Warner Bros. and Intel's daughter company Digital Content Protection have filed a lawsuit against a hardware manufacturer that creates devices enabling consumers to bypass HDCP copy protection. The devices, which presumably use the leaked HDCP master key to convert digital to analog signals, can be useful for connecting digital devices to analog displays. However, they could also be used by pirates to copy pay-per-view, on-demand, and other premium content.

Two years ago there was a huge uproar in the tech community when the HDCP master key was cracked, opening the door to mass circumvention of high-definition content protection.

The crack was Hollywood’s worst nightmare as it opens an “analog hole” that allows everyone to copy digital video, including pay-per-view streams. Intel, the developers of HDCP, were also outraged and promised to crack down on abusers of the key.

“There are laws to protect both the intellectual property involved as well as the content that is created and owned by the content providers. Should a circumvention device be created using this information, we and others would avail ourselves, as appropriate, of those remedies,” Intel warned.

Soon after the master key was published the first circumvention devices were put on the market but neither Intel or the Hollywood studios took any action against manufacturers or retailers. That position has now changed.

Yesterday Warner Bros. and Intel’s daughter company Digital Content Protection filed a lawsuit at a federal court in Ohio against the technology company Freedom USA and its CEO Alex Sonis. The Hollywood studio and the chip maker accuse the Ohio company of copyright infringement and violating the DMCA’s anti-circumvention provisions.

Freedom USA, which also operates under the names AVADirect and AntaresPro, makes several devices which allow consumers to convert HDCP-encrypted digital signals to analog signals. This means that users could potentially record pay-per-view broadcasts, including Hollywood movies.

“Warner Bros. requires the use of HDCP in many of its distribution licenses for pay-per-view, video-on-demand and other premium digital content delivery services to which Warner Bros. licenses its film and television programming,” the movie studio writes in the complaint.

According to Warner the bypassing of HDCP leads to more pirated copies being made available, which in turn decreases the demand for legal movies.

“When HDCP is circumvented, the risk of unauthorized copying and redistribution of the content formerly protected by HDCP is dramatically increased,” Warner Bros. writes.

“This damages Warner Bros. because the unauthorized and uncompensated reproduction and distribution of Warner Bros. copyrighted content decreases the demand for such content through legitimate distribution channels, such as home video, video-on-demand, premium broadcast channels and the like.”

The defendant is accused of selling devices that allow for this circumvention. Although the earlier referenced leaked master key is not mentioned, the complaint does explain that the devices are capable of decrypting HDCP.

“The [device] transmits HDCP-protected content to non-HDCP devices by performing HDCP decryption, without the authorization of either the copyright owner of the HDCP-protected content or DCP, and by avoiding, bypassing, removing, deactivating, and/or impairing the HDCP authentication process,” the complaint reads.

Both Warner Bros. and Intel accuse Freedom USA of violating the DMCA’s anti-circumvention provisions, and the movie studio also holds the company responsible for the copyright infringements that were induced by these devices.

Both plaintiffs ask the court to prohibit these devices from being sold and want to be compensated for the damages they’ve suffered.

Considering the ongoing debate on the legality of these circumvention devices for fair use, this case is going to be one to watch. Aside from the “piracy” element brought up in the complaint the devices sold by Freedom USA also have legitimate uses, such as connecting a new set-top box to an older TV or monitor.