Setting the scene in DVD drama

A small software firm takes on big movie studios over whether home users can make copies

02/27/2003

By DOUG BEDELL / The Dallas Morning News

Chris Morris / DMN

Friday in a California courtroom, a small St. Louis software company begins a fight for its life against a phalanx of powerful Hollywood movie studios.

The outcome could impact our collective digital future.

On one side is 321 Studios (321studios.com), maker of computer programs that allow home users to copy DVD movies they own.

On the other is the Motion Picture Association of America, which charges that 321's software circumvents copy protection schemes in violation of the Digital Millennium Copyright Act.

The court proceeding represents a head-on collision between the DMCA and fair use rights of consumers.

Since the DMCA's passage in 1998, copyright holders have been using one section of the act against all sorts of technological developments. Manufacturers of universal garage-door remote controls, for example, are being sued for circumventing proprietary protections inside the door opening machinery.

Chris Morris / DMN

And makers of replacement printer toner cartridges are being dragged to court for constructing chips that allow Lexmark printers to use their products.

"This is a waste of the courts' time," says Elizabeth Sedlock, 321 Studios chief marketing officer. "The way it's going, anyone can create an access control mechanism and sue anyone else for violating it. The entire issue needs to be revisited. It's causing a lot of problems."

In its filings, the MPAA's nine Hollywood studios, including MGM, Sony and Time Warner Entertainment, say that DVD encryption technologies must be protected in a digital age when home computers can create perfect copies of all sorts of media. Otherwise, it reasons, piracy will run rampant.

THE FAIR USE ACT
Other times when push came into play
1984
     The U.S. Supreme Court decides that even though videotape technology could be used for piracy of copyrighted movies, videotape players should not be banned because, in effect, society would be deprived of a potentially useful tool.

1992
    The Audio Home Recording Act gives consumers certain rights to make personal copies of music on digital audiotape for noncommercial purposes.

1998
    Federal legislation updates the copyright law for the digital age. The Digital Millennium Copyright Act is heralded as a way to protect the rights of artists and writers. But copyright holders have used a provision of the act – one that prohibits the circumvention of copy protection schemes – against new technologies and digital developments.

2001
     A U.S. District judge orders the file-sharing program Napster to shut down, in part ruling that the videotape case should not apply because Napster had not shown a "substantial" legal application for its technology.

For MPAA leader Jack Valenti, the DMCA "makes very clear that anyone who makes available material which circumvents encryption of creative works violates the law.

"In prose, there is no ambiguity."

But 321 Studios is just as sure that DVDs are no different than VHS tapes.

"You can make backup copies of any VHS tape you own, but Hollywood is trying to set a line of demarcation between VHS and everything else and DVDs," says Ms. Sedlock. "It's trying to say digital media is different and should be treated differently."

The company's $100 DVD X Copy is the first product to let users copy an entire DVD movie onto a blank DVD in any computer DVD-writable drive. Since being released in November, more than 150,000 copies have been sold at outlets such as CompUSA, Circuit City and Fry's Electronics.

To deter its use as a piracy tool, 321 Studios has built its own copy protection into DVD X Copy. Code embedded into the copies made by the program will not permit copies to be made of copies.

As a further defense, a digital watermark is injected into the DVD copies. That way, they can be tracked if they appear on rogue Internet file-sharing services. The program inserts a disclaimer informing viewers that the DVD is a backup intended for the personal use of the DVD purchaser.

Legal brief on DVD copying
August 2001
    321 Studios goes into business, launching DVD Copy Plus.

April 23, 2002
    321 Studios files suit on nine major movie studios and seeks a judgment stating that it does not violate the Digital Millennium Copyright Act. The suit further asserts that the DMCA is unconstitutional.

June 14, 2002
    The movie studios ask that the suit be dismissed.

July 3, 2002
    The Justice Department files notice of a motion to join the defendants.

July 11, 2002
    321 Studios files opposition to the motion to dismiss.

Aug. 9, 2002
    The court grants the U.S. government motion to intervene and defend the constitutionality of the DMCA.

Sept. 5, 2002
    321 Studios announces that Fry's, CompUSA and Office Depot are selling DVD Copy Plus.

Nov. 5, 2002
    321 Studios amends its complaint to include its new product DVD X Copy. Pixar is dropped from the suit.

Nov. 8, 2002
    321 Studios releases a new version of DVD copying program, DVD X Copy. DVD X Copy now allows a DVD to be copied onto another DVD.

Dec. 19, 2002
    Seven of the movie studios countersue, claiming that 321 Studios violates the DMCA. The countersuit seeks to stop the sale of DVD Copy Plus and DVD X Copy, and to recover damages from the sales of DVD Copy Plus and DVD X Copy.

Jan. 7, 2003
    Jon Lech Johansen, also known as DVD Jon, is acquitted of charges over his development and distribution of DeCSS, a program that can be used to break the digital copy-protection mechanism of DVDs.

Jan. 21, 2003
    The seven major Hollywood studios request a ruling that 321 Studios' products, DVD Copy Plus and DVD X Copy, are illegal under the DMCA.

The developers of DVD X Copy also point out that it doesn't break the code used to protect commercially sold movie discs. Instead, the program grabs video and audio after it is decrypted by the DVD drive, which means the DMCA is never in play, 321 Studios attorneys argue.

To bolster its anti-piracy stance, 321 Studios earlier this month said it was opening a Piracy Prevention Hotline to receive any information on misuse of its products, including an older release, DVD Copy Plus, which copies DVDs to CDs. And it has offered a $10,000 reward for information leading to the conviction of anyone using its software in a commercial manner.

The MPAA, says Ms. Sedlock, has been unwilling to even discuss such measures.

"But it's really not about piracy at all," she says. "This is about whether or not it is legal for consumers to make backup copies of DVDs they own. Either it is or it isn't. We say it is legal for consumers to do whatever they want in the privacy of their own homes."

Friday, U.S. District Judge Susan Illston of the Northern District of California will be asked to decide whether 321 Studios should be enjoined from distributing its software.

But Ms. Sedlock says this may be only the first skirmish in a lengthy legal fracas.

"We are willing to take this all the way," she says. "If we don't, companies like ours are going to go out of business. And more companies will follow. This provision of the DMCA just stifles technology and stifles advancement.

"It's just all wrong."