What makes this case absolutely absurd is the fact that backing up computer software is perfectly legal under provisions in federal copyright law. There are other products, such as Alcohol 120%, which are capable of backing up copy protected discs as well, and they are, like Games X Copy, perfectly legal. The only difference is that 321 Studios has been actively speaking on behalf of consumer rights -- every consumer should have the right to make backups of the products they have purchased, if there is a possibility of the original product being damaged. Obviously the movie industry, and now the video game industry, don't agree with this.
The lawsuits brought against 321 Studios by movie industry have made the company an easy target for others to go after. It is quite unfortunate, that their endeavors to provide consumers with rights to fair use of the products they purchase, seem to have failed.
Source: Yahoo! News