DVD X Copy Sales Will Fund Piracy Foes

One of 321 Studios's last corporate acts will be paying off the companies that drove it to extinction.

The St. Louis developer of commercial software for copying DVDs and other digital content posted a closing notice on its Web site last week, saying court injunctions barring U.S. sales of its software leaves it with no choice but to discontinue operations. On Tuesday, the Motion Picture Association of America (MPAA) announced a settlement deal with the now-defunct company.

Antipiracy Funding

321 Studios will make a "substantial" financial payment to the motion picture studios it had been battling in court, according to the MPAA. Those funds will be donated to the motion picture industry's antipiracy campaign.

The terms of the settlement also call for 321 Studios to cease selling its software--a moot issue since the company's closure.

The company marketed DVD X Copy, which allows users to circumvent the copy protection on DVDs in order to make back-ups on recordable DVD or CD media. In March, 321 Studios introduced DVDXtreme, a suite of DVD and CD authoring and backup tools that also copy DVDs that are not encrypted.

"321 Studios built its business on the flawed premise that it could profit from violating the motion picture studios' copyrights," MPAA CEO Jack Valenti says in a prepared statement. "This is not the end of the story in our massive fight against piracy."

321 Studios could not be reached for comment.

Litigious History

The company began its legal crusade in April 2002, when it filed suit against several motion picture companies as a pre-emptive strike, seeking the court's endorsement of the legality of its products. A countersuit followed, and by June of this year 321 Studios was entangled in a legal morass that the company's founder forecast would lead to bankruptcy.

Settlement talks with 321 Studios were under way before the company's collapse, says Matthew Grossman, an MPAA spokesperson. Despite the shutdown, the MPAA is confident it will be paid according to the settlement deal's terms, he adds.