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INTELLECTUAL PROPERTY & THE DIGITAL ECONOMY

Pamela Samuelson,

School of Info. Mgmt. & of Law,

March 17, 1999

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CONTEXT

• Clinton Administration NII Initiative

• Working Group on Intellectual Property

• 1995 “White Paper” & proposed cop. law

• Same proposals made to int’l group

• Diplomatic conference in Dec. 1996 at World Intellectual Property Organization (WIPO) to consider draft treaty

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MAXIMALIST DIGITAL AGENDA AT WIPO

• Copyright control of temporary copies

• Strict liability for online service providers

• Copyright control of digital distributions

• Fair use no longer needed because licensing possible

• Ban “circumvention” technologies

• Protect integrity of rights mgmt. info.

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MINIMALIST WIPO TREATY

• Nothing on temporary copies

• Merely providing facilities for communication NOT basis for liability

• Fair use still applies in digital environment

• Protection for integrity of RMI

• “Adequate protection” and “effective remedies” for circumvention of TPS

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FRAMEWORK FOR GLOBAL E-COMMERCE PRINCIPLES

• Private sector should lead

• Avoid undue gov’t restrictions

• When gov’t involved, “predictable, minimalist, consistent, & simple legal environment” (e.g., copyright)

• Recognize unique qualities of Internet

• Facilitate on global level

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ACTIONS FOLLOW PRINCIPLES?

• WIPO Copyright Treaty consistent with Framework principles (in spite of Clinton Administration)

• WIPO treaty implementation legislation proposed by Clinton Administration not consistent with Framework principles

• Digital Millenium Copyright Act generally OK but for anti-circumvention provisions

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DIGITAL COPYRIGHT BILLS

• Between Jan. 1997 and spring of 1998, held up by dispute between OSPs (e.g., telcos) and copyright industry groups

• Compromise: “safe harbors”for transitory network communication, system caching, information residing on systems for users, & information location tools

• “Notice and take down” rules

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OTHER ASPECTS OF DMCA

• Temporary copying done in course of hardware maintenance (partial fix to MAI v. Peak)

• Study about distance education rules

• Protection for integrity of RMI (closely tracking WIPO treaty language)

• Technical amendments (not worth discussing)

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CIRCUMVENTION RULES

• Not clear U.S. had to pass to comply with treaty

• Competing bills were maximalist v. minimalist

• Maximalists = Hollywood (plus allies)

• Minimalists = Silicon Valley (plus allies)

• Administration supporting Hollywood

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ACT OF CIRCUMVENTION

• Campbell-Boucher bill: outlaw circumvention to engage in copyright infringement

• DMCA: ban on act of circumventing TPS for access control, 17 U.S.C. s. 1201(a)(1)

• 2 year moratorium; study of impact on noninfringing uses

• 7 specific exceptions

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EXCEPTIONS TO 1201(a)(1)

• Clinton bill: OK for legitimate law enforcement, national security purposes

• House IP subcomm: nonprofit “shopping privilege,” OK to circumvent to make fair use of lawful copy

• Sen. Jud. Comm: exception for reverse engineering for interop’ity; no mandate to “read,” not broadening contrib infringement

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MORE ON EXCEPTIONS

• House Commerce Comm: encryption research, privacy protection, parental control; moratorium & study

• At last minute, computer security testing exception added

• Need for “or other legitimate purpose” exception to access control rule

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? OK CIRCUMVENTIONS ?

• Reasonable grounds to believe infringing copy inside TPS

• Illegitimate invocation of “technical self-help”

• Reverse engineering for other legitimate reasons

• Unannounced computer security testing• News reporting about toxic spill

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ANTI-DEVICE PROVISIONS

• Illegal to “manufacture, import, offer to public, provide or otherwise traffic” in

• Any “technology, product, service, device, [or] component”

• If primarily designed or produced to circumvent TPS; if only limited commercial purpose other than to circumvent TPS or if marketed for circumvention uses

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MORE ON DEVICE RULES

• 1201(a)(2)--devices to circumvent effective access controls

• 1201(b)(1)--devices to circumvent effective use controls

• Felony provisions if willful & for profit

• Generous damages & injunctions

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CURIOUS THINGS

• Only 3 exceptions to 1201(a)(1) explicitly allow building tools to enable

• Only interoperability exception limits both anti-device rules

• Congress meant to allow circumvention to make fair use, but are tools to accomplish illegal? (Ha! Ha!)

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VAULT v. QUAID

• Vault made “Prolok” copy-protection s/w

• Quaid reverse-engineered and made “spoofing” software “Ramkey”

• Vault sued for direct infringement (copying to reverse-engineer) and contributory infringement (making tool to enable users infringe copy-protected software)

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MORE ON VAULT

• No direct infringement: reverse engineering to learn technical details OK

• No contributory infringement: substantial noninfringing use to allow backup copies

• 17 U.S.C. sec. 117 allows owners of copies to make backup copies

• Would the result be different now?

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VAULT POST-DMCA

• Circumventing access control or use control?

• If former, no exception for this

• If latter, OK to circumvent to make noninfringing uses under 1201(c)(1)

• But anti-device rules don’t speak to illegitimate circumvention, only to circumvention as such

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FOR SELF v. FOR MARKET?

• Quaid might bypass to make own backup copies, but can’t do without making tool to enable--is this illegal?

• Strict interpretation v. loose interpretation

• More likely to get in trouble if selling or sharing with others, but what if genuinely believe supporting noninfringing uses

• What if it’s impossible for ordinary people to bypass to make fair uses w/o tool?

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CONSIDERATIONS

• Hollywood wanted broad anti-device rules (more even than act of circumvention rules)

• Broad rules make it easier to sue

• No act of underlying infringement required

• Potential for infringing uses = threat

• Yet seemingly contradictory: OK to make fair use but illegal to make tool to do?

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ANOTHER EXAMPLE

• Posit Windows 2000 as trusted system

• Intel processor ID must be on as part of trusted system and as condition of license

• Suppose EPIC makes “spoofing” software

• Defeats access control system

• Device to defeat component of TPS for access or use control

• Privacy exception doesn’t mention tools

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MORE CONSIDERATIONS

• EPIC software not really piracy-encourager of sort Hollywood said this rule was about

• Sony Entertainment v. Connectix: anti-circumvention claim; defeating anti-copying scheme when users play games on iMac with C’s emulation software

• $2500 in damages for each copy (even though no proof of underlying infringement)

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STUDY PROVISION

• Librarians and educators expressed concerns about impact of TPS on access, public domain, & fair uses

• 2 year moratorium; study by Copyright Office of impact

• Exempt from 1201(a)(1) if negative impact• But no defense to anti-device rules• Another meaningless privilege?

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BROADER STUDY NEEDED

• Study other impacts of act of circumvention rules (e.g., broader security testing)

• Study impact of anti-device rules because overbroad and contradictory

• Potential for “strike suits”

• Potential for “chilling effects”

• Potential for other deleterious consequences

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INTERNATIONAL ISSUES

• Argument for broad anti-circumvention rules in U.S. to promote them as “international standards,” as proper implementations of WIPO treaty abroad

• Only E.U. proposing similar rules so far

• E.U. and U.S. coordination in int’l arena

• WIPO treaty not yet effective, let alone part of TRIPS (“trade with teeth”)

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CONCLUSION

• Regulation of circumvention technologies relatively new

• Mostly been done when intent to enable infringement is clear

• Analogy to “burglar’s tools” hides that many technologies have dual uses

• Digital economy more likely to thrive when copyright wears a lighter cloak