Property, Contract, and DRM

by on May 7, 2007 · 10 comments

You should check out the ongoing discussion with Cord Blomquist about the ethics of digging AACS keys. Cord’s core point seems to be this:

Copyright and patents aren’t contracts, they’re codified law, and it’s understandable why we’d prefer a common standard for such things. Imagine we had to sign a contract waving acknowledging that the seller retains the rights to reproduction every time we bought a book or magazine. This would be cumbersome and tedious. Yet even without a contract or another such explicit statement we all know that we can’t just post an article from a magazine on a site and put AdSense ads against it and call ourselves a legitimate web business. This would be copyright infringement and stealing. Take this idea a step further and we see that he 2nd or 3rd person to copy the material is equally liable for the copying if they know that the material is copyrighted.

How is this different from Digg hosting something that is copyrighted? Are we saying DRM and music copyrights don’t deserve the same respect because they are copyrights we don’t like?

The first thing to point out here is that Cord is lumping together two very different rights. I wholeheartedly agree with him that copyright law is a beneficial institution, and it’s entirely appropriate for the state to take action to protect peoples copyrights. If Digg’s users were posting copyrighted songs or films, I would certainly be a lot more critical.

But DRM is not the same thing as traditional copyright. Anti-circumvention rights are a brand new legal right that was invented from whole cloth by Congress in 1998. The question of whether those rights are legitimate are wholly separate from the question of whether the underlying copyright.

Cord continues:

I understand that it’s frustrating to have a machine running Linux, for example, and not being able to play a DVD for no reason outside DRM, but that’s the way that a private party has decided to sell their property, with certain rights restricted. When only a small legal issue and a bit of code stands in the way of using our machines as we see fit it’s frustrating, but it’s also frustrating for my neighbor knowing that I still have the lean on that property I sold her and a few lines of text entitle me to stop her from building a 12 foot fence.

I think this analysis misses a couple of important points. In the first place, it entirely misses the distinction between real and personal property. My understanding of the law (and I’m not a lawyer, so any lawyers in the audience please correct me if I screw something up) is that while you can place liens on real property (land and fixed improvements on the land), you can’t do the same thing with personal property. So if I’m a devout Christian, and I sell you my car with the stipulation that it not be driven on Sunday, that stipulation is not enforceable via property law. It might be enforceable under contract law, but in that case the burden of monitoring and enforcing the terms of the contract fall on me. And if the car is sold to a third party, my only cause of action is against the person with whom I have the contractual relationship, not subsequent owners of the car.

There are some good reasons for this distinction. Enforcing conditional property rights is expensive, and in most cases it’s more trouble than it’s worth. Land is expensive and easy to keep track of, so the overhead of keeping track of liens is comparatively small. But if the state were in charge of keeping track of and enforcing whatever goofy conditions on personal property ownership anyone might dream up (I sell you my pen, on the condition that you not use it to criticize Democrats), that would be foisting a large and unjustified burden on taxpayers. So if you want to sell someone personal property with conditions attached, you have to do it with contract law, and you have to bear the costs of monitoring and enforcement (i.e. filing a lawsuit for breach of contract) yourself.

As another example, consider scalping laws. The usual (and in my view, correct) libertarian position on the subject is that a free market in tickets is a good thing, because it allows the people who most want to see a show to vote with their dollars.

But wait, a libertarian might say, if you read the fine print on your ticket, it usually includes a clause saying that the ticket is not for resale. So the scalper was only granted the right to use the ticket himself, not the right to transfer the ticket to others. The scalper, therefore, is effectively stealing from the show, by selling something he doesn’t have the right to.

But this is why the difference between property and contract is important. The show has a contractual right to deny entrance to the show, or even to sue the re-seller for breach of contract. But it is not a violation of the show’s property rights to re-sell the ticket, any more than it’s a violation of property rights to re-sell a car that was sold to you on the condition it not be driven on Sundays.

Or to look at the issue in a slightly different way, the issue is who should bear the cost of enforcing the “no resale” rule, the show’s organizer or the taxpayer? When you pass an anti-scalping law, you’re diverting police officers away from investigating rapes and murders, and toward tracking down people who might be violating the fine print on their tickets—at taxpayer expense. Venues have every right to restrict resale of their tickets, but they shouldn’t ask me to pay for the cost of enforcing that restriction.

Nor would most libertarians support holding eBay liable if someone uses the site to scalp tickets. eBay isn’t a party to the contract between the seller and the show organizer, and so there’s no reason they should have to police a third party’s contractual rights.

So to get back to DRM and the DMCA, if we assume that DRM is like a contract (which itself is problematic—when did I sign a contract promising not to watch my DVDs on Ubuntu?—but I’ll grant it for the sake of argument), the question is who should bear the cost of enforcing that contract? Should we pass special laws putting the weight of civil and criminal penalties not only against those who break the contract, but also against third parties who provide information that gives users the ability to break their contracts? That doesn’t sound very libertarian to me.

  • http://www.digitalproductions.co.uk Crosbie Fitch

    Copyright isn’t a contract.

    A contract is a VOLUNTARY AGREEMENT.

    Abolish copyright law and we’ll see just how many people will voluntarily prefer buying art from artists that require the signing of a contract that precludes, copying, public performance, or the production of derivative works.

    To say that copyright law is a convenience for the benefit of the majority of people who would obviously prefer to make such contracts automatic is grievously disingenuous.

  • http://www.digitalproductions.co.uk Crosbie Fitch

    Copyright isn’t a contract.

    A contract is a VOLUNTARY AGREEMENT.

    Abolish copyright law and we’ll see just how many people will voluntarily prefer buying art from artists that require the signing of a contract that precludes, copying, public performance, or the production of derivative works.

    To say that copyright law is a convenience for the benefit of the majority of people who would obviously prefer to make such contracts automatic is grievously disingenuous.

  • http://enigmafoundry.wordpress.com/ enigma_foundry

    IANAL, but the term I had heard was “attach” which is similar to a lien, but with regard to personal property. Not used very often.

    There is a whole category of contracts which cannot be enforced. Society makes rules defining what are the terms of a sale of a car for example, which has the goal of preventing deep pocketed legally sophisticated entities taking advantage of those in an inferior bargaining position. Each time we do this, we have to weigh the plus’s and minus’s.

    In any case, those laws, such as the DMCA, which delete basic freedoms, such as the First Amendment, have a particularly high hurdle.

    So, I can support lemon laws for example that proscribe terms under which a car is sold to a consumer, but I can not abide by the erasure of the Frist Amendment, which I would suggest is in a special, prefered position.

    First is, well, First.

  • http://enigmafoundry.wordpress.com eee_eff

    IANAL, but the term I had heard was “attach” which is similar to a lien, but with regard to personal property. Not used very often.

    There is a whole category of contracts which cannot be enforced. Society makes rules defining what are the terms of a sale of a car for example, which has the goal of preventing deep pocketed legally sophisticated entities taking advantage of those in an inferior bargaining position. Each time we do this, we have to weigh the plus’s and minus’s.

    In any case, those laws, such as the DMCA, which delete basic freedoms, such as the First Amendment, have a particularly high hurdle.

    So, I can support lemon laws for example that proscribe terms under which a car is sold to a consumer, but I can not abide by the erasure of the Frist Amendment, which I would suggest is in a special, prefered position.

    First is, well, First.

  • http://openmarket.org Cord Blomquist

    Hey everyone. I just got a chance to catch up on some of the heated TLF action that has occurred over the past few days. I’ve been on the phone for hours after work today because my sister is having a baby boy today! I’m also heading home to Wisconsin to become the godfather of my other sister’s baby boy who was born two months ago. I’m quickly becoming the old maid of the family.

    Anyway, I want to prepare a thoughtful response to Tim’s post and as many of the comments as I can cover. I’ll post either at openmarket.org or cordblomquist.com, my personal site. Either way, I’ll let Tim know when I’ve posted and hopefully we can continue our discussion next week after my weekend with new nephews is over.

  • http://www.techliberation.com/ Tim Lee

    Congrats to your sister, Cord!

  • http://www.cordblomquist.com cordblomquist

    Hey everyone. I just got a chance to catch up on some of the heated TLF action that has occurred over the past few days. I’ve been on the phone for hours after work today because my sister is having a baby boy today! I’m also heading home to Wisconsin to become the godfather of my other sister’s baby boy who was born two months ago. I’m quickly becoming the old maid of the family.

    Anyway, I want to prepare a thoughtful response to Tim’s post and as many of the comments as I can cover. I’ll post either at openmarket.org or cordblomquist.com, my personal site. Either way, I’ll let Tim know when I’ve posted and hopefully we can continue our discussion next week after my weekend with new nephews is over.

  • http://www.techliberation.com/ Tim Lee

    Congrats to your sister, Cord!

  • Richard

    To go a step further on the distinction between contract and property:

    Property law is often criticized for imposing forms of ownership which perpetuate hierarchy. Given that DRM and music copyrights are generally held by corporations, this raises another concern. Where corporations control both the contractual relationship with artists (or software engineers) and the property forms with consumers, they are able to perpetuate a system of governance which re-distributes wealth to their bottom line. All corporations strive towards monopoly power (it is the nature of capitalism to compete), and therefore the forms of property they promote will tend towards narrow ownership of previously unregulated aspects of our lives. Just as wealthy individuals have been able to create forms of property in land–such as an asset protection trust–which guards wealth via form (property) not equity (contract), so too can corporations promote property forms which tighten their grip over certain forms of information. Given the protections afforded property by the Constitution, we should probably ask twice before conveying such power to entities.

  • Richard

    To go a step further on the distinction between contract and property:

    Property law is often criticized for imposing forms of ownership which perpetuate hierarchy. Given that DRM and music copyrights are generally held by corporations, this raises another concern. Where corporations control both the contractual relationship with artists (or software engineers) and the property forms with consumers, they are able to perpetuate a system of governance which re-distributes wealth to their bottom line. All corporations strive towards monopoly power (it is the nature of capitalism to compete), and therefore the forms of property they promote will tend towards narrow ownership of previously unregulated aspects of our lives. Just as wealthy individuals have been able to create forms of property in land–such as an asset protection trust–which guards wealth via form (property) not equity (contract), so too can corporations promote property forms which tighten their grip over certain forms of information. Given the protections afforded property by the Constitution, we should probably ask twice before conveying such power to entities.

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