Opening arguments are about to begin in a closely watched trial that observers say will test the limits of a controversial federal copyright law.

The trial -- unfolding this week in U.S. District Court in San Jose, California -- pits the Russian software firm ElcomSoft against federal prosecutors who claim the company broke the law when it created a program that breaks the encryption on Adobe eBook files.

Prosecutors and defendants headed to court on Monday for jury selection. Opening arguments are slated for Tuesday.

Observers say the case could set significant legal precedent in interpreting the reach of the 1998 Digital Millennium Copyright Act, a law drafted to protect intellectual property owners that has drawn criticism for stifling the public's ability to freely use copyrighted materials they purchase.

"The issue at stake here is: What is the balance of rights between copyright holders and citizens?" said Joe Kraus, co-founder of DigitalConsumer.org, a group that promotes fair-use rights. The court's decision, he said, ought to shed some light on the question of whether a potentially useful innovation may be deemed illegal because it has the potential for foiling copyright protections.

The dispute also touches upon some interesting issues involving jurisdiction in the Internet age, said ElcomSoft spokeswoman Judy Trummer. She said the company believes it should not be subject to an extraterritorial law like the DMCA because it does business from Russia.

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