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SAN FRANCISCO -- DVD-copying software maker 321 Studios is defending the legality of its products in court here, possibly facing an uphill battle before a judge who opened the hearing by saying she leans toward siding with Hollywood.

U.S. District Court Judge Susan Illston said she is "substantially persuaded" by the opinions of other judges in earlier cases involving the 1998 Digital Millennium Copyright Act, which makes it illegal to distribute tools that circumvent copy prevention technologies. Those opinions were in favor of copyright holders.

Several of Hollywood's largest movie studios are opposing 321 Studios, which markets several tools to make copies of movies on DVD. Initial hearings were held on Thursday in the request for an injunction barring the software vendor from selling its product. 321 Studios is facing complaints form Columbia Pictures, Disney, MGM Studios, The Saul Zaentz Company, Time Warner Entertainment, Tristar Pictures, and Universal City Studios.

Piracy or Fair Use?

The 321 Studios software lets users copy DVD movies onto recordable DVDs or standard CD-R media, despite the encryption technology used on the discs to prevent copying, called Contents Scrambling System. The company uses a freely available decryption technology called DeCSS to circumvent CSS.

At least two federal courts have already determined that it is illegal to distribute DeCSS under the DMCA. Illston referred to a case in which the Web site of hacker magazine 2600: The Hacker Quarterly was barred from linking to Web sites offering the DeCSS code for download.

321 Studios argued before the court that the DMCA provisions are unconstitutional and obstruct fair-use rights. Furthermore, 321 Studios argued that CSS is not a copy protection tool but an access control tool.

"What rights does a copyright holder have and what restrictions are imposed on the user who buys a DVD?" said Daralyn Durie, the lawyer presenting 321 Studios in court. "Surely one right that is transferred to me once I buy a DVD is the right to unlock the encryption and access the content."

Buyers can play the DVD in a player, but "the right to make a complete digital copy" is not part of fair use, said Russell Frackman, the lawyer representing the movie studios. "Under no doctrine of copyright law is a user ever entitled to extra copies of any copyright-protected material," he said.

Frackman said there is "hardly a difference" with any of the other cases involving DeCSS, just that 321 Studios "sells it commercially."

Familiar Arguments

Frackman and Durie are veterans when it comes to the DMCA and copyright cases. Frackman represented the recording industry against Napster, the now-defunct file-swapping pioneer.

Durie was part of the team that defended Dmitry Sklyarov, the designer of software that strips copy protection of certain electronic books who was arrested at a hacker conference in 2001.

The hearing, in the U.S. District Court for the Northern District of California, came one year after 321 Studios filed suit against the motion picture companies as a preemptive strike. A countersuit followed.

"We're eager and we think this is an open-and-shut case. It is a very straightforward DMCA case," said Marta Grutka, a spokesperson for the Motion Picture Association of America.

321 Studios Chief Executive Officer Rob Semaan was "a little bit discouraged" by the judge's opening statement. He believes his lawyers presented a persuading case, he said after the hearing.

If the studios prevail, that would mean consumers have to find fair use in old media, said Cindy Cohn, legal director at civil liberties group the Electronic Frontier Foundation, who attended the hearing.

"It would mean the copyright owners get to move into the 21st century while the consumer gets horses and buggies," Cohn said.

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