321 Studios has closed down after a series of court decisions that ruled that its key product, DVD X Copy, was illegal to distribute.
The software had been marketed as a tool that allowed consumers to exercise their legal right to make backups of legally purchased products. Whilst consumers do have this right, they must defeat the copy protection present on disks in order to do so. Defeating a copy protection system is illegal in a number of countries, including the US and Europe.
Since copy protection systems are seen to interfere with consumers’ fair-use rights, groups like the EFF believe that revisions to the law to make it fairer for customers are not far off.
321 Studios, based in St. Louis, had faced several court cases this year from industry leaders such as Vivendi Universal Games and Atari, and had even revised their product to remove the DVD descrambling component, CSS.
At the high of its business, 321 Studios employed nearly 400 staff and expect make US$200 million (€166 million) in sales in 2004.
The injunction only applies to 321 Studios – it is not illegal to own or even operate the software itself.