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MPAA Files Lawsuit Against Movie Rental Start-Up

Six movie studios have filed a federal lawsuit against Zediva -- a movie rental start-up that allows users to watch films shortly after they're released on DVD, but before they become available on services like Netflix or Redbox.

According to Zediva's founder and chief executive, Venky Srinivasan, the company operates like any other brick-and-mortar DVD rental service. Users pay to rent individual DVDs, which they can watch on physical players. The only difference is that the DVD players aren't located in users' homes, but in Silicon Valley. Customers can remotely control the players to stream films to their homes, but their array of choices depends upon Zediva's DVD stocks. If the company has 10 DVDs of a certain film, only 10 people can watch it at a time.

Srinivasan says his company is simply taking advantage of a loophole in U.S. copyright law, which allows Zediva to effectively stream movies without paying royalties to film companies. "We are fairly confident that the law allows a user to watch a DVD they've rented and we're actually building upon these other ideas to offer a very compelling service," Srinivasan told the Financial Times last month. "We also spend millions of dollars to buy DVDs, so we would like to think that we are a pretty important customer to [the studios]."

But the MPAA seems convinced that Srinivasan's approach is illegal. "Zediva's mischaracterization of itself is a gimmick it hopes will enable it to evade the law and stream movies in violation of the studios' exclusive rights," said Dan Robbins, senior vice president of the MPAA. "Courts have repeatedly seen through the facade of this type of copyright-avoidance scheme, and we are confident they will in this case too."

Tags: dvd, lawsuit, movie rentals, MovieRentals, movies, MPAA, rentals, streaming, studio, top, Web, zediva