MCA Scores in Its Case Against Video Decoder

MCA’s Universal City Studios, anxious to minimize unlawful copying of its videocassettes, on Thursday won an extended temporary restraining order against a Sylmar manufacturer of devices that can be used to decode an anti-piracy feature that MCA has been using on its cassettes.

The defendant, Xantech Corp., agreed to turn over its existing inventory of the so-called “black boxes” to an MCA attorney and a representative from the Motion Picture Assn. of America for storage at MPAA offices in Sherman Oaks until the dispute is resolved. A hearing for a preliminary injunction was tentatively set for Aug. 3 in U.S. District Court in Los Angeles.

Dana E. Weisman, one of the attorneys representing MCA, said she believes that the ruling marks the first time a federal judge has issued a temporary restraining order against a manufacturer of devices used to decode anti-copying coding in videocassettes. Such orders have been obtained in the past against manufacturers of descrambling devices in the computer, toy and pay-television industries, she said.

But Herbert E. Seymour, president and founder of 19-year-old Xantech, made clear in a telephone interview that the company plans to defend its product, which it began shipping in late 1986. Seymour noted that Xantech is already fighting a patent infringement suit filed early this year by Macrovision, the maker of the encoding process used by MCA and certain other studios, but he expressed optimism about winning that suit.

Legitimate Use Defended

Seymour explained that his product, called the Picture Perfect Video Tape Descrambler, was developed in response to consumer complaints of reduced image quality in some videocassettes encoded with the Macrovision process. “People complained that they couldn’t even view tapes they had rented,” he said.

The Xantech president said he sympathizes with MCA’s effort “to protect intellectual property; I do respect that right.” But he defended the legitimate use of his product, noting that Sony and other video recorder manufacturers prevailed against MCA in the U.S. Supreme Court when MCA sued on what Seymour described as similar legal grounds.

Seymour said his firm agreed to turn over its product because U.S. District Judge Richard A. Gadbois Jr. had already granted MCA a 24-hour restraining order in an “ex parte” hearing on Wednesday.

In copyright cases, “one side can approach the judge without notice to the other . . . to request a seizure,” Weisman explained. The judge did not order a seizure, however, because the two sides agreed to the arrangement before Thursday’s hearing. Weisman said MCA expects to pick up between 300 and 400 boxes on Xantech’s loading dock today.

Seymour said his closely held company manufactures components for recreational vehicles and home video accessories. The 150-employee firm generates annual sales of less than $10 million, he said.

Seymour declined to say how many decoders his company has produced, but he said there are companies producing higher volumes of similar devices. “I believe we have been chosen (for litigation) because we are in . . . their backyard.”