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The Promise And Peril Of Hollywood's Intellectual Property Strategy For The Digital Age


Thursday, Jan. 03, 2002

If you believe the major movie studios and record companies, the accelerating shift from analog to digital technologies may represent either an unprecedented opportunity or a looming disaster. The opportunity: Hollywood entices consumers to pay billions for the privilege of downloading films and songs over speedy broadband connections to the Internet. The disaster: consumers instead choose to download, via Napster-like services, films and songs that the media giants invest billions to produce, and pay nothing.

Not surprisingly, Hollywood has a strategy to capture the opportunity and avoid the disaster. The first element of that strategy -- the Digital Millenium Copyright Act -- is already in place. But additional elements are now emerging, and all lead to the same end: invisible, enforceable, and ubiquitous "digital rights management" or "lockware" systems under the control of content providers.

Hollywood hopes that lockware will reduce piracy, allow more efficient exploitation of intellectual property rights, and, by raising the monetary returns from creative expression, increase incentives to create -- thereby enriching our culture.

Set within proper limits, Hollywood's strategy may fulfill these goals. But if Hollywood is allowed to overreach, lockware may succeed in reducing digital piracy only at the expense of important First Amendment values.

Lockware Step 1: Encrypt The Data, and Punish Code-Breakers

Hollywood and its allies have succeeded, through legislation such as the Sonny Bono Copyright Term Extension Act, in extending the breadth and duration of intellectual property rights. Duke University law professor James Boyle has described this process as amounting to "a far ranging enclosure movement over the public domain, paralleling the eighteenth century's enclosure of common lands."

Efforts to expand the domain of intellectual property continue today, most notably in the form of "database protection" proposals. These proposals would extend copyright to cover mere facts and ideas, which, unlike creative expression, may not be copyrighted under traditional IP doctrine.

But even the broadest intellectual property rights are useless if they cannot be enforced. And in the case of digital media, where use -- authorized or otherwise -- of the copyrighted material is made by hundreds of millions of individual consumers, infringement lawsuits are not particularly useful in stopping piracy.

So Hollywood relies primarily on encryption technologies -- such as the "Contents Scramble System" (or "CSS") that protects movies on DVD -- rather than lawsuits against individuals.

Programs like DeCSS are, in Hollywood's view, the digital equivalent of burglar tools. If these programs became widely available, they could democratize digital piracy by allowing ordinary consumers to evade encryption -- a situation much like what we see now with "script kiddie" hackers who attack computer networks with scripts and programs written by others.

Hollywood has responded to this threat with a series of lawsuits against hackers and hacker websites under the Digital Millenium Copyright Act ("DMCA"), a statute that imposes civil and criminal penalties for the use -- or even the distribution -- of technologies designed to circumvent access and copy controls protecting copyrighted works.

In the most widely publicized DMCA lawsuit, Universal City Studios, Inc. v. Reimerdes, the Second Circuit recently rejected a First Amendment challenge to a district court's order. The order enjoined a hacker website from posting DeCSS source code, and from linking to other web sites containing the DeCSS code. (However, a California state intermediate appellate court has recently issued a contradictory ruling in a separate DMCA action against a hacker website. The California court held that a lower court's injunction against a website's posting of DeCSS source code was an unconstitutional prior restraint.)

So for the moment, Hollywood has succeeded in reducing the threat to its encryption technologies from programs like DeCSS. But not in eliminating it -- although posting or linking to DeCSS source code may be enough to land you in hot water, the Reimerdes injunction does not appear to apply to "non-executable" source code (that is, source code in a form that cannot be read by a computer) or other forms of expression, such as descriptions of the algorithms underlying DeCSS, that are not themselves source code but from which any decent programmer could construct source code.

Now available on the Web are t-shirts and pop songs containing DeCSS code (the t-shirt maker has been sued for his trouble). The DeCSS song has been banned from on-line music sharing site, but is still available, as are step-by-step instructions for programmers in the form of an extended haiku. (The haiku's introductory stanzas offer a delightfully arch commentary on Hollywood's attempt to impose lockware.)

Lockware Step 2: Digital Rights Management Everywhere

DRM offers a number of advantages for content providers. First, because Microsoft controls the market for desktop operating systems, Microsoft-compliant DRM technologies soon will be widely distributed.

Second, DRM systems are designed to work behind the scenes, so that consumers will often not even be aware that their computer is probing for unauthorized usage.

Lockware Step 3: DRM -- Use It Or Else

Emboldened by the successes with the DMCA and DRM, Hollywood is gearing up for what may prove the final step of its strategy -- a plan to write lockware into law.

Working with Senator Ernest Hollings (D-S.C.), the powerful chairman of the Senate Commerce Committee, movie studios and record companies have helped craft legislation that would require DRM code to be embedded in nearly all consumer electronic devices and PCs.

A draft bill, currently titled the Security Systems Standards and Certification Act ("SSSCA"), directs technology companies to sit down with digital content providers and, within 12 months of the SSSCA's passage, work out a DRM standard, which will then be submitted to the Department of Commerce for certification. Once the DRM standard is in place, the SSSCA would impose criminal and civil penalties for creating, selling, or distributing any digital device -- essentially, anything with a microprocessor in it -- that does not include compliant DRM technologies.

The SSSCA has provoked howls of protest from computer and consumer electronics manufacturers, and from the tech community at large. In response, Senate Commerce Committee hearings, originally set for October 25, 2001, have been postponed.

But Hollywood will continue to press for the legislation, and it may have an important ally: Microsoft. Digerati have observed that the SSSCA could help kill off threats to Microsoft's monopoly from open-source operating systems such as Linux, as it would be difficult, if not impossible, to build SSSCA-compliant encryption into open-source software, where every line of source code is available for public inspection and modification.

But What About Fair Use?

Although Hollywood's lockware strategy is not wholly malign -- it is very likely, for example, to reduce piracy, and to facilitate efficient pricing strategies -- it does threaten to effectively eliminate consumers' long-established privilege to make certain "fair uses" of copyrighted works gratis and without authorization.

Indeed, the district court in the Reimerdes case specifically found that "certain uses that might qualify as "fair" for purposes of copyright infringement -- for example, the preparation by a film studies professor of a single CD-ROM or a tape containing two scenes from different movies in order to illustrate a point in a lecture on cinematography Ö.-- would be difficult or impossible absent circumvention [which is prohibited by the DMCA] of the CSS encryption."

Preserving fair use is important for at least two reasons. First, it is clear that the fair use doctrine has some constitutional dimension -- although it is not clear whether fair use is compelled by the First Amendment or is rather merely an element of the Copyright Act designed to minimize conflicts between the First Amendment and the Copyright Clause.

The Supreme Court's 1985 decision in Harper & Row, Publishers, Inc. v. Nation Enterprises suggests that fair use may be constitutionally compelled, but is far from definitive. In Harper & Row, the Supreme Court was asked to create a special First Amendment rule barring the assertion of copyright to prevent copyrighted materials from being used in news reporting. The Supreme Court declined, "[i]n view of the First Amendment protections already embodied in the Copyright Act's distinction between copyrightable expression and uncopyrightable facts and ideas, and the latitude for scholarship and comment traditionally afforded by fair use . . . ."

Second, regardless of the exact constitutional status of fair use, the doctrine is worth preserving because it contributes to the vitality of our marketplace of ideas. A paragraph from an amicus brief filed in Reimerdes by Professors Yochai Benkler and Lawrence Lessig uses real-world examples to make this point:

"Imagine a ten-year-old girl doing her homework on the history of the Holocaust. She includes in her multimedia paper a clip from Steven Spielberg's film, Schindler's List, in which a little girl in red, the only color image on an otherwise black-and-white screen, walks through the pandemonium of a deportation. In her paper, the child superimposes her own face over that of the girl in the film. The paper is entitled "My Grandmother." Or imagine a professor of critical film theory putting together a series of illustrations of sexist or racist stereotyping in Hollywood movies. Or imagine a law professor who teaches media law, who offers a short snippet of The Insider to motivate discussion of the costs and benefits of commercial media. These and millions of other unsung acts of individual creativity that rely on common cultural materials are central to expressive freedom. They are what allow us all to speak to each other using not only plain text, but also a rich tapestry of the cultural materials within which we live as members of a community and a culture. And they are precisely the uses that First Amendment values have traditionally protected through the device of fair use."

The "Right of Access" -- A First Amendment Value for the Digital Age

All well and good, some commentators have said, but lockware does not really touch fair use at all. Rather, it simply disallows the access to a copyrighted work that may be necessary to make fair use copies. And, as FindLaw's Marci Hamilton wrote in a recent article, "there is no right of access to others' copyrighted material".

It isn't that simple. In the "old media" world of paper books, celluloid films, magnetic videotapes, and vinyl recordings (or even, until recently, unencrypted CDs), there was no question of access to make fair uses. Because there were exceedingly few analogs, in the analog world, to today's digital encryption and rights management technologies, one was granted access by virtue of possession.

So to say that there is no judicially-established right of access to make fair uses of copyrighted materials is not to say much. In the analog world we lived in until (at least in the timeframe of the law) only yesterday, the question simply never came up.

Moreover, to the extent we could even imagine, from an analog perspective, that access to copyrighted materials would ever be germane to fair use, in that world the issue would be presented as access to material in the possession of a person other than the one seeking access. How could it be otherwise, since possession of analog materials necessarily entailed access to make a copy?

Digital Rights Management to the Rescue?

Now that the issue of "access" is squarely presented, what should we do?

First, we should recognize that in the digital world, the fair use doctrine will be very little use to anyone without a "fair access" doctrine. We need a mechanism that, at a minimum, allows people to access their own digital property for the purpose of making fair use copies.

The answer is not to "free digital content" by throwing out lockware altogether -- the threat of digital piracy is real, and if infringement suits are the only resort, the pirates win.

Perhaps we should begin to look for an answer in the same digital rights management schemes that serve as an important element of Hollywood's lockware strategy. If we can arrive -- possibly through legislation -- at a set of boundary lines that separate "fair" from "unfair" uses, then those boundaries can be written into DRM systems as rules that allow some limited copying.

Making DRM friendly to fair use would require us to agree on what portion of a copyrighted work may be copied "fairly", and how many copies of that extract should be permitted. The rules may limit or prohibit serial digital reproduction of fair use copies, or may require that the quality of serial copies be degraded, if serial copying would otherwise limit the market for the copyrighted expression.

Admittedly, the process of identifying and agreeing to fair use rules would be difficult, and no set of rules could cover every asserted fair use. But the alternative may be the extinction of the fair use doctrine, and of the valuable expression that the doctrine allows.

Chris Sprigman is Counsel to the Antitrust Group in the Washington, D.C. office of King & Spalding. Mr. Sprigman previously served as appellate counsel to the Antitrust Division of the U.S. Department of Justice.

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