Already a Bloomberg.com user?
Sign in with the same account.
By Stephen H. Wildstrom To hear the entertainment industry tell it, a wave of digital piracy threatens to destroy the future of movies, records, and other media. While the danger of piracy is real, the other side of the story is that Hollywood has been on a remarkable legislative and legal winning streak in its campaign to win increased protections (see BW Online, 4/18/02, "High Tech vs. Hollywood on Capitol Hill"). Along the way, some long-established consumer rights may disappear. And the message from the courts so far seems to be "Get used to it."
The invention of digital media has made it possible for people without any special skills or equipment to make copies that are essentially indistinguishable from the originals. It has also given the creators of media the technical means not only to prevent copies from being made but to limit the ways consumers use products they have purchased, for example, by blocking the playing of U.S. DVD movies in Europe or preventing certain music CDs from being played in computers.
Copyright law has always tried to strike a delicate balance between the rights of content creators to be compensated for their work and the rights of consumers to use what they have paid for. But the development of digital media and Big Media's attempt to completely control it have destroyed the delicate equilibrium that is copyright law.
UNDER ASSAULT. Two legal doctrines, called "first sale" and "fair use" are threatened by these technical changes. Under first sale, the buyers of copyrighted works in the U.S. may dispose of their purchases as they see fit (this isn't true in all countries). If you own a book, record, or DVD, you can sell it, lend it, or give it away. Fair use is a broader and vaguer concept, but it covers such things as quoting from a book in a review, copying part of a work for classroom use, or, most relevantly, making a copy of a music recording for personal use.
Both doctrines are now under assault. The most recent blow came in a May 8 ruling by U.S. District Judge Ronald M. Whyte in San Jose, Calif., in which he upheld the constitutionality of key provisions of the 1998 Digital Millennium Copyright Act (DMCA).
This criminal case, U.S. v. Elcom Ltd., is a curious one. It began last July when FBI agents, acting on a complaint from software maker Adobe Systems, arrested Elcom employee Dmitry Skylarov at a hackers conference in Las Vegas. He was charged with "trafficking" in software designed to circumvent copy protections in Adobe's eBook Reader software, a criminal violation of the DMCA. The case against Skylarov were eventually dropped, and he returned to Russia, but the charges against Elcom are moving forward.
RESTORING RIGHTS? Adobe's eBook software allows the publisher to specify what can be done with text. Depending on the software's settings, the purchaser of an e-book may or may not be able to lend or give a copy of it to someone else or to print the work in whole or part. Elcom's software, the Advanced eBook Processor, defeated the built-in copy-protection.
While Elcom's program could be used to make illegal copies, it could also be be seen as restoring what has always been regarded as fair-use rights that Adobe allowed publishers to bar. In attempting to quash the prosecution, Elcon, among other things, argued that the DMCA was unconstitutionally vague because it prohibits trafficking in software that helps consumers exercise their fair-use rights while at the same time saying the law is committed to protecting fair use.
Although he accepted the premise, Judge Whyte wasn't buying the conclusion. "Fair use of a copyrighted work continues to be permitted...even though engaging in certain fair uses of digital works may be made more difficult if tools to circumvent use restrictions cannot be readily obtained," the judge wrote. "That is part of the sacrifice Congress was willing to make in order to protect against unlawful piracy...." The decision means that the criminal trial of Elcom will continue. It's unlikely that the ruling will be challenged before the trial is over, and then, of course, only if Elcom is convicted.
TRACKING COUCH POTATOES. This was the second recent ruling for the U.S. District Court in San Jose that threatens to erode fair-use rights. On Apr. 26, Magistrate Charle Eick ordered SONICblue to modify the software of all Replay TV 4000 digital videorecorders starting as soon as possible (existing users would get the new software via a download) so that it can collect and turn over to movie and TV studios detailed data on how customers are using the devices. The studios are attempting to block the sale of the Replay TV 4000, charging that its claimed ability to skip commercials on playback and to transmit recorded programs to other Replay TV 4000 units over networks violates their rights under the DMCA.
These are only the two latest victories in a winning streak stretching back a couple of years. But the entertainment industry might want to be a bit more careful about what it wishes for. Its insistence on total control over digital products is threatening to stifle the development of new means of distributing and playing content, from online music sales to personal video recorders.
In the early 1980s, the movie industry fought a fierce legal battle to block the sale of video-cassette recorders, claiming they would promote piracy. Finally, in 1984, the Supreme Court denied that claim, ensuring the sales of recorded movies, a business that now generates far more revenues for the entertainment industry than theatrical distribution. Now, Hollywood may need a higher court to rescue it from itself again. Wildstrom is Technology & You columnist for BusinessWeek