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Hollywood fired the latest salvo in the war against digital piracy last month. On Sept. 17, Paramount Pictures and Twentieth Century Fox filed a complaint in a New York federal court against four companies that distribute software capable of copying DVDs. Paramount Pictures Corp. v. Tritton Techs. Inc., No. CV 03-7316 (S.D.N.Y. filed Sept. 17, 2003). In this action, brought under the controversial Digital Millennium Copyright Act (DMCA), the studios are seeking an injunction and unspecified damages against Tritton Technologies, QOJ, World Reach and Proto Ventures for distributing software that allows consumers to make backup copies of their DVDs. The lawsuit follows a pending action in California between the film industry and 321 Studios LLC, one of the creators of DVD copying software. 321 Studios v. Metro-Goldwyn-Mayer Studios, No. C 02-1955 SI (N.D. Calif. filed April 22, 2002). The Tritton action, however, is the first attempt to pursue distributors of software designed to circumvent the content scramble system (CSS) copy-protection system built into every DVD. The DVD battles began in September 1999, when a 15-year-old Norwegian hacker named Jon Johansen, collaborating with two unidentified individuals he met on the Internet, reverse-engineered a DVD player and culled from it the keys and other information necessary to decrypt CSS. Johansen posted the executable code of the resulting program, appropriately named “DeCSS,” on his Web site. Within months, hundreds of Web sites around the world were posting versions of the code in both source code and executable form. The Motion Picture Association of America (MPAA) quickly began sending out cease-and-desist letters to Internet service providers that hosted Web sites posting DeCSS. Though the industry succeeded in removing a large number of postings of the program, it inflamed the hacker community, which responded by stepping up its efforts to disseminate DeCSS. Hollywood then turned to the courts. On Dec. 29, 1999, the DVD Copy Control Association, the body entrusted with licensing CSS to DVD manufacturers, commenced a state court action in California against a number of Web site operators for misappropriation of its trade secrets as embodied in the DeCSS software. DVD Copy Control Ass’n Inc. v. McLaughlin, No. CV 786804, 2000 WL 48512 (Calif. App. Dep’t Super. Ct. Jan. 21, 2000). On Jan. 21, 2000, the court issued a preliminary injunction against posting the DeCSS program and related information on the defendants’ Web sites, but declined to enjoin them from linking to other Web sites that did. On Nov. 1, 2001, a California appeals court reversed, ruling that the lower court’s injunction was a prior restraint against free expression as protected by the First Amendment. DVD Copy Control Ass’n Inc. v. Bunner, 93 Cal. App. 4th 648 (2001). The association appealed that decision, and on Aug. 25, 2003, the California Supreme Court ruled that while restrictions on the dissemination of computer algorithms like DeCSS are subject to scrutiny under the First Amendment, the preliminary injunction was content-neutral and therefore did not violate free speech protections any more than required to satisfy the relevant government interests. DVD Copy Control Ass’n Inc. v. Bunner, 31 Cal. 4th 864 (2003). However, since the appellate court had not addressed whether the injunction was appropriate under California trade secret law but merely held that the injunction violated the First Amendment even if justified under trade secret law, the Supreme Court remanded for further consideration of that issue. In a concurring opinion, Justice Carlos Moreno indicated that the association will have a difficult time on remand. The association will have the burden of showing not only that it acted expeditiously to maintain the secrecy of DeCSS, but that the algorithm actually remained a secret after the initial posting. DMCA proves more effective The movie industry has found far more success under the DMCA than it has using trade secret misappropriation. On Jan. 14, 2000, the major studios filed suit in a New York federal court against three of the most notorious publicists of the DeCSS code-Shawn Reimerdes, Roman Kazan and Eric Corley-for violating � 1201(a)(2) of the DMCA. Section 1201(a)(2) prohibits the trafficking of any technology that “is primarily designed or produced for the purpose of circumventing a technological measure that effectively controls access to a work” protected by copyright. Finding it “perfectly clear” that CSS is such a technological measure and that DeCSS was designed primarily to circumvent it, the district court issued an injunction against the defendants prohibiting them from publishing DeCSS or posting it on their Web sites. Universal City Studios Inc. v. Reimerdes, 82 F. Supp. 2d 211, 216-17 (S.D.N.Y. Feb. 2, 2000). Later, after Corley announced his intention to engage in “electronic civil disobedience” by linking to other Web sites containing the program, the court also enjoined Corley from linking to any such sites. Universal City Studios Inc. v. Reimerdes, 111 F. Supp. 2d 294 (S.D.N.Y 2000), aff’d 273 F.3d 429 (2d Cir. 2001). Represented by the Electronic Frontier Foundation, Corley appealed, arguing that the injunction violated his First Amendment right to free speech, that neither he nor anyone else the movie studios could identify had actually used DeCSS to violate any copyrights, and that interpreting the DMCA to bar the dissemination of codes like DeCSS would essentially eliminate fair use in the digital world. Numerous amicus briefs were filed in support of this last claim, arguing that a myriad of fair uses would become virtually impossible because of the DMCA. The government also intervened, but to defend the DMCA. Decryption codes, it argued, are not constitutionally protected expression, and even if they were, the anti-trafficking rules are constitutional because there is no other way to prevent piracy. The 2d U.S. Circuit Court of Appeals basically agreed. Although it ruled that computer programs like DeCSS are speech within the meaning of the First Amendment, the provisions of the DMCA are constitutional because they serve the important purpose of protecting encryption devices. Universal City Studios Inc. v. Corley, 273 F.3d 429 (2d Cir. 2001). As for the defendant’s fair-use argument, the court declined to delve too deeply into the issue, since Corley did not claim to be making fair use of any copyrighted material and neither the injunction nor the DMCA itself prohibited fair use of encrypted works-they only limited access and the ability to copy. The court conceded that such limitations make fair use more difficult, but held “[w]e know of no authority for the proposition that fair use, as protected by the Copyright Act, much less the Constitution, guarantees copying by the optimum method or in the identical format of the original.” Id. at 459. The next battleground Soon after Corley was decided, a new battle over DeCSS erupted. Faced with MPAA threats to stop the sale of its DVD-copying software, on April 22, 2002, 321 Studios filed a declaratory judgment suit in California federal court seeking a declaration of its product’s legality. The company alleged that its software is marketed for the sole purpose of allowing consumers to make backup copies of DVDs they already own. As with Corley, amicus briefs were filed by a collection of fair-use advocates. This time, however, they had an additional argument in their arsenal. What happens to a movie whose copyright term has expired? How would such a work ever enter the public domain if it only exists in encrypted DVD format? In oral argument regarding a summary judgment motion on May 15, 2003, Judge Susan Illston asked the MPAA lawyers the same questions. According to reporters, they did not have a good answer. The judge then asked how reviewers like Ebert and Roeper could include a clip of a movie in their review if the studios refused to cooperate. “Fair use is not a constitutional right,” was the reported reply. With their latest lawsuit, Paramount Pictures v. Tritton, the studios are back on the offensive. While the defendants have not yet filed a reply, they will presumably proffer the same arguments as 321 Studios, namely that allowing consumers to make backup copies of DVDs they already own is a permissible fair use. Not surprisingly, the MPAA disagrees. The studios allege that “unlike the defendants in Reimerdes-at least one of whom pronounced that he was engaged in ‘electronic civil disobedience’-Defendants in this case are commercially exploiting this tool of piracy by actively marketing it at prices ranging from $49.97 to $69.99.” Mem. Supp. Pls.’ Mot. Prelim. Inj. at 5. Ultimately, the studios may enjoy a happy ending in both actions. Tritton was purposely brought in a New York federal court so that the Reimerdes and Corley decisions would be binding. Meanwhile, despite her pointed questions, Illston indicated in the 321 Studios oral argument that she is leaning toward ruling for the movie studios. (As of Oct. 20, she had not handed down a decision.) And both Tritton and 321 Studios face the same problem with their fair-use arguments that the hackers did before them-they’re not the ones actually making the fair use; the end user is. They are, however, accused of trafficking in anti-circumvention technology in direct violation of the DMCA. Opportunity for reform Some fair-use advocates argue that the only real way to preserve the appropriate balance between fair use and the legitimate interests of the studios in the digital age may be to change the DMCA. In January, representatives Rick Boucher, D-Va., and John Doolittle, R-Calif., introduced the Digital Media Consumers’ Rights Act of 2003 (DMCRA) into Congress. The DMCRA would reaffirm that traditional fair-use standards apply to digital works by permitting circumvention for legitimate fair uses such as playing a “stereo-only” CD on a computer, and watching a DVD on a Linux computer. The DMCRA would also allow for the manufacture and distribution of hardware and software capable of enabling significant noninfringing uses, possibly rendering moot the lawsuits involving 321 Studios and others. Representative Zoe Lofgren, D-Calif., has introduced the Benefit Authors without Limiting Advancement of Net Consumer Expectations Act. Less of a departure than the DMCRA, this act would permit consumer circumvention only if it is necessary for a noninfringing use and the copyright owner does not enable the purchaser to exercise his fair-use rights. Both bills have been referred to the Congressional Subcommittee on Courts, the Internet and Intellectual Property. Yet the DMCA may not need to change to accomplish these goals. Under � 1201(a)(1)(C), the U.S. Copyright Office is required to conduct a study every three years and to issue exemptions from the DMCA if it finds that consumers are being hampered in their ability to make lawful use of copyrighted material. Several hundred comments were submitted to that office in the latest round of anti-circumvention rule-making, requesting exemptions for backing up DVDs, skipping commercials and playing machine-restricted CDs, among others. Hearings were held in May with post-hearing comments submitted by June 20. Based on the recommendations of the Copyright Office, the Librarian of Congress will issue its ruling before Oct. 28 on what (if any) exemptions will be granted to the DMCA’s general ban on circumvention. Regardless of the outcome of any DMCA reform or exemption proposals, one thing’s for sure-Hollywood will be watching. David M. Klein ([email protected]) is a partner at New York’s Shearman & Sterling and leads the firm’s technology transactions and outsourcing practices. He is the author of Intellectual Property in Mergers & Acquisitions (Thomson/West 2003). Ian Ramage, an intellectual property associate in the firm’s Menlo Park, Calif., office, contributed to this article.

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