The founders of AACS include Microsoft, Intel, IBM and Walt Disney.
Digg is a news aggregator site heavily dependent on its users, who vote for the stories that should be featured on the site. The editors step in to remove content they object to.
However, when Digg took down all references to the code users revolted and started to act en masse, posting comments and voting for stories featuring the code.
Digg's management then relented and its founder Kevin Rose posted his decision on the site:
"After seeing hundreds of stories and reading thousands of comments, you've made it clear. You'd rather see Digg go down fighting than bow down to a bigger company. We hear you, and effective immediately we won't delete stories or comments containing the code and will deal with whatever the consequences might be.
"If we lose, then what the hell, at least we died trying."
Digg's investors include Pierre Omidyar, a founder of Ebay, and US venture capital group Greylock Partners.
Digg has been embraced by UK newspaper websites including the Daily Telegraph and Daily Mirror, which have set up links allowing readers to flag up their stories to the site.
Other similar bookmarking sites include and .
Digg's experience provides a parallel to the copyright lawsuit recently served on video-sharing website YouTube by Viacom, after YouTube users posted Viacom programming on the site.
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