321 Studios v. MGM Studios

Citation: 321 Studios v. MGM Studios, Inc., 307 F.Supp.2d 1085, 70 U.S.P.Q.2d (BNA) 1028 (N.D. Cal. 2004).

Factual Background
A federal court in California has enjoined the sale of software used to copy CSS-encrypted DVDs, because the software violates the anti-circumvention provisions of the Digital Millennium Copyright Act. The offending software is published by 321 Studios, a company that also sells several kinds of legitimate media editing and recording software (including software that allows users to record their own PowerPoint presentations to DVDs).

Two of 321 Studios’ products were involved in this case: a program called “DVD Copy Plus” that enables users to copy CSS-encrypted DVDs to CD-ROMs (for playback on computers), and another program called “DVD X Copy” that enables users to copy CSS-encrypted DVDs to DVDs (for playback on DVD players).

Movie studios are those in the entertainment industry most interested in CSS encryption, because when their movies are released on DVDs, they are released in a CSS-encrypted format to prevent piracy.

When families record their own home movies to DVDs &mdash; something they can do using a separate 321 Studios program called “DVD X Maker,” or competing programs from other companies &mdash; families do not use CSS encryption. The offending feature of “DVD Copy Plus” and “DVD X Copy” was their ability to circumvent CSS encryption (not their ability to record movies to DVDs).

321 Studios responded to cease-and-desist demands by the studios by filing a declaratory relief suit against MGM (and other MPAA members). The issues before the court were: whether the offending programs violate the anti-circumvention provisions of the DMCA; and if so, whether those anti-circumvention provisions are constitutional.

Trial Court Decision
Federal District Judge Susan Illston concluded that “DVD Copy Plus” and “DVD X Copy” violated the DMCA for two reasons:


 * Because CSS controls access to movies recorded on DVDs, and the offending programs are designed to enable users to circumvent that control, without the consent of copyright owners. Judge Illston rejected 321 Studios’ argument that movie studios have consented to access to their movies by those who buy DVDs. Rather, she explained, studios have consented the private viewing of their movies, not to their decryption. That means that selling software that circumvents CSS violates Section 1201(a)(2) of the DMCA.


 * Because CSS also prevents copying of DVDs, and the offending programs are designed to enable users to circumvent that control, too. Judge Illston rejected 321 Studios’ argument that CSS prevents access, but not copying. She explained that the sole purpose of preventing access is to prevent copying, so CSS does protect copyright owners’ exclusive right to reproduce their movies. That means that selling software that circumvents CSS also violates Section 1201(b)(1).

Judge Illston also upheld the constitutionality of the anti-circumvention provisions of the DMCA for two reasons:


 * Because those provisions do not violate First Amendment free speech rights. Instead, they further important and substantial government interests in protecting intellectual property rights &mdash; interests which are unrelated to suppressing free expression &mdash; and any incidental restrictions that may be imposed on First Amendment freedoms are no greater than essential to furthering those interests.


 * Because enactment of the anti-circumvention provisions of the DMCA did not exceed the authority given to Congress to do so by the Commerce or Intellectual Property Clauses of the Constitution.

For these reasons, Judge Illston issued a preliminary injunction that bars 321 Studios from continuing to make or sell “any type of DVD circumvention software.”