INTELLECTUAL PROPERTY THE DIGITAL ECONOMY Pamela Samuelson

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

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 2

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. 3

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 4

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 5

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 6

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 7

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) 8

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 9

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 10

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 11

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 12

? OK CIRCUMVENTIONS ? • Reasonable grounds to believe infringing copy inside TPS • Illegitimate invocation of “technical selfhelp” • Reverse engineering for other legitimate reasons • Unannounced computer security testing • News reporting about toxic spill 13

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 14

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 15

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!) 16

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) 17

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? 18

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 19

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 20 to bypass to make fair uses w/o tool?

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? 21

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 22

MORE CONSIDERATIONS • EPIC software not really piracy-encourager of sort Hollywood said this rule was about • Sony Entertainment v. Connectix: anticircumvention claim; defeating anti-copying scheme when users play games on i. Mac with C’s emulation software • $2500 in damages for each copy (even though no proof of underlying infringement) 23

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? 24

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 25

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”) 26

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 27