(Fake Headline, Serious Point:) Movie Studios, Blockbuster File Copyright Infringement Suit Against Customer For Failing to Return DVD Rentals

That’s obviously not true, but from the way people talk about Rhapsody and other music “rental” services, they believe that the story could happen, at least in principle.  This is part of yet another misunderstanding about how the DMCA reworked the nature of copyright.

Too often, people confuse defenses of DRM+DMCA based on their ability to prevent *infringing* uses and defenses based on protection of new business models predicated on preventing *non-infringing* uses. The former defense is about protecting copyright holder’s exclusive rights, the latter is in effect about expanding those rights. These days, this confusion typically involves online music rental subscription services like Rhapsody.

The DRM on Rhapsody songs can (in theory) prevent some infringing uses. But Title 17 grants the copyright holder several exclusive rights in 17 USC 106 (e.g., copying, distribution, public performance), and keeping songs after your subscription ends doesn’t infringe any of them. When the DRM prevents you from listening to the song, it’s limiting a private performance. The copy you downloaded was lawfully made, and you’re entitled to make fair use [*1]; to the extent the uses would be protected with a purchased copy, you can move this “rented” copy to a portable player or make a back-up copy of it [*1], for instance.

At first, this might seem strange to some, but consider a DVD you rent from Blockbuster. If you fail to return the movie, can the copyright holder or Blockbuster sue you for copyright infringement? No, they can’t; you can keep watching that movie for as long as you like. Put aside DRM+DMCA and focus on 17 USC 106 for the moment — if you rip a copy to your computer, it’s a fair use just like ripping a DVD you bought at Wal-Mart; to the extent that the latter is non-infringing, so is the former. The copyright holder could argue that this ripped copy of the rental threatens the market for the work and thus is not a fair use, but ripping the purchased DVD threatens the market in much the same way; after all, if you can rip your purchased DVD, then it threatens the market by making it harder for them to sell you a second copy for use on your computer or your portable player. [*1] You can apply the same reasoning to rented or purchased VHS.

To be clear, you could be violating your contract with Blockbuster. And services like Rhapsody could sue you for violating their Terms of Service. In principle, they could get an injunction and actual damages.

However, you aren’t infringing under 17 USC 106 and thus copyright holders couldn’t get statutory damages on that basis. The DRM and DMCA don’t change this analysis [*2], strictly speaking. If you use FairUse4WM to unwrap your Rhapsody WM DRMed songs, you may violate their ToS, you may violate the DMCA (17 USC 1201) and have to pay statutory damages, but you are not infringing (17 USC 106). The public is still technically entitled to fair use, first sale, and all your other rights under copyright, but in exercising them you might violate the DMCA.

So this suggests one way the distinction matters (the DMCA radically changes the available remedies), but there’s a bigger issue here. In reality, the people who support the DMCA’s protection of this business model are not supporting the protection of copyright holder’s limited exclusive rights, let alone supporting the prevention of “Internet piracy” — they’re supporting in effect an expansion of copyright holder’s rights.  The DMCA gives copyright holder’s essentially a broad, exclusive right to control any uses of the work and compatible devices.

Some people may still argue that we need the DRM+DMCA because it protects Rhapsody’s business model and thus this expansion of rights is a good thing. You return your rented DVDs not because Blockbuster will sue you, but because they’ll cut you off from renting again. Rhapsody has no similar threat to hang over your head, so you could download the entire catalog and unsubscribe.

I would dispute that the subscription models would go away for this reason, but let’s assume they wouldn’t offer downloads any more. The endangerment of a business model, by itself, is not a sufficient reason to extend the scope of copyright holder’s rights. Title 17 entitles copyright holders to certain rights, not to certain business models. There are a lot of old and new business models copyright holders would love to protect. For instance, the movie and television studios’ business models were ostensibly threatened by time-shifting, and they’d love to be able to limit it in many ways today in order to enable new revenue models. But that wasn’t and isn’t a sufficient reason to block time-shifting and creation of compatible devices via the DMCA, or to mandate DRM a la the broadcast flag.

A more valid argument here would be that the public benefits by protecting the rental model. Again, I would dispute that the DMCA+DRM really provides a lot of public benefit there. But, regardless, I think most would agree that there are many endangered business models that don’t need protecting. I think many dislike how protection of the rental model also involves inhibiting innovation and competition in the development of compatible music devices. I think many would agree that prohibiting time-shifting and backing-up of purchased media doesn’t benefit the public, even if it enables some new business models. And I bet there are many more ill-effects of the DMCA that they would disapprove of , as well.

On that basis, I think that even those who laud the DRM+DMCA’s role in protecting rental models would be, on the whole, unhappy with the DMCA. To be sure, there are those who like the DMCA because it acts as a general right to control use of copyrighted works and creation of compatible devices; they laud price discrimination and platform monopolies predicated on restricting non-infringing uses. But I think many don’t share that view, particularly when they see that those models aren’t about stopping infringement, let alone “Internet piracy.”

[*1 – Update: Initially, I also stuck first sale in here.  We’ve had an interesting back-and-forth
in the comments about how I may be wrong that first sale would actually apply to the DVD or to your hard drive with the Rhapsody file on it. Indeed, a court might actually view giving away your hard drive with the song as protected by first sale, but giving the away the DVD wouldn’t be, since you can keep a permanent copy of the WMA file and don’t have to return it, but you were just borrowing the DVD that perhaps Blockbuster itself had acquired under a revenue-sharing license agreement rather than as an outright purchase. Thanks
to my interlocutor, “analoghole” The possible problem there doesn’t affect my fair use analysis, however. Note that it also doesn’t change my point that you’re still entitled to first sale to the extent you were with a DRM-free, rented copy. Finally, since people are really getting up in arms about a person being able to keep the songs and use them past the subscription (that’s the biz model at stake), I figured I’d just pull the first sale analysis out, for clarity’s sake.]

[*2 – Update: see a minor clarification in the comments on this. If a copy is *only* non-infringing because of some implied or express license from the copyright owner that vanishes when you circumvent, then that could change the analysis.]

Zune-PlaysForSure Reax: “This Can’t Be True.”

Skim the Digg commentary and you’ll find many users who can’t believe that Zune won’t Play For Sure. It’s so bizarre, they assume the report is inaccurate, despite citations to numerous press reports and MS’ own release. Even CrunchGear refused to believe it. I think most media reports were so confused, that they didn’t report on it — better to avoid the subject altogether than to write an erroneous report. (That, and the media got spun hard on the wireless sharing feature.)

To be fair, I was pretty shocked too. Sure, I can understand the possible business rationale, but the simple fact remains: Microsoft developed a player that can’t play protected Windows Media content from all services providers except the Zune Marketplace. Hell, that even includes the MSN Music Store. On its face, that just doesn’t seem to make sense — until it was official, I couldn’t believe any of the rumors.

Kudos to Wired’s Eliot Van Buskirk who did report this early and often, before the official Zune announcement this week.