WASHINGTON — Just days after shuttering its business, 321 Studios has waved the white flag in its legal battle with the Motion Picture Assn. of America.
The St. Louis-based company settled its two-year legal battle with the MPAA, agreeing to pay an undisclosed fee to the studios and pledging to cease and desist selling DVD and computer game copying software worldwide.
321 Studios actually pulled the plug on its business last week, announcing on its web site that court injunctions obtained by the major studios to halt the distribution of its software had made it too difficult to stay in business.
“321 Studios built its business on the flawed premise that it could profit from violating the motion picture studios’ copyrights; the courts have been amply clear — there is no leniency for violating federal copyright laws,” MPAA topper Jack Valenti said in a statement. “Now that the company’s illegal copying software is off of store shelves, worldwide, we have moved to settle this case.”
Lawyers for company founder Robert Moore did not immediately return calls seeking comment. The MPAA also did not elaborate on the details of the settlement, saying only that 321 Studio founders agreed to make a “substantial financial payment” to the studios, which they will donate to the industry’s consumer piracy education program.
Legal dispute began two years ago when 321 filed suit against several studios seeking a declarative judgment that its DVD-copying software was legal. Film companies counter-sued on the grounds that the company’s software packages promoted piracy and violated the Digital Millennium Copyright Act.
Company claimed its products allowed consumers to make personal backups of legally purchased DVDs under a loose legal concept known as “fair use.”
But the courts have not been kind to 321’s defense so far this year. Company has suffered several major legal blows as several courts ruled that consumers have a theoretical right to make copies for their own fair use, but 321 could not sell tools that break through built-in encryption.
In the end, resistance in the courts and mounting legal bills pushed 321 Studios to the settlement table.