Movie industry settles suit with chip firm ESS

The company makes chips that decode the Content Scramble System, or CSS, which is the copy-protection system used for DVDs.

Representatives of Hollywood's major movies studio on Thursday settled a lawsuit with a microchip company they charged with selling chips to makers of equipment that could be used to illegally copy DVDs.

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The Motion Picture Association of America settled the suit with ESS Technology Inc, ESS said in a statement.

The company makes chips that decode the Content Scramble System, or CSS, which is the copy-protection system used for DVDs.

ESS Technology, based in Fremont, California, said it will now only sell its chips to companies with valid CSS licenses as part of their agreement. In late Nasdaq trading, ESS shares were off 4 cents to $4.84 each.

Hollywood studios have launched rounds of assaults against technology companies and individuals they claim are involved in the illegal distribution of movies, which costs studios billions of dollars of lost revenue annually.

The MPAA settled a similar suit against chipmaker Sigma Designs Inc last November.