Kaleidescape's high-end servers can store and back up hundreds of DVD and CD music and movie files on hard disks and send the digital files over a wired Ethernet home network to Kaleidescape players in the house. The systems also have an Internet connection to gather metadata about the music and movies and download software updates from the company.

Lawyers for the DVD CCA say the case will have a narrow focus on the specifics of Kaleidescape's contract with their consortium. The group of studios and systems companies administers the Content Scramble System (CSS) designed to protect DVD content from unauthorized copying.

"There won't be any fair-use issues coming up, this is just a breech of contract case. It's not about copyright infringement. It's very narrow and simple," said Bill Coats, an attorney with White & Case LLP (Palo Alto, Calif.) representing the DVD CCA.

A lawyer with the Electronic Frontier Foundation who has been following the case since it was filed in December 2004 disagreed. The EFF does not represent Kaleidescape.

"This is a case where what is essentially a cartel is stifling legitimate innovation where there is clear market demand and a technical capability," said Fred von Lohmann, a senior staff attorney with the EFF.

"The DVD CCA is misusing the copyright law to take away people's fair use rights," said Michael Malcolm, founder and chief executive of Kaleidescape in an interview with EE Times. The company has filed a written brief to that effect, he added.

For its part, the DVD CCA is likely to allege the Kaleidescape system can be used to make copies of rental DVDs for indefinite viewing. Malcolm said his company has had about four examples of such activity in the course of selling about 3,000 systems to date.

"We have had tech support calls from people with a problem importing a disk, and it turned out the problem was it was a scratched disk because it was a rental. We had our legal counsel call and advise them such use is not authorized," said Malcolm.

Kaleidescape sells packages of DVDs such as a collection of all movies that have won an Academy Award. The company made about $750,000 on DVD sales last year and expects to make more than $1 million in 2007.

"Most of our customers will go out and buy 200-300 DVDs when they buy a system," said Malcolm.

"The Kaleidescape product is not focused on enabling file sharing over the Net," von Lohmann said. "If you can afford $10,000 for a home server, you can afford $10 for a DVD," he added.