Firm Says Law Stifles Fair Use

Robert H. Moore, a software developer on the outskirts of St. Louis, built a multimillion-dollar business out of helping people copy DVDs.

Now he’s trying to prove that his products are legal.

Moore’s wares enable the copying of discs even if they are scrambled to prevent duplication, as are most movies sold on DVD. This sort of product, officials at the Motion Picture Assn. of America say, blatantly violates a 1998 federal law against picking the electronic locks on copyrighted works.

Moore disagrees, saying the public has the right to make backup copies of the DVDs it buys. His company, 321 Studios of Chesterfield, Mo., has asked a federal judge to rule that its DVD Copy Plus product does not violate copyright law. As an alternative, the company asked the judge to declare unconstitutional the anti-circumvention provision of the Digital Millennium Copyright Act.

The case is one of several high-stakes battles in courts and in Washington that pit consumer rights against copyrights.

These fights center on new technologies such as online file-sharing networks, digital television broadcasts and personal video recorders that enable people to make -- and in some cases, distribute -- high-quality digital copies of music, movies and other creative works.

Film studios, record companies and publishers say digital piracy poses an unprecedented threat to their businesses. Electronics manufacturers, technology companies and civil libertarians argue that the protections demanded by copyright owners would roll back consumer rights and stifle innovation.

In fact, these groups say, Congress already has given the copyright owners too much control. They argue that the technical provisions of the law squash the historical so-called fair-use rights people have to make personal copies of the media they buy.

“If you circumvent [electronic locks] to get access to content that you may have a perfect, fair-use right to get, you are still subject to criminal penalties,” said Gary S. Klein, vice president for government and legal affairs at the Consumer Electronics Assn.

Moore says he knew nothing about these issues when he started selling DVD Copy Plus last year. At that time, he didn’t even think he was building a business.

“The whole thing’s a fluke,” said Moore, who has spent the last two decades advising companies on database management and other software issues. Hoping to interest his son in his line of work, Moore said, he set up his laptop on his kitchen table and built a Web site that could sell products electronically.

He didn’t have a product, so his son suggested that he write an instruction manual for copying DVDs -- something Moore had been doing as a hobby. He slapped together the manual with software freely available on the Internet, then started selling the package from the new Web site for just under $20.

Since then, he has sold 100,000 copies of DVD Copy Plus, offering increasingly polished and expensive versions over time. He also has moved the business from his home in House Springs, Mo., to offices in Chesterfield and hired about two dozen employees.

MPAA spokeswoman Marta Grutka said there’s a clear line between a legal and an illegal product. If it circumvents the scrambling technology on a DVD, “then the developer of the software or device is exposing themselves to criminal prosecution” under the Digital Millennium Copyright Act.

To Moore and his attorneys, that’s the wrong question. They argue that consumers use DVD Copy Plus to make backup copies of the movies they buy, protecting their investment in the delicate plastic discs. This kind of personal copying is exactly the kind of fair use that other provisions of federal copyright law allows, they say.

The program is slow -- it takes six to 20 hours to copy a DVD -- and it doesn’t make exact duplicates. Instead, it squeezes videos into a lower-quality format that can fit on a CD, enabling buyers to use a CD recorder instead of a more expensive DVD burner.

Those limitations crimp the value of DVD Copy Plus to potential pirates. But early next month, 321 Studios is releasing a new product for consumers with DVD recorders, dubbed DVDXCopy, that is designed to make perfect copies of DVDs in 60 to 90 minutes.

Hoping to allay Hollywood’s concerns, the new version injects electronic barriers into the copies it makes to prevent them from being duplicated further. It also inserts digital watermarks and identifying information that Moore said can trace the source of any file that’s transmitted over the Internet, a feature that the studios are trying to include in the next generation of DVD recorders, players and discs.

Moore said these protections could conceivably be circumvented too, but they should deter piracy. “It’s our way to try to bridge the gap between pirates and fair use,” he said.

In addition to enabling people to make backup copies, Moore said, the new program can restore scratched and unplayable DVDs by taking advantage of the ability of computer DVD drives to correct for errors.

Neither of 321 Studios’ products, however, can tell the difference between a DVD that’s owned and one that’s rented, borrowed from a friend or checked out of the library. As a result, people can just as easily copy DVDs they don’t own as ones they do.

In March, Ken Jacobson, a senior anti-piracy official with the MPAA, told a reporter that DVD copying programs violated federal law, and that the MPAA had asked the FBI to investigate. Those comments prompted 321 Studios to file suit in U.S. District Court in San Francisco, asking the court to protect the company.

The nine studios named in the company’s complaint -- including Sony Pictures Entertainment Inc., Time Warner Entertainment Co., Universal City Studios Inc., Metro-Goldwyn-Mayer Studios Inc. and Disney Enterprises Inc. -- argued in court papers that the suit was premature because they haven’t threatened to sue 321 Studios.

They also argue that the company is trying to avoid being sued in New York, where an appeals panel has upheld the constitutionality of the anti-circumvention provisions of the 1998 Copyright Act.

Unfortunately for 321 Studios, a federal judge in the Bay Area ruled shortly after Moore filed his lawsuit that anti-circumvention provisions are constitutional. However, the ruling, out of U.S. District Court in San Jose, isn’t binding.

“As long as you are engaged in production of tech that’s primarily designed for circumvention, you’re in the cross hairs,” said Harvard University law professor William W. “Terry” Fisher III. The constitutional challenge to the 1998 law “is unlikely to go anywhere until it’s presented in a more traditional free-speech context,” such as circumvention for academic research, he said.

The Digital Millennium Copyright Act may preserve the public’s right to copy DVDs, said Pamela Samuelson, a copyright law expert at UC Berkeley. But there’s no such protection, she said, for the companies that make circumvention products.

Daralyn J. Durie, an attorney for 321 Studios, countered that her client’s products aren’t primarily designed to circumvent electronic locks. They’re designed to copy DVDs, some of which have no locks.

And as much as Moore’s company has benefited from the booming popularity of DVDs, it’s also feeling the pain of digital piracy: Copies of DVD Copy Plus are freely available on Internet file-sharing networks, and pirates frequently trade serial numbers to unlock unauthorized copies.