Circuit City Ripping DVDs for Users

Grooves writes "Circuit City is offering a DVD transfer service that's sure to enrage the MPAA. For $10 for 1 DVD or $30 for 5, Circuit City will violate the DMCA and rip commercial DVDs for users to put on their mobile players. From the article: 'This should be a viable market. Software and services are losing out to draconian digital rights management philosophies and anti-consumer technologies aimed at increasing revenues stemming from double-dipping--what I call the industry's penchant for charging twice for the same thing.' They note that fair use backups of DVDs have not been tested in court because all of the attention is focused on the circumvention software itself." Update: 08/04 22:40 GMT by Z : Acererak writes "Red Herring reports that Circuit City isn't offering any DVD-to-DVD copying scheme. The Slashdotted sign was an isolated screwup."

countdown

And 5... 4... 3... 2... 1... *whistle and confetti!* congratulations Circuit City!!! You just got sued!

That is, unless Circuit City is giving a cut of the money to the MPAA. Thankfully Circuit City has deep pockets and good lawyers, it should be interesting to see the MPAA go up against them instead of picking on little kids.

Re:countdown

You act like Circuit City is just stupid to get sued. But if they see it as a business opportunity and think they have a case, the cost of settling the issue in court could be well justified. If Diamond Multimedia hadn't successfully defended a similar lawsuit [salon.com] from the musuic industry, we wouldn't have anything like the iPod today.

Re:countdown

I wholeheartedly HOPE Circuit City gets sued -- because I think they have a good chance of winning. It's about time big business stood up for fair-use rights... even if they're only doing it so they can make a quick buck. The end justifies the means in this case, because I don't see any other chance for fair use rights to be debated by 2 large businesses (CC vs. MPAA). The MPAA always picks on individuals and then sues them into the ground with its army of lawyers -- Circuit City has a pretty good band of lawyers, so it can defend itself and fair-use rights.

Re:countdown

Merely watching the thing isn't fair use according to the MPAA. Despite what they think, want, or say, that doesn't mean they're correct (morally or legally).

Re:countdown

The consumer by and large should be able to fully appreciate the benefits of being able to copy material for their own personal and private use, and so one might argue that Circuit City is only doing for the customer what the customer could do for himself.

If Circuit City was not charging for that service, that argument might hold some water. But they are, making this a commercial endeavor. Show me where any sort of commercial activity is permitted in the "Fair Use" exemptions to copyright infringement.

Re:countdown

Show me where any sort of commercial activity is permitted in the "Fair Use" exemptions to copyright infringement.

A lot of commercial uses are permitted under the "Fair Use" doctrine. Excerpts used for a commercial review site for example. Show me where commercial use is specifically omitted from Fair Use.

Section 107 contains a list of the various purposes for which the reproduction of a particular work may be considered "fair," such as criticism, comment, news reporting, teaching, scholarship, and research. Section 107 also sets out four factors to be considered in determining whether or not a particular use is fair: 1. the purpose and character of the use, including whether such use is of commercial nature or is for nonprofit educational purposes; 2. the nature of the copyrighted work; 3. amount and substantiality of the portion used in relation to the copyrighted work as a whole; and 4. the effect of the use upon the potential market for or value of the copyrighted work. The distinction between "fair use" and infringement may be unclear and not easily defined. There is no specific number of words, lines, or notes that may safely be taken without permission. Acknowledging the source of the copyrighted material does not substitute for obtaining permission. The 1961 Report of the Register of Copyrights on the General Revision of the U.S. Copyright Law cites examples of activities that courts have regarded as fair use: "quotation of excerpts in a review or criticism for purposes of illustration or comment; quotation of short passages in a scholarly or technical work, for illustration or clarification of the author's observations; use in a parody of some of the content of the work parodied; summary of an address or article, with brief quotations, in a news report; reproduction by a library of a portion of a work to replace part of a damaged copy; reproduction by a teacher or student of a small part of a work to illustrate a lesson; reproduction of a work in legislative or judicial proceedings or reports; incidental and fortuitous reproduction, in a newsreel or broadcast, of a work located in the scene of an event being reported." Copyright protects the particular way an author has expressed himself; it does not extend to any ideas, systems, or factual information conveyed in the work. The safest course is always to get permission from the copyright owner before using copyrighted material. The Copyright Office cannot give this permission. When it is impracticable to obtain permission, use of copyrighted material should be avoided unless the doctrine of "fair use" would clearly apply to the situation. The Copyright Office can neither determine if a certain use may be considered "fair" nor advise on possible copyright violations. If there is any doubt, it is advisable to consult an attorney. FL-102, Revised July 2006

copyright.gov's formatting is nicer... [copyright.gov]

Re:countdown

The fact that CC is charging for the reproduction is irrelevant. If I wish to make a fair use photocopy of a book or magazine article, Kinko's is going to charge me for it at 5 or 10 cents per page. Are they charging me for the content? No. They are charging simply for labor, materials. Circuit City is charging for their time and materials (the bank DVD, the storefront, etc). They are not profitting from the content itself, they did that when they sold you the original disk.

Re:good to see..

I wouldn't make the mistake of assuming they are 'standing up' to anyone. Either they will get sued and desist/settle, strike an arrangement to kick back to the MPAA, or get totally ignored.

Re:good to see..

>strike an arrangement to kick back to the MPAA

That's too naked. What they're doing is illegal. They can't just pay someone off without making it blatantly clear that the DMCA is a tax-generating system for the MPAA et al. And, more basically, they can't just pay someone to break a law. US law doesn't (yet) work that way, even though we treat it as if it does. To the best of my knowledge, they're violating a federal law, which means it's a felony. (I may be wrong: this is just what I've been told.) Either the law goes or they do.

Make no mistake: I think it's a cool idea and if publicized will make a lot of waves when people think "huh, gee, that makes sense: everyone should be able to do that." If it gets publicized before it gets shut down, it's very very bad press for the MPAA. But I don't believe that it will actually happen.

Re:good to see..

Hm, it WOULD be interesting to see Circuit City say "ok, ok, we'll quit ripping your stupid DVDs" then replace their entire DVD/CD section with iPod-loading kiosks. Leftover floorspace would go to selling ipods and various accessories. (Ok, ok, they could even throw in a PlaysForSure store and a few players). You could even float this past the shareholders by talking about "embracing the future of electronic delivery of goods".

Re:good to see..

The assumption keeps being made that Circuit City hasn't actually been authorized to do this.

I'd like to know where that assumption comes from.

The unauthorized circumventing of access controls isn't even just a mere civil offense, it's criminal. People can go to jail for that. Exactly why are people assuming that CC hasn't actually done their homework and at the very least got some kind of permission from the DVD-CCA to go ahead with this project. Given the prices they're charging, and the nature of the service, it looks to me like something the DVD-CCA would approve. All we have is an article from an increasingly dumber Ars Technica (they're not what they were.) which infers that they don't have permission only from the fact that the service exists.

The high expensive, and the intended use (which may even involve converting DVDs to another DRM'd format, we don't know at this stage) certainly suggests that the service wouldn't have been veto'd automatically on presentation to the DVD-CCA. And we're assuming at this stage that Circuit City aren't pointing a miniDV camera at a plasma TV.

Benefit Analysis Is Flawed...

Did some bean counter had a brain fart when performing the benefit analysis? Make gobs of money by ripping DVDS minus bigger gobs of money paying attorney fee equals a world of hurt.

Re:Benefit Analysis Is Flawed...

Like a movies star, there is no such thing as bad press (yeah yeah the mel g thing). Sometimes there isn't a number that can be placed on things like attention and maybe a little PR. If CC spends say, 2 million on lawyer fees for this vs. 2 million in TV adds (which TIVO takes care of alraedy), then maybe that may have a better rate of return. I will hear about it like right now reading it on /. vs being skipped anyway.

Re:Benefit Analysis Is Flawed...

If CC spends say, 2 million on lawyer fees for this vs. 2 million in TV adds (which TIVO takes care of alraedy), then maybe that may have a better rate of return.

Right on..
The first thing that I thought of when I read the blurb on the main /. page was "Wow, I should start shopping there more often b/c they get it."

Re:Benefit Analysis Is Flawed...

Nope.

Step 1: Rip DVDs, bring in lots of income
Step 2: Get sued by MPAA/Jack Valenti/Sony Pictures/Disney/somebody.
Step 3: Pay lawyers
Step 4: Get lots and lots of FREE publicity, building public empathy and support.
Step 5: ????
Step 6: Profit!

Re:Benefit Analysis Is Flawed...

Make gobs of money by ripping DVDS minus bigger gobs of money paying attorney fee equals a world of hurt.

I think that's an exaggeration. First, you can be certain any corporation the size of Circuit City already has a sizable legal department. It's unlikely this action hasn't already been vetted. To the extent there are issues, and dealing with those issues gets beyond the abilities or capabilities of their legal department to handle (an unlikely scenario), they're already set up for using outside counsel when appropriate and such costs are typically budgetted well in advance.

The big question here is, given the possible legal issues, What Was Circuit City's reasoning? The article provides no real insight on that question, and the Circuit City website offers no press releases or information on the subject. In fact the article is a scoop from another website (which, in turn contains a photograph and similar speculation), so it's anybody's guess as to what's going on and why.

Re:Why isn't CleanFlicks allowed to do this?

CleanFlicks lost not because they made a "backup copy" of the original copyrighted work but rather because they manipulated the copyrighted work to edit out "offensive content" without the permission of the copyright holder. This is legal in certain exceptional cases such as parodying a copyrighted work, but in this case, it was a clear violation of copyright law. Cleanflicks sold a modified version of a copyrighted work without the consent of the copyrighted holder, and their main purpose was commercial and not artistic, political etc.

The legal argument against CleanFlicks and the resulting decision in favor of the movie industry focused more on the right of a artistic creator to see his/her work presented in its intended form, without manipulation by 3rd parties, and NOT an attack on the illegal distribution of movies.

Here are some pertinent quotes from the Defendant:

  "Directors put their skill, craft and often years of hard work into the creation of a film," added Apted, whose own repertoire includes the 1999 James Bond adventure The World Is Not Enough and Gorillas in the Mist. "These films carry our name and reflect our reputations. So we have great passion about protecting our work...against unauthorized editing."

And from the case itself:

  ""[Moviemakers'] objective...is to stop the infringement because of its irreparable injury to the creative artistic expression in the copyrighted movies," the judge wrote. "There is a public interest in providing such protection. Their business is illegitimate."

The service that Circuit City is providing is not analogous to that of Cleanflicks. They're not selling a modified version of the movie, nor are they selling ANYTHING. Instead, they're charging for the SERVICE of ripping a movie into a format that's capable of being played in a mobile player. Because they are circumventing CSS, they are breaking the DMCA. Therefore, Circuit City is breaking the law, but for different reasons than that of decision in the Cleanflicks case.

Re:Why isn't CleanFlicks allowed to do this?

I'm not sure that your analysis is really the whole story. It wasn't just the editing that got CleanFlicks in hot water, it was the copying of an edited version. If they had just taken a VHS tape, and physically cut out offensive sections with a razor blade and spliced it back together, they would have been fine. (Actually, my understanding is that some companies did that, pre-DVD, although it's too labor-intensive to be commercially viable.) The problem was that they were editing the film and then reproducing it; even though it was 1 reproduction for every 1 original copy, and they were rendering the originals unplayable, it was still infringement. The problem stemmed from a combination of the commercial nature of the service, the fact that the edits weren't authorized, the fact that the copy could have been passed off as the 'actual movie' (i.e. someone might have watched it and not known that what they were watching was not what the director really made), and the fact that they were making unauthorized copies of the edited versions.

Copyright law is fairly vague, particularly in relation to fair use. It's difficult to look at something like CleanFlicks and say "this action right here, this is what was illegal" within the scope of their entire business practices. It was the whole procedure that was found to be infringing. If they had done the editing without reproduction (e.g. VHS splices, or the timecode based systems now in use) they probably would have been okay. But the combination of things they were doing precluded a fair use defense, and thus they lost.

Anyway, I agree with your ultimate point: Circuit City isn't going to have nearly the problem with copyright law as they're going to have with the anti-circumvention provisions of the DMCA. Frankly if they do end up in court, I think this could end up being a much more significant and interesting case than CleanFlicks was. On the scale of "bad laws," the DMCA is orders of magnitude worse than copyright law even in its current state, since it has no exemption for fair use. In the CleanFlicks case I could at least see the situation from the perspective of the studios or a copyright holder who didn't want edits being made to their stuff, but I don't think that they have any such right to dictate the format in which a viewer watches the Work. Except wherein the format it's watched in has a real impact on the artistic merits of the movie, and where the prohibition is enforced against (say) all portable players because it was designed to only be seen in IMAX theaters, that's not something that a rightsholder should be able to claim control over.

I think we're only starting to see the very beginning of the battles over the DMCA: the number of future services that are going to run afoul of it are just mind boggling; ultimately I think the consumer demand for these services is going to be so great, that if the law is not modified it's just going to be flouted by the public, leading to some Prohibition-like state where the law is so disconnected from reality that it's bordering on irrelevance.

Re:Benefit Analysis Is Flawed...

The investment to make a movie is substantial. All the people in the credits get paid, equipment is rented and/or purchased, special effects need to be created. Even the film costs astonishingly large amounts of money. Obviously, there is some value in the movie, otherwise you wouldn't invest the time in pirating it. I agree copyright has been taken too far, but very few people are of the delusion that we can get rid of it entirely. If we didn't have copyright, who would pay for that movie you have shown yourself to value?

According to your logic everytime I make my own hamburger instead of buying one from McDonalds I am depriving some snot nosed kid of a living...but if you can do it better, faster, cheaper, etc too bad for them.

Your analogy is flawed. Nobody is preventing you from making your own movie, paying for the videotape, the equipment, and the labor. If you can produce a better product than Hollywood for less, good for you. By your logic, however, you could buy a master print from the first movie theater to release the cool movie of the moment and undersell the distributor. The creators of the movie get nothing, and you make pure profit for doing nothing. I'm sure you'd like that a lot, but honestly, how long do you think that would last before movies stopped getting made?

Incidentally, the same logic works for patents. It's nice that we have all this wonderful medical equipment and drugs to keep you alive, but who will pay the researchers if somebody else can easily come along and trivially steal the knowledge that was accumulated through substantial financial investments?

Re:Benefit Analysis Is Flawed...

They are helping you copy your own stuff for your own use.

This would be like paying the neighbor kid to set your VCR to record, or rip your CDs to your computer. Except the neighbor kid works at Circuit City.

If it's legal for me to do something, why would it be illegal for me to pay someone to do something for me?

Re:Benefit Analysis Is Flawed...

*If it's legal for me to do something, why would it be illegal for me to pay someone to do something for me?*

I have to chime in on this one, sorry. It's legal to masturbate (well, in most states), but it's illegal to pay someone else to masturbate you. I know, not the same thing at all, but I thought it was funny.

Good for them

I don't care much for Circuit City, but I'm glad they're taking this on. It's going to take companies like this to change the mindset (god knows no one wants to listen to "the little guys")

They charge that much for running "DVD Decrypter"?

10 bucks per CD? Better option is to get the DVD Decrypter and donate a few bucks to the developers :)

S

Re:They charge that much for running...

It wasn't bought out, and it wasn't shut down by the British version of the MPAA. Macrovision sent a C&D, and LUK went on to continue development of the burning engine from DVDDecrypter, as IMGBurn. DVDDecrypter is still the easiest way to exercise your fair use rights, but due to new corrupted formats like ArCoss, you sometimes need to include another party like DVDFabDecrypter or FixVTS and make an extra step.

Re:They charge that much for running "DVD Decrypte

Agreed, but Average Joe is not going to want to bother keeping up in the DRM arms race for casual pir^H^H^HFair Use purposes, and will happily pay a smart techie to do this for him, saving himself from (A) having to learn to do it himself and (B) being directly liable for breaking the DMCA.

Re:They charge that much for running "DVD Decrypte

10 bucks per CD? Better option is to get the DVD Decrypter and donate a few bucks to the developers :)

Wow, you are more than 1 year behind the times with this post. DVD Decrypter has been dead since early 2005 when Macrovision gave a cease and desist letter to the creator of DVD Decrypter. The reason? DVD Decrypter can be used to remove Macrovision, which is a violation of the DCMA. The creator was forced to stop developing DVD Decrypter and give all source code to Macrovision. I don't know if he was forced to pay a fine to them or not, but he was threatened with legal action and facing the prospect of jail time and/or fines, he accepted their "offer" and gave them the code and removed the software from his website. In fact, the formerly official website now goes straight to Macromedia.

I have read that certain video forums are regularly monitored by Macromedia to see if the developer ever posts anything that in any way can be said to talk about decrypting DVDs or removing Macrovision and if they ever find him saying anything on those topics, they are going to take him to court and try to get him convicted for breaking the DCMA. Given the legal rulings on the subject to date, this is a very realistic possibility. I think he does still participate to a limited extent in video forums, but only on topics that have nothing to do with decrypting DVDs.
   

Re:They charge that much for running "DVD Decrypte

Please, get your terminology right. Halfway through your post you switch from Macrovision [macrovision.com], the company that provides DVD encryption, to Macromedia [macromedia.com], the company that provides Flash. I doubt the latter has a care one way or the other in DVD protection.

It's the DMCA, not the DCMA. Digital Millennium Copyright Act. Not "Copyright Millennium". And, young man, it doesn't fit the music [userfriendly.org] as well. "It's fun to violate the D-M-C-A!"

Finally, he didn't "give all source code to Macrovision." Ignoring the grammatical ambiguity therein, he gave rights to the code, and unfortunately had not previously licensed it under a perpetual redistribution license. If he had simply GPL'd it (or CC-SA or anything), Macrovision would've had all the source code they wanted and couldn't've done a thing about it.

It will be interesting

As the content pushers (Circuit City, Best Buy, Walmart) try to go into these new arenas to sell content. What happens if WalMart goes to the RIAA and MPAA and says "we want to be able to sell the content however we want." Will /. cheer then as they push their weight around to shake up the *IAA monopolies?

You go guys. Kudos to Circuit City.

I know they're just looking for another revenue stream, but its great to see big companies (even inadvertently) fighting the system on behalf of individuals rights.

WOW

They must have thought this through. You don't do something risky like this if you're a massive business. They must have talked to a lawyer and have A) a loophole, or B) a license to do this (sharing profits with MPAA?). I mean, million or billion dollar companies are careful to avoid these sorts of lawsuit-risking moves, simply because they're a huge target.

Re:WOW

They must have talked to a lawyer and have A) a loophole

Fair use is not "a loophole". It's an intended part of copyright. As customers have bought a DVD, part of their fair use rights include space-shifting - moving the film from the DVD to another device. Circuit City are employed by the customer to do this on their behalf.

It's not like Circuit City are simply giving people illegal copies, they are doing something perfectly legal on behalf of the owner of that property.

violate the DMCA? In what way?

In what way would this violate the DMCA?

Since Circuit City has the software and tools to do the copy and would presumably not be handing them out to customers the standard "providing tools to circumvent copyright" issue wouldn't apply. Since backups for play on another device are fair use and legal I don't see the issue.

Obviously, since companies don't like getting sued into non-existence I suspect Circuit City feels they are on sold legal ground as well.

Re:violate the DMCA? In what way?

In what way would this violate the DMCA?

"No person shall circumvent a technological measure that effectively controls access to a work protected under this title.
17 U.S.C. 1201(a)(1)(A).

Legally, a corporation is a 'person,' and movies on DVD are almost all protected by copyright.

Re:violate the DMCA? In what way?

I may be wrong on this one, but perhaps Circuit City has purchased a license to the CSS keys, that would allow them to decrypt and re-encrypt DVD's without "circumventing" the copy protection...just a possibility.

The average consumer can't afford the thousands of dollars it would cost to get one of those licenses, but Circuit City could...

Oh, and yay for DVD Decrypter and DVD Shrink!!!

Re:violate the DMCA? In what way?

In what way would this violate the DMCA?

They're defeating encryption without permission. Same as if you or I use deCSS to do the same thing. It's illegal whether or not we commit infringement. Dumb Law, needs to go.

Re:violate the DMCA? In what way?

In what way would this violate the DMCA?

Since Circuit City has the software and tools to do the copy and would presumably not be handing them out to customers the standard "providing tools to circumvent copyright" issue wouldn't apply. Since backups for play on another device are fair use and legal I don't see the issue.

This is an interesting point. Does the DMCA specifically disallow the sale or distribution of tools that provide for a circumvention, or does it disallow the circumvention itself? If it is the former, then Circuit City is just providing a service that enables the fair use rights of the consumer.

Now, if the act of circumvention itself is illegal, then CC is up a creek without a legal paddle.

Reversal of Fortune

It's a shame that only Circuit City is challenging the MPAA. Their offering is commercially viable. But I don't think Circuit City has the financial wherewithall to take this to its conclusion.

I would love it if some large corporations would gang up against the MPAA and RIAA. Power without challenge is a dangerous thing -- evidenced by DRM, and the litigious nature of these two agencies.

Many years ago Circuit City bravely (but foolishly) pursued the DivX versus DVD issue (the betamax vs. VHS of its time). That battle, which, if it had gone Circuit City's way, would have hurt the consumer. It's ironic now, because DivX was a kind of DRM back then. You bought a movie at a lower price but had to renew via a special player that connected to a site over a phoneline to renew your ability to watch that movie. Or, you could spend more and get "unlimited viewing" -- assuming, of course, the movie studio even offered it. From the initial releases there were only a handful of movies that could be had for "unlimited viewing."

There was a grass-roots effort to thwart this nonsense (DRM over the phone) and DVD as we know it now won the battle; only to be replaced by another DRM years later. A much more pervasive and restrictive DRM. The irony of Circuit City's current stand is thick.

This time, however, I'd back 'em up... Is someone up to the cause? Does the grass even have roots anymore? In spite of all of the podders out there, I don't think most of them have the mental fortitude to stand against the MPAA/RIAA. Are they even aware?

(objectively speaking: this could be a bad idea because you can bring in any number of iPods and copy a single movie to each of them. This, I believe, it's ethically reprehensible; it's also a major flaw behind this service.)

Re:Reversal of Fortune

Mod me troll (and grammar nazi), but DivX is a MPEG4-based codec that was named after the DIVX you-re talking about. That's why the first versions of DivX was named DivX 3.11 :-) [wikipedia.org]

Re:Reversal of Fortune

Dammit - my mod points just expired.

You hit the nail on the head. The Circuit City/DivX fiasco should be the textbook business case that we push to the public and Congress whenever the **AA's start trotting out the "piracy is killing us" line.

There is nothing like pain as a negative reinforcement, and Circuit City took it up the ass (no lube, either) directly due to the overly restrictive controls on their product. They KNOW how much it hurt business, and can point straight to the balance sheet. So I'm not surprised they are looking in the other direction.

As for pissing off the **AA's, I seem to recall that Disney was their partner in the DivX fiasco, and once things started going sour, Disney hung them out to dry. Maybe that's why Disney never learned from it - they never experiencede teh pain, and so are still in love with DRM. I can't see any love lost between Circuit City and the content producers.

They could make a fortune doing this...

Not every joe sixpack is savvy enough to have backed up his DVD collection. Some of my old original disks are already failing on commercial players. (Stargate season 1, bought when it first came out, is now unplayable.)

As people find more and more of their disks failing, these services could become seriously mainstream. And at 10bucks a pop, a lucrative source of cash.