321 Studios Fights on, with a Little Help from its Friends
Posted Apr 12, 2004

Embattled software firm 321 Studios got slammed from both coasts in late February, with U.S. district court judges in California and New York ruling that the St. Louis company had to stop producing and marketing its DVD X Copy software. Both judges found in favor of movie studios—Paramount Pictures and Twentieth Century Fox in New York, seven others in California—who alleged that the software, which allows users to make single copies of copy-protected DVDs, violates the Digital Millennium Copyright Act (DMCA).

The company responded to the February 20th California District Court ruling, which included an injunction against 321, by distributing ripper-free (RF) versions of the X Copy software that do not include the content descrambling utility. (Only DVD X Copy Platinum and DVD X Copy Express are available in RF versions; DVD X Copy Gold is temporarily unavailable in any configuration.) In late March, the judge who issued a March 3 ruling against 321 in New York agreed to a stay to his order that 321 stop manufacturing and selling the full version of its software, and 321 has filed appeals both there and in California.

In addition to switching over to the RF version of the software, 321 went on the offensive in the press and on the Internet, mounting a publicity and protest campaign called "Fight for Fair Use Week." From its new Web site, www.protectfairuse.org, the company called on consumers to participate in a series of daily actions between March 1 and March 5, including emailing Hollywood studio executives, calling studio switchboards, and contacting Congress to call for DVD copying to be included under allowable fair-use exceptions to copyright law. According to 321 spokesperson Julia Bishop-Cross, the company's March 3rd telephone and fax campaign resulted in 42,000 faxes being sent to major studios. "All indications appear that several of the studios finally turned their faxes off," Cross said of the company's software-generated fax campaign; all users had to do was go to the Web site and enter their name, and a fax would be sent to six studios. By week's end, 321 claimed that more than 100,000 emails, faxes, and calls were delivered to studio executives and elected officials.

In its "Protect Fair Use" campaign, 321 is relying less on one of its oft-repeated defenses, that its software was primarily intended so people could back up their DVDs in case they got damaged. Instead, the company is advocating a broader fair use-based argument, comparing the use of DVD X Copy to the use of a photocopy machine, audio tape deck, or CD copying software. Each of those functions, of course, allows people to make personal-use copies of content. What they don't include, however, is the descrambling of a copy-protection device, which is exactly where 321 has run afoul of the DMCA.

The Final Frontier?
Indeed, with the help of the Electronic Frontier Foundation (EFF), 321 asserts that the DMCA—in particular, section 1201, which prohibits the circumvention of copy-protection technology—violates consumers' fair-use and First Amendment rights by preventing them from making copies of DVD content for educational, critical analysis, and other legitimate functions. For example, if a film studies professor wanted to make copies of several scenes in a particular film for his students to analyze, section 1201 of the DMCA prevents him or her from simply copying those scenes and showing them side-by-side. On the other hand, fair-use precedents allow instructors to do exactly that with commercial VHS content, to say nothing of literary texts, provided they stay within certain limits.

The San Francisco-based EFF, a non-profit organization formed in 1990 to protect what it saw as threats to free speech in the digital age, came to support 321's case because it felt that the DMCA's anti-circumvention provisions were giving copyright holders the right to dictate how works were used in ways that the law hasn't allowed them to do in the past, says Wendy Seltzer, an EFF attorney who specializes in fair use and intellectual property issues. Fair use, Seltzer says, is designed to balance the rights of the public with the rights of the copyright holder, and to promote the progress of science and the useful arts. The DMCA "erodes the public's right to use, comment upon, criticize, and interact with copyrighted work," Seltzer says, adding that the DMCA's section 1201 was only the manifestation of market and legislative trends that were in play since the early 1990s.

The EFF's involvement with DeCSS cases began when it filed an amicus brief on behalf of 2600 magazine, which was sued by the DVD Copy Control Association (DVD CCA) for posting DeCSS code on the Web. 2600 lost that case on the basis that the DVD CCA's claim to a trade secret trumped 2600's free speech rights. The EFF also filed an amicus brief on behalf of Andrew Bunner, a California resident who also was sued for posting the code. In February, a California appeals court overturned a lower court's finding for the DVD CCA, arguing that there's no evidence that DeCSS was a trade secret at the time Bunner posted it online.

The EFF filed an amicus brief supporting 321 in its court case against the studios in California. "We thought that 321 Studios was making a product that would be valuable to parents who wanted backup copies of movies their toddlers might damage, or to professors who want to use a series of excerpts for an in-class lecture, even to critics who wanted to analyze portions of a film isolated from the rest of the DVD," Seltzer says. The 25-page document argues that section 1201 of the DMCA is unconstitutional because it violates established fair-use principles, something that Congress didn't intend when it passed the act in 1998. The EFF's brief quotes Marybeth Peters, U.S. Registrar of Copyrights at the time the DMCA was enacted: "Although not addressed in this bill, fair use is both a fundamental principle of U.S. copyright law and an important part of the necessary balance on the digital highway. Therefore the application of fair use in the digital environment should be very strongly reaffirmed."

That hasn't been the case in many court interpretations of the DMCA, which the EFF says has tilted the fair-use balance away from the public in favor of the copyright holder. "New technology shouldn't mean that the public loses rights," Seltzer says. "The courts are saying they're simply ruling about tools and access and copying, not about fair use. But only the most twisted reading of the law would interpret these decisions as not affecting fair use. Without the tools for fair use, the public's rights are very clearly affected."

Seltzer notes that, prior to the DMCA, courts regularly affirmed the public's right to use content in ways that the copyright holder might not agree with. "Parody and scathing criticism, the kind that a copyright holder would never authorize, have all been upheld in court," she says, making the point that fair-use and First Amendment rights go hand in hand.

The next stop for the 321 case is the 9th Circuit Court of Appeals. Based in San Francisco, that court's bench is filled with judges whom Seltzer says understand technology well because of their proximity to Silicon Valley. "We're still hopeful that when they look at the 321 Studios case they'll recognize the importance of fair use and allow people to innovate without asking permission from publishers," she says. 321 is fighting legal battles on other fronts, too.

In February, the DVD CCA filed suit in the Southern District of New York accusing 321 of patent infringement, a suit that 321 president Robert Moore sees as part of a larger scheme to bog the company down in lawsuits. "The studios are trying to bury us in New York lawsuits and legal costs—they think the judges there will be more likely to deny 321's transfer motion in the Paramount and Fox case if there are multiple cases before the court in New York," Moore wrote in a statement responding to the DVD CCA suit. Moore says that Paramount and Fox are fighting to keep the suit in that district, despite the fact that none of the companies involved has a material connection to New York. "Our customers are also the studios' customers. We recognize and share the studios' legitimate concerns about piracy and the ‘Napsterization' of their industry," Moore says in the statement. "Our technology and ideas on how we can work together to solve these common problems would put an end to these lawsuits…the problem is that our requests to meet studio executives are falling on deaf ears."