1. 1 INTELLECTUAL PROPERTY & THE DIGITAL ECONOMY Pamela Samuelson, School of Info. Mgmt. & of Law, March 17, 1999

2. 2 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

3. 3 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.

4. 4 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

5. 5 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

6. 6 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

7. 7 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

8. 8 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)

9. 9 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

10. 10 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

11. 11 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

12. 12 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

13. 13 ? 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

14. 14 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

15. 15 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

16. 16 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!)

17. 17 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)

18. 18 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?

19. 19 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

20. 20 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?

21. 21 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?

22. 22 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

23. 23 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)

24. 24 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?

25. 25 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

26. 26 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”)

27. 27 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