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321 Studios close to shutting down

Wave of lawsuits and courtroom defeats may shutter maker of programs to copy DVDs and games.

Faced with a new set of lawsuits, prominent DVD and game copying software company 321 Studios may be nearing the end of its short and tumultuous life, Chief Executive Robert Moore said Wednesday.

Moore's company was sued by a trio of large video game companies on Tuesday. The companies contend that 321 Studios' recently released Games X Copy software violated copyright law. Previously, a San Francisco judge had ruled that 321's popular DVD X Copy was illegal, because it was able to circumvent copyright protection programs. The judge ordered it removed from the market.

The company, which used to number nearly 400 employees, has laid off all but about 20 people now. Although he hasn't made the decision, the latest lawsuit may well trigger a final shutdown, Moore said.

"That is one of the options that we're considering," Moore said. "This has been a long and enjoyable ride up until the time we lost in California. Things have gone from good to bad to worse since then."

The St. Louis company has been a standard-bearer for the idea of fair use of entertainment--essentially the idea that consumers should be able to make personal backup copies of products they have purchased, such as CDs, DVDs or video games.

Copyright law allows people to make their own backup copies of CDs, since in most cases, music discs do not have copy protection coding to block such duplication. However, DVDs and many software packages and video games have digital rights management tools that prevent copying. Copyright law forbids distribution of tools that can break through these technological guards, though consumers might otherwise have the right to make personal copies of their legally purchased content.

Content companies contend that the DVD and game-copying software contributed to wider piracy instead of being limited to simple home backups.

"Video game copyright owners stand to lose an enormous amount from the piracy enabled by products like Games X Copy," Entertainment Software Association President Douglas Lowenstein said in a statement, announcing the game maker's lawsuit Tuesday.

Although 321 Studios has stripped the ability to copy Hollywood DVDs from its popular software, free tools that do the same thing are still widely available online. Hollywood studios have sued a handful of other companies that offer similar products.

Moore said that even if his company closes its doors, it has had an impact. He cited a recent visit to Congress, in which several lawmakers were sympathetic to the company's plight.

"They understand that it's common sense," he said. "People who buy things in the store should have a right to back things up for personal use."

CNET News.com writer Matt Hines contributed to this story.