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ARTICLE
321 Studios v. M.G.M Studios, INC., et al.
Par Yannick-Eléonore Scaramozzino

Case on 321’s DVD copying software

On February 19, 2004, Susan ILLSTON, judge of the United States District Court (Nothern District of California) has granted defendant (Metro Goldwyn Mayer Studios, INC. et al.,) /counterclaimants motion for partial summary judgment. This Court enjoins plaintiff 321 Studios from manufacturing, distributing, or otherwise trafficking in any type of DVD circumvention software.

 

 

Background

 

A digital versatile disc (“DVD”) is a five inch wide plastic disk that stores digital information. DVDs currently make up 39% of the sales of video and film works. Many films are sold only on the DVD format. Many DVDs store the digital data in a format called the “Contents Scramble System” or “CSS”. The Copyright Control Authority administers the CSS encoding scheme and the licensing of the electronic “keys” used by DVD players to playback DVDs. The 31 CSS keys and the algorithm that can be used to decode a DVD are broadly available on the Internet.

 

Plaintiff 321 Studios, LLC is a company that markets and sells software and instructions for copying DVDs. First Amended Complaint sells two products: DVD Copy Plus[1], which began selling in August 2001 and DVD-X COPY, which began selling in November 2002.

 

 

Complaint for a declaratory relief on April 22, 2002  

Plaintiff 321 Studios filed a complaint for declaratory relief on April 22, 2002, seeking in :

 

1- Claim One a declaratory judgment from this Court that “its activities in distributing DVD Copy Plus and DVD – X COPY do not violate the provisions of the Digital Millennium Copyrights Act (DMCA), or in the alternative, that these provisions are invalid in light of other copyright law provisions, these provisions are invalid because Congress exceeded its enumerated powers under Article 1, Section 8, of the United States Constitution, these provisions are unconstitutionally vague, and/or these provisions are unconstitutionally vague, and/or these provisions violate the First Amendment of the Constitution.

 

2- Claim two a declaratoty judgment from this Court that its distribution of DVD Copy Plus and DVD-X COPY do not violate the Copyright Act “on the grounds that DVD Copy Plus and DVD-X COPY have substantial non-infringing uses, that the use of DVD Copy Plus and DVD-X COPY constitute fair use, and/or that the provisions of the Copyright Act, if interpreted to bar the distribution of DVD Copy Plus and DVD-X COPY, violate the First Amendment of the Constitution.

 

 

Previous cases dealing with the decryption of DVDs and the scope of DMCA

A number of recent cases, Universal City Studios, Inc. v. Reimerdes (S.D.N.Y. 2000), Universal City Studios. Inc.v. Corley (2nd Cir. 2001), United States v. Elcom LTD., 203 F. Supp. 2d 1111 (N.D. Cal.2002), dealt, as this instant case does, with the decryption of DVDs and the scope of DMCA. This Court has discussed both the Corley and the Elcom decisions in more detail throughout his opinion.

 

 

I- Defendants’ motion for partial summary judgment

 

 

The Digital Millennium copyright Act :

Congress enacted the DMCA in 1998 following the adoption of the World Intellectual Property Organization Copyright Treaty. Two sections of the DMCA are at issue in this case : 17 USC § 1201 (a) (2)[2] and 17 USC § 1201 (b) (1)[3].

 

 

The challenged conduct of 321 Studios :

The Studios state first that 321’s DVD copying software is plainly technology within the meaning of § 1201. Defendants then assert that CSS is a technological measure that both effectively controls access to a work protected under the DMCA, triggering § 1201 (a) (2), and effectively protects a right of a copyright owner under the DMCA triggering § 1201 (b) (1). As defined by the statute, a technological measure effectively controls access to a work “if the measure, in the ordinary course of its operation, requires the application of information, or a process or treatment, with the authority of the copyright owner, to gain access to the work”, while a technological measure “effectively protects a right of a copyright owner under this title’ if the measure, in the ordinary course of operation prevents, restricts, or otherwise limits the exercise of a right of a copyright owner under this title”. 17 U.S.C § 1201 (a) (3) (B). It is evident to the Court, as it has been to previous court that CSS is a technological measure that both effectively controls access to DVDs and effectively protects the right of a copyright holder. See Reimerdes, 111 F. Supp. 2d at 317-18

 

 

a) The provisions specific to § 1201 (a) (2)

This Court agrees with the Corley court that the purchase of a DVD does not give to the purchaser the authority of copyright holder to descrypt CSS. This Court rejects plaintiff’s argument that the “without the authority of the copyright holder” language exempts its product from liability under § 1201 (a) (2).

 

b) The provisions specific to §1201 (b) (1)

The Court finds, as did both the Corley and Elcom courts, that the legal downstream use of the copyrighted material by customers is not a defense to the software manufacturer’s violation of the provisions of § 1201 (b) (1). 321 also asserts that its software does not violate §1201 (b) (2) because the software does not “circumvent” encryption. Section 1201 (b) (1) defines such circumvention, as “avoiding, bypassing, removing, deactivating, or otherwise impair a technological measure, but that its software does not avoid, bypass, remove, deactivate, or otherwise impair a technological measure, but that is simply uses the authorized key to unlock the encryption. However, while 321’s software does use the authorized key to access the DVD, it does not have authority to use this key, as licensed DVD players do, and it therefore avoids and bypasses CSS. For these reasons, §1201 (b) (1) does apply to 321’s DVD copying software.

 

c) The common provisions of § 1201 (a) (2) and §1201 (b) (1)

It is impossible for this Court to determine on summary judgment whether 321’s product has only limited commercially significant purposes other than circumvention, as this is a question of fact or a jury to decide, and neither party has produced significant evidence on this issue. This Court has found that the CSS circumvention portion of the 321 software is illegal. Therefore, as 321 markets its software for use in circumventing CSS, this Court finds that 321’s DVD copying software is in violation of the marketing provisions of §§ 1201 (a) (2) and (b) (1). Accordingly, this Court finds that 321’s software is in violation of both § 1201 (a) (2) and § 1201 (b) (1), because it is both primarily designed and produced to circumvent CSS, and marketed to the public for use in circumventing CSS.

 

 

II- Constitutionality of the DMCA 

 

 

The DMCA does not unconstitutionally restrict 321’s speech

Plaintiff contends that the DMCA unconstitutionally restricts 321’s First Amendment right to tell others how to make fair use of copyrighted works. Courts have held that computer code is speech, and therefore merits First Amendment protection (See Corley 273 F.3d at 445-449, and Junger v. Daley, 209 F. 3d 481, 484 (6th Cir. 2000)). Courts have found that both the executable object code and the more reable source code merit First Amendment protection. (See Elcom, 203 F. Supp. 2d at 1126). As with other kinds of speech, the scope of the protection for computer code depends upon whether the restriction on the code is because of its content (See Corley, 273 F.3 d at 450). This Court comes to the same conclusion as the courts who previously considered this question, and determines that intermediate scrutiny is the appropriate standard under which the DMCA should be analyzed. Congress determined that the DMCA was needed to protect copyrights and intellectual property rights. This Court finds that the challenged provisions further important and substantial government interests unrelated to the suppression of free expression, and to that the incidental restrictions on First Amendment freedoms are no greater than essential to the furtherance of those interests.

 

 

The statute does not impermissibly burden the fair use rights of users

This Court concludes that the challenged portions of the DCMA do not unconstitutionally burden the fair use rights of users of the copyrighted material. In reaching this result, the Court rejects as too sweeping plaintiff’s claim that such users have a First Amendment right to make fair use of copyrighted works based on Eldred v. Ashcroft, 123 S. Ct 769 (2003). There are significant governmental interests involved in this prohibition on DVD copying software, and it is not required that proof of its use for copyright infringement be presented at this stage. This Court finds that a ban on manufacturing, importing, offering to the public, providing, or otherwise trafficking in technology that circumvents CSS does not impermissibly burden the First Amendment rights of it DVD users.

 

 

The DMCA does not exceed the scope of Congressional powers

This Court determines that the DMCA does not exceed the scope of either the Commerce or the Intellectual Property Clauses. Defendants are entitled to summary judgment that 321 has violated 17 U.S.C. § § 1201 (a) (2) and (b) (1), and that 321 is not entitled to a declaratory judgment that its DVD Copy Plus and DVD-X Copy are permissible under 17 U.S.C. § 1201. Furthermore, this Court dismisses 321’s Second Claim for Relief as moot, since by granting summary judgment to defendants, there is no current and justiciable controversy as to whether 321 is also liable for copyright infringement, the claim raised in the Second Claim for Relief.

 

 

III- Request for injunction

 

This Court also determines that an unjunction, as provided for in 17 U.S.C. § 1203 (b) is appropriate. That statute provides : “In an action brought under [section 1201 or 1202], the court may grant temporary and permanent injunctions on such terms as it deems reasonable to prevent or restrain a violation”. The Court in Reimerdes stated “injunctive relief is appropriate if there is a reasonable likelihood of future violations absent such relief and, in cases brought by private plaintiffs, if the plaintiff lacks an adequate remedy at law.” Reimerdes, 111 F. Supp. 2d at 343. These two elements are present in the instant case. While the Reimerdes court in did not issue the injunction until after a full trial, that court stated “in the Court’s view, the trial fully vindicated its pre-trial assessment that there were, in actuality, very few genuinely disputed questions of material fact. Examination of the trial record will reveal that virtually the entire case could have been stipulated”. Reimerdes, 111 F. Supp.2d at 345. Furthermore, there is a distinct likelihood of appeal in this case and judicial economy leads this Court to attempt to ensure that the appellate record is complete.

 

 

conclusion :

This Court grants defendant/counterclaimants’ motion for partial summary judgment. Further, this Court enjoins plaintiff 321 Studios from manufacturing, distributing, or otherwise trafficking in any type of DVD circumvention software.

 

 

GLOSSAIRE :

 

DVD Copy Plus video content from original DVDs regardless of whether they are encoded with CSS. The software does not create an identical copy of the DVD, rather it allows the user to copy a portion of the video contents on the DVD onto a recordable CD.

 

DVD-X COPY:  DVD-X COPY reads the data on the original DVD, decodes it, and then uses the data to create a backup copy of the DVD. This data is read by the DVD drive, decrypted by the DVD-X COPY software, and then stored on the computer until the backup copy of the DVD is created. Once the backup copy is created, the stored data from the original DVD is automatically deleted. If the DVD is encoded with CSS, DVD-X COPY uses a CSS “player key” to access the data. DVD-X COPY also contains publicly known computer code that performs the algorithms to decode the DVD data. DVD-X COPY does not affect the encryption on the original DVD.

 

 



[1] DVD Copy Plus consists of an electronic guide explaining how to create backup copie of DVDs, two pieces of free, publicly available software, and one CD burning application, PowerCDR, licensed from a German company.

[2] 17 U.S.C.§ 1201 (a) (2) provides :

«  No person shall manufacture, import, offer to the public, provide, or otherwise traffic in any technology, product, service, device, component, or par therefore, that -

(A)     is primarily designed or produced for the purpose of circumventing a technological measure that effectively controls access to a work protected under this title ;

(B)     has only limited commercially significant purpose or use other than to circumvent a technological measure that effectively controls access to a work protected under the title : or

(C)    is marketed by that person or another acting in concert with that person with that person’s knowledge for use in circumventing a technological measure that effectively controls access to a work protected under this title.”

[3] 17 U.S.C. § 1201 (b) (1) provides :

No person shall manufacture, import, offer to the public, provide, or otherwise traffic in any technology, product, service, device, component, or part thereof, that –

(A) is primarily designed or produced for the purpose of circumventing protection afforded by a technological measure that effectively protects a right of a copyright owner under this title in a work or a portion thereof ; (B) has only limited commercially significant purpose or use other than to circumvent protection afforded by a technological measure that effectively protects a right of a copyright owner under this title in a work or a portion thereof.”


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