparent to a human being watching a movie with a standard DVD player. They instead take advantage of the differences between how a person watches a DVD and the behavior of DVD copying programs, to impede the functionality only of the latter. Hearing Tr. (Schumann) at 309:18-310:17; Hearing Tr. (Dixon) at 866:3; 880:18-22; 883:3-11; 972:19-21; Hollar Dec., Exh. B, ¶¶ 14-16.

69. ARccOS and RipGuard function primarily by inserting corrupted or “bad” sectors on DVDs: intentional obstacles placed subversively in DVD data that cause “read” errors when the sectors are read by a DVD drive so as to severely impede copying of the DVD. Hearing Tr. (Schumann) at 307:7-13; Hearing Tr. (Dixon) at 882:5-10; Schumann Dec., Exh. A, ¶ 85; Hollar Dec., Exh. A, ¶ 16. These bad sectors are placed onto portions of a DVD that are commonly accessed by ripping software but not by standard DVD players because they are outside of the data path that contains the actual playable DVD content. Schumann Dec., Exh. A, ¶ 86; Hollar Dec. ¶¶ 14, 17; Hearing Tr. (Dixon) at 871:14-17; 880:8-22.

70. These bad sectors are physical errors that slow down software that copies DVD content in a “linear” fashion, i.e., bit-by-bit from start to finish. Hearing Tr. (Dixon) at 884:18-885:1. While it is possible to slow a linear copy by using these physical errors, it is not possible to stop the copying entirely, as DVD drives can be directed to ignore or “time out” any errors encountered. Dixon Dec., Docket No. 212, Exh. A, 13; Nelson Dec., Exh. 24 (Hollar Dep.) at 46:18-^47:2; Hearing Tr. (Dixon) at 876:3-22; 886:16-887:23; 890:11-22. The attendant time penalty associated with these errors will vary depending on the number of bad sectors in the particular disk, but can range from estimates of “the time it takes to playback a movie” to an additional eight hours or more and copying at some delays “may not be viable.” Hearing Tr. (Dixon) at 890:23-891:3; Ellinikos Dec., Exh. C (Brennan Dep.) at 965:23-24; 966:13-15.

71. ARccOS and RipGuard also use secondary techniques to interfere with attempts to avoid bad sectors by intelligently navigating the data path on a DVD and making intentional, calculated modifications to various aspects of the DVD file structure. Hearing Tr. (Schumann) at 308:17-309:13; Schumann Dec., Exh. A, ¶ 87; Hollar Dec. ¶ 18. These modifications can obfuscate menu structures and data files or even create false menus, either of which will impede copying of the DVD content but will not affect the normal viewing of a DVD. These techniques take advantage of the differences between the way a human interacts with a DVD player and the way an automated DVD copier attempts to gather data from a DVD. Hearing Tr. (Schumann) at 358:22-359:1; 366:18-22; Schumann Dec., Exh. A, ¶ 87; Hollar Dec. ¶ 18.

72. ARccOS and RipGuard secondary techniques may also implant errors such as “hidden” buttons or menus, which do not affect playback but which serve to mislead DVD rippers that attempt to intelligently follow all the streams of the DVD content when copying a DVD. Hearing Tr. (Schumann) at 308:25-309: ¶ 13; Nelson Dec., Exh. 24 (Hollar Dep.) at 303:3-17. They are sometimes referred to as “logical” errors. Hearing Tr. (Dixon) at 882:25.

73. Of the top 300 DVD titles commercially released in 2005-2007, thirty were protected by RipGuard, and an additional twenty five by ARccOS. Hollar Dec., Exh. A, ¶ 38; Nelson Dec., Exh. 24 (Hollar Dep.) at 117:7-113:1; 113:11-114:9. One Studio (Disney) uses RipGuard to protect nearly all of its DVD titles distributed throughout the United States. Miller Dec. ¶ 4. The Studios have paid tens of millions of dollars over the last four years to protect their content using these systems. Id.; Nelson Dec., Exh. 24 (Hollar Dep.) at 117:7-113:1; 113:11-114:9; Hollar Dec. ¶ 38.

74. Standard error-handling software is used by DVD players when data is being read from a storage device, e.g., a DVD drive, to assist with playback. Dixon Dec., Exh. A., ¶ 14. According to Real’s expert Mr. Dixon, such software is designed to work with physical errors on disks that arise as a result of accidental damage to a DVD, such as scratches or smudges, but it can also check for the types of errors caused by ARccOS and RipGuard, i.e., intentionally corrupted bad sectors, as well as logical errors. Id. ¶¶ 14-15. Mr. Dixon also opines that this standard DVD player software is, technically, copying the content from the DVD as part of the playback process. Id. ¶ 19.

The court accepts that this, perfectly legal, error-handling software does not run into a problem with such “copying” because standard DVD players should not encounter purposefully placed sector errors. See Id. However, this finding obviously cannot compel the conclusion that all DVD copying software that avoids such errors is itself legal. The court finds that Mr. Dixon’s expert reports fail to provide credible evidence to support such a leap in logic. If this were true, then many DVD rippers would be legal. Other findings of fact indicate the world is not so black and white; namely, there are distinctions between temporary and permanent “copying” of copyrighted content. As noted previously, temporary copying is nothing more than “buffering” or “caching,” a requisite part DVD playback with DVD players. The fact that error-handling software legally avoids copy-protection errors when it buffers or caches content does not mean that copying software, as RealDVD does, thereby also legally avoids copy-protection measures when it makes permanent copies of DVD content on a hard drive.

A. RealDVD’s Attempts to Avoid ARc-cOS and RipGuard Errors

75.Real was aware of ARccOS and RipGuard during the development of the RealDVD products. Hearing Tr. (Bielman) at 1017:8-11. Real software engineers identified ARccOS and RipGuard as both copy protection systems and barriers to their development of a DVD copying device from the outset of the RealDVD project. Hearing Tr. (Schumann) at 315:10-16; Blavin Dec., Exh. 5 (Buzzard Dep.) at 158:14-159:4; Exh. 11 (Schwarz Depo.) at 78:8-14; Exh. 8 (Hamilton Depo.) at 64:14-19.

76. RealDVD software is intended never to encounter ARccOS or RipGuard physical errors (bad sectors) or logical errors (false information or hidden buttons) when copying a DVD. The result of a correctly executed “play and save” process in RealDVD is a complete copy of all playable content on a DVD that is made without ever encountering ARccOS or Rip-Guard errors. Hearing Tr. (Dixon) at 931:22-932:2; 973:17-974:20; Nelson Dec., Exh. 24 (Hollar Dep.) at 146:3-9; 152:2-154:9.

77. The Real software engineering team that designed Vegas understood that errors encountered during the “save” process could be intentional errors placed on certain DVDs. The Vegas team referred to these errors generically as “ARccOS.” Buzzard Dec., Docket No. 213, ¶¶ 12-13. The Vegas team of engineers sought to write software code that addressed and overcame these errors. Id.

78. The Real software engineering team that designed Facet understood that ARccOS and RipGuard place errors on unused or unplayable portions of certain DVDs. Hearing Tr. (Bielman) at 1017:8-13. The team spent over a year creating software that would ensure that Facet never encountered ARccOS or RipGuard errors as it made a copy. Id. at 1081:3-6; 1109:16-1110:7; 1121:21-1122:24.

79. Facet begins by copying DVD content in a linear fashion, but if it encounters a number of consecutive bad sectors, it switches to a second method of copying (a software program called “DVD Walk”) which uses a virtual machine method that seeks to avoid copy protection sectors by mimicking a human watching a DVD. Hearing Tr. (Schumann) at 357:3-6. Hearing Tr. (Bielman) at 1009:10-18, 1010:17-1111:3, 1011:5-9. As it “watches” the DVD, separate software within Facet makes a copy of the content that DVD Walk plays. Hearing Tr. (Bielman) at 1015:9-1016:4; Bishop Dec., Exh. A, ¶25. Collectively, this code and DVD Walk are equivalent to a “play and save” method of copying DVD content. Hearing Tr. (Bielman) at 1015:13-19.

80. Facet switches to DVD Walk regardless of the cause of the errors it encounters. There is no explicit mechanism or code in Facet to identify ARccOS or RipGuard errors with certainty; Facet only recognizes sector errors, whether intentional or inadvertent, such as from a scratch. Hearing Tr. (Bielman) at 1018:24-1019:17; Dixon Dec., Exh. A, ¶ 14; Exh. B, ¶ 19; Buzzard Dec. ¶ 13; Suppl. Brennan Dec. ¶¶ 14-16.

81. Facet treats read errors differently in “play” mode from the “save” or “play and save” modes, however, and alters its copying behavior on detection of read errors when saving a DVD to specifically avoid ARccOS or RipGuard errors. Schumann Dec., Exh. A, ¶¶ 102-106; Exh. B, ¶¶ 40-42. Facet has no read-error-handling code in “play” mode, instead relying upon the built-in error-handling functionalities of the DVD Drive. Schumann Dec., Exh. B, ¶ 40. Real’s own DVD Walk is not used when playing a DVD, as it was designed to avoid logical errors such as hidden menu buttons encountered during copying. Hearing Tr. (Bielman) at 1117:20-21; 1119:20-25; 1022:17-24; Hearing Tr. (Schumann) at 326:18-22; Schumann Dec., Exh. A, ¶ 105.

82. Vegas copies DVD content to a hard drive differently than does Facet. When Vegas encounters an error on a DVD, it implements a standard solution to avoid such read errors: it will attempt to determine the extent of the damage and skip over it to the next logical section of the DVD. Buzzard Dec. ¶¶ 14-15. When Vegas is in “save” mode, it attempts to identify and parse out the error to determine if it is extensive: if so, it will jump over the rest of the unreadable data precisely to the end of the navigable error; if not, it will continue copying in a linear fashion. Hearing Tr. (Schumann) at 320:6-321:3; Schumann Dec., Exh. A, ¶ 95; Hollar Dec., Exh. A, ¶ 43. Vegas implements these same error-recovery steps every time it reaches a defective sector on a DVD, regardless of the cause of the error per se. Buzzard Dec. ¶¶ 14-15.

83. The intentional, calculated sector and file-structure errors that are created by ARccOS and RipGuard as part of their copy protection systems present different characteristics from physical scratches. A typical scratch or smudge would not have the numbers of bad read errors in a row, i.e., sequentially from when reading a disk, that an ARccOS or RipGuard error does, because scratches are typically perpendicular to the path of data that spirals radially around the DVD (much like the grooves on a vinyl record). These differences would be distinguishable by a software program that copies DVD content. Schumann Dec., Exh. A, ¶ 88; Hollar Dec. ¶ 13.

CONCLUSIONS OF LAW

I. Preliminary Injunction Standard

84. A preliminary injunction is a provisional remedy, the purpose of which is to preserve status quo and to prevent irreparable loss of rights prior to final disposition of the litigation. Sierra On-Line, Inc. v. Phoenix Software, Inc., 739 F.2d 1415, 1422 (9th Cir.1984). The Ninth Circuit authorizes preliminary injunctive relief for “a party who demonstrates either (1) a combination of probable success on the merits and the possibility of irreparable harm, or (2) that serious questions are raised and the balance of hardships tips in its favor.” Prudential Real Estate Affiliates, Inc. v. PPR Realty, Inc., 204 F.3d 867, 874 (9th Cir.2000). These are not separate tests, but rather “opposite ends of a single ‘continuum in which the required showing of harm varies inversely with the required showing of meritoriousness.’ ” Cadence Design Sys., Inc. v. Avant! Corp., 125 F.3d 824, 826 (9th Cir.1997).

II. DMCA

85. The DMCA introduced epochal amendments to U.S. copyright law when it implemented the World Intellectual Property Organization Copyright Treaty and the Performances and Phonograms Treaty. See DMCA, Pub.L. No. 105-304, 112 Stat. 2860, § 1 et al. Importantly, the DMCA instituted anti-circumvention and anti-trafficking provisions into Title 17, the U.S. Copyright Act. 17 U.S.C. §§ 1201(a), (b).

86. Section 1201(a) of the DMCA is herein referred to as the “access-control” provision. That provision reads in relevant part:

No person shall manufacture, import, offer to the public, provide, or otherwise traffic in any technology, product, service, device, component, or part thereof, that—

(A) is primarily designed or produced for the purpose of circumventing a technological measure that effectively controls access to a work protected under this title;

(B) has only limited commercially significant purpose or use other than to circumvent a technological measure that effectively controls access to a work protected under this title; or

(c) is marketed by that person or another acting in concert with that person with that person’s knowledge for use in circumventing a technological measure that effectively controls access to a work protected under this title.

17 U.S.C. § 1201(a)(2).

87.Section 1201(b) of the DMCA is herein referred to as the “copy-control” provision. That provision reads in relevant part:

No person shall manufacture, import, offer to the public, provide, or otherwise traffic in any technology, product, service, device, component, or part thereof, that—

(A) is primarily designed or produced for the purpose of circumventing protection afforded by a technological measure that effectively protects a right of a copyright owner under this title in a work or a portion thereof;

(B) has only limited commercially significant purpose or use other than to circumvent protection afforded by a technological measure that effectively protects a right of a copyright owner under this title in a work or a portion thereof; or

(c) is marketed by that person or another acting in concert with that person with that person’s knowledge for use in circumventing protection afforded by a technological measure that effectively protects a right of a copyright owner under this title in a work or a portion thereof.

17 U.S.C. § 1201(b)(1).

88. DMCA’s anti-circumvention and anti-trafficking provisions establish “new grounds for liability in the context of the unauthorized access of copyrighted material.” Chamberlain Group, Inc. v. Skylink Technologies Inc., 381 F.3d 1178, 1194 (Fed.Cir.2004). The DMCA created new causes of action both for circumvention of access controls in ways that facilitate copyright infringement and for trafficking in circumvention devices that facilitate copyright infringement. Id. at 1195.

89. The DMCA provides for the following remedies: “[a]ny person injured by a violation of section 1201 ... may bring a civil action in an appropriate United States district court for such violation” [and] “the court ... may grant temporary and permanent injunctions on such terms as it deems reasonable to prevent or restrain a violation [of DMCA].” 17 U.S.C. § 1203(b)(1). See Reimerdes, 111 F.Supp.2d at 343 (under the DMCA, “injunctive relief is appropriate if there is a reasonable likelihood of future violations absent such relief and, in cases brought by private plaintiffs, if the plaintiff lacks an adequate remedy at law.”).

A. CSS Technology and Access-Control Provision

90. To prevail on a DMCA claim for violation of the access-control provision based on circumvention of CSS technology, plaintiff must first show that CSS is a “technological measure” that “effectively controls access” to copyrighted works. 17 U.S.C. § 1201(a)(2). As defined in section 1201(a), “a technological measure ‘effectively controls access to a work’ if the measure, in the ordinary course of its operation, requires the application of information, or a process or a treatment, with the authority of the copyright owner, to gain access to the work.” 17 U.S.C. § 1201(a)(3)(A).

91. The Studios have established that CSS is a technological measure that effectively controls access to copyrighted works, namely, copyrighted DVD content. Real’s argument to the contrary, based on its allegation that CSS is no longer an effective technological measure because it has already been cracked or hacked, is of no moment. The DMCA is predicated on “the authority of the copyright owner” not “whether or not [the technological measure] is a strong means of protection.” Reimerdes, 111 F.Supp.2d at 318. Thus, to whatever extent CSS may have been cracked and certain CSS keys and algorithms have been compromised by hackers and made available on the Internet, this “availability” is not sufficient, under the DMCA’s language that the measure gives access “in the ordinary course of its operation” and “with the authority of the copyright owner.”

A plain reading of this statutory language means that access-control is at the level of the ordinary consumer, to prevent the easy creation of widely available and usable copyrighted works. See Pearl Investments, LLC v. Standard I/O, Inc., 257 F.Supp.2d 326, 350 (D.Me.2003) (The question of whether a technological measure “effectively controls access” is analyzed solely with reference to how that measure works “in the ordinary course of its operation” and whether someone had “alternative means of access to the works is irrelevant to whether the [technological measure] effectively controlled access to them”). Here, the court finds that CSS technology still effectively controls access to DVD content for the average consumer. See, e.g., 321 Studios v. Metro Goldwyn Mayer Studios, Inc., 307 F.Supp.2d 1085, 1095 (N.D.Cal.2004) (Illston, J.) (rejecting similar contentions about CSS being ineffective access control, stating “this is equivalent to a claim that, since it is easy to find skeleton keys on the black market, a deadbolt is not an effective lock to a door.”).

92. Plaintiff must then show that Real’s RealDVD products are either: (a) primarily designed or produced for the purpose of circumventing technological measures that effectively controls access to a copyrighted work; (b) have only a limited commercially significant purpose or use other than to circumvent such technological measures; or (c) marketed for use in circumventing such technological measures. 17 U.S.C. § 1201(a)(2). These are disjunctive clauses. The court need look no further than the first enumerated condition to find that the Studios are likely to prevail on the section 1201(a)(2) claim. As defined in section 1201(a), “to ‘circumvent a technological measure’ means to descramble a scrambled work, to decrypt an encrypted work, or otherwise to avoid, bypass, remove, deactivate, or impair a technological measure, without the authority of the copyright owner.” 17 U.S.C. § 1201(a)(3)(A). CSS is a “technological measure” that effectively controls access to copyrighted DVD content and RealDVD permits the access of that content without the authority of the copyright owner. RealDVD products are designed primarily for circumvention of that technology, as Real has admitted its intent upon initial development was to create a software product that copies DVDs to computer hard drives so that the user does not need the physical DVD to watch the content. This unauthorized access infringes the Studios’ rights because it entails accessing content without the authority of the copyright owner, as discussed infra.

93. Real has violated section 1201(a) of the DMCA by trafficking in RealDVD products for the purpose of circumventing CSS technology. Specifically, RealDVD’s “play and save” feature, which allows the user to view the DVD content while RealDVD makes a copy of the content on the device’s hard drive, or its “save” feature, which commands RealDVD to simply copy the content from the DVD onto the device’s hard drive so that it can be played later, both circumvent CSS technology by permitting RealDVD to access DVD content from the hard drive without going through most of the CSS protection steps, such as DVD drive-locking, CSS authentication and CSS bus encryption. Once RealDVD has copied a DVD, it does not authenticate the DVD drive or receive encrypted keys at that time. The record shows that CSS technology requires that a DVD drive “lock” upon insertion of a CSS-protected DVD and prevent access to its contents until an CSS authorized player engages in an authentication procedure, none of which RealDVD does when it reads back DVD content from its hard drive. The process of authentication with the DVD drive, and subsequent content decryption, is thereby circumvented by the RealDVD products.

94. As a threshold matter, Real contends that a DMCA claim is unavailable to the Studios against a co-licensee to CSS technology. Real cites such cases as Sun Microsystems, Inc. v. Microsoft Corp., 188 F.3d 1115, 1121 (9th Cir.1999) and Jacobsen v. Katzer, 535 F.3d 1373, 1380 (Fed.Cir.2008) to contend that copyright licenses are governed by contract law and copyright owners who enter into such licenses waive their rights to sue the licensee for copyright infringement and are limited to breach of contract claims. These cases are unavailing on these facts, because the Studios are not bringing copyright infringement claims against Real, nor are they the direct licensors of CSS technology. Moreover, the cases cited by Real only limit licensees to breach of contract claims when the licensee is acting “within the scope of its license.” Sun Microsystems, 188 F.3d at 1121-22. As discussed herein, the court finds that Real has acted outside the scope of its license with the DVD CCA. Accordingly, the Studios are not limited to breach of contract claims against Real. For all of these reasons, the Studios are well within their rights to bring circumvention claims under the DMCA.

95. While it is true that no case has ever held that a licensee to the CSS License Agreement with the DVD CCA can be held liable for circumventing that same technology under the DMCA, that is simply because no court has ever adjudicated the issue. And, it may be that no licensee has been so bold as Real. This court holds that the Studios are permitted to bring both DMCA claims for circumvention of CSS technology and breach of contract claims under the CSS License Agreement, noting that other courts have permitted such types of claims to co-exist. See, e.g., Ticketmaster L.L.C. v. RMG Technologies, Inc., 507 F.Supp.2d 1096, 1111-13 (C.D.Cal.2007) (granting preliminary injunction on DMCA and breach of contract claims); Davidson & Associates v. Jung, 422 F.3d 630, 642 (8th Cir.2005) (affirming breach of software license and circumvention under DMCA).

96. Real’s argument that section 1201(a) does not apply to situations where even unauthorized persons use a technology, so long as they do not break or impair the technology, is misguided. See, e.g., Egilman v. Keller & Heckman, LLP, 401 F.Supp.2d 105, 113-14 (D.D.C.2005) (“using a username/password combination as intended' — -by entering a valid username and password, albeit without authorization — does not constitute circumvention under the DMCA.”). The DMCA, in general, is aimed at entities seeking to traffic in circumvention tools, while section 1201(a), in particular, is aimed at circumvention tools that control access to protected works. The statute is not, as Real asserts, solely intended to thwart hackers. Rather, it provides broad statutory protection against circumvention of technological measures that protect the interests of copyright owners. This includes any form of unauthorized use — not just “breaking” — of a technology such as CSS, which requires the application of information or a process with the authority of the copyright owner, to gain access to copyrighted works. See 17 U.S.C. § 12