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321 Studios Loses One Battle, but Continues the War
Posted Dec 5, 2003 Print Version     Page 1of 1

In what appears to be a last-ditch attempt to gain public support, 321 Studios introduced a promotion in November that offered a Lite-On CD/DVD burner for $20 to all customers who purchase its DVD X Copy Platinum software and one additional 321 Studios software title.

This announcement cameabout two weeks after the U.S. Copyright Office decided that, under the Digital Millennium Copyright Act (DMCA), it is illegal to use DVD X Copy Platinum software to back up DVDs. Every three years, the Copyright Office reviews the DMCA. "We went before them with some 50-plus other petitioners to request an exception from the DMCA for our product, but it was not granted," says Julia Bishop-Cross, director of public relations for the St. Louis-based software company. 321 has vowed to continue its fight, and at press time, they were about to file an appeal.

In what appears to be an effort to demonstrate that the company's interests in challenging the DMCA go beyond promoting its own software, 321 announced the DVD burner promotion. For each burner/software package sold, 321 said it will donate $25 to the Electronic Frontier Foundation, a non-profit organization of lawyers, volunteers, and visionaries working together to protect digital rights. The burner, an internal Lite-On LDW-401S, has a list price of $149.99. The bundle will only be sold through 321's Web site and through the company's new St. Louis Touch Point Customer Service Center.

Lite-On—which has offices in China, Hong Kong, Japan, Taiwan, and the U.S.—sells its own drives but is better known as an OEM supplier. The company has no direct connection to 321's promotion and did not return requests for an interview. 321 Studios bought the drives for the promotion, according to Bishop-Cross.

321's main argument stems around "Fair Use." Consumers, they say, should have the right to do what they want with the things they buy. DMCA, they say, is vague and needs to be more articulate. Intellectual property rights have changed because the digital age calls for a totally new way of saving data.

"Our customers are not pirates or criminals," said 321 Studios president Robert Moore in a prepared statement. "They're soccer moms who want to make sure The Little Mermaid is always at hand; dads who want to protect their movies from the DVD rot and delamination they've been hearing about and are starting to witness first-hand; and movie lovers who can't find a replacement copy of an out-of-print work or who can't afford to buy a second or third copy of The Matrix after the original gets so scratched the DVD player can't read it."

In 2002, 321 filed a declaratory judgment action against eight major motion picture studios in an attempt to thwart the studios from filing against them. It didn't work. Currently, the company is waiting for a California-based federal court to rule on a partial summary judgment motion in a counter-claim suit that was filed by seven of the same studios that claim "irreparable damage." The studios' suit asks 321 to hand over all profits from its software.

 "The movie studios are essentially on a crusade. 321 certainly has an argument," said an attorney who requested anonymity. "People who buy product should be able to back up copies, but that's not the way the law is written. While 321 is trying to get popular opinion on its side, its products clearly violate the DMCA. I don't see any way out of this. While 321 claims to be getting a lot of money in, it will be tough to fight all of the major studios. I think it will take time, but 321 will likely be trounced."

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