Despite having settled its key contract with the studios and TV networks last year, and having successfully lobbied for federal tax breaks to curb runaway production, the Directors Guild of America faces a pivotal year in 2005.

And one of the guild’s biggest headaches will continue to be its ongoing legal tangle with the nascent industry that specializes in filtering language and scenes deemed offensive in movies.

Late last year, the guild came perilously close to losing that battle when conservatives in the House of Representatives added legislation that would allow movie-filtering to a popular antipiracy bill, which wound up stalling.

The fact that the bill didn’t make it through wasn’t exactly great news for the DGA and its 12,000 members.

“We were bitterly disappointed that not only did antipiracy legislation not get through, but that the Family Movie Act was inserted after we had invested a lot of time, money, resources and anxiety (into the bill),” says DGA president Michael Apted. “It’s something that’s very disturbing to us and goes against the very heart of what we stand for.”

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The Family Movie Act, sponsored by Rep. Lamar Smith (R-Texas), is an attempt to address a lawsuit by the seven major studios and the DGA against Utah-based ClearPlay, one of several companies manufacturing and selling software and services that remove language and scenes from DVDs.

During two fiery hearings on the topic, conservative House Republicans maintained the technology gives parents more entertainment choices for their children.

But the DGA, along with top helmers including Steven Spielberg, Martin Scorsese and Steven Soderbergh, are adamantly opposed to the technology, arguing it treads on their creative rights and destroys their films’ integrity.

“This DGA building is built on the notion that we should be consulted at every stage (when a film is being altered), and the Family Movie Act and ClearPlay deny that,” Apted says. “They say it’s perfectly OK for other people to make 15,000 versions of ‘Titanic.’ That’s an arrow in our heart, and politically, we haven’t done very well with it. We’ve been out-Washingtoned by them.”

Apted couldn’t comment as to how Congress’ decision to get involved in the movie-filtering matter will affect the DGA’s ongoing settlement talks on several different legal fronts.

This battle dates back to 2002, when a retailer specializing in the sale of filtered movies, CleanFlicks, launched a pre-emptive suit against the DGA and 16 leading directors — including Apted, Soderbergh, Spielberg and Scorsese — hoping to obtain a favorable court ruling that would legally christen the practice of altering films.

The DGA then countersued, alleging copyright and trademark infringement. That action was soon joined by the studios, and software-maker ClearPlay was also added to the list of litigants.