Digital Rights Management and International DRM Enforcement September 20, 2004

From Copyright Protection to DRM This transition raises international and individual issues Copyright designed to protect authors/owners of original works Grants 5 basic rights to authors/owners: –Reproduce the work –Make derivative works –Distribute copies to the public –Public performance and public display Copyright protections limited by a fair use clause allowing portions of a work to be reproduced, educational copying, library access, individual private copies, etc.

What Problems Is DRM Trying to Solve? 1) Outright Piracy for Profit According to the Business Software Alliance: –Global Software Piracy Rate Averages 36% China is highest at 92% US is lowest at 22% –Asia/Pacific average is 53% Exception is Japan at only 29% –Eastern Europe average is 70% –Latin American average is 63% Estimated cost of global software piracy was $29 billion in 2003

Other DRM Targets 2) File sharing and free online distribution of entertainment media According to the Recording Industry Association of America (RIAA) –World-wide “pirate” music sales cost the industry $4-5 billion annually –Globally 2 in 5 recordings are “pirate” copies (RIAA Definition of pirate copies includes copies made by individuals for home use)

Strict DRM Enforcement Transforms Previous Copyright Practice (And Raises Some Fundamental Rights Issues) Fair Use not clearly allowed Individual ownership (and control) of the use of a copyrighted item once purchased (“First Sale rights”) Privacy protection for the consumer’s non- commercial use Shift from civil to criminal penalties –Tampering with or removing DRM systems from personal property – even if there is no other prohibited action involved –Distributing tools or information on how to circumvent DRM systems

International DRM Agreements WIPO –World Intellectual Property Organization updated Berne Copyright agreement to include digital content protection in December 1996 –US content providers pushed hard for the strictest possible protection of owner’s rights –Each country belonging to WTO required to pass enforcement measures to ensure in-country compliance with WIPO measures Enforcement examples –US=Digital Millennium Copyright Act (DMCA) –Europe = European Union Copyright Directive

DMCA Overview DMCA –US enforcement act, passed in 1998; even stricter than the general WIPO agreement –Created 2 NEW author/owner rights: –Anti-circumvention rules “Illegal to make, import, offer to public, provide, or otherwise traffic in technologies that bypass access controls” Illegal to make, etc. technologies that bypass other technical protection methods used by copyright owners to protect a right in their works” –Protection for copyright management information as well as the protective technology itself Don’t have to actually copy anything; just telling someone how to get around an existing protection is an offense against DMCA

U.S. DMCA Enforcement Examples Arrest of Russian programmer at a US conference for publishing details about the DRM system that protects Adobe eBooks Princeton professor threatened with lawsuit over academic paper with detailed analysis of weaknesses in DRM systems Critique of Diebold voting machine flaws blocked from publication and author threatened with suit Lexmark vs. Static Controls (toner cartridges) Chamberlain vs. Skylink (garage door openers)

EU Copyright Directive More restrictive than DMCA –Bans all acts of circumvention, not just access controls –No exceptions, not even for research purposes –Broad ban on all circumvention technologies, no matter what the purpose US allows circumvention to protect children from harmful material and to protect against surveillance without proper notice Boucher HR107 Digital Media Consumers' Rights Act of 2003 would re-create fair use exemptions for individual copying for non-infringement purposes (But this bill hasn’t become a law)

EU Directive Coming on Strong Many groups have tried to stall final implementation; calling the provisions “DMCA on steroids” –Became official in April 2004 EU member countries have two years to create local legislation and enforcement provisions based on the Directive UK has already passed a new copyright law that mirrors the EU provisions (Copyright and Related Rights Regulations 2003) –Consumers can no longer make a back-up copy of a CD they have purchased, even for private use –Penalties for file sharing, etc. now imposed by UK government (compared to RIAA enforcement in the US)

Asia/Pacific Japan –Now a crime to make or distribute circumvention technologies or offer circumvention services as a business China –Illegal to intentionally circumvent technologies without explicit permission of copyright owner or the government Australia –Illegal to make, import, or distribute circumvention device that can reasonably be known to expose copyright works to illegal copying

But Up In Canada Spring 2004 court ruling in favor of legality of peer to peer file sharing –Not expected to stand up to entertainment industry challenges

What About the Individual? Rights to fair use are disappearing Tougher enforcement provisions “makes criminals of us all” (according to UK article protesting the new restriction on back-up CD copies) Shift from DRM as a means of existing copyright protection to DRM as a new, tougher type of copyright law that puts owners of works in the power position Will it work to stem losses from piracy and digital file sharing, or will it backfire in terms of consumer behavior and loyalty?

Alternative: DRM Focus on Creating New Businesses Instead of Protecting Old Ones Thirty years ago, video recording and VCRs were supposed to destroy the film industry? –In 1976, Walt Disney and Universal Studies sued Sony to try and block the US sale of VCRs Eight years later, they lost…. Today, the film industry makes most of its profits from video and DVD sales, not from movie ticket sales Today, the music and entertainment industry is calling on DRM and its enforcement to protect the sales of CDs and DVDs and block media downloading –What will be the most profitable platform for music and movie sales in ten to twenty years? Definitely not CD-ROM! Probably not DVD