Competitive Intelligence

No Lawsuit for Grad Student Author of CD Copy Protection Paper

SunnComm, the company behind the MediaMax CD3 copy-prevention system, decided not to sue Princeton grad student John Halderman after all in civil court under the Digital Millenium Copyright Act, after Halderman published a paper describing how simple it was to defeat, as applied by BMG on the Anthony Hamilton CD he'd released last month. The paper concluded that "most users who would be affected can bypass the system entirely by holding the Shift key every time they insert the CD," an action that prevents the MediaMax drivers from loading. Here’s another excerpt:

Since Halderman's paper appeared, SunnComm's shares have slipped precipitously, losing about $10 million in value. The company's stock appears on the Over-the-Counter Bulletin Board and was trading at 11 cents Friday morning.

Without giving specifics, SunnComm's original statement indicated that the company had planned to sue Halderman and claim libel or defamation in addition to the DMCA charges. "No matter what their credentials or rationale, it is wrong to use one's knowledge and the cover of academia to facilitate piracy and theft of digital property," the original statement said. "SunnComm is taking a stand here because we believe that those who own property, whether physical or digital, have the ultimate authority over how their property is used."

So, what's your verdict: is SunnComm a penny-stock with a worthless product that managed to dupe a few record execs into thinking they were the saviors of the record industry? Or were they really unjustly tested and smeared when an ambitious grad student decided to get famous on the back of the hot topic of CD piracy?

- Arik