Taking on the DMCA

Rob Semaan's 321 Studios is a unique enterprise: It's deemed by Hollywood to be one of the most dangerous, piracy-abetting technology companies around, but its products are available without hint of any controversy on the shelves of local computer stores.

The company's most popular software enables people to make copies--backups, CEO Semaan says--of DVDs. That's controversial, because DVDs are supposed to be loaded with high-tech digital locks that block copying. But programmers figured out how to pick those locks years ago, and 321's X Copy software is just the most high-profile of the packages that do this.

Semaan's company and others that produce this software say making backups of DVDs, for archival or strictly personal use, is perfectly permissible. DVDs get lost or damaged, and blocking consumers from protecting their investment doesn't make any sense, they say.

But Hollywood studios say this copying is flatly illegal, under provisions of the Digital Millennium Copyright Act (DMCA) that bar the circumvention of "access control" measures that protect digital content. It might not be illegal in the abstract to make a personal copy of a DVD, but it is against the law to break through the copy protection locks to do it, Hollywood lawyers say.

The two sides have been waiting for nearly six months for a judge to rule on the issues in the case, and the long delay has many observers wondering if a surprise is in order. In the meantime, the Librarian of Congress started a scheduled process of looking for digital lock-breaking activities that should be allowed despite the DMCA's restrictions, and 321 decided to apply.

Late last week, the Librarian of Congress came back with his ruling, and making DVD backups wasn't on the list of legalized activities. Many DMCA critics protested--but Semaan now says his company is convinced enough of its position that it will appeal the Librarian's ruling to a federal court.

This could be even more of a long shot than the company's original legal case, but Semaan says the issue is worth fighting for on several fronts. Besides, he says, the legal case has helped spur considerable sales of his software. CNET News.com spoke to him last week about his rapidly expanding legal plans.

Q: The Librarian of Congress denied your request to make DVD copying, or making backups of DVDs, legal under the Digital Millennium Copyright Act. Does that affect your overall legal strategy at all?
A: I don't know that it affects our legal position. There were there two separate matters, pursued in entirely separate venues. We went into the copyright office hoping to seek an exemption for our class of works, allowing people to make backup copies of movies. But out of 200 different applications, they only granted four exemptions, so the effort was probably from the outset doomed to failure. We didn't get what we hoped for, but it doesn't put us any worse off legally, either.

You're going to appeal the ruling, however.
Yeah. We've decided that they ignored certain evidence. For example, they ignored evidence we brought that many DVDs are out of print and hard to replace. Disney does that--brings movies into print for a few months or years and then takes them off the market again. "Little Mermaid" was one of those. So how do people protect their investment in that case?

The fact is that they ignored lots of evidence that we put in front of them.

Their reason they gave is that a marketplace has established itself, and the way to protect yourself is to go back into the marketplace and buy the movie again. Sometimes you can do that at an auction or at eBay. But in some cases that's not possible.

So the fact is that they ignored lots of evidence that we put in front of them. That includes public domain movies. We provided evidence to show that studios have actually encrypted movies that are public domain material. So with evidence like that, we're going to go back to a federal appeals court.

Is the appeal focused just on DVDs, or could it apply to other digital media?
Our push for fair-use rights applies to anything within the digital realm: CDs and DVDs and any other digital medium. But this is just DVDs. That's largely because this issue deals with the Digital Millennium Copyright Act. Only DVDs, not CDs, have encryption devices put on them, with the CSS (Content Scrambling System). There are very few access control-protected CDs in the market today. Maybe a handful. At some point, music studios are going to start releasing more CDs that are copy-protected. But for the appeal, we're only talking about DVDs.

If you do win on the Library of Congress ruling, does that pre-empt your earlier legal case?
I don't think so. I don't know whether it pre-empts. I think it's two entirely different directions. A federal court judge isn't necessarily persuaded or bound by the copyright office, and vice versa.

But my opinion is that (our original case) will go to the Supreme Court. The loser will appeal. I'm sure they will, and I know we will. That will catapult it to the appeals level, and win or lose, it will go to the Supremes. Either that, or the issue needs to go in front of Congress again to clarify the DMCA.

Has the trial and the impending decision affected sales and distribution of your software?
Yes, but positively. Because the media has covered these issues--and covered them very fairly--that has helped educate the market about what we're doing and what we represent. As we educate the market, people realize that the product exists. In the course of learning about these things, they buy the product.

This is not some underground operation.

Have large retailers had any trepidation about carrying the product because of the lawsuit?
They did initially. But then they saw that we were the ones that took the issue to court in the first place. We're the good guys; we're not hiding here. This is not some underground operation. They felt comfortable, so they picked up the product.

They believe in the cause. Retailers are consumer-oriented machines, and they believe in the cause. They've expressed to us an interest in helping. They've even thrown some resources at our ProtectFairUse.org Web site.

So they've actually given you financial support?
I wouldn't say it is cash support. It's more moral support. They're telling their customers that they think our products are legal by carrying them on their shelves.

We don't need their money and don't want their money--we've never asked anyone for legal defense help. The way we support ourselves is by selling our product.

How is the product doing?
Got 10 products on store shelves. The most popular is the X Copy line (of DVD-copying software). We've sold more than 1 million copies, mostly in the United States--mostly through retailers. The fourth quarter is an exciting period. It's a huge period for retailers, and we expect to do well. We didn't exist a few years ago, and now have a few hundred employees here.