Declan McCullagh

The Struggle Over Intellectual Property

Declan McCullagh*
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"What's the best way to protect digital works—by acts of Congress or with technology?"
Speedy Internet links, improved compression techniques, and fatter hard drives have dealt harshly with traditional views of copyright. From the ongoing courtroom wrangling over Napster's fate to the online swapping of pirated movies, our current copyright structure is being stretched and tested by unforeseen technologies.

It's a high-stakes tussle between technology and the law, highlighted by tens of millions of file traders thumbing their noses at legal restrictions. True, Napster's court imbroglio may have cost it a third of its users in the last two months, but other file-trading services that don't rely on centralized servers have found their business booming. Eight movie studios have sued a hacker magazine for distributing a DVD-descrambling program that they claim aids piracy. A federal panel of appeals judges in May seemed sympathetic to their arguments and a decision is expected soon, but hundreds of copies of the descrambler utility remain available on the Internet.

Content owners, distributors, and publishers fret that the ease of online distribution will encourage copyright infringement and reduce sales. They have some reason to worry: As bandwidth increases and distribution technology improves, the online price of intellectual property may start to approach zero. Anonymous publishing systems promise to accelerate this trend. Devotees of free content, on the other hand, offer more varied arguments. They say piracy is justified because of content owners' unconscionably high profits, because it may lead to increased sales of the work eventually, or because record companies have not made it possible to readily buy music online so piracy is justified.

Everyone likes stuff for free, of course, and piracy has always nibbled at the edges of publishers' and distributors' profits. But it's far easier and cheaper to copy an MP3 file than photocopy a Tom Clancy novel, and digital copies—unlike their analog counterparts—do not diminish in value. Every copy has the same quality, which means that, if taken to its logical conclusion, widespread piracy will destroy the incentives to create valuable content.

The Government's Role

What should the government's role be in this dispute? Let's start at first principles. The primary responsibility of governments is to safeguard the rights of the governed, including our physical selves and our tangible property. Intellectual property, however, is a recognizably different species. (A copyright gives its owner an exclusive right to copy, publish, or create "derivative works" from the original. A patent allows its holder to prevent others from making use of the patented invention.)

First, copyright or patent infringements do not deprive the creator of his original copy. Justice Blackmun once wrote that: "The copyright owner, however, holds no ordinary chattel. A copyright, like other intellectual property, comprises a series of carefully defined and carefully delimited interests to which the law affords correspondingly exact protections." Thomas Jefferson put it more eloquently. "He who receives an idea from me," wrote Jefferson, a writer and inventor, "receives instruction himself without lessening mine—as he who lights his taper at mine, receives light without darkening me."

Second, it is true that the U.S. Constitution provides for copyright protection. It allows Congress "to promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries." But the United States didn't have what we'd consider to be modern copyright protections until a century ago. Imagine America's westward expansion, homesteading, and the Gold Rush without property rights protected in law! Yet that was the case for intellectual property until 1909. In that year, Congress expanded the penalties for unlawful commercial use of copyrighted works to include any type of infringement. Previously criminal copyright law only included unlawful performances, say of a dramatic work.

Third, the ways in which others can make legal use of your tangible property—such as your home or your body—without your permission are few. Copyright law, however, features a rabbit's warren of complicated rules, exceptions, and procedures. Because of the First Amendment's equal footing in the Constitution, we have the "fair use" exception to copyright. It generally allows others to expropriate portions of your work, within limits, even if you object. Another example is the federal law requiring compulsory licensing of music, something that Napster's lobbyists are hoping to extend to MP3 files on the Internet.

Fourth, intellectual property rights often conflict with not only the idea of unfettered speech, but also with the use of tangible property. Copyright laws tell us we must not use our computers or printing presses in a certain way, lest we risk fines or prison sentences. Patent laws restrict what we may do with the raw materials we buy and seek to transform into products in our factories or machine shops.

Fifth, traditional, tangible property is economically scarce. If you buy a plot of land and build a house, nobody else can use that space. Your use of it precludes others from doing the same. So scarce resources can be used without eternal conflict over ownership, John Locke proposed a reasonable rule of thumb: He who mixes his labor with raw materials becomes the owner. But because intellectual property is not economically scarce, the same rules don't apply. My enjoyment of a pirated MP3 file doesn't deprive anyone else of their copy. Just ask the Recording Industry Association of America (RIAA), which is trying its level best through litigation and legislation to remove pirated music from the web—the modern-day analogue to Jefferson's candle.

Testing the Digital Millennium Copyright Act

Claiming the threat of piracy demands immediate action, the RIAA and its allies have persuaded Congress to enact increasingly restrictive copyright laws. In December 1997, President Clinton signed the No Electronic Theft Act, which makes it a crime to share copyrighted content valued at over $1,000 with your family or friends—even if there's no money changing hands. A year later, Congress overwhelmingly approved the Digital Millennium Copright Act (DMCA), which outlaws most attempts to remove copy protection from books, music, video, or other works.

In July, Dmitry Sklyarov, a Russian programmer and graduate student visiting the United States, became the first person prosecuted under the DMCA. The 27-year old programmer's legal troubles began weeks earlier, when his employer, a Russian software company called Elcomsoft, began selling a program called the "Advanced eBook Processor." It allowed Elcomsoft's customers to strip away the copy protection from a proprietary software format that Adobe Systems invented to encode electronic books.

To peeved Adobe executives, the decoder was a tool of software pirates. They fired off a stiff letter to the Russian firm claiming "unauthorized activity relating to copyrighted materials," and demanding that the $100 eBook decoder be taken off the market. After Adobe contacted the FBI, federal agents arrested arrested Sklyarov in Las Vegas on July 16. They charged him with one count of "trafficking" in illegal copyright-circumvention software in violation of the DMCA. He's being held without bail and is facing a five-year prison term and a fine of $500,000.

Like an increasing number other companies, Adobe is relying on both the law and technology to protect copyrighted works. Their eBook protection technology is a first line of defense: If that's circumvented, they can turn to civil suits and criminal prosecutions to limit the fallout.

But academics, librarians, and computer programmers have criticized both the Sklyarov prosecution and the DMCA itself. They say that Elcomsoft's descrambler allows its users to make reasonable uses of the decoded eBooks. For instance, it permits someone to copy an eBook from a desktop to a laptop computer for reading on the road, which would be fine under existing "fair use" standards but not permitted by Adobe's technology or contract with the user.

The Role of Technology

The Sklyarov case lies at the heart of an increasingly important debate over what set of rules should govern advances in technology and digital content. Should it be a criminal act to create software that de-protects digital books, music, or DVDs? Should it be a civil offense? More broadly, what's the best way to protect digital works—by acts of Congress or with technology?

One way out of this seeming impasse is to encourage a scheme that would replace, or at least supplement, statutory law with technology. That would allow buyers and sellers efficiently to agree on terms that would award a bundle of copyright uses that are precisely what the buyer desires. A customer would not buy rights that he would not need, and market forces would begin to replace political ones. This scheme may involve higher transaction costs in negotiating each exchange, but it seems likely that a set of standard contract terms would emerge.

By now, it's clear that copyright holders have concluded the law alone isn't sufficient to protect their work. Teenage pirates flout legal restrictions, secure in the knowledge that there are too many of them to prosecute and they have few assets at risk in a civil suit. Overseas pirates are even less likely to be concerned about copyright laws, which are generally not as strict as the ones in the United States. Just as tangible property holders rely on not merely the law but also technology in the form of fences, locks, and safes to protect their property, copyright holders have started to do the same.

Unhappy with the limited number of criminal prosecutions and recognizing the futility of suing 50 million Napster users, companies like Adobe, Microsoft, and Verance are turning to technology instead of the law. They're testing copy-protection systems and watermarking methods that will become increasingly widely used as technological protection schemes for copyrighted works. It's too early to say whether they will be successful, which technologies will become standards, what kinds of licenses will emerge as defaults, and what consumers will prefer. Perhaps the market will reject digital rights management entirely as too cumbersome or complex. This happened, after all, with the failed DiVX pay-per-use DVD format. But content owners have strong incentives to find a solution that will please customers.

Such systems work in varied ways. The group of companies that invented the DVD format use a relatively weak encryption scheme called CSS to deter pirates from copying movies. Adobe's system restricts the number of computers on which an electronic book can be viewed. Microsoft is moving toward a piracy-limiting operating system that checks a computer's configuration and refuses to run if too many components have been changed.

Critics of such approaches say, with some justification, that it may become more difficult to make traditional "fair use" of copyrighted works if they're locked behind digital gates. They have a point, but they tend to de-emphasize the costs associated with fair use. Currently those who wish to protect their ability to make fair use of a work or reduce fair use of a work have the option of lobbying Congress, focusing especially on the judiciary committees that oversee copyright law. But the political system is a poor and inefficient means of expressing economic preferences, and a large body of work shows that legislators typically seek to advance their personal interests, not the interests of the general public.

Tom Bell of Chapman University argues that technological systems would create additional incentives for content owners to license their works. Because content would increase in value and could be licensed more efficiently, owners of photograph or magazine articles would be far more likely to place their work online and in searchable databases. By eliminating intermediaries by means of Internet delivery, a contractual system could reduce transaction costs.

But just because technological locks may be a good idea, it does not mean that it makes sense to outlaw the creation or distribution of devices or computer programs that can circumvent such schemes. Such codebreaking is a necessary part of legitimate encryption research, and its publication should be protected by the First Amendment. Just as guns should not be outlawed because they can be used for harm, software should not be banned because it could aid piracy. Wrong acts should be punished, not the creation of a tool that can be used for both good and evil. Besides, the impact of criminal enforcement is limited and may offer businesses a false sense of security: For every Russian hacker arrested by the FBI in Las Vegas, as Dmitry Sklyarov was in July, there are hundreds more who will stay home.

These emerging technologies offer the benefit of reducing piracy, or at least casual piracy, and thus reducing the cost of the product to the consumer. If creating content becomes more attractive because of reduced losses due to copyright infringements, both consumers and producers will be better off. By taking the natural tensions between creators, users, and pirates out of the political realm, it replaces law with technology and lobbying with coding. Let the best programmers win.


* Declan McCullagh is the Washington bureau chief for Wired News. His email address is declan@well.com.

For more articles by Declan McCullagh, see the Archive.
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