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321 Studios spins toward zero
By Jerri Stroud
Of the Post-Dispatch
06/01/2004
Robert H. Moore's 321 Studios has moved five times in 2 1/2 years to cope with rapid growth in sales of its DVD-copying software, DVD X Copy.
But court orders that bar 321 Studios from selling any version of that product have thrown the company's growth into reverse.
They've forced Moore to lay off nearly 300 people in the last two months and led him to sublease part of the 80,000-square-foot headquarters 321 Studios has occupied in the Missouri Research Park since last fall.
A half-floor of offices is vacant, and a handful of employees work in a warehouse that once hummed with activity. Today, the company has about 50 employees, down from nearly 400, said Julia Bishop-Cross, a spokeswoman.
Moore, 43, founded 321 Studios nearly three years ago as a way to get his son, Brian, interested in the computer business.
Robert Moore figured out how to use a compact-disc burner to make backup copies of his collection of movies on DVD and videocassette. Brian Moore put together a Web site to sell his father's instructions, and sales took off.
The company kept expanding - opening retail stores and a call center to market DVD X Copy and related products - until February, when the movie industry won an injunction halting sales of the product.
The injunction was like "a hit to the back of the head," Moore said. He believes that some major movie studios want to put him out of business.
Matthew Grossman, a spokesman for the Motion Picture Association of America, said the studios simply are defending their copyrights from piracy.
"Obviously, we're not in the business of making people unemployed," Grossman said. "We are doing what we have to do to defend our studios' copyrights."
Moore said 321 Studios was on track for sales of $100 million or more this year before a federal judge in San Francisco ruled that 321's product violated the Digital Millennium Copyright Act.
The judge said the software's circumvention of encryption codes on copyrighted material was a specific violation of the act. In March, a judge in New York issued a similar ruling in a suit filed by Macrovision, which makes encryption technology.
Grossman said the MPAA has won similar judgments against 10 other companies marketing technology similar to what 321 Studios was selling.
"The courts all agree that these are copyright violations," Grossman said. "If it's illegal, it's illegal."
321 Studios says making copies for personal use is legal under the long-standing principle of fair use of copyrighted material that an individual has purchased. Moore adds that his software has anti-piracy provisions, so it's impractical to use it to make copies for resale.
The Electronic Frontier Foundation, a San Francisco-based group dedicated to defending digital rights, filed briefs in support of 321 Studios before the injunctions were issued.
The group says the Digital Millennium Copyright Act has been used to stifle a wide variety of legitimate activities by journalists, publishers, scientists, students and programmers.
Moore hasn't given up his fight against the injunctions, but he has been unable to persuade the judges to reconsider their rulings.
"We're gasping for breath," Moore said. "No one will listen to us scream."
321 Studios has other products for sale, including game-copying software and a CD-rescue program. But sales of those products total only about $10 million a year, Moore said.
"We still have the expenses of a $100 million company," he said, including big legal bills and expenses for lobbying Congress to revise the digital-copyright act to allow making copies for personal use.
Moore has turned his attention to supporting a bill in Congress that would allow consumers to make copies of DVDs, music CDs and other material for personal use. This month, he testified in favor of the bill, which the MPAA opposes.
Fred von Lohmann, a senior staff attorney for the Electronic Frontier Foundation, said he's encouraged by the bill's prospects this year because Rep. Joe Barton, R-Texas, is supporting it. Barton is chairman of the House Committee on Energy and Commerce, which held hearings on the bill last month.
Moore worries that his company's legal troubles are threatening more than sales.
"People are losing confidence that we are a viable company," Moore said. But rather than give up, he plans to fight. "If we go out, we're going out swinging."
By Jerri Stroud
Of the Post-Dispatch
06/01/2004
Robert H. Moore's 321 Studios has moved five times in 2 1/2 years to cope with rapid growth in sales of its DVD-copying software, DVD X Copy.
But court orders that bar 321 Studios from selling any version of that product have thrown the company's growth into reverse.
They've forced Moore to lay off nearly 300 people in the last two months and led him to sublease part of the 80,000-square-foot headquarters 321 Studios has occupied in the Missouri Research Park since last fall.
A half-floor of offices is vacant, and a handful of employees work in a warehouse that once hummed with activity. Today, the company has about 50 employees, down from nearly 400, said Julia Bishop-Cross, a spokeswoman.
Moore, 43, founded 321 Studios nearly three years ago as a way to get his son, Brian, interested in the computer business.
Robert Moore figured out how to use a compact-disc burner to make backup copies of his collection of movies on DVD and videocassette. Brian Moore put together a Web site to sell his father's instructions, and sales took off.
The company kept expanding - opening retail stores and a call center to market DVD X Copy and related products - until February, when the movie industry won an injunction halting sales of the product.
The injunction was like "a hit to the back of the head," Moore said. He believes that some major movie studios want to put him out of business.
Matthew Grossman, a spokesman for the Motion Picture Association of America, said the studios simply are defending their copyrights from piracy.
"Obviously, we're not in the business of making people unemployed," Grossman said. "We are doing what we have to do to defend our studios' copyrights."
Moore said 321 Studios was on track for sales of $100 million or more this year before a federal judge in San Francisco ruled that 321's product violated the Digital Millennium Copyright Act.
The judge said the software's circumvention of encryption codes on copyrighted material was a specific violation of the act. In March, a judge in New York issued a similar ruling in a suit filed by Macrovision, which makes encryption technology.
Grossman said the MPAA has won similar judgments against 10 other companies marketing technology similar to what 321 Studios was selling.
"The courts all agree that these are copyright violations," Grossman said. "If it's illegal, it's illegal."
321 Studios says making copies for personal use is legal under the long-standing principle of fair use of copyrighted material that an individual has purchased. Moore adds that his software has anti-piracy provisions, so it's impractical to use it to make copies for resale.
The Electronic Frontier Foundation, a San Francisco-based group dedicated to defending digital rights, filed briefs in support of 321 Studios before the injunctions were issued.
The group says the Digital Millennium Copyright Act has been used to stifle a wide variety of legitimate activities by journalists, publishers, scientists, students and programmers.
Moore hasn't given up his fight against the injunctions, but he has been unable to persuade the judges to reconsider their rulings.
"We're gasping for breath," Moore said. "No one will listen to us scream."
321 Studios has other products for sale, including game-copying software and a CD-rescue program. But sales of those products total only about $10 million a year, Moore said.
"We still have the expenses of a $100 million company," he said, including big legal bills and expenses for lobbying Congress to revise the digital-copyright act to allow making copies for personal use.
Moore has turned his attention to supporting a bill in Congress that would allow consumers to make copies of DVDs, music CDs and other material for personal use. This month, he testified in favor of the bill, which the MPAA opposes.
Fred von Lohmann, a senior staff attorney for the Electronic Frontier Foundation, said he's encouraged by the bill's prospects this year because Rep. Joe Barton, R-Texas, is supporting it. Barton is chairman of the House Committee on Energy and Commerce, which held hearings on the bill last month.
Moore worries that his company's legal troubles are threatening more than sales.
"People are losing confidence that we are a viable company," Moore said. But rather than give up, he plans to fight. "If we go out, we're going out swinging."
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