A federal judge on Monday ordered the temporary shutdown of a streaming video service that provided unauthorized access to movies on the same day that they became available on DVDs.
The case is being watched closely by people both in the entertainment and technology industries as one that could set the boundaries regarding emerging new media services online.
From the start, Zediva, a start-up in Sunnyvale, CA stirred controversy because its founders did not strike licensing deals with the movie studios and did not respect the studios’ business model of staggering the release of films to the public online.
Theservice streamed newly-released DVDs from Zediva’s servers by playing one disc for a viewer at a time over the Internet.
Zediva’s founders had argued that its service didn’t violate copyright law because the experience was equivalent to viewing DVDs from home players — it was just being accessed remotely over the Internet.
The movie studios disagreed and filed a lawsuit against both the company and its founder Venky Srinivasan in late May in order to shut it down.
On Monday, Judge John F. Walter of the Central District of California decided it would be harmful to the movie studios to allow the service to continue operating while legal proceedings were underway, and he ordered the two sides to come up with an agreement to temporarily halt the service while they battle each other in court.
To read the judge’s order, it wasn’t even a close call. The judge ruled that the studios were likely to succeed on the merits, they were likely to suffer “irreparable injury”, that the balance of hardships favored the studios and that the public interest favored a shut down.
The judge even likened Zediva to Napster and Grokster, noting that the “service threatens the development of a successful and lawful video on demand market and, in particular, the growing internet-based video on demand market” and that Zediva’s very presence “threaten[ed] to confuse consumers about video
on demand products, and to create incorrect but lasting impressions with consumers about what constitutes lawful video on demand exploitation of Plaintiffs’ Copyrighted Works, including confusion or doubt regarding whether payment is required for access to the Copyrighted Works.”
When Zediva was launched, doubts about its legality abounded. However, when sued, the service hired a prestigious team of lawyers from the boutique law firm of Durie Tangri, one of the world’s most renowned intellectual property lawyers.
With the judge’s order about to shut down Zediva temporarily, expect an appeal to the Ninth Circuit to reverse the decision.
Stay tuned.
