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AEI has a new online publication titled, The American. Sounds like a good effort. I’ve followed AEI’s innovation policy work for years, and am impressed by their research, particular from Dr. Robert Hahn. Thus, I was disappointed that in the inaugural issue of The American, AEI would publish an article on the DMCA and DRM that is contrary in so many ways to its accomplishments in IPR policy.
There are numerous business, technical and legal shortcomings in the DMCA-DRM article. For instance, it emphasizes points that do not have much significance: “(Microsoft’s) Plays for Sure” music and the new Zune format have always been incompatible with Apple’s wildly popular iPod, and with the iTunes music store.” Thanks for telling us! Yes, as Microsoft and Apple vie for dominance in their business markets they want consumers to buy their products rather than their competitors'.
Later on, the author writes: That path is closed (by the DMCA and DRM) to an inventor wanting to make the next great digital video product… It’s no surprise that the market for video devices has been dominated by deep-pocketed incumbents like Apple, Microsoft, and Sony, and that even these would-be entrants have struggled. Hmmm:) Is reverse engineering necessary to make a product? Nope. The comment about “deep-pocketed incumbents” is funny too. How many of these firms reverse engineered each other’s products to create their digital music offerings? Perhaps they did to understand their rivals, but an interoperable product was not in the plan. And why does the author say the big firms struggle, after declaring unhappily that they dominate a market where competition doesn't exist. Isn't it good for imcumbents to struggle, as that signals market opportunities for small firms?
A potentially misleading statement: “Format-conversion software is, in most circumstances, illegal unless authorized by the company that created the format.” This example used to argue for the unreasonableness of the DMCA’s anti-circumvention exception is not the only means of achieving interoperability, and neither is it necessarily the most efficient, nor practical. Developers often seek interop by linking the “secret handshake” of DRM schemes with other systems, whereas format conversion strips one DRM scheme to implement another.
The author wants to repeal the DMCA due to uncertainty under the 1201(f) anti-circumvention exception. With the scope of 1201(f) vague on its face, the logic of the author's position makes sense only if courts do not provide guidance on factors contributing to the (il)legality of reverse engineering. However, the author ignores the process of stare decisis, and forms his argument by looking only at the outcomes of some DMCA anti-circumvention cases, whose consequences he describes as: The DMCA… prohibits “circumvention” of copy protection …called DRM. .. Hence, the DMCA gives software companies a legal tool to bar competitors from building products compatible with their own, promoting the balkanization of the digital media marketplace into a cacophony of mutually incompatible formats. Several issues deserve clarification.
First, the DMCA does not prevent competition as the author portrays. By not considering *how* courts decide cases, the author misunderstands judicial concern over *finished products* of reverse engineering violating the DMCA.
The author points to the fact that parties who reverse engineer often lose in litigation as evidence of the DMCA outlawing reverse engineering. Does he think reverse engineering does not happen in the industry? If so, I’ll tell a couple pals their engineering work doesn't exist. Does the author think reverse engineering for interoperability is always illegal even though it may occur? Yes, here’s why.
The article employs a narrow understanding of the DMCA’s anti-circumvention rules; the author views the only pertinent aspect of reverse engineering as the act itself. However, legal scholars note that courts do not consider the process of reverse engineering decisive. Courts do not want to dictate to engineers how to do their work. In reading the DMCA, courts will allow some infringement in the course of achieving interoperability.
The determinative factor in DMCA’s anti-circumvention cases often rests on whether the finished product is protected by the reverse engineering exception or violates other aspects of copyright law. The anti-circumvention exception protects reverse engineering for interoperability, but does not exempt copyright infringement in the case that an interoperable product simply has too much in common with the original one, or when the interoperable product breaks the intent of the original DRM scheme (by allowing unauthorized copying and use).
It is highly likely the author simply misunderstands DMCA decisions which rest on the finished product, he reads them to hinge on the act of reverse engineering.
Second, the article essentially advocates unauthorized use of digital content. The author does not think its necessary for content owners to choose participate in or be compensated by the digital movie market. To do his part in launching the digital movie industry, he wants to open the door for mass piracy by enabling copying of DRMd-DVDs. Also, his review of several movie services is bizarre, he talks about buggy software rather than anything on fair use or how licensing arrangements can induce content owners to join the movie market.
Finally, the article’s comments on piracy are clumsy. The author states that because DRM schemes can be easily circumvented, and the DMCA has not prevented all piracy, society would be better without the DMCA because its costs outweigh its benefits. While the author wants to repeal the DMCA for these reasons, one would hope that he does not then criticize the efforts of content owners to stop piracy and infringement by leveraging the DMCA (which he implies throughout the article).
I hope future issues of The American have more considered articles than this one. AEI reached far down the ladder to publish an article by someone not even affiliated with it. There are tons of AEI staff, researchers and friends who do excellent IPR work, so this article should just be seen as a fumble early in the game.
posted by Noel Le @ 8:07 AM | DMCA, DRM & Watermarks, etc.
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