The present invention discloses a digital rights management (DRM) system and method based on device proximity for controlling what devices can utilize DRM protected content. DRM data and DRM protected content are copied from a first device to a second device such that the DRM protected content on the first device becomes locked out and the copied DRM protected content is not locked out on the second device. The first device periodically performs a proximity check between the first and second devices such that if the first and second devices are determined to be within a short range of one another the DRM lockout of the first device is disabled.

 
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