321 STUDIOS SEEKS LEGAL, LOBBYING SUCCESS IN COPYRIGHT
Software company that leveraged a first-strike copyright lawsuit against Hollywood into sales of tens of thousands of units of movie-copying software now is seeking to crystallize consensus for public policy that simultaneously fights piracy and protects fair use across digital media. 321 Studios planned to launch ProtectFairUse.org over weekend as forum meant to bridge usually polarized copy-protection views and build grassroots lobbying platform in favor of fair-use bills by Reps. Boucher (D- Va.) and Lofgren (D-Cal.) when they're re-introduced next Congress.
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Initiative’s public launch is expected in Jan., when company hopes to have lined up partner organizations, said chief mktg. officer Elizabeth Sedlock. “We're trying to be the voice of reason,” she said.
321 filed against 7 studios seeking declaration from U.S. Dist. Judge Susan Illston that its products don’t violate Digital Millennium Copyright Act (DMCA). MPAA executive’s discussion of company had been quoted prominently and at length in context of newspaper interview on piracy, Sedlock said. “There was no direct threat,” she acknowledged. Studios raised but dropped jurisdictional challenge to suit, and their answer to complaint is due Dec. 20, said 321 attorney Michael Page. Defendants are Columbia Pictures, Disney Studios, MGM Studios, Saul Zaentz Co., Sony Pictures, Time Warner Entertainment and Tristar.
Suit originally concerned 321’s $49.99 first product, DVD Copy Plus, which combined shareware, added tech support and made it easier to use in making imperfect copies of DVDs to CDs. More than 100,000 copies have been sold. Second product, released last month and added to court case, is $99.99 DVD X Copy, which makes exact copies to DVDs. It cleverly seeks to circumvent DMCA’s circumvention ban by capturing and copying content as it is output rather than defeating CSS protections. Product has sold more than 30,000 copies -- including through CE retailers such as Hastings and J&R Music and computer chains like CompUSA, Fry’s and Office Depot -- and more than 20,000 online, directly from 321 and from resellers like Amazon.com and Outpost.com -- outpacing first product’s sales record, Sedlock said.
Most tech start-ups try to avoid courts and lawyers like plague, Sedlock said, but 321 took preemptive action mainly because company thought it was in right legally and wanted to let world know and to get judicial confirmation. Publicity was considered secondarily, and it has been substantial and helpful in boosting company and its products, she said: “People are interested in the David vs. Goliath aspect.” Publicity has been major force driving sales, especially since company has spent little on marketing, most of that on banner ads, Sedlock said. On the expense side, she wouldn’t discuss attorney Page’s financial terms except to say: “It’s not pro bono.”
Benefits of initiating litigation contrast with business hits that companies such as Napster and ReplayTV have taken by finding themselves on wrong end of copyright infringement lawsuits, Sedlock said. By same token, stepping up as plaintiff doesn’t guarantee tech company success, said Electronic Frontier Foundation lawyer Fred von Lohmann, citing woebegone peer-to-peer service Madster -- which used to be Aimster and operates in defiance of shutdown order and under shadow of possible contempt decree later this month. Legally, taking offensive allows company to pick friendly forum, like tech-conscious northern Cal., von Lohmann said, and to determine lawsuit’s timing, Page said -- but substantively, it’s not supposed to affect outcome, they agreed.
“We are against piracy in all forms,” Sedlock said. 321 isn’t just talking anti-piracy talk. It has taken 3 measures in DVD X Copy: (1) Written warning, which can’t be removed from copies, that they aren’t for commercial use. This alerts purchasers who believe they bought originals. (2) Insertion of data into copies that stops software from making 2nd-generation copies. (3) Electronic watermarks on copies, making them traceable to users who made them. Company gladly would incorporate more protections, including some entertainment companies might suggest, Sedlock said: “We totally love Hollywood. We love what they do, and we believe that they're allowed to protect their investments in what they do.”
321 doesn’t, however, promote its protections as models for solving all copyright issues. No technical measures are bulletproof forever, Sedlock said. Some unauthorized copying is almost inevitable with any technology, but sufficient flexibility to allow consumers uses they justifiably expect would limit serious piracy to level that could be combated and tolerated, she said.
Company’s legal and public-policy initiatives are inseparable from its underlying business efforts, Sedlock said. Goal is to educate consumers first that copying for personal use is lawful, and 2nd that there are products that do it. “All our marketing efforts are tied to our lawsuit and to our fight for fair use,” she said.