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DVD-copying case heads to court

Software start-up 321 Studios will face off with Hollywood over whether it has the right to sell programs that get around copyright protections in a key legal test of the DMCA.

The latest major clash between technology and copyright owners heads to federal court Thursday, where software start-up 321 Studios hopes to win a reprieve from a legal attack by film companies on its DVD-copying software.
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The case, which will be heard in U.S. District Court in San Francisco, holds important consequences not only for software developers and for the motion picture industry but also for consumers, who face increasingly complex rules governing the uses of entertainment products.

Seven major movie studios are seeking to stop St. Louis-based 321 from shipping its DVD X-Copy and DVD Copy Plus programs, claiming the software violates a controversial copyright law banning the sale of products that can crack copyright protection measures.

While most DVDs include anticopying features as a shield against piracy, 321 essentially contends that consumers should be allowed to get around those measures in certain cases--for example, when they make personal back-up copies of legally purchased material.

At stake is the scope of 1998's Digital Millennium Copyright Act (DMCA), which has been wielded by the entertainment industry to crack down on several technologies that make it easier to copy and distribute digital material.

Legal experts said the case is one of the more thorny DMCA showdowns because the judge is being asked to clarify something that other cases have not--whether the law prevents all circumvention or whether there are cases in which circumvention is legal.

"That's a big open issue that this will help define," said Mark Radcliffe, an intellectual property lawyer at Palo Alto, Calif.-based Gray Cary Ware & Freidenrich. "This is one of the first tough cases" to address this issue.

The conflicting interests of studios and consumers have put technology companies in the middle of a high-stakes battle over intellectual property rights. Courts in the past have allowed copyright exemptions for personal use, such as for recording television programs to VCRs. But publishers are not required to sell works in formats that can be easily reproduced, raising a legal cloud over products that get around measures to hinder copying, like 321's.

A number of cases have been brought that seek to roll back the DMCA's circumvention prohibitions, with mixed results.

A federal appeals court in November 2001 upheld a decision banning Web publisher 2600 from posting or linking to DeCSS, code that can be used to crack DVD encryption.

But in December, a federal jury in California acquitted a Russian software company of criminal copyright charges under the DMCA. The charges were brought after Elcomsoft started selling a program that can crack antipiracy protections on electronic books. Much like 321, Elcomsoft had argued that its products were designed to allow consumers to make legal back-up copies.

On Thursday, U.S. District Judge Susan Illston will hear arguments from both sides on the legality of 321's DVD X-Copy and DVD Copy Plus products.

Cracking wise
The position of the studios--Metro Goldwyn Mayer Studios, TriStar Pictures, Columbia Pictures Industry, Time Warner Entertainment, Disney Enterprises, Universal City Studios and Saul Zaentz Company--is that cracking DVD copy protections is illegal in nearly every case, no matter what a person intends to do with the copies.

"Any copies that are made by a user are infringing and not permitted whether they are making back-up copies or extra copies," said Russell Frackman, a partner with Los Angeles-based Mitchell Silberberg & Knupp, who is representing the studios. He added, however, that the position could change if better antipiracy technology were created in the future.

"We have a product out there that's being used to infringe our clients' copyrights," he said.

But 321, in arguing that its products are legal, is also arguing that the DMCA must be reined in. "The court is going to have to come up with a new, nuanced interpretation of the statute," said 321 attorney Daralyn Durie, a partner at San Francisco-based Keker and Van Nest. "What's at stake is the ability to engage in fair use in a digital environment."

Durie said that as more films move to distribution in digital format exclusively, the studios' efforts to control what people can and cannot do with a DVD becomes more important.

"The studios would love a regime where a movie reviewer would have to get permission before viewing a clip, because that could influence the content of the review," she said.

The case between 321 and the studios started more than a year ago, when the software developer took the unusual pre-emptive step of asking a court to declare DVD Copy Plus legal. Company executives decided to file the brief last April after reading newspaper reports in which studio representatives said they planned to sue DVD-copying software makers and in which 321 was mentioned.

The studios didn't follow through on the promise to sue until December, a few weeks after 321 released DVD X Copy. The program makes perfect copies of a DVD, including the extra features, whereas DVD Copy Plus had made inferior versions of a movie.

Battle lines
The case has attracted the attention of several parties, including the federal government, which has stepped in on the side of movie studios to defend the constitutionality of the DMCA.

The Electronic Frontier Foundation (EFF) has weighed in on the other side, arguing that the courts should protect technologies that enable copying that's traditionally been legal--such as when people make back-up copies, when videographers duplicate their work or when teachers excerpt films for educational use.

"The public should benefit from new media technologies, not find its rights further restricted when new formats are used," EFF staff attorney Wendy Seltzer said in a statement.

The digital-copyright roadkill has piled up in recent years as companies in the film, record and publishing industries have stepped up their legal battles against consumer electronics and software developers. Because the Internet makes it so easy to copy and distribute works in unprecedented numbers, intellectual property owners fear they will lose millions of dollars from piracy, or unauthorized copying.

Napster, Aimster and Scour are among file-swapping services that have all failed amid charges that their services violate copyright law in some way.

But 321 is hoping that a recent ruling that file-swapping companies Grokster and Streamcast Networks, which distributes Morpheus, weren't liable for copyright infringement that took place on their networks. Although that decision didn't deal directly with the DMCA, Durie said the cases are related. "It shows courts are actually willing to look at new technology on a case-by-case basis and not assume that because a technology can be misused, (it) means that it should be banned altogether," Durie said.

Meanwhile, studio attorney Frackman said the studios will continue to pursue cases against technology they view as illegal. "Hopefully, you send a message with 321, but some people won't get that message."