Here's an O'Reilly weblog I wrote a while back with some background on this situation.

New DVD 'ripper' pre-empts DMCA ruling
By Munir Kotadia for ZD Net.

DVD software developer Studio 321 is preparing to launch six new applications, including an enhanced version of DVD copying software that is the subject of a US court case brought under the controversial Digital Millennium Copyright Act (DMCA).

Studio 321 is awaiting a ruling over its DVD X Copy software, which includes a facility that allows users to rip backups of movie DVDs. If the ruling goes against Studio 321, the company says this new version of the copying software will ship without the "ripper" module, which decrypts movie DVDs and allows them to be copied...

Studio 321 landed in court after taking the unusual pre-emptive step of asking a court to declare DVD Copy Plus legal. Company executives decided to file the brief last April, after reading newspaper reports in which movie-studio representatives said they planned to sue DVD-copying software makers and which mentioned 321.

The case holds important consequences not only for software developers and for the motion picture industry, but also for consumers, who face increasingly complex rules governing the uses of entertainment products.

Semaan is adamant that his company's software does not advocate piracy, saying that it helps users to protect their property. He argues that if it is legal to make back-up copies of tapes and CDs, then it should not be any different to copy DVDs. "The DMCA says that it is supposedly illegal to circumvent encryption, and while DVDs come encrypted, those other forms of media do not," said Semaan...

In May, the judge in charge of this case said she would come back with a ruling "shortly", but two months later, there is still no word. However, no news is good news for Semaan: "For us, the longer she takes the better."

Here is the full text of the article in case the link goes bad:

New DVD 'ripper' pre-empts DMCA ruling 10:17 Wednesday 9th July 2003 Munir Kotadia

http://news.zdnet.co.uk/story/0,,t269-s2137242,00.html

DVD software developer Studio 321 is preparing to launch six new applications, including an enhanced version of DVD copying software that is the subject of a US court case brought under the controversial Digital Millennium Copyright Act (DMCA).

Studio 321 is awaiting a ruling over its DVD X Copy software, which includes a facility that allows users to rip backups of movie DVDs. If the ruling goes against Studio 321, the company says this new version of the copying software will ship without the "ripper" module, which decrypts movie DVDs and allows them to be copied.

Other products in the new line-up include a DVD editing and authoring application that allows conversions to and from standard DV video, MPEG-2 and MPEG-1 formats. The company is also creating an add-in that converts Microsoft PowerPoint, as well as a CD/CDRW/DVD utility that enables data to be recovered from damaged or defective discs.

The expansion of the product range is effectively an insurance policy in case the ruling goes against the company; if the ruling does go against Studio 321, the company's main business will sustain "a hit" because it will have to make fundamental changes to its DVD X Copy and DVD Copy Plus software, said chief executive Rob Semaan.

Studio 321 landed in court after taking the unusual pre-emptive step of asking a court to declare DVD Copy Plus legal. Company executives decided to file the brief last April, after reading newspaper reports in which movie-studio representatives said they planned to sue DVD-copying software makers and which mentioned 321.

The case holds important consequences not only for software developers and for the motion picture industry, but also for consumers, who face increasingly complex rules governing the uses of entertainment products.

Semaan is adamant that his company's software does not advocate piracy, saying that it helps users to protect their property. He argues that if it is legal to make back-up copies of tapes and CDs, then it should not be any different to copy DVDs. "The DMCA says that it is supposedly illegal to circumvent encryption, and while DVDs come encrypted, those other forms of media do not," said Semaan.

Semaan explained that Studio 321's DVD X Copy software contains four anti-piracy measures that are explicitly designed to stop people using it for producing pirate movies.

Before the copy process begins, users are asked if the source DVD is a rental or borrowed copy. If the user answers yes, the software will shut down. Although this is easily bypassed -- by lying -- the second anti-piracy measure ensures that all copies produced with the software contain a disclaimer -- similar to the FBI warning at the beginning of DVDs -- that inform the viewer that they are watching a back-up copy. The disclaimer lasts for eight seconds and cannot be fast forwarded or deleted, according to Semaan.

Another deterrent is that DVD X Copy will not allow a copy to be made from a copy. Only original DVDs can be copied. But Semaan believes the most interesting deterrent is the unique 'watermark' that is embedded into each copied disk. The watermark, or fingerprint, is created from encrypting user information such as IP address and email address (both are required to activate the software and acquire the fingerprint), which means that all copied disks can be traced back to their original owner.

In general, said Semaan, he approves of the DMCA, but he has a problem with the way the law is being interpreted by the Hollywood movie makers. "We understand the need for the DMCA and we want to prevent online privacy as well. But [the Hollywood studios] have a complete stranglehold -- Congress never intended this for the law," said Semaan, who has a law degree.

If Studio 321 is forced to change its software, its users would have to download a third-party 'ripper' module from the Internet and run it before using his software to make a copy: "Customers would need to find one of the dozen or so rippers off the Internet. It would add an additional step, and would affect sales," he admitted.

In May, the judge in charge of this case said she would come back with a ruling "shortly", but two months later, there is still no word. However, no news is good news for Semaan: "For us, the longer she takes the better."