DVD-copying trailblazer shuts its doors

By John Borland
Posted on ZDNet News: Aug 4, 2004 5:10:00 AM

In a posting on its Web site, the company said it could no longer sell or support any of its products.

"Despite 321 Studios' best efforts to remain in business, injunctions entered against 321 Studios by three U.S. federal courts earlier this year has resulted in 321 Studios no longer being able to continue operating," the site now reads.

The St. Louis-based company had cast itself as a test case of controversial provisions in copyright law that make it illegal to distribute software that breaks through digital copy protections.

Executives said that the company's popular DVD X Copy, which allowed people to make copies of DVDs, was simply a tool that allowed people to exercise their rights to make backups of legally purchased movies.

However, most commercial DVDs come wrapped in a copy-protection mechanism that prevents that kind of backup. Several courts subsequently ruled that even if consumers might have a theoretical right to make their own personal copies, 321 Studios could not sell tools that would help them break through that copy protection.

After deliberations that lasted nearly eight months, a San Francisco federal judge in February issued a preliminary injunction against sale of the software. Several parallel judgments quickly followed, and by mid-June the company said it was close to shutting down.

On its Web site, the company says some versions of its legal products are still available in stores. It offers an online form for people to check the status of outstanding rebates.

While no longer available in stores, the company's software, along with other DVD copying tools, are still being widely distributed through peer-to-peer networks and elsewhere online.