PARAMOUNT PICTURES CORP v. 321 STUDIOS, (S.D.N.Y. 2004)

Citation Codes

Equivalent Citations

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Docket Number

03-CV-8970 (RO)

Judges

Richard Owen

Acts

Copyrights — Copyright Protection And Management Systems — Circumvention Of Copyright Protection Systems

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Smart Summary

Factual and Procedural Background

This opinion addresses plaintiffs Paramount Pictures Corporation and Twentieth Century Fox Film Corporation's motion for a preliminary injunction against defendant 321 Studios, which manufactures and sells DVD-copying software. Defendant also moved to transfer the case to the Northern District of California. The Northern District of California had recently issued an injunction against 321 Studios for similar conduct in 321 Studios v. Metro Goldwyn Mayer Studios, Inc., making consideration of the transfer motion unnecessary. Plaintiffs allege that 321 Studios violated the anti-trafficking provisions of the Digital Millennium Copyright Act (DMCA) by manufacturing and selling software that circumvents the Content Scramble System (CSS) used to protect DVDs, enabling users to make unauthorized copies.

Legal Issues Presented

Whether the manufacture and sale of 321 Studios' DVD-copying software violates the anti-trafficking provisions of the DMCA, specifically 17 U.S.C. §§ 1201(a)(2) and 1201(b)(1).
Whether the defendant's software is "primarily designed or produced for the purpose of circumventing CSS," thus falling within the scope of prohibited conduct under the DMCA.
Whether constitutional challenges raised by the defendant are addressed by existing precedent.
Whether the case should be transferred to the Northern District of California.

Arguments of the Parties

Defendant's Arguments

321 Studios argued that its DVD-copying software did not violate the DMCA because it was not primarily designed to circumvent CSS.
The defendant asserted that the software had legitimate, non-infringing uses, such as restoring and retrieving damaged DVDs that are unplayable or defective due to physical damage or delamination.

Plaintiffs' Arguments

Paramount and Twentieth Century Fox contended that 321 Studios' software violated the DMCA's anti-trafficking provisions by enabling circumvention of CSS, facilitating unauthorized copying of DVDs.
They relied on prior rulings holding similar software in violation of the DMCA, emphasizing that commercial sale of such software constitutes trafficking.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Universal City Studios, Inc. v. Reimerdes, 82 F. Supp. 2d 211 (S.D.N.Y. 2000)	Ordering preliminary injunction against DeCSS software violating DMCA anti-trafficking provisions.	Cited as foundational precedent establishing that software designed to circumvent CSS violates DMCA provisions.
Universal City Studios, Inc. v. Reimerdes, 111 F. Supp. 2d 294 (S.D.N.Y. 2000)	Ordering permanent injunction enforcing DMCA anti-trafficking provisions.	Used to confirm that manufacture and distribution of circumvention software violates DMCA, supporting current injunction.
Universal City Studios, Inc. v. Corley, 273 F.3d 429 (2d Cir. 2001)	Affirming permanent injunction against distribution of DeCSS software.	Affirmed lower court rulings, reinforcing that circumvention software infringes DMCA protections.
321 Studios v. Metro Goldwyn Mayer Studios, Inc., No. C 02-1955 SI (N.D. Cal. Feb. 19, 2004)	Issuance of injunction against manufacture and distribution of 321 Studios' DVD-copying software.	Referenced to justify denial of defendant’s transfer motion and to support injunction in the instant case.

Court's Reasoning and Analysis

The court began by noting the recent injunction issued by the Northern District of California against 321 Studios' DVD-copying software, which rendered defendant's motion to transfer moot. The court then analyzed the allegations under the DMCA's anti-trafficking provisions, focusing on whether the software was primarily designed to circumvent CSS.

The court found that the conduct at issue was essentially identical to that in prior cases (Reimerdes and Corley) where the manufacture and distribution of DeCSS software was held to violate the DMCA. The court rejected defendant's argument that the software had substantial non-infringing uses, emphasizing that the prohibition applies to any technology primarily designed to circumvent technological protection measures, regardless of limited alternative uses.

The court agreed with the prior finding that the sole purpose of DeCSS software is to circumvent CSS and that offering such software for commercial sale does not alter its unlawful status under the DMCA. The court also referenced prior rulings addressing constitutional challenges, finding them dispositive here.

Ultimately, the court granted the plaintiffs' motion for a preliminary injunction, enjoining 321 Studios and related parties from manufacturing, distributing, or trafficking in the infringing software and from transferring related assets abroad without court approval.

Holding and Implications

Holding: The court granted the plaintiffs' motion for a preliminary injunction, enjoining defendant 321 Studios from manufacturing, distributing, or trafficking in DVD-copying software that circumvents CSS in violation of the DMCA.

Implications: This decision directly restrains 321 Studios and affiliated persons from engaging in activities involving the infringing software and related assets. It affirms that commercial distribution of software primarily designed to circumvent technological protection measures violates the DMCA. The ruling follows established precedent and does not set new legal ground beyond applying prior decisions to the facts of this case.

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PARAMOUNT PICTURES CORPORATION and TWENTIETH CENTURY FOX FILM CORPORATION, Plaintiffs -against- 321 STUDIOS, A/K/A 321 STUDIOS LLC, A/K/A TERR LCC, Defendant

OPINION AND ORDER

RICHARD OWEN, Senior District Judge

Before me is plaintiffs' motion for a preliminary injunction and defendant's motion to transfer the case to the Northern District of California.

On February 19, 2004, in 321 Studios v. Metro Goldwyn Mayer Studios, Inc., No. C 02-1955 SI (N.D. Cal. Feb. 19, 2004), the Northern District of California issued an injunction against the manufacture and distribution of 321 Studios' DVD-copying software. Accordingly, in the case at bar, defendant's motion to transfer this case to the Northern District of California requires no consideration.

Paramount alleges that 321 Studios violated the Digital Millenium Copyright Act, 17 U.S.C. § 1201("DMCA"), 17 U.S.C. § 1201(a)(2) and § 1201(b)(1) (the so-called "anti-trafficking provisions") by manufacturing and selling — trafficking — in a computer software product that permits the possessor of a digital versatile disk ("DVD") encoded by a protective technological measure known as the Content Scramble System ("CSS") to decode the CSS, and thereby make identical copies of such DVDs.

321 Studios' conduct at issue in this case is essentially identical to what this Court and the Second Circuit have heretofor held violates the anti-trafficking provisions of the DMCA. See Universal City Studios, Inc. v. Reimerdes, 82 F. Supp.2d 211 (ordering preliminary injunction); Universal City Studios, Inc. v. Reimerdes, 111 F. Supp.2d 294 (ordering permanent injunction);Universal City Studios, Inc. v. Corley, 273 F.3d 429 (affirming permanent injunction). In those cases the Courts found that the defendants' DeCCS software violated the DMCA.Corley, 273 F.3d at 435-444: Reimerdes, 82 F. Supp.2d at 216-17; Reimerdes, 111 F. Supp.2d at 318-19.

In Reimerdes and Corley the defendants offered their DeCSS software for free over the Internet whereas here, 321 Studios is offering such software for commercial sale.

But the rule applies here as well, and I find that manufacturing and distributing DeCSS software for sale violates the anti-trafficking provisions of the DMCA. Of identical outcome is the recent decision in the Northern District of California involving the same software at issue in this case, the Court issuing an injunction against the manufacture and distribution of 321 Studios' DVD copying software (see footnote 1, supra). The Court there 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 CSS." See 321 Studios, No. C 02-1955 SI, at 15.

In the briefing as well as during oral argument, 321 Studios adamantly insisted that its DVD copying software did not violate the DMCA because it was not "primarily designed or produced for the purpose of circumventing CSS" — urging it had other diverse uses such as:

The 321 software not only allows for decryption, it allows for the restoration and retrieval of damaged DVD[s] that are unworkable, unplayable, skippable, and they can restore it to viewable conditions. . . . [Y]oung children play with them, they get scratched, you take a DVD out of the plastic case and sometimes they are hard to get out, they can crack and chip and warp, and there is a process of delamination.

February 5, 2004 Transcript at 8.

However, prohibition of manufacture or trafficking of any technology primarily designed to circumvent a technological measure that either controls access to or protects a right of a copyright owner to or in a work protected under the DMCA, obviously is not evaded by the existence of arguably limited alternative uses.

As the Court found in Reimerdes, "the only purpose or use of DeCSS is to circumvent CSS. . . ." Reimerdes, 111 F. Supp.2d at 319. I agree here.

The constitutional issues raised by 321 Studios are answered byUniversal City Studios, Inc. v. Reimerdes, 111 F. Supp.2d 294 (S.D.N.Y. 2000), aff'd Universal City Studios, Inc. v. Corley, 273 F.3d 429 (2d Cir. 2001), see also 321 Studios, No. C 02-1955 SI (N.D. Cal, 2004).

Accordingly, plaintiffs' injunction is granted, and 321 Studios, and its agents, servants, employees, officers, attorneys, successors, licensees, partners, and assigns and all persons acting in concert with it, are enjoined and restrained from:

1. Manufacturing, importing, offering to the public, facilitating, encouraging the use of, linking to, providing or otherwise trafficking in DVD X Copy Platinum, DVD X Copy Gold, DVD X Copy Xpress, DVD X Copy, DVD Copy Plus, SmartRipper, CladDVD, or DeCSS, or functionally equivalent applications; and

2. Pending further proceedings herein, the above are also restrained from directly or indirectly transferring abroad, assigning or selling to a foreign corporation, individual or entity, otherwise disposing of, by transfer outside of the United States and its territories, any funds, assets, monies, securities, claims, or other real or personal property, located in the United States, owned by, controlled by, managed by or in the possession or custody of 321 Studios and its subsidiaries or affiliates without prior application to and consent of this Court for which jurisdiction is retained.

So Ordered.