> wouldn't that qualify as legitimate use of a backup copy?

The archival copy privilege as an exception to the usual rules that copyright excludes anyone from making copies without specific permission from the copyright holder [1] applies only to works classified as "computer programs" under the law. While DVDs do include computer programs, the main element of a DVD is an audiovisual work and likely wouldn't be included in the exception, so even if it would be a legitimate use of a backup copy, the kind of work isn't one in which there is any right under copyright law to create such a backup.

[1] 17 USC Sec. 117(a)

While I presume your quote is correct, I don't think you are applying it correctly. That is one exception, but there are others. Although I don't think there is clear case law, ripping audio CD's for archival backup is almost universally presumed (even by the MPAA and RIAA) to be legal in the US: https://www.publicknowledge.org/news-blog/blogs/united-state...

And it's frequently presumed that creating backups of legally owned video DVD's would constitute fair use under US copyright, but is instead illegal because it requires breaking DRM to do so, and the DMCA offers no such exception: http://lifehacker.com/5978326/is-it-legal-to-rip-a-dvd-that-...

But if you happen to come across an unprotected commercial DVD that you legally own (I have only ever come across one, "Cane Toads: An unnatural history") I think you probably would prevail in asserting that it is fair use to create a personal backup copy for use in case the original is destroyed.

I think that, if they were challenged, they would have to prove that they are only sending out as many backup copies as they have originals.

I wouldn't want to endanger my business to licensing lawsuits based on something like that which would be terribly hard to prove.

That would actually be really easy to prove given their database already tracks the location of DVDs.

I'm sure there are other issues at play.

Potentially, yes. Would you want to spend the next decade fighting that lawsuit up to the Supreme Court, hoping that the case goes your way? I think the odds would be in their favor but am even more confident that the movie industry would see the threat of an expensive lawsuit as a great lever to extort higher royalties.