August 11, 2011 (original publication date on EntertainmentLitigation.com)
On April 4, 2011, the Motion Picture Association of America (“MPAA”) filed suit in the Central District of California against Zediva, a company that bills itself as online DVD rental service, alleging copyright infringement and seeking an injunction against the company. Zediva allows customers to pay $2.00 to rent a DVD and a DVD player–housed in the company’s server rooms–and watch the DVD as its streamed over the Internet to the customer. Zediva’s service offering is described as follows:
Defendants provide their customers with access to DVDs purchased by Defendants containing the Copyrighted Works. To operate their service, Defendants have purchased hundreds of DVD players and installed them in cabinets at a data center they lease in Santa Clara, California. Defendants also have purchased copies of Plaintiffs’ Copyrighted Works on DVD, and place those DVDs in their DVD players, with each DVD remaining in its respective DVD player while it is transmitted to Defendants’ customers on multiple occasions.
When a customer requests a particular Copyrighted Work, Defendants, through their Zediva service: (1) start the play process on a particular DVD player holding the requested Copyrighted Work; (2) convert the analog video signal from the DVD player into a digital signal using a video adapter; (3) feed the digital signal into a DVD control server which converts the digital signal to a form suitable for streaming across the Internet; (4) convert the digital signal to a format that can be viewed in the player created by Defendants and used on their website; (5) transmit the performance via the internet to the customer; and (6) provide the customer with a custom viewer necessary to view the video stream.
To begin this process, the customer “presses” a virtual button on Defendants’ website that was designed by Defendants. Defendants’ system then sends a request to their control server, which then begins a series of actions on various servers created and controlled by Defendants. Defendants’ customers never have physical access to the DVDs or the DVD players. In fact, the customers do not know which particular DVD player or DVD is used by Defendants to transmit the requested Copyrighted Work. In addition, the customers cannot access all the other features available on the DVD, such as deleted and extra scenes, or other special DVD features. Defendants maintain exclusive control of their servers, and the customers have no control whatsoever over the various servers that Defendants use to direct traffic among their stacks of DVD players
Defendants describe their service as allowing customers to “rent” a particular DVD and DVD player for 14 days. However, Defendants’ customers do not have access to or control over a specific DVD or DVD player. Instead, Defendants stream the content of the DVD to a customer for a maximum period of four hours, provided that the customer does not pause it for more than one hour during that time. After four hours of total “rental” time or an hour-long pause, whichever occurs first, Defendants use the DVD player containing the same DVD to transmit the Copyrighted Work to a different customer. When the first customer makes a request to resume viewing, the transmission may be sent from a different DVD or a different DVD player than the one originally used to transmit the Copyrighted Work in the earlier “rental” period. According to their website, if all of the copies of a particular Copyrighted Work are “rented out” when a customer wants to view it, that customer “can request to be notified, via email, when it becomes available.
The MPAA moved for a preliminary injunction on the grounds that Zediva’s service infringes the public performance right (17 U.S.C. 106(4)) of MPAA members. Applying the definitions of “public place” (17 U.S.C. § 101(1)) and “transmit” (17 U.S.C. § 101(2)) to the facts at hand, U..S. District Court Judge John Walter determined that Zediva was “violating Plaintiffs’ exclusive right to publicly perform their Copyrighted Works by transmitting those Copyrighted Works to the public over the internet, without a license or Plaintiffs’ permission, through the use of Defendants’ Zediva service.” Judge Walter granted the MPAA’s motion, and ordered the parties to meet and confer and filed an agreed preliminary injunction consistent with the court’s order. A copy of the Judge’s decision is available here.