Maker of DVD-copying software appeals ruling

Friday, April 2, 2004

ST. LOUIS -- A Missouri maker of DVD-copying products said Thursday it has appealed court rulings in New York and California that it stop making and marketing its software. The company, 321 Studios Inc. based in the St. Louis suburb of Chesterfield, filed the appeals in the 9th U.S. Circuit Court of Appeals in California and the 2nd U.S. Circuit appellate court in New York.

Federal judges in both states ordered 321 in recent weeks to stop marketing the software, siding with various Hollywood studios that contended that the DVD-copying products violate the 1998 Digital Millennium Copyright Act. That law bars circumvention of anti-piracy measures used to protect DVDs.

Since those rulings, 321 has shipped retooled versions of the DVD-copying products, removing a built-in tool for descrambling movies.

The company has argued its products merely give consumers fair use of the movies they've bought, including backing up expensive copies of children's movies in case the originals get scratched.

In both appeals, which include requests that the court rulings be stayed, 321 argues that the DMCA is unconstitutional and illegally extends copyright protections. The company also insists that the New York injunction violates free speech, that both courts ignored a previous court case, and that "the balance of harm is in 321's favor."

The company also argued that the New York injunction violates constitutionally protected free speech by barring 321 from speaking out about its products or dealing with customers in jurisdictions where no DMCA-like law applies.

And both court injunctions, 321 argues, are inconsistent with another previous district court's ruling that the DCMA did not forbid the sale of a universal garage-door-opener remote control, even though the remote bypassed encryption.

In that case, 321 said, a judge "upheld the garage owner's right to open his own garage door, and 321 similarly argues that lawful purchasers of DVDs have the inherent right to unlock their DVD's encryption to access the DVD's contents."

Rich Taylor, a Washington-based Motion Picture Association of America spokesman, said he found 321's latest appeals unsurprising, but he expected the previous rulings to be upheld.

"We have total confidence they're going to be on the losing end of the rulings," he said.

The company has said it has sold a million copies of the questioned DVD Copy Plus and DVD X Copy nationwide, and that it likely would lose hundreds of thousands of dollars destroying the versions with the descrambling tool built in. That's on top of the millions already spent on legal fees.

Hearings are scheduled for April 13 in the New York case and for June 18 in the California one.

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