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DRM and Globalization Panel

Moderator: Andrew Rens Speakers: Michael Birnhack, Natali Helberger, Richard Owens, Robin Gross, Gwen Hinze, Ken Lohento.

I. Introduction

A. Framing the panel discussion: (http://research.yale.edu/isp/a2k/panels.html#drm) The questions where and when is DRM appropriate. How can DMR be used to advance the project of A2K, what are the dangers of DRM to A2K.

B. Introduction of speakers. See http://research.yale.edu/isp/a2k/speakers.html for full bios

II. Panel Presentations

A. Michael Birnhack:

Michael Birnhack's presentation

IP Globalization + DRM framework Global copyright (G©) as Trade Free speech and free trade Asymmetry: Copyright is going global Free speech is local Hence, the conflict I a locus of a battle over globalization, or more precisely\ glocalization.

G© Multilateral instrument Berne-TRIPs-WCT Bilateral instruments TRIPS+, TRIP++ commitments over and beyond that required by TRIPS Unilateral measures Special 301 report will be published any day

The problem is that US can pressure developing countries to go beyond minimal requirements. TRIPS does not require protection of DRM but US puts pressure to do just that.

TRIPS: 149 countries, no DRM requirement WCTL 58 Countries Art. 11 Observations concerning Tech. Measures Contractive parties shall provide adequate legal protection and effect legal remedies against the circumvention of effective technological measure that are used by author in connection with the exercise of their rights under this Treaty or the Berne convention….

FTA--in the spirit of the DMCA Strong requirements, limited exceptions, left to the discretion of implementing countries

DRM as Para ©

Level 1: Public ordering (Copyright)

US approach (fair use) provision, it's flexible, but it vague and may have a chilling effect European approach explicit exceptions, provide clarity, but inflexible

Level 2: Private ordering (DRM)

But DRM can act like copyright. It's an act of self-help. Protecting information through technological control measures.

Who used DRM? Birnhack suspects it's mostly northern, developed countries

Level 3: Public ordering of private ordering (laws regulating or protecting DRM) DMCA

G© as Trade

Global Harmonization? Void of theory G© as a hybrid of philosophical justifications, no coherent underlying theory.

Free Speech is local: Speech, politics first, trade second Free speech jurisprudence reflects history, politics, culture, local debates and may be balanced. -hate speech laws: Germany, France -pragmatic balances of speech with conflicting interests national security.

B. Natali Helberger DRM colonialism: standards that Conquer the World

Knowledge costs money and its consumers that pay. A2k is also a question about access to market and infrastructure. Technology developers realize the new potential markets and they realize that DRM can be used to reduce the risk in targeting these markets

FairPlay conquers France…and the French response

France very protective of its culture. Worried that limited formats would end up hurting producers of French cultural products (movies, music, etc.) The response: Art. 7 of the French draft CR law, which requires interoperability among DRM techn. So that consumers can access/use content on a variety of devices and make private copies of it

Other European countries consider to follow.

Mandated interoperability: There are some good reasons not to do it: --security --inferior standard setting --stifle incentives and innovation But there are also GOOD reasons to do it. --economic reasons --cultural reasons --political reasons

Would France have adopted a similar law if they controlled the dominate standard? Probably not. It was the fact that the Americans controlled the dominate standard. But so what?

Electronic colonization of distribution channels

Markets are to a large degree vertically integrated. One company owns production and distribution (IPOD owns ITUNES the player and ITUNES the store and controls the music compression format). This makes for a separation of product streams. Virgin owned, distributed, developed content not compatible with ITUNES product line.

First Europe…and the world?

Digitization and the internet offer new opportunities for new markets to develop. Notably, Africa.

Crucial: establishment f the necessary distribution infrastructure and market entry for local players

"We are marching this digital music revolution around the world" Steve Jobs, chief exec of Apple Worldwide.

Concluding remarks

Protection of national markets and culture is an important factor in favor of mandated interoperability

Non-industry driven solution preferable to industry-driven solution The leading DRM standards are controlled by global players the solution should be sought on global level too. But: timing problem

This is not only about access to music, Also about Access to text, media, distance learning. Music industry only a forerunner.

C. Richard Owens Discussion of technology. Definitional point: DRM widely referred to as Technological protection measures. This is the notorious part of DRM. But there is another part of it

DRM can designed to grant access to defined group or numbers of people. We think DRM is here to stay, so arguments if it is good or bad are a moot point. The key issues that we face relating to access the question is whether companies will be allowed to use DRM to restrict competition, which affects the market. CR owners are just part of it, the DRM providers are also part of it, they compete with each other, try to maximize their market share too. Something else we should look at is how to control DRM providers and ensure that they don't run out other DRM providers.

How do we do this? Legislation? Do we require interoperability? Owens says we should be very careful not to stifle competition among DRM providers. Technology mandates, interoperability mandates are dangerous paths. Standards settings, however, may make more sense. Standard setting is now full of patent issue, patent stacking, blocking technology. There is a question about transparency of licensing provisions. Also questions about Open source software. These are the issues we should address, not just a simplistic DRM good or bad discuss. It's not just about CR anymore; it's about regulation of competition. One option: do nothing, let the market decide. Owens asks, but which market? The American one? The European one?

D. Robin Gross,DRM & Globalization

Robin Gross's presentation

Illegal to bypass the tech. restrictions even to engage in lawful use (anti=circumvention laws like DMCA).

Rational "digital is different" no digital fair sue rights for public (only in analog world)

DRM == 3 layers of legal rights

1. technology itself and laws about protecting protection 2. copyright law 3. contract law (e.g., click wrap licenses)

rights overlap each other this means that the power of the publisher is expanded.

WIPO treaty provide flexibility on anti-circumvention legislation

WIP Copyright Performance and Phonograms Treatt:

"contracting parties shall provide adequate legal protection…

DMCA (Gross calls it Digital CR over-kill)

Bans tools capable of bypassing DRM bans circumvention of access DRM

Widely criticize as over-broad. Big problem for access to knowledge. Another problem, what about the public domain. What if DRM "protect" public domain material? Could this eliminate the domain? Also, outlaws "reverse-engineering" no interoperability or tinkering. Prevents freedom of expression about critical technical weakness (can't publish some cryptography papers). This creates a chilling effect. DRM also impedes competition--creates monopolies on adjacent products.

Report from conservation CATO Institute:

The DMCA is anti-competitive

DMCA creates a "legal regime that reduces options and competition in how consumers enjoy media and entertainment"

"Fortunately, repeal of the DMAC would not lead to intellectual property anarchy."

US nat. academy of scientists, national research council report:

Congress implementation of the WIPO treaty proves a cautionary tale about the pitfalls of the legislation in the high tech area

UK commission on IP rights repot

UK commission stud warned developing nations away from passing extreme DMCA like laws.

So what can we do?

Enrich public domain Recognition that all intellectual works are based on pre-existing works Gov' should enable access to public information (instead we see commercialization of public info -artists are harmed the most by shrinking public domain.

We should all ensure private copying rights

Most copies are not infringements (although industry claims as acts as if they are)

Must create access to the tools that are necessary to engage in private copying if rights are to have any meaning

Lessons of history: industry attempted to ban piano rolls, radio, vcrs, mps players, etc.

Access to Knowledge is a human right in an information society.

E. Gwen Hinze, Global DRM (TPM) Laws

Gwen Hinze's presentation

The key issue is how to implement the 1996 WIPO so that it is flexible and yet goes no further than the right guaranteed.

WIPO CR treat and Performance Phonograph treaty (1996) Proposed WIPO Broadcasting Treaty (art. 14) EU Directive 2001/29/EC, art. 6 U.S. DMCA (1998) DMCA emerging global standard via U.S. Free Trade Agreements (2002-) US-Chile FTA Art. 17.7.5, US-Australia, Art. 17.4.7 Australia FTA implementation.

Implications of overbroad TRM regimes impair access to knowledge

Override national CR law exceptions Impair access to digital information widening knowledge gap Harm global competition Stifle technology innovation and transfer Threaten free and open source software

National CR law supplanted

US TPM law provides protection beyond CR CR law's balanced set of rights replaced by "anti-circumvention law Overrides US statutory exceptions and fair use Tools ban CR balance redraw by unilateral action of CR owner Global context: foreign CR owners' preference trump national law exceptions For net IP importers this is wealth transfer mechanism.

Overbroad TPM laws impact libraries: --overrides national exceptions --reservation: obsolescent TPMS

Product lock0in at higher monopoly-based prices -printer cartridges, garage remote controls, cell phones Rights beyond CR -Geographic market segmentation via region-coded DVDS game, printer cartridges

Stifles techn. Innovation

Control over tech platform: dvd players Threat to free and open source software development -impairs reverse-engineering to create new products=information tech transfer -standards: tech. mandate + bans FOSS products Us. FCC broadcast flag regulation WIP broadcasting treaty.

Different approach in Australia

As a result of FTA with US had to re-write laws

Aust. Parliament recently released a report review TPM

--Nexus between TM protection and CR infringement --Limit potential anti-competitive impact-exclude region coding technology --administrative process to create meaningful exceptions with noncommercial tools.

F. Ken Lohento

Ken Lohento's presentation

What do you mean when you say DRM? Lohento will be talking from his experience with IP policy as regional and national level.

PIWA: regional independent NGO, promotion of citizenship, democracy, governance, peace, from radio to ICT policies

Reminder: some key facts of the ICT territory

Africa internet usage and populates stats: Only 2.6% of African population are internet uses.

CD and DV piracy, however, is very high. Local and international productions are just too expensive. You'd have to spend a third of your monthly salary to get an original DVD in Senegal. So what is normal is to by the pirated CDs.

The low level of internet use means that: 1) ICT cultures is still at the "happy few" stage, 2) policy makers still lack ICT culture, and 3) civil society and consumer associations in general still lack internet culture.

ICS legal environment and ipr

Legal ICT enviro. still virgin in most countries In most cases CR law contain no reference to ICTs (see the study undertaken in 2003 by IP survey an implementation of WCT and WPPT.)

BUT the situation is changing because of --cyberfraud (identify theft, 419 scam, etc.) development in some countries --international pressure….

DRM???....but DRM!!!!

CIAPCO..CIPESA e-debate on UCT UOR issues in Africa -draft syntheses www.cipaco.org e-debate section Divergent opinions regarding IPR issues within stakeholders? DRM: what do you mean? Only a few people feel so far the effect of DRMS…but these people are key players, citizens, students, etc.

TWO KEY ISSUES

How to ensure that least developed countries decision-makers, negotiation understand TRM, ICT IPR and access to knowledge issues in general, in a situation where the immediate negative impacts are not on the majority of population/voters.

At the International level adequate limitations and exceptions must be adopted to allow the effect A2K in LDCS.

III. Q&A

A. What is the role of WIPO in given technical advice where DRM goes beyond protecting CR.

Owens: WIPO wouldn't give specific advice that TPMs should only apply to CR, this is not mandated by the treaty. The treaty requirement is that if TPMs are applied, they must be protected.

B. In between the idea that technology exists and the questions about implementation and competition, hasn't the ship already sailed? Isn't the question to what extent should this technology be privileged? Should DRM be subject to the same type of balance that CR is subjected to?

Helberger: that's not an either/or issue. Competition aspect also important Hinze: I think the implementation issue is key. When you are implementing the protection of TRM the pint is that there is a balance between scope of CR protect and scope of protection of TPM.

Lohento: another issue is that in reality is that developing countries don't always have the expertise, the complexities/implications of implementation not always understood.

C. Two million songs protected by drm and others are drm-free available in file-sharing networks, do you expect the ration to change?

Owens: there is a relationship between pricing and interoperability. We may get really tailored online music services. Helberger: DRM will play an increasing role in online music content.

D. physical goods can be differentiated in order to solve the problem of gray market goods. This allows companies to engage in differential pricing, which can be good for the consumer. (We see this with generic drugs marketed to poor countries: pills are different color than those marketed in Europe or America). In theory, DRM could be used to the do the same thing. For example, it could be used to provide cheaper textbooks to markets that can't afford textbooks at US prices. Is this happening, and if not, why not?

Birnhack: Actually, there have been several attempts. The DVD zoning was actually an attempt to do this. But it failed. Why? People were unwilling to pay for a product that they couldn't use they way they wanted it. The power of the consumer should not be underestimated. It might actually be wonderful to have extremely strong DRM and DMCA because then the people would protest.

Helberger: there was some price discrimination, itunes songs sold for more money in UK than in Germany.

Owens: not yet developed, but in theory, it will be one day.

E. Given the tech problems often caused by DRM what incentive does a consumer have to acquire something with DRMs when they can get it for free without DRMS on p2p network?

Helberger: itunes was an innovative model. No fear of legal action.

Owens: you're right, it's not just about cr, it's also about the tech problems with associated with DRM.

Gross: the only incentive is that you won't go to jail. This is not the right approach. We are seeing more and more criminalization of what should be a civil case.

Papers and resources

Michael Birnhack, Global Copyright, Local Speech http://ssrn.com/abstract=888297