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http://star-techcentral.com/tech/story.asp?file=/2004/2/23/technology/7379003&sec=technology

Movie industry wins DVD copying suit
LOS ANGELES: A federal court has ruled that privately held 321 Studios must stop making software that allows users to copy DVDs, handing Hollywood's movie studios a big victory in their ongoing battle against copyright piracy.

St Louis-based 321 Studios said it would appeal the ruling by Judge Susan Illston of US District Court in San Francisco.

Illston barred 321 from selling its DVD copying software within one week. As part of its appeal, 321 said it would seek to stay the ruling so it can continue selling its DVDXCOPY program.

"This court enjoins 321, as of seven days from the issuance of this order, from manufacturing, distributing, or otherwise trafficking in any type of DVD circumvention software," Illston wrote in her opinion.

At stake in the legal battle, the studios argued, were potentially billions of dollars in lost revenue if DVD copying software such as 321's DVDXCOPY were allowed to be sold.

The studios and their representative, the Motion Picture Association of America (MPAA), claim the industry loses US$3bil (RM11.4bil) a year from the copying and resale of analogue videotapes.

The industry is worried it could lose even more if digital copies of movies are allowed to proliferate more widely on black markets and on the Internet.

The MPAA said the ruling sent a "clear message" to companies to stop violating laws by selling software that gets around copy protection.

"Companies have a responsibility to develop products that operate within the letter of the law and do not expose their customers to illegal activities," MPAA chairman Jack Valenti said in a statement.



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Robert Moore, the cofounder of 321, said he was "disappointed but prepared" for the ruling.

If a stay on the ruling is not granted, 321 will replace its products with a modified version that does not include the disputed software code allowing DVD copies to be made.

In effect, users could still buy DVDXCOPY for its compression technology, then download the so-called "ripper" software off the Internet, he said.

"We feel that it's important that we continue the fair use fight on behalf of our customers," he said. "This is a fight that we believe in and that our customers believe in."

The case had tested the limits of 1998's Digital Millennium Copyright Act (DMCA), which protects copyright holders from illegal copying of movies, music, books and TV shows.

321 Studios had argued its software protected DVD owners because it gave them the ability to make copies in case their original DVDs were destroyed, and the company claimed the DMCA allowed DVD copying if the copies were designed for the sole use of the owners.

The studios had countered that 321's software circumvented special software encryption codes that protected the DVDs from being copied and therefore violated the DMCA regardless of their end use. Illston agreed.

"It is the technology itself at issue, not the uses to which the copyrighted material may be put," she wrote in her ruling.

MPAA attorney Russell Frackman of Los Angeles-based firm Mitchell, Silberberg, and Knupp said the next phase, after an appeal, would be to seek damages that could include all of 321's profits. -- Reuters