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Jason Olson, Deseret Morning News
Flix Club owner Daniel Thompson talks to the media and customers Tuesday. The store rents and sells edited Hollywood movies.

OREM — Clinton Uytenbogaardt and his fiancee, Celeste Wright, scanned the shelves, pulling off an edited copy of the epic depiction "300" to add to the "Pirates of the Caribbean: At World's End," already in hand.

"Is it edited?" Wright's 10-year-old son, David, asked about the pirate movie, and his mom nodded.

"Yes!" he cheered, and pumped his fist in the air.

"He didn't get to see the second one, because it wasn't edited," Wright said. "So for him, this is great."

Tuesday's holiday party, with a gift of the newly released third "Pirates of the Caribbean" movie, at Flix Club on 908 S. State in Orem, turned into a teary goodbye as customers learned the family-friendly store was closing.

"I'm sorry I can't fight this battle," owner Daniel Thompson said, becoming emotional as he addressed the crowd that gathered in his store. "I can't. I've tried."

Thompson explained that about two weeks ago, he got a letter from an attorney in New York who represents Warner Brothers, Sony, Disney, Twentieth Century Fox and Paramount movie studios, telling him his edited movie rental and sales business was breaking copyright law and he had to close.

"This is my life," Thompson said of Flix Club. "I've worked 6 1/2 years for this."

Thompson then asked the attorney about legitimate ways to keep operating. What about selling the real movie but giving customers an edited copy as a free gift? What about having an unedited back-up copy for every edited movie rented? And what would happen if Flix Club just stayed open?

"'If you stay open, we will break you,'" Thompson said, quoting the attorney. "'We will go after you for everything you have.'"

"I don't want to be broken," he said. "I've never been scared until recently."

The edited-movie battle began in 1998 when an American Fork movie theater cut out steamy topless scenes of Kate Winslet from the film "Titanic." Paramount Pictures reprimanded the theater, then yanked the film.

Businesses sprang up and a series of lawsuits followed, ending with a federal judge's decision in July 2006 that editing businesses were breaching copyright laws and had to stop.

But the lawsuit didn't name Cougar Video or Flix Club, who tried to sneak by without detection or slide through on an educational loophole, in which 80 percent of edited sales must be education based.

"We felt like no news was good news," said Kirt Merrill, who has owned Cougar Video for 15 years. "(We decided) to fly under the radar until some dude in a dark suit walks into my store and hands me paperwork. It was all great until September when some guy (walked) into the store ..."

... And handed him a threatening letter.

"We don't want to get wrapped up in a lawsuit," said Merrill, who also attended the closing announcement at Flix Club, then made the same announcement at his store later Tuesday evening. "(A lawsuit) would cost us far more money than closing the store. They would just toast us. We just cannot really afford to fight the thing anymore."

"I've never rented from anywhere else," said Devin Sims of Lindon, who came with three of his five children to get the Pirates present. "There are plenty of movie stores from our house to here. But it's worth driving down here. You know you can take (a movie) home and have a good, wholesome family film."

Both Flix Club and Cougar Video, along with Family Video Book and Clothing on the Alpine/Highland border and several other Utah County companies, will be gone by Dec. 31.

"So what's been around for 15 years is going away because of this ruling and lawsuit," Merrill said. "They've destroyed the store, and there's nothing I can do to solve it. They've crushed us."

E-mail: sisraelsen@desnews.com