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Real Worried About Apple Lawsuits
sebFlyte writes "silicon.com is reporting that Real is very worried that Apple will sue it over its Harmony technology that 'breaks' iTunes' FairPlay DRM to allow its music to play on the iPod. They acknowledged in an SEC filing that a lawsuit from Apple would potentially be very damaging to the company's bottom line, as it accepts that a court might not agree that the reverse-engineering is legal."
Harmony brings discord, Fair Play accused of playing unfair. We're adrift in a sea of marketing.
-Peter
as it accepts that a court might not agree that the reverse-engineering is legal.
Real makes a competing product. They want to be able to interoperate with the songs sold on iTunes. This should be an open and shut case. I cringe to think what sort of legal wrangling will go on.
I know that Real is no great champion, but we should support them if there is a possibility it will help to preserve what little bit of fair use we still have left.
Well, I think that Appl...BUFFERING [12%]...
Anyone remember Streambox?
I don't think Real was whining about the DMCA then.
is this the first time I'll be rooting FOR Real?
Neither side is acting in particularly good faith on this issue.
BUT, before all of Slashdot flies off the handle on this "story", I think it's worth pointing out that this is an SEC filing, and it is every company's responsibility, in fact under the law, to state all possibilities that may negatively affect a business, however remote those possibilities may be. I don't think it's any secret to anybody that Apple could sue Real, and that there is at least a chance that Apple would win (because you just never know what can happen in the courts). Given that, Real must disclose this information to investors.
The news here seems to be that Real is "admitting" to something that seems to be common sense. But Real has to admit that they're at risk of a lawsuit, and that there's a chance that they would lose - to do otherwise would be fraud. It would be withholding information in order that people would continue buying their stock.
If you are not used to reading these SEC filings, even the healthiest of companies can seem to be in pretty dire straits once you get to the "risks" section. These are worst-case scenarios, presented basically to cover the company's ass from class action lawsuits and SEC investigations should the unthinkable happen. That doesn't mean anything listed as a risk will happen, or even has a good chance of happening. It's kind of the same as putting a warning label on a 9 volt battery that says "warning! eating this battery may cause injury!" I mean, duh. But they have to put that label on there or you just know that one idiot who eats that battery and gets sick is going to sue.
Is reverse-engineering software necessarily illegal?
No. Reverse-engineering is legal. But not as legal as it once was, since the DMCA bans the circumvention of copyright protection devices, except for interoperability purposes.
Has a precedent been set in the software world that would apply to this?
Yes and no. There is a good amount of legal precedent from before, e.g. Vault Corp. v. Quaid Software Ltd, which held that reverse-engineering was legal, even though there was an EULA prohibiting it. This was even for a copyright-protection circumvention device. (a program which would copy copy-protected floppies)
But that ruling is from before the DMCA, and probably isn't as relevant anymore.
The thing is, the DMCA is rather new, so there isn't a lot of precedent defining exactly what qualifies as 'interoperability purposes'. Nor is the idea of a 'copyright protection device' very well defined yet. Which is why there are lots of eager lawsuits trying to strech this to cover everything.
I think Real could probably make a good argument that it's for interoperability purposes. But since it's not well-defined, they're right to be cautious.
In Europe, things are somewhat clearer. Council directive 91/250/EEC, article 6 also allows reverse-engineering for interoperability purposes, and defines those purposes somewhat better than US law.
It's worth mentioning that stopping reverse-engineering through copyright law is only possible if the subject material is copyrightable to begin with. And people tend to overestimate how much of a program is copyrightable. For instance, an API is either not in itself copyrightable (Computer Associates v. Altai) or, duplicating it is allowed through fair-use (Sega v. Accolade).
IANAL.
Not quite. It is every company's responsibility to state all facts that a reasonable investor might consider important in deciding whether to invest.
The required level of disclosure is certainly something less than "all possibilities . . . however remote [they] may be." Under this type of standard, a company would have to disclose the possibility of an asteroid hitting the corporate headquarters, or the possibility of the CEO's having a heart attack and an infinite number of other "possibilities".
To be fair (and at the risk of stating the obvious), Real's disclosure is right on the money. Given the current state of the law and the spectre of even a threatened DMCA action, any new technology that requires reverse engineering (especially one that goes straight for Apple's market) makes its author vulnerable, and disclosure in this case is warranted.