updated 8/4/2004 12:23:14 AM ET 2004-08-04T04:23:14

A maker of software that enabled users to copy DVDs and computer games folded Tuesday under the mounting weight of lawsuits by deep-pocketed movie studios and video game producers.

In a posting on its Web site, 321 Studios Inc. quietly announced “it has ceased business operations including, but not limited to, the sale, support and promotion of our products.”

The company said that despite its “best efforts to remain in business,” unfavorable court rulings by three federal courts this year assured its demise.

“The employees and those associated with 321 Studios sincerely appreciate your support of our company and products over the last couple of years,” said the statement by the “321 Studios Team.”

The company, based in the St. Louis suburb of St. Charles, warned in June that it could seek federal bankruptcy protection to free itself of copyright-related lawsuits by Hollywood and makers of computer games.

Tuesday’s announcement came just five days after 321 suffered another legal setback. On Thursday, a federal judge in New York imposed a worldwide ban on the production and distribution of 321’s Games X Copy software, which had fetched $60 and let users make what 321’s Web site had called “a PERFECT backup copy of virtually any PC game.”

The injunction came as part of a June lawsuit by three leading makers of video games, marking a new legal front against a company that already was at odds with Hollywood over the company’s DVD-copying software.

Robert Moore, 321’s founder and president, long had cast his crusade as a David-and-Goliath struggle, insisting his company’s software was meant to let consumers innocently make backup copies of their DVDs and computer games.

Hollywood and the computer-gaming companies — Atari, Electronic Arts Inc. and Vivendi Universal Games — argued otherwise, accusing 321 of violating the 1998 Digital Millennium Copyright Act. That law bars circumvention of anti-piracy measures used to protect DVDs and other technology.

Federal judges in New York and California have barred 321 from marketing the questioned DVD-cloning software. Since those rulings, 321 has shipped retooled versions of its DVD-copying products, removing the software component required to descramble movies.

Messages left Tuesday with 321 were not returned. Repeated calls to the company in recent weeks have gone unanswered.

In announcing what would be the inevitable end of his “magnificent venture,” Moore said that in a matter of months this year 321 went from having nearly 400 employees and expectations of doing $150 million to $200 million in sales this year to about two dozen workers and less than $400,000 in monthly income.

In May, Moore told a congressional panel the court rulings in Hollywood’s favor have put his company “on the brink of annihilation.”

Even in possible bankruptcy, Moore has said, 321 would make good with creditors, satisfy customers seeking rebates and press its case against Hollywood that consumers “should have the right to make copies of their own legally obtained digital materials.”

In its announcement Tuesday, 321 said anyone seeking customer support should do so by Aug. 1, 2005, at the company’s Web site, “where you should be able to resolve most of your concerns.” The company said it no longer can offer telephone, e-mail or live chat support for any of its products.

Copyright 2004 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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