DVD copying software sparks new legal battle

321 Studios LLC is set to release a product that it claims will allow consumers to make perfect copies of their DVDs, but before the product hits the market, the startup must first weather a legal storm brewing in its path.

The software maker plans to release on October 31 a product called DVD X Copy, which allows users to create "bit-for-bit" copies of their DVDs using a standard recordable DVD drive, said company President Robert Moore.

While the software promises to give consumers the same privileges they have for copying VHS movies, it is potentially against the law, according to industry experts. A U.S. legislation called the 1998 Digital Millennium Copyright Act (DMCA) deems it illegal to distribute tools that circumvent copy prevention technologies used to protect DVD content. That is just what 321 Studios' software does.

Movies are stored on DVDs using an encryption technology called Contents Scramble System, or CSS. 321 Studios has designed its software to copy a movie to blank DVDs using a freely available decryption technology called DeCSS. At least two federal courts have already determined that it is illegal to distribute DeCSS under the DMCA, said Fred von Lohmann, senior staff attorney for the Electronic Frontier Foundation (EFF), who specializes in fair use and intellectual property.

While 321 Studios has not been asked to stop distributing an existing version of its software, which allows users to copy a DVD on to a CD, Moore said he is not waiting for a lawsuit to land in his lap. The company has taken a pre-emptive strike against its movie industry foes by filing a lawsuit aimed at protecting the software from being squashed.

Moore and his lawyers argue that people should be able to create backup copies of their DVD movies, just as they can copy VHS movies or music CDs. It's a matter of fair use, they say. If a DVD is damaged, for example, a user should be entitled to own a backup copy. The DMCA, however, has so far hindered such technology from being distributed, and critics are attempting to get the legislation modified.

"We believe those provisions in the DMCA are unconstitutional because they basically trump the fair use rights," said Michael Page, an attorney with Kecker and Van Nest LLC in San Francisco, who is part of the legal team representing 321 Studios in its lawsuit. "If you make it illegal to make a backup copy of a work that you lawfully own, you have overstepped the legitimate bounds of the Copyright Act."

The DMCA ties the hands of software makers, said von Lohmann, who has helped fight similar cases against the DMCA. It is not against the law for users to own copies of their DVD movies, but the DMCA prohibits the distribution of any tools that make such copying possible.

"If someone wants to make fair use of a DVD they bought, they need to circumvent the copy protection technology to do that," von Lohmann said. "The DMCA would arguably make that illegal.

"If nobody can build the tools then essentially we've all been denied our fair use rights," he said.

In May, 321 Studios filed a motion in the U.S. District Court for the District of Norther California, asking the court to rule that its technology was not in violation of the DMCA. The company is based outside St. Louis, Missouri, and operates an office in Berkeley, California. It is seeking a declaratory judgement, which means that a judge could rule that the software is either legal or illegal.

"I would like a judge to rule either way before we are sued," Moore said.

That pre-emptive strike has prompted a legal spar. Nine movie studios named in the company's suit have asked the court to throw out the motion for a declarative judgement. The U.S. Department of Justice has also filed a motion to intervene in the case, and is backing the movie studios in asking the court to throw out 321 Studios' motion for dismissal.

A hearing on that leg of the lawsuit is scheduled to take place on Oct. 15 in San Francisco, 321 Studios says.

"We really don't want it to be dismissed. We want it to be ruled on," said Rob Semaan, the company's chief executive officer.

Moore admits that he is up against a tough foe, and he says half-joking that his company is really just "a couple of peons from the Midwest." Relative to the movie industry on the other side of the fight, he's right. 321 Studios sells its software for between US$50 and $100, and is treading along cash-flow positive with no outside investment, Moore said.

The early generation of its software, called DVD Copy Plus, is already available in retail outlets and on the Internet. It can be used to copy a DVD movie onto a blank CD, which can then be played on some DVD players. The caveat is that some quality is lost when the movie is copied to a CD. Additionally, out takes and other special content that movie studios cram onto DVDs can not be copied with the existing software. Also, because DVDs hold more data than CDs, a movie typically has to be copied onto multiple CDs.

DVD X Copy is designed to make exact replicas of a DVD movie in about an hour, and can also be used to restore scratched or damaged DVDs, the company says. It supports a variety of drives including DVD-R (DVD-recordable), DVD-RW (DVD-rewritable), DVD+R or DVD+RW. In an attempt to side-step some copyright concerns the software also automatically inserts its own disclaimer before the U.S. Federal Bureau of Investigations warning on each movie.

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Matt Berger

PC World
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