321 Studios has already announced that it disagrees with the New York ruling (as well as the previous San Fransisco ruling) and will appeal both cases. 321 Studios bases their court process on the fact that American copyright legislation allows consumers to back up material that they own -- but by copy protecting that material and making it illegal to distribute tools that allow circumventing the copy protection, that right has been effectively removed even that it is still stated in copyright legislation as the "fair use" right.
Both lawsuits against the 321 Studios were brought up by various movie studios. The studios behind the New York case are Paramount Pictures and Twentieth Century Fox Film.
More information:
321 Studios press release
News.com