The highly popular DVD X Copy line of products were sold through major North American and International retailers and online via the official website.
Anticipating a lawsuit by the major Hollywood motion picture studios, in April 2002, 321 Studios filed a pre-emptive complaint against eight Hollywood studios contending that the Digital Millennium Copyright Act (DMCA), a law that prohibits the circumvention of copy protection technology, violates consumer rights as provided in the Fair Use doctrine of the Copyright Act of 1976.
The Fair Use doctrine provides individuals with limited rights to copy certain forms of copyrighted material.
On February 23, 2004, Judge Susan Illston of the Northern District Federal Court for California ruled that 321 Studios' products violated copyright law and ordered an injunction that prohibited the sale of DVD X Copy products in the United States within seven days of the injunction.
The ruling caused 321 Studios to shut down with the company finally ceasing operations in August 2004.