Northern District Court of California Finds DVD Copying Violates the DMCA
This article was originally published in the Spring 2004 edition (Vol. 4, No. 1) of Thelen Reid's Intellectual Property and Trade Regulation Journal.
The advent of new technologies to produce, distribute and, most importantly, control copyrightable material has created a paradigm shift in copyright law. The passage of the 1998 Digital Millennium Copyright Act ("DMCA") reflected this change by replacing the focus of analysis onto the act of circumvention of anti-piracy measures, rather than by judging the legitimacy of the uses of such "illegally" obtained copyrighted material. Thus, in a pre-DMCA era, a fair use defense absolved Sony Corporation of America from any contributory infringement for the sale of video recording devices. Sony Corp. v. Universal City Studios, Inc. 464 U.S. 417 (1984). However, in the current regime, the circumvention of antipiracy technology itself is an illegal act and can often trump the consumer's legal right to fair use of legally-owned material, such as making personal copies of their movies.
This notion was reinforced on February 19, 2004, when a federal judge in San Francisco found that DVD copying software made by 321 Studios ("321") violates the DMCA. 321 Studios v. Metro Goldwyn Mayer Studios, Inc., et. al, 2004 WL 415250, N.C. Cal. Feb 19, 2004. 321 develops and sells computer software that allows users to make backups of DVDs by defeating the copy protections encoded onto movie disks, called "Consents Scramble System" or "CSS." 321's software, called DVD-X Copy, uses a CSS "player key" to access the data. Judge Susan Illston granted the Hollywood studio's request for an injunction against 321, finding "it is the technology itself at issue, not the uses to which the copyrighted material may be put. Legal downstream use of the copyrighted material by customers is not a defense to the software manufacturer's violation of the provisions (of copyright law)." Id. at 9.
The court points out two sections of the DMCA that are implicated in this case. 17 U.S.C. §1201 (a) (2) states that:
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 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 this title; or
- c) is marketed by that person or another acting in concert with that person's knowledge for use in circumventing a technological measure that effectively controls access to a work protected under this title.
The second section, 17 U.S.C. §1202 (b)(1) sets forth the same restrictions but targets technological measures that effectively protect the rights of a copyright owner under this title, instead of controlling access to such work. In both of these sections, the satisfaction of any one of the three prongs results in a violation of the statute.
Both of these sections are subject to 17 U.S.C. §1201 (c) (3), which states: "Nothing in this section shall affect rights, remedies, limitations, or defenses to copyright infringement, including fair use, under this title."
321 provided the following arguments: that the DVD Copy Code works on original DVDs the user has already purchased and thus has the right to access; that §1201(b) does not apply because CSS only controls access to DVDs rather than controlling or preventing copying; that even if §1201(b) does apply, DVD Copy Code does not violate it because its primary and intended use does not violate any right of a copyright holder; and, finally, that making personal backup copies of DVDs is expressly authorized under the copyright laws as fair use, and that since the primary and intended use of 321's software is legal fair use, 321 does not violate the DMCA. 321 Studios v. Metro Goldwyn Mayer Studios, Inc. at 7.
The Court's Reasoning
The court rejected all of these arguments. The court found that the purchase of a DVD does not grant the purchaser the authority of the copyright holder to decrypt CSS. Although the purchaser of a DVD has the right to view a DVD with a licensed DVD player, the act of circumventing CSS to view the DVD on unlicensed software such as 321's is in direct violation of §1201(a)(2). The court was similarly not persuaded by 321's argument that CSS controlled access only and was not a copy control measure. Although CSS does not prevent copying of the encrypted data on the DVD, 321 admitted themselves that such copying would not be particularly useful since any copy made without circumventing CSS could not be accessed or viewed. Id. At 8.
321 claimed that the software would be exempted from §1201(b)(2) because its primary and intended use of the software does not violate any right of a copyright holder. 321 listed other uses of the software such as fair use, making copies of DVDs that are in the public domain, or making a single, archival backup copy of a movie. However, the court found that the downstream uses of the software by the customers of 321, whether legal or illegal, are not relevant to determining whether 321 is violating the statute. As stated in a prior case discussing the DMCA, "Congress did not ban the act of circumventing the use restrictions. Instead, Congress banned only the trafficking in and marketing of devices primarily designed to circumvent the use restriction protective technologies. Congress did not prohibit the act of circumvention because it sought to preserve the fair use rights of persons who had lawfully acquired a work." United States v. Elcom LTD., 203 F. Supp. 2d 1111, 1120 (N.D. Cal. 2002). After analyzing and then ultimately rejecting 321's arguments, the court found 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 antipiracy technology. 321 Studios v. Metro Goldwyn Mayer Studios, Inc. at 10.
321 also contended that the DMCA unconstitutionally burdened the fair use rights of users of the copyrighted material. Specifically, 321 argued that users have a First Amendment right to make fair use of copyrighted works based on Eldred v. Ashcroft, 123 S. Ct. 769 (2003). The court found that this claim was too sweeping as there is no obligation that fair use, as protected by the Copyright Act or the Constitution, guarantees copying by the optimum method or in the identical format of the original. Id. at 13, quoting Universal City Studios, Inc. v. Corley, 273 F. 3d 429, 459 (2nd Cir. 2001). Thus, although the court recognized the fair use right of users, it established clear boundaries of its application.
The ruling in this case was a victorious one for Hollywood studios, which lose a claimed $3 billion a year from copyright piracy. Bob Tourtelloute, "Movie Industry Wins DVD Copying Suit," Reuters, February 20, 2004. The 321 case has far-reaching implications for the application of the DMCA in a copyright regime struggling to find a delicate balance between the legal rights of users and the rights of copyright holders in an increasingly technologically-driven world.
©2004 By Thelen Reid & Priest LLP. This article has been published as an information service to clients and friends. Please recognize that the information is general in nature and must not be relied upon as legal advice. The authors, listed above, or your Thelen Reid attorney contact, would be happy to discuss the information in this article in greater detail and its application to your specific situation. We welcome your comments and suggestions.