Macrovision disputed this as circumventing their copy protection and the Court agreed, issuing an injunction against Sima which was upheld in June.
Consumer Electronics Association president Gary Shapiro said, "Consumers should be outraged by today's decision. The devices Sima Products manufactures simply allow consumers to use digital techniques to make up for viewing artifacts in analog material—some from age or distortion, and some caused as a result of the use of distortive copy protection techniques. The legislative history of the 1998 Digital Millennium Copyright Act (DMCA) is clear that passive analog measures that distort video signals are not 'technical protection measures.'"
There is now an appeal in front of a Federal Court attempting to show that this form of copy protection does not in actuality protect consumers from making copies, only inhibits them from making a worthwhile copy. Therefore, there is no circumvention to speak of, it's merely a technological pitfall.
There is no resolution in sight for this debate, however anti-DRM groups such as the Electronic Frontier Foundation have spoken out by saying, "If Macrovision wins, digital video innovators will be stuck carrying the albatross of Macrovision's analog noise for years to come."
Source:
ARS Technica