321 Studios filed an action in U.S. Federal District Court this past April in an attempt to get a ruling from the Court that 321's DVD-copying software, DVD X Copy, does not violate the Digital Millennium Copyright Act. The DCMA legislation was passed by Congress to bar the creation or distribution of technology that can be used to circumvent copyright protections on films, music, software and other media forms. Seven Hollywood film studios filed their own Counterclaim action against 321's original action, requesting the same Court to find that 321 Studios cease production of its DVD X Copy software, on the grounds that the software program aids in copyright piracy. DVD X Copy allows users to copy DVDs directly to blank DVDs. The studios also requested that the Judge issue an injunction against 321's use of its software program and order the return of all copies of the software program that it has sold. Additionally, the Counterclaim seeks an order from the Court for 321 to turn over all profits made from the software, claiming that the 321 program is used to crack content scrambling software. The studios fear that DVDs will be pirated and released on the Internet, bypassing the royalties and traditional distribution routes for the studios and film producers. DVDs have earned roughly $4.6 billion in sales for the film studios in 2001.
321 Studios' spokesperson, Elizabeth Sedlock, responded to the Counterclaim filing, saying that the DCMA's 'fair use' provisions cover 321's software, which permits consumers to legally make copies that are for personal use. "We do not believe that we are in violation of the copyright law. We ultimately want to be the voice of reason in this debate between copyright holders and consumer rights."