A Missouri maker of software that has enabled users to copy DVDs and computer games soon could fold under the mounting weight of lawsuits by deep-pocketed movie studios and others, the company's chief said.
Robert Moore said on Wed-nesday that he'll decide within weeks whether his 321 Studios Inc would seek federal bankruptcy protection to free itself of copyright-related lawsuits by Hollywood and makers of computer games.
Moore long had cast his crusade as a David-and-Goliath struggle, insisting his suburban St. Louis company's software was meant to let consumers innocently make backup copies of their DVDs and computer games.
Hollywood and three leading makers of video games argued otherwise, accusing 321 of violating the 1998 Digital Millennium Copyright Act. That law bars circumvention of anti-piracy measures used to protect DVDs and other technology.
Federal judges in New York and California have barred 321 from marketing the questioned DVD-cloning software. Since those rulings, 321 has shipped retooled versions of its DVD-copying products, removing the software component required to descramble movies.
But the legal feuding has taken its toll. In three months, Moore said, the company has gone from having nearly 400 employees and expectations of doing US$150 million to US$200 million in sales this year to about two dozen workers and less than US$400,000 in monthly income. Last month, he told a congressional panel the court rulings in Hollywood's favor have put his company "on the brink of annihilation."
"That's the decision and cross-roads we're at," Moore, 321's founder and president, said of prospects of bankruptcy because of the latest lawsuit and "mounting pressure on us as a company to sustain ourselves."
Even in possible bankruptcy, Moore said, 321 would make good with creditors, satisfy customers seeking rebates and press its case against Hollywood that consumers "should have the right to make copies of their own legally obtained digital materials."
In announcing Tuesday's lawsuit by computer game-making Atari, Electronic Arts and Vivendi Universal Games, Entertainment Software Association chief Doug Lowenstein said "what's at stake here is a rather important legal principle -- that products with no purpose other than to circumvent copyright protection are illegal" under federal copyright law.
Lowenstein called 321's questioned Games X Copy piracy-easing software "masquerading as a consumer-friendly tool."
The lawsuit seeks a court order blocking 321's production and sales of Games X Copy, which lets users make what 321's Web site calls "a PERFECT backup copy of virtually any PC game."
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