copycat blues

<body topmargin=0 leftmargin=0 marginheight=0 marginwidth=0> <table cellpadding=0 cellspacing=0 border=0><tr> <td valign="top" colspan=3 height=80 BGCOLOR="#000000" TEXT="#F7F7FF" bgproperties="fixed" background="07700500dvldtc.gif"> <div> copycat blues</div> <div> </div> </td> </tr><tr> <td valign="top" rowspan="2" width=210 BGCOLOR="#000000" TEXT="#F7F7FF" background="078d2c00dvldtc.gif"> <div> <A HREF="index.htm" TARGET="_top" TITLE="Law Offices of Jeffrey S. Benice"><U>Home</U></A></div> <div> <A HREF="id3.htm" TARGET="_top" TITLE="curriculum vitae"><U>curriculum vitae</U></A></div> <div> <A HREF="id2.htm" TARGET="_top" TITLE="Background Education"><U>background & education</U></A></div> <div> <A HREF="id47.htm" TARGET="_top" TITLE="Professional References"><U>professional references</U></A></div> <div> <A HREF="id11.htm" TARGET="_top" TITLE="Contact Information"><U>contact information</U></A></div> <div> <A HREF="id15.htm" TARGET="_top" TITLE="Civil Trial Practice"><U>civil trial practice</U></A></div> <div> <A HREF="id4.htm" TARGET="_top" TITLE="Criminal Trial Practice"><U>criminal trial practice</U></A></div> <div> <A HREF="id46.htm" TARGET="_top" TITLE="Entertainment Practice"><U>entertainment litigation</U></A></div> <div> <A HREF="id45.htm" TARGET="_top" TITLE="Current Pending Litigation"><U>pending litigation</U></A></div> <div>  <A HREF="id8.htm" TARGET="_top" TITLE="Published Opinions"><U>published opinions</U></A></div> <div> <A HREF="id10.htm" TARGET="_top" TITLE="Internet Case Sightings"><U>case sightings</U></A></div> <div> <A HREF="id22.htm" TARGET="_top" TITLE="california daily journal case citing"><U>california daily journal feature articles</U></A></div> <div> <A HREF="id6.htm" TARGET="_top" TITLE="Recent Articles"><U>recent articles</U></A></div> <div> <A HREF="id36.htm" TARGET="_top" TITLE="Trial Digest"><U>trial digest</U></A></div> <div> <A HREF="id20.htm" TARGET="_top" TITLE="Verdicts Settlements"><U>verdicts & settlements</U></A></div> <div> <A HREF="id54.htm" TARGET="_top" TITLE="National Media Coverage"><U>video footage</U></A></div> </td> <td valign="top" height=376 colspan=2 BGCOLOR="#000000" TEXT="#F7F7FF"> <div> <A HREF="http://dailyjournal.com/" TARGET="_top" TITLE="http://dailyjournal.com/"><U><IMG SRC="17d4b2c0.gif" border=0 width="331" height="44" ALIGN="BOTTOM" HSPACE="0" VSPACE="0"></U></A></div> <bR> <div> <TABLE BORDER="0" CELLPADDING="1" CELLSPACING="1" WIDTH="626" BORDERCOLORLIGHT="#C0C0C0" BORDERCOLORDARK="#808080" FRAME="VOID" RULES="NONE" ALIGN="BOTTOM" HSPACE="0" VSPACE="0" > <tR> <tD VALIGN=CENTER HEIGHT= 44 WIDTH="622"><div> Daily Journal Extra - Apr 14, 2003 </div> <bR> </tD> </tR> <tR> <tD VALIGN=CENTER HEIGHT= 66 WIDTH="622"><div> <B>Copycat Blues - </B><B>321 Studios has picked a fight with a dozen studios over its controversial software, which allows consumers to make copies of DVD's. </B></div> </tD> </tR> </TABLE></div> <bR> <div> By Liz Valsamis</div> <bR> <div> To take on Hollywood with its deep pockets, in-house counsel and legions of outside law firms, you need lawyers with a lot of talent and resources on your side. And that doesn't come cheap.</div> <bR> <div> Luckily for 321 Studios Inc., San Francisco's high-profile civil and criminal defense firm Keker & Van Nest will spring for the resources and talent at a reduced rate when it feels strongly about a cause.</div> <bR> <div> 321 Studios is a small Midwest software developer and manufacturer that has picked a fight with a dozen Hollywood movie studios over its DVD copying software, which allows consumers to make copies of DVDs containing copyright works, such as movies. The studios say the company's software clearly violates their copyrights. Keker & Van Nest, known for its intellectual property work, is representing 321 Studios at a bargain rate, according to co-counsel Daralyn Durie, who wouldn't elaborate on the rate structure. Her usual hourly rate, however, is $450.</div> <bR> <div> Durie, a litigation partner at Keker & Van Nest, says that the firm involves itself in Digital Millenium Copyright Act cases because they are "phenomenally interesting, cutting-edge work." Many companies, individuals and law firms across the country have taken on the constitutionality of the 1998 Digital Millennium Copyright Act, arguing that the law impedes the public's reasonable use of copyrighted works. It's an argument that has had little success in three separate courtrooms, yet it's also one that refuses to go away.</div> <bR> <div> "The Digital Millennium Copyright Act is an extraordinary law," Durie says. "It is, as of yet, relatively untested." 321 Studios is the latest company to argue that corporate America is bending the Digital Millennium Copyright Act in its favor, to the detriment of consumers' rights. Meanwhile, Hollywood claims it has been dealt a financial blow by technology that allows for bootlegged copies of movies to reach the public before the films are even released. On April 25, the final credits may roll on 321 Studios. That's when U.S. District Judge Susan Illston will hear the Hollywood studios' motion for summary judgment in the case. If Illston grants the motion, 321 Studios would be prohibited from selling its software. 321 Studios v. Metro-Goldwyn-Mayer Studios Inc., C 02-1955 (N.D. Cal., filed April 21, 2002.) Nevertheless, Durie and her group are unfazed.</div> <bR> <div> "We really believe in the individuals and companies that we're representing," Durie says. "The Digital Millennium Copyright Act is incredibly important legislation, and it's very important that it's interpreted and understood correctly. Studios have an array of excellent lawyers and a lot of resources on their side of the battle, and it's very important for these smaller companies to make themselves heard." The studios in this case have some of Hollywood's best and brightest lawyers in Patricia Benson and Russell Frackman, both partners with Los Angeles' Mitchell, Silberberg & Knupp. Frackman and his team of lawyers shut down online music-sharing giant Napster in 2000 on behalf of the record labels. A&M Records v. Napster Inc., 114 F.Supp.2d 896 (2001)</div> <bR> <div> In addition to formidable opposing counsel, 321 Studios faces an uphill battle with the courts, which so far have ruled that selling equipment that can reproduce "locked" copyright works is a violation of the 1998 Digital Millenium Copyright Act. The act states that no person or device can circumvent protection systems. The rise in technology that made illegal copies more available brought on the act's creation as Hollywood pushed for better protection of its copyright works. Hollywood also began using a content scrambling system, which scrambles a DVD's content and can only be read by DVD players.</div> <bR> <div> Benson and her colleagues usually represent plaintiffs in Digital Millenium Copyright Act cases - studios suing companies for providing software that allows bootleg copies. But that's not the situation this time. In an interesting twist, 321 Studios brought suit in April 2002 against the studios in an attempt to protect itself from any future prosecution for its products. In doing so, the company woke a sleeping giant.</div> <bR> <div> The suit names most major Hollywood studios: MGM Studios, Tristar Pictures Inc., Columbia Pictures Industries Inc., Sony Pictures Entertainment Inc., Time Warner Entertainment Co., Disney Enterprises Inc., Universal City Studios Inc. and The Saul Zaentz Co. The studios, in turn, filed a counterclaim Dec. 19, asking that the court prohibit 321 Studios from continuing to make its product available. The studios also asked for all profits made off the software, according to Benson.</div> <bR> <div> Durie, who refers to 321 Studios as a "pop-and-son" shop, says the company made the first move after learning of the plight of Russian software developer Dmitry Sklyarov, another Keker & Van Nest client whom the federal government criminally prosecuted for developing code-cracking software for his company Elcomsoft. The case spanned 2001 and 2002.</div> <bR> <div> Computer programmer Robert Moore and his son, Brian, founded 321 Studios in 2001 when they developed software that allows consumers to make copies of DVDs containing copyright works. Today, 321 Studios has 60 employees and is based in Chesterfield, Mo.</div> <bR> <div> Its product now sells for $99.99 in retail stores across the country, like Best Buy, Fry's Electronics and Comp USA. Since August 2001, it has sold 100,000 units of its DVD Copy Plus and DVD X Copy, according to company spokeswoman Elizabeth Sedlock. The company would not disclose its revenues. The company's products allow customers to make DVD copies more quickly than existing products on the market. Hollywood contends that the software is a transgression of the Digital Millennium Copyright Act's Section 1201 provision, which prohibits the use of devices that can unlock technological protections like those used to protect copyright material on DVDs.</div> <bR> <div> 321 Studios counters that its product is intended for a consumer's private use, an acceptable use of copyright material under the law. These cases are not new to Benson and her Mitchell Silberberg colleagues. She's familiar with the argument of fair use but feels that it has little merit. She says the companies violating the copyright provision of 1998 are wasting valuable judicial resources. In the Elcomsoft Inc. case, the Russian software company and its employee Sklyarov were prosecuted for selling software that allows customers to circumvent locks on digital books so that they could be translated from the Adobe format to the Portable Document Format. United States v. Elcom Ltd., 01-20138</div> <bR> <div> In first leg of the case, U.S. District Judge Ronald Whyte upheld the constitutionality of the Digital Millennium Copyright Act, ruling that it was not overly restrictive of a consumer's fair use rights, in a May 8, 2002, decision. The criminal charges were dropped in exchange for Skylarov's testimony against his employer. The case then went to a jury, and the company admitted that it had violated the act but argued that it never meant to break the law, believing that its product was legal. In December, the company was acquitted by a jury, which was given a critical instruction by Whyte that the prosecution had to show that the company knew it was breaking the law in order to convict.</div> <bR> <div> In yet another case, eight movie studios sued 2600 Magazine for publishing the codes to crack encrypted DVDs. The magazine argued that its reason for publishing the codes was to provide users of the Linux operating system with a way to view DVDs, a use that it argued was fair. But the court rejected the quarterly hacker magazine's arguments and found it in violation of the Digital Millennium Copyright Act. Universal City Studios Inc. v. Reimerdes, 00Civ.0277 (S.D.N.Y., filed Jan. 14, 2000).</div> <bR> <div> "The [2600] case and the Elcom case really answered all of the arguments that 321 is making," Benson says. "What we're seeing in this case is the same arguments unsuccessfully made in the case of Elcom."</div> <bR> <div> O'Melveny & Myers partner Robert Schwartz, who represents Time Warner against online music swappers, sounds exasperated when discussing cases challenging the Digital Millennium Copyright Act. "This case seems to me like 321 is swimming upstream against a commonsense decision from the 2nd Circuit that says that this activity is prohibited under the Digital Millennium Copyright Act," Schwartz says. "Trying to make a business out of a prohibited activity is a pretty foolish endeavor." Schwartz is referring to the 2nd U.S. Circuit Court of Appeals' nearly 200-page decision on the 2600 case, that intellectual property lawyers representing studios see as a strong denial of the claim that the Digital Millennium Copyright Act infringes on a consumer's legal use of copyright materials.</div> <bR> <div> Yet the father-and-son team at 321 Studios took steps to prevent its software from being used for piracy even before they knew what the Digital Millenium Copyright Act was. For instance, the software puts a marker on a newly made DVD copy so that the copy cannot be used to make one or 1,000 more copies, in an attempt to prevent illegal mass production. The Hollywood studios fire back that only 321 Studios software can read this watermark, and the newly decrypted DVD copy can be duplicated countless times using other equipment.</div> <bR> <div> Robert Moore picked up a newspaper one day in 2002 and read an article that specifically mentioned his own company as a potential violator of the Digital Millennium Copyright Act. Concerned, he called the San Francisco's Electronic Frontier Foundation, an Internet civil liberties organization that executives at the company were familiar with. The organization then directed him to Keker & Van Nest because of the firm's work in the Elcomsoft defense, according to Sedlock.</div> <bR> <div> Several in the legal community accuse the Electronic Frontier Foundation of forum shopping by backing cases that have similar arguments in other courts. It's a charge that staff attorney Wendy Seltzer denies. Seltzer says the facts in this case are different from the Elcom case. Namely, she says, the 321 Studios product has a broad variety of uses, such as inserting clips rather than just offering the ability to copy DVDs. The foundation submitted an amicus brief on 321 Studios' behalf, which Seltzer drafted. It did the same in the 2600 Magazine case.</div> <bR> <div> Seltzer's organization believes that a consumer should have the right to use DVDs in ways that don't violate copyright law, like making a backup copy of a legally purchased movie or interjecting clips of films in educational material, which 321 Studios says is what its software is used for. Durie concurs. "We think it's possible to interpret the Digital Millennium Copyright Act in a way that preserves its constitutionality and means it is legal to make copies of digital works if you're doing it for purposes that are legal," Durie says. "We think that courts and Congress should say that it's perfectly legal to make a backup DVD." Yet, the Hollywood studios are losing a fortune to piracy, and that has a trickle-down effect on many in the industry, Benson says. "[Piracy] is a huge problem," Benson says. "And Congress recognized that."</div> <bR> <div> Benson says that piracy costs the studios between $11 billion and $30 billion a year. "Think about what that does to studios. Piracy is putting lots of people out of business," she says. "Movies are the creations of electricians, camera people, people who run catering trucks. A whole lot of people are depending upon the motion picture industry for their livelihood."</div> <bR> <div> Yet other intellectual property lawyers feel that cases like 321 Studios are not a complete waste of time. They influence members of the Library of Congress, who can make revisions to the Digital Millennium Copyright Act, which is reviewed every three years. "This case and others like it potentially contribute to a build up of pressure on Congress to make more exceptions to the Digital Millennium Copyright Act," says Evan Cox, a copyright specialist and partner with the San Francisco office of Covington & Burling.</div> <bR> <div> Meanwhile, should the Hollywood studios' motion for summary judgment be granted next week, 321 Studios intends to appeal the decision, according to Sedlock. "We just want our day in court, ultimately," she says. </div> <bR> <bR> <div> <B>HEAD CASE</B></div> <bR> <div> Cases involving Mickey Mouse, the Beach Boys and Barbie represent some of the most interesting intellectual property issues in the entertainment industry over the past 12 months. Below is a sampling of some of the hottest cases in the last year and the lead attorneys who worked on them. In choosing the following cases, Daily Journal EXTRA limited the selections to cases involving California lawyers.</div> <bR> <div> • <I><U>Gardner v. Nike Inc.</U></I> </div> <div> 2002 DJDAR 1193</div> <div> (9th Cir. Jan. 31, 2002)</div> <bR> <div> The 9th Circuit ruled that the owner of exclusive copyright cannot sign over those rights to another party without the consent of the original copyright owner. Nike had sold the rights of a cartoon character to Sony, which then transferred those rights to Michael Gardner and his company. Litigation ensued when Nike objected to the sale.</div> <bR> <div> Lawyers for Nike: C. Dennis Loomis of the Los Angeles office of Chicago's Lord, Bissell & Brook</div> <bR> <div> Lawyers for Gardner: Larry A. Sackey and Herbert Hafif of the Law Office of Herbert Hafif in Claremont</div> <bR> <div> <B>•</B> <I><U>Brothers Records Inc. v. Jardine</U></I> </div> <div> 2003 DJDAR 1087</div> <div> (9th Cir. Jan. 28, 2003)</div> <bR> <div> The Beach Boys formed Brothers Record Inc. to manage the band's intellectual property rights. Brothers Records sued former band member Alan Jardine over his use of the name Beach Boys Family and Friends on his tour. The 9th Circuit affirmed a lower court's decision that the use of the name was a violation of Brothers Record's Beach Boys trademark.</div> <bR> <div> Lawyers for Brothers Record: Phillip H. Stillman of Flynn Sheridan & Stillman in Del Mar Mar</div> <bR> <div> Lawyers for Jardine: Jeffrey S. Benice of the Irvine-based Law Office of Jeffrey S. Benice and Vincent Chieffo of Greenberg Traurig</div> <bR> <div> <B>•</B> <I><U>Eldred v. Ashcroft</U></I> 2</div> <div> 2003 DJDAR 512</div> <div> (U.S. Jan. 16, 2003)</div> <bR> <div> The court ruled that the Sonny Bono Copyright Term Extension Act of 1998, which extended the terms of most copyrights by 20 years, did not violate the constitutionality of the Copyright Clause or the First Amendment, thereby extending the copyrights of Walt Disney's Mickey Mouse and other copyright holders.</div> <div> Amicus briefs were filed by lawyers on both sides of the bar and in every corner of the industry.</div> <bR> <div> Lawyers for Eldred: Lawrence Lessig, Professor at Stanford Law School</div> <bR> <div> Lawyers for Ashcroft: Theodore Olson, Solicitor General Counsel of Record</div> <bR> <div> <B>•</B> <I><U>Mattel Inc. v. MCA Records Inc</U></I><I><U>.</U></I> </div> <div> 2002 DJDAR 8297</div> <div> (9th Cir. July 25, 2002)</div> <bR> <div> The 9th U.S. Circuit Court of the Appeals confirmed a lower court's ruling that the song "Barbie Girl" produced by MCA Records was not a violation of Mattel's trademark rights. The court agreed that the song is a parody of the Barbie doll, and consumers were not misled to think that Mattel produced the song. On Jan. 27, the Supreme Court denied review of the case.</div> <bR> <div> Lawyers for Mattel: Adrian Mary Pruetz of Los Angeles' Quinn Emanuel Urquhart Oliver & Hedges</div> <bR> <div> Lawyers for MCA: Russell Frackman of Mitchell Silberberg & Knupp</div> <bR> <div> Pending Cases of Interest:</div> <bR> <div> <B>•</B> <I><U>MGM Inc. v. Grokster</U></I></div> <div> CV 01-085541</div> <bR> <div> Eight movie studios and 20 record labels contend that, like Napster, KaZaa, Grokster and StreamCast allow consumers to illegally swap music and movie files online. A hearing for summary judgement was held Dec. 2 and no decision has been handed down.</div> <bR> <div> Lawyers for plaintiffs: Music companies, Frackman of Mitchell Silberberg, David Kendall of Washington, D.C.'s Williams & Connolly; movie studios, Robert Schwartz of O'Melveny & Myers for Time Warner; publishers, Carey Ramos of New York's Paul, Weiss, Rifkind, Wharton & Garrison</div> <bR> <div> Lawyers for defendants: Groxter, Michael Page of Keker & Van Nest; KaZaa, Rod Dorman of Hennigan, Bennett & Dorman; Music City, Charles Baker</div> <bR> <div> <B>•</B> <I><U>Huntsman v. Soderbergh</U></I> </div> <div> 02-M-1662 (D. Colo.)</div> <div> Filed Aug. 29, 2002</div> <bR> <div> Colorado video rental company, CleanFlicks, and an Idaho attorney sued Hollywood directors in an attempt to get a judge's protection for its practice of editing sex, violence and gore from movie videos before renting them out. Discovery has begun and a status conference is scheduled for June 4.</div> <bR> <div> Attorneys for Huntsman: Scott Mikulecky of Denver's Sherman & Howard</div> <bR> <div> Attorneys for Soderbergh: Studios, Jonathan Zavin, New York office of Los Angeles' Loeb & Loeb; directors, Ernest Getto of the San Francisco office of Los Angeles' Latham & Watkins</div> <bR> <bR> <DIV ALIGN="LEFT"></DIV> <div> <A HREF="id50.htm" TARGET="_top" TITLE="_"><U><IMG SRC="092bd3e0.jpg" border=0 width="189" height="62" ALIGN="BOTTOM" HSPACE="0" VSPACE="0"></U></A></div> <div> <A HREF="id50.htm" TARGET="_top" TITLE="_"><U>Click on Gavel to Continue</U></A></div> </td> </tr><tr> <td valign="top" colspan=2 height=24 BGCOLOR="#111111" TEXT="#F7F7FF"> <div> To Preview Your Selection - Click on any Blue Link (Above)</div> </td> </tr></table></body>