DMCA, DRM & Piracy

The U.S. recently lost a WTO suit brought by Antigua. Basically the U.S. had outlawed overseas internet gambling, but allowed certain types of domestic gambling sites. The WTO sided with Antigua and told the U.S. it had to change its law. Today is the deadline for the U.S. to make that change and it doesn’t seem like it will. For one thing, the U.S. has little incentive. The normal course in this situation is that Antigua would be allowed to place trade sanctions on U.S. imports. But for a country with a population of 70,000, this would hurt them more than it would hurt the U.S. So, the Antiguans are looking for other options. According to the Boston Globe,

Antigua is considering retaliatory moves that could enable the tiny nation to punch above its weight. … the country may refuse to enforce American patents and trademarks. This would make it possible for Antiguan-based companies to produce knock-offs of American intellectual property, like video and music recordings or computer software. Such a tactic would get the attention of major US firms like Microsoft Corp. and entertainment titan Time Warner Inc. It would also put tiny Antigua’s trade war against the United States on front pages around the world.

There’s also an NPR story on the Antiguan affair here. Easier than actually producing physical knock-offs, they could allow online businesses a la Napster, My.MP3.com, or AllOfMP3.com to go up within their borders. I wonder how far this will go. If they just want to get attention and put pressure on the U.S., or if they’ll go further. Also, what will the WTO make of this? Under the Dispute Settlement Understanding, sanctions aren’t the express remedy. The treaty states that if a settlement can’t be reached by the parties, the plaintiff can seek the WTO’s OK “to suspend the application to the Member concerned of concessions or other obligations under the covered agreements.” The TRIPS Accord would be a candidate for suspension. Although it looks like the WTO Dispute Resolution Body has previously demurred on the topic, some have made the case that TRIPS can “serve as an enforcement device for developing countries in the WTO.”

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The New York Times has the latest evidence that Hollywood is clueless when it comes to selling its products on the Internet. Hollywood has finally gotten around to offering users the opportunity to purchase and download movies online:

New movies will cost about $20 to $30 to download; older titles will cost as little as $10. The downloads will be available on the same day that the DVD is released–quicker than rentals, which are put online about 45 days later and cost $2 to $5.

Last time I looked, you can get DVDs of new videos for less than $20 from Amazon.com. So an Internet download will be more expensive than buying the movie on DVD. But at least there will be some new functionality, right?

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Solveig Singleton links to this article about the French DRM proposal. I agree with its conclusion, but it strikes me as rather naive:

Like most such legislation, this bill is ill-conceived and should not pass. The reason for this is simple: it would weaken any DRM scheme, almost to the point of superfluity, and would serve only to increase piracy…

But deeper analysis shows that the provisions do nothing but undermine DRM. The problem is that the type of information necessary to achieve interoperability is also precisely the information necessary to render DRM useless: encryption algorithms, keys, content metadata, and so on. DRM would be reduced to the tiniest of speed bumps, easily surmountable with utility software that would become readily available. The boundaries between such “interoperability utilities” and circumvention software (hacks) would be erased, and the difference between legitimate and illegitimate uses of those technologies would revert to plan old copyright law–which is where we started before DRM came into being.

He’s right: the information necessary to achieve interoperability is the same information necessary to render DRM useless. But it’s not like that information is presently a secret. To the contrary, it’s already widely available, both to hackers and to any mainstream company that cares to do a bit of reverse engineering. In fact, it’s only a bit of an exaggeration to say that “the tiniest of speed bumps, easily surmountable with utility software” is a pretty good description of DRM as it exists today.

So while I don’t think companies should be required to share details of their proprietary products with rivals, my objection is mostly a matter of principle. As a practical matter, mere information disclosure isn’t likely to have much of an impact on anything.

The scary part, I think, is that sooner or later this may give judges authority over the design of software products. Because Apple changes its DRM scheme pretty regularly to deter hackers. The next step on this regulatory path is for rivals to complain that Apple doesn’t disclose those changes promptly enough. And at some point, I’m afraid that we’ll get to the point where a French judge has to sign off on any format changes before Apple can go forward with them, so rivals have time to modify their products. I don’t want the French courts to be telling Apple how to build their products.

This is the beauty of simply repealing the anti-circumvention rule (or in the French case not enacting one): companies would be free to implement interoperability features if they wanted to, but the cost of doing so would be entirely on their shoulders. The state wouldn’t be forcing Apple to open up its platform, but it wouldn’t be forcing other companies to leave it closed, either. Both Apple and its competitors would have to rely on self-help, not the courts, to make their business plans work.

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French legislators recently approved a bill that will force technology companies such as Apple Computer to share proprietary technology with rivals. Such a move is not only a recipe for disaster but completely unnecessary.

The digital music market has always been a tumultuous place. For a long time, Hollywood and Silicon Valley battled over how to sell music while avoiding the theft of digital goods. Now that there’s a truce and Apple’s iTunes store just sold its 1 billionth legally downloadable song, it’s more than a little ironic that the French government wants to essentially steal Apple’s intellectual property.

“The French implementation of the EU Copyright Directive will result in state-sponsored piracy,” Apple said in a statement. “If this happens, legal music sales will plummet just when legitimate alternatives to piracy are winning over customers.”

It’s not a given that a standardized platform would promote music piracy as Apple implies, but it is the case that if France’s bill passes the Senate in May, the country will be endorsing the theft of Apple’s intellectual property by its rivals. That’s not a good outcome and one might wonder what is motivating the French to take such drastic action.

Read more here.

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Bridget Dooling and I have an article in this weekend’s Wall Street Journal. It’s the Rule of Law column and, not surprisingly, it’s on orphan works. Here’s a bit:

Fiddling with copyright terms and registration, however, would require not only the abrogation of several international intellectual property treaties, but also the political will in Congress to stand up to movie and publishing lobbies. Luckily, a much simpler solution is possible, and an orphan works component can be snapped into the existing copyright system. Congress can create an affirmative defense–along the lines of fair use–for those who copy a work after trying unsuccessfully to locate the copyright owner.

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There are a lot of political debates in which one side believes that a particular activity ought to be compulsory, while the other side believes it ought to be prohibited. For example, conservatives liberals want to teach evolution in schools, while liberals conservatives want to prohibit the teaching of evolution in schools. The debate over filling birth control prescriptions is similar: conservatives think pharmacies should be prohibited from requiring their pharmacists to fill them, while liberals think pharmacists should be required to fill them.

Ordinarily, libertarians stake out a third position: that the activity in question should be neither prohibited nor compulsory. In the case of schools, they argue for giving parents more choices, so they can find a school whose curriculum matches their beliefs. In the case of prescriptions, they believe the pharmacy should be free to set whatever policy it likes, and the pharmacists are free to find a new job if they don’t like it.

That’s hard for non-libertarians to swallow, because they’re always more interested in the particular issue (should our kids learn evolution? Should women have access to birth control?) than the broader issue of whether the state should get involved at all.

So here’s another example of this kind of unlibertarian thinking. In his recent criticism of my paper, Mr. Ross seems to think there are only two options: either interoperability can be mandatory, or it can prohibited:

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In my initial response to Patrick Ross’s critique of my paper, I said that he appears to have failed to engage (or to simply not have grasped) my central arguments. Here is an example:

The paper also appears to embrace piracy. Take this example: “Shipping a carton of bootleg videotapes across state lines is expensive, time-consuming, and legally risky. Uploading a bootleg movie to a file-sharing network, in contrast, costs almost nothing, can be done in minutes, and is unlikely to lead to jail time. In the Internet age, people can infringe copyright from the comfort of their homes.” This is all factual. It also seems to be a compelling case for government to re-exert its traditional role of defining and enforcing property rights to ensure a functioning market. But the author seems to believe that this ease in piracy–and the decreased risk in jail time–means that the copyright owners should be willing to surrender some of their rights that were more easily enforced in an analog world.

I have no idea where he gets that conclusion. I do not in any way shrug my shoulders at piracy or say that peer-to-peer file sharing is just fine. I don’t claim that copyright holders have to give up rights they enjoyed in the analog world. This appears to be another example of question-begging on his part. He believes that permitting circumvention would increase piracy, so he projects that assumption on me and concludes that I’m also soft on piracy.

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Jim will have to stop needling PFF for ignoring my paper, as Patrick Ross has posted a truly epic three part critique.

I found his responses disappointing for several reasons.

First, he engages in a fair bit of name-calling, insinuating that anyone who agrees with EFF can’t possibly be a libertarian. (I wonder if Ross has actually bothered to peruse their site? While I don’t agree with every position they’ve taken, I would imagine that he, as a libertarian, would find a lot to like.) The entire critique is suffused with this kind of black and white, “us versus them” attitude. For example, he faults me for both criticizing and praising Apple, as though there’s something inconsistent about praising one aspect of a company and criticizing another. He also, bizarrely, argues that my comparison of DRM to a Maginot Line means that my “friends who like to breach DRM” are the Nazis.

Second, it doesn’t appear that he really engaged my central arguments. For example, he doesn’t make any effort to address the point that DRM hasn’t been an effective piracy deterrent. He doesn’t seem to have grasped my specific criticism of OpenCable–that the DMCA has put consumer electronics companies like TiVo at the mercy of the cable industry, thereby stifling the development of any devices that might be a competitive threat to cable companies. The analogy to the IBM BIOS case (a case in which a platform was opened against the will of its originator) seems to have made no impression on him. And most generally, the distinction between inter-platform and intra-platform competition appears to be completely lost on him.

Finally, throughout the paper, he makes statements like this:

The author also freely admits that some court decisions have not been in accord with his belief in this “balance,” yet we are told that we shouldn’t trust Congress or markets but rather unaccountable judges.

Note the question-begging use of the word “markets.” In point of fact, that’s precisely where we disagree: whether the DMCA is an interference with the free market. A free market is an economic system in which individual rights are protected, contracts are enforced, but people are otherwise left alone by the government. While a circumvention ban might be compatible with market principles, it certainly isn’t required by them. Yet whenever I point out problems that have been caused by the DMCA, he responds by accusing me of being hostile to markets. That’s a non-sequitur.

Mr. Ross and I have some serious policy disagreements about the real-world consequences of the DMCA, and we have some different opinions about whether some of those consequences are good or bad. I plan to address a couple of his specific criticisms in a subsequent blog post. But I wish he’d focus a bit more on engaging on those policy disagreements instead of constantly insinuating that I should have my libertarian card revoked.

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I’ve got a new op-ed in the Salt Lake Tribune. There won’t be anything in it that’s news to regular TLF readers, but here’s how it starts:

Did you know that it’s a federal crime to listen to your music on the wrong brand of portable music player?

It’s true. At least, it is if you buy your music online. Take Apple’s iTunes Music Store, which recently sold its billionth song. Apple talks a lot about the convenience and affordability of its music, but they don’t mention its darker side: it’s only compatible with Apple products. MP3 players from other companies aren’t supported.

In a free market, that wouldn’t be so bad. Manufacturers of competing MP3 players, such as Sony, Creative and Samsung, could provide software to automatically convert the music to a compatible format. But that would be illegal, thanks to a little-known law called the Digital Millennium Copyright Act, which Congress passed in 1998.

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