Warner Bros. and Intel have signed a massive settlement with hardware seller Ace Deal. The California company admitted to violating the DMCA and has agreed to pay over $5 million in damages for selling devices that can 'strip' Blu-ray and 4K content protection.

To make it harder for pirates to get their hands on the latest blockbusters, all popular Blu-rays and HD streams have content protection.

HDCP is the standard in the field. The technology, which is owned by Intel daughter company DCP, makes it hard to rip HD content, but not impossible.

Earlier this year DCP and Warner Bros. filed two lawsuits against companies that sell hardware which can effectively bypass HDCP 2.2 content protection.

The first lawsuit against a Chinese company was settled last month, with the rightsholders on the ‘losing’ end. However, this week DCP and Warner Bros. have something to celebrate.

The two companies signed a settlement with the California-based hardware seller Ace Deal, which admits to violating their rights under the DMCA. Ace Deal sold so-called HDCP strippers, devices that allow users to render protected video content in the clear, circumventing the copy protection.

The parties have submitted a joint proposal for a final judgment and a permanent injunction at a California federal court. According to the documents (pdf) Ace Deal sold 2,078 circumvention devices in recent years.

Not only does the hardware seller admit guilt, it has also agreed to a hefty damages amount of $5,250,000, which is quite something for such a small company.

In addition to the money, the settlement includes a permanent injunction that prohibits Ace Deal and its employees from offering similar products in the future.

They are ordered to refrain from “importing, manufacturing, offering to the public, providing, selling, using, or otherwise trafficking in any technology, product, service, device, component or part thereof that is primarily designed or produced to circumvent HDCP…”

The court still has to sign off on the proposed orders but that’s expected to be a formality. Meanwhile, Ace Deal has already removed the offending products from its website.

While this case shows a lot of similarities with the one filed against the Chinese company LegendSky, the outcome is entirely different. LegendSky was also accused of “stripping” HDCP copy protection, but these claims didn’t stick.

LegendSky successfully argued their 4K splitter device does not “strip” any HDCP copy protection. Instead, it merely downgrades the higher HDCP protection to a lower version, which is permitted as an exception under the DMCA.

For Ace Deal this argument does not apply so they are left with millions in debt. At least on paper, which may not always be true.