After getting cornered with a few leading questions about whether or not RealDVD software is capable of copying rented DVDs (err, yes?), RealNetworks and the MPAA directed the discussion towards the company's plans for Facet, a $300 DVD-ripping player inspired by the massively expensive Kaleidoscape boxes of yore. Real CEO Rob Glaser even went so far as to lay out what's really at stake in this case:

If we're enjoined (from selling RealDVD), it would have very dire consequences frankly for us to ever be in this business.

And this is just a preliminary hearing. Essentially, if the court rules against RealDVD, then Facet—and its software, which would presumably be licensed to other DVD player manufacturers—would be dead in the water. Moreover, the precedent could make any DVD backup solution much more difficult to bring to market. Shitty, all around.

But the more I think about it, the less this strategy makes sense. Testing the waters with a low-stakes product isn't a bad idea in itself, but RealDVD is the wrong low-stakes product for the job. Real claims that Facet copies DVDs to an internal HDD, but offers absolutely no means by which these files could be shared—they're DRMed, disconnected from the outside world a locked in an actual box. RealDVD, on the other hand, copies films to your PC's drive and wraps them in iTunes-style DRM, which allows playback on up to five machines. That opens opens a piracy angle for the MPAA—one that could conceivably swing the case in their favor, killing RealDVD and precluding production of Facet for reasons that don't even apply to it. [CNET—Photo courtesy of Greg Sandoval/CNET]

If you don't recall, RealDVD was a late, unusual addition to the DVD copying field. By late, I mean the latter half of 2008, and by strange, I mean not free. Surprise! The MPAA is outraged, and the product is pulled from shelves literally days after launch. Now the controversy is making its way to a federal court, where Real attorneys will square off against whatever reptilian law-creatures the movie industry is employing these days, and the fate of RealDVD will be decided.

But the NYT thinks they've uncovered RealNetworks', ehh, Real™ intentions: to build ripping capabilities into mainstream DVD players. It's all part of a project called Facet that actually predate RealDVD, at least internally, by some time. Real wants to license this software on the cheap to major DVD player manufacturers, who could then produce reasonably priced (sub-$300) DVD-saving players.

Fun, right? Well, the underlying technology is pretty much RealDVD on Linux, so it—and pretty much any other integrated DVD player backup solutions—is depending on courtroom victory this week. If this is really their strategy, then RealDVD was might have never even a serious product—just a sad, legal, sacrificial lamb. [NYT]

The arguments centered around fair use: Real claimed that making a bit-for-bit copy of the film, which is what their software did, falls under that umbrella. The studios claim that fair use does not include decoding a movie from any media besides the original DVD — something what RealDVD enables. Far from the legal victory or even protracted, public battle that Real was hoping for, the decision will likely hold into the foreseeable future. [Wired Threat Level]

In a small victory for Real, they got the case moved out of the studio-infested Central District to California's Northern District court. Now they just have to convince the studios and the judge that the extra DRM sprinkles it piles on top of the rips make RealDVD totally kosher. [Electronista]

The stakes for RealNetworks aren't terribly high either, as sales of RealDVD might have been slow because of, oh, I don't know, the mountains of free software that does a better and more complete job. Within the day, Real filed a countersuit which could possibly set a new precedent for the interpretation of the Hollywood's DVD license. Even in a best-case scenario, the most legal headway that could probably be made would be to permit neutered software like RealDVD, which would still leave any useful method of DVD backup well outside of the law. [NYT]

For $50, or $30 for a limited time, RealDVD allows you to rip standard DVDs in perfect quality to your hard drive (no Blu-ray), complete with bonus features, menus and such. The process takes anywhere from 10 to 40 minutes and requires 4-8GB of space. The catch is that these video files can only play in Real's player and cannot be converted for use by your other devices, like iPods or phones.

RealNetworks' solution is that you can buy four additional licenses for $20 apiece to view your content on other PCs. And it's not a very good one.

Then again, it's important to note that this is the DVD copying solution that the industry has allowed. And even with the strict limitations in place, it's surprising that you don't need to have the actual DVD in the drive to play the ripped files. [RealDVD]