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DVD-Copy Software to be Revamped Following Court Order

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_____Digital Rights_____
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By Anick Jesdanun
AP Internet Writer
Monday, February 23, 2004; 5:31 PM

NEW YORK -- The maker of DVD-duplication software ruled in violation of copyright law is nevertheless pledging to keep selling it -- but without a built-in tool for descrambling movies.

In order for the popular DVD Copy Plus and DVD X Copy programs to successfully make copies of DVDs, users will now need to obtain a separate descrambler that is widely available on the Internet, said Robert Moore, founder and president of 321 Studios Inc.

"It's a hollow victory" for movie studios, Moore said.

On Friday, U.S. District Judge Susan Illston in San Francisco gave 321 Studios a week to stop making, distributing "or otherwise trafficking in any type of DVD circumvention software."

She agreed with the Hollywood studios' contention that 321's DVD-copying products violate the 1998 Digital Millennium Copyright Act, which prohibits the circumvention of anti-piracy measures such as the Content Scramble System, or CSS, that is used to protect DVDs.

Makers of DVD players license keys to descramble CSS-protected DVDs, and Illston deemed 321's use of those keys unauthorized.

The ruling does not affect 321's other software for copying computer games or creating DVDs from home videos, PowerPoint presentations and digital photos. It also does not cover the scores of DVD-copy products available elsewhere online, often for free.

Moore said 321 would fully comply while it appeals the ruling. Retailers are also encouraged to return unsold copies to the company, he said, though the judge did not specifically order that.

Russell Frackman, a lawyer for the movie studios that brought the lawsuit, questioned whether 321's response was consistent with the spirit of Illston's order.

"You can't sell the product with a wink and a nod and then tell your users, 'What you need to do is get the ripper (descrambling) component ... from another source,'" said Frackman said. "The law generally does not permit one to do indirectly what they can't do directly."

The Chesterfield, Mo.-based 321 had argued that its products merely give consumers fair use of the movies they've purchased, including backing up expensive copies of children's movies in case the originals get scratched.

Jack Valenti, head of the Motion Picture Association of America, has suggested that consumers have no legitimate need for such software, telling The Associated Press in November, "If you buy a DVD you have a copy. If you want a backup copy you buy another one."

To comply with the ruling, Moore said, manufacturing plants are being retooled to produce versions without the descrambling tool, and the company's Web site will start selling the new version later this week.

Descrambler-free software already is sold in Japan and Australia because retailers there were fearful about violating copyright law, Moore said. He said worldwide partners will be encouraged to use the new version, even though the U.S. court order technically does not apply abroad.

The company will also remove anti-piracy features that Moore said had been included "as a show of good faith." They include embedding a disclaimer on all copied DVDs that they were not originals. Another feature being stripped had prevented further duplication.

Moore said the company would likely lose hundreds of thousands of dollars destroying the versions with the descrambling tool built in, on top of the millions of dollars he said has already spent on legal fees.

Despite selling about 1 million copies of DVD Copy Plus and DVD X Copy in the United States, Moore said, "we haven't made any profits yet because we've been giving it to the lawyers."


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