Law and Information

My colleague and friend Dr Ian Brown, co-leader of the EUCD best practice project (check out the wiki and the project report), has posted a great article written for the EDRI-gram on the International Intellectual Property Alliance’s (IIPA) recent recommendations to the US Trade Representative’s 2007 review of global copyright laws. Ian concludes:

It is not surprising that US companies lobby to change global laws that would increase their profits. On past performance, the US government is likely to take careful note of their recommendations. But European nations should robustly defend their right to shape copyright policy to meet the needs of their own citizens, and not just those of large copyright holders.

I hope the EUCD best practice project mentioned above and similar initiatives support European policy makers in identifying the leeway they have under the WIPO Internet Treaties and the EUCD when shaping their copyright and DRM frameworks.

This morning, I had the pleasure and honour to speak – “as the European voice” – at the FTC hearing on “Protecting Consumers in the Next Tech-ade” (check out the official weblog for more information and summaries of the discussion.) I was asked to report about the legal and regulatory discussions on DRM in Europe and to focus on DRM interoperability in particular. The latter question is also part of an ongoing research collaboration between the Berkman Center at Harvard Law School and our St. Gallen Research Center for Information Law. The research project is aimed at exploring the interaction between interoperability and e-innovation, an important aspect that was only briefly mentioned at today’s hearing.
Here is the longer and slightly modified (links added) written version of my statement. For a more detailed discussion, check out the excellent paper “DRM Interoperability and Intellectual Property Policy in Europe” by Mikko Valimaki and Ville Oksanen.

Over the past few years, much of the legal/regulatory debate in Europe about DRM has focused on the legal protection of technological protection measures and its ramifications for the digital ecosystem, because EU member states have faced the challenge to transpose the rather vague EU Copyright Directive into their national laws and comply with the relevant anti-circumvention provisions of the WIPO Internet Treaties.

Introducing and harmonizing anti-circumvention laws across Europe has been a long and an enormously controversial process. As far as DRM is concerned, three topics in particular have caused heated controversies:

• DRM and its legal protection vis-à-vis traditional limitations on copyright such as the “right” (or privilege) to make copies for private purpose;
• DRM and “fair compensation”;
• DRM and interoperability.

Given our panel’s topic, please let me address the interoperability issue in some greater detail – a topic that has gained much attention in the context of iTunes’ penetration of the European market, esp. in France.

At the European level, though, no coherent DRM interoperability framework exists, although DRM interoperability has been identified as an emerging issue by the European Commission, which has established – among other things – a multi-stakeholder High Level Group on DRM that has also addressed DRM interoperability issues.

The lack of specific and EU-wide DRM interoperability provisions leaves us with three areas of law that address this issue more generally, both at the EU level as well as the level of EU member states. The areas are: copyright law, competition law, and consumer protection law.

Copyright Law

The EU Copyright Directive, mandating the legal protection of DRM systems, does not set forth rules on DRM interoperability. Recital 54 only mentions that DRM interoperability is something member states should encourage, but does not provide further guidance and seems to trust in the market forces. However, one might argue that the anti-circumvention framework itself allows the design of interoperable systems – e.g. a music player able to play songs encoded in different DRM standards – by outlawing only trafficking in such circumvention devices that are (inter alia) primarily designed and marketed for circumvention of effective TPM. Along these lines, at least one Italian Court has ruled – in one of the Bolzano rulings – that the use of modified chips aimed at restoring the full functionality of a Sony PlayStation (incl. its ability to read all discs from all markets despite region coding) is not illegal under the EUCD’s anti-circumvention provisions.

At the EU member state level, France has taken a much more proactive approach to DRM interoperability. A draft of the revised copyright law (implementing the EUCD) introduced an obligation of DRM providers to disclose interoperability information upon requests without being compensated. This “lex iTunes” has triggered strong reactions by the entertainment industry, and the final version of the law softened up the original proposal. Current French law states that a regulatory authority mediates interoperability requests on a case-by-case basis. Under this regime, too, DRM providers can be forced (under certain conditions) to disclose interoperability information on non-discriminatory terms, but they now have the right to reasonable compensation in return.

Competition Law

The baseline is: Competition law in Europe may become relevant in cases where a company with a dominant market position refuses to license its DRM standard to its competitors. However, to date, there exists no case law at the EU level where competition law has been applied to the DRM interoperability problem. But there are important cases (IMS Health and Magill, but also the anti-trust actions against Microsoft) illustrating how competition law — at least in exceptional circumstances — can give the need for interoperability more weight than the IP claims by dominant players. In France, Virgin Media tried to use competition law as an instrument to enforce access to iTunes FairPlay system. The French competition authority, however, has ruled in favour of iTunes, partly because it considered the market for probable music players to be sufficiently competitive (click here for more details).

Consumer Protection

From a consumer protection law perspective, three issues seem particularly noteworthy. First, the Norwegian Consumer Ombudsman has been very critical about Apple’s iTMS interoperability policy in response to a complaint by the consumer council. The Ombudsman argues that iTMS is using DRM and corresponding terms of services to lock its consumers into Apple’s proprietary systems.

Second, a French court fined EMI Music France for selling CDs with DRM protection schemes that would not play on car radios and computers (check here and here). EMI violated consumer protection law because it did not appropriately inform consumers about these restrictions. The court obliged EMI to label its CDs with the text: “Attention – cannot be listened on all players or car radios”.

Third, a recent proposal by the European Consumers’ Organisation proposes to include DRM in the unfair contract directive. The idea behind it is that consumer protection authorities should also be able to intervene against unfair consumer contract terms if the terms are “code-” rather than “law-based”.

I’m currently in Berlin, attending Wizards-of-OS 4.0, a terrific conference organized by Volker Grassmuck and this team. Earlier the week, Lawrence Lessig, Yochai Benkler, and Hal Varian – to name just a few – had been presenting. Yesterday, I had the pleasure to chair a panel on the EU Copyright Directive. In essence, the session sought to analyze and evaluate the current EU copyright landscape as shaped in important ways by the EUCD (among other directives). On the panel were Bernt Hugenholtz, Director of the Institute for Information Law at the Univ. of Amsterdam; Tilman Lueder, Head of Unit “Copyright and knowledge-based economy”, DG Internal Markets, European Commission; Cornelia Kutterer, Senior Legal Advisor BEUC; and Maja Bogataj, Director of the Intellectual Property Institute, Slovenia.

The four presentations, each rich in substance, touched upon a broad variety of important issues and it is almost impossible to summarize the panel. However, I think there were at least three recurring themes where some sort of consensus among the panelists emerged.

Harmonization of copyright law comes at significant cost and leads to a race to the top as far as the protection of copyright holders’ interests are concerned.

Bernt Hugenholtz explained in quite some detail, based on a recent (still confidential) report he wrote for the European Commission, why we should be very skeptical about copyright harmonization. He argued, in essence, that the EU step-by-step-harmonization efforts have imposed a huge burden on both the EU legislative machinery as well as on national lawmakers who, in the past 15 years or so, have had continuously to transpose EU copyright directives into their national laws. More fundamentally, he raised the question whether harmonization, at all, can be the right tool – vis-à-vis enormously time-consuming legislative processes (the work on the EUCD goes back to 1996) – in a quicksilver technological environment. The strongest argument against harmonization, though, is the observation that harmonization has created significant asymmetries and imbalances: It significantly distorted the traditional balance between the interests of copyright holders on the one and the interests of users and the public at large on the other hand in favor of copyright holders. Bernt also argued that harmonization (vis-à-vis the principle of territoriality of copyright law) has produced negative effects on the Internal Market. In the recommendation-part of his speech, he proposed to restrain from future harmonization in this area. Rather, he suggested the use of soft law and, in the long run, of the creation of a unified, truly European Copyright Law.

The EUCD has created significant asymmetries and imbalances that need to be fixed.

It doesn’t come as a surprise that Cornelia Kutterer in particular has made it very clear in what ways and areas the EUCD has favored copyright holder’s interest over user’s interest. Much of the discussion focused on Art. 5 EUCD, which sets forth (largely voluntary) exceptions and limitations, and on the legal protection of technological protection measures. In the latter context, Cornelia addressed issues such as interoperability and (lack of) transparency. From a very different perspective, Tilman Lueder was questioning whether the EUCD has struck the right balance between exclusive rights and fair compensation, and whether compensation models will prevail in the age of digital distribution (vis-à-vis DRM.)

The solution to some of the flaws of the EUCD might be found in other areas of law such as competition law or consumer protection law.

With regard to potential answers to the problems created, in part, by the EUCD, Cornelia Kutterer – as well as previously Tilman Lueder to some extent – proposed to consider the use of consumer protection laws and competition law to rebalance interests. She suggested, for instance, to conceptualize DRM as “technical terms” in analogy to contractual terms, and to extend the scope of the Unfair Contract Terms Directive in a way that it includes such technical terms (“code”) too. Another issue to be dealt with in the consumer protection acquis is EU-wide labeling requirements for DRM.

Later this morning, we will ask how accession and candidate countries can learn from these (largely: bad) experiences surrounding the EUCD in particular and EU copyright harmonization in general. At a workshop sponsored by the Soros Foundation, we will talk in greater detail about the pitfalls of EUCD implementation (what Maja Bogataj yesterday has described as “cut-translate-paste”-legislation). In this context, we will also explore as to what extent best practices of implementation can be identified that might be helpful to future EU member states (and, probably, in the context of law reform projects.) We had a first cut at what shall become a EUCD best practice guide, check it out here. It’s an initial and uncompleted draft and very much research in progress, so feedback and contributions are most welcome and much appreciated.

A team of experts is currently working on a resource site and best practice report on the implementation of the EU Copyright Directive (EUCD). A draft version of the best practice guide will be presented and discussed at the Wizards of OS conference in Berlin (with wonderful speakers, BTW, including Hal Varian, Claudio Prado, Larry Lessig and Yochai Benkler) and further explored at the WOS4 EUCD workshop on September 17th. A final report – based on the Berlin feedback – will be released in November.The guide is based on a peer-produced collection of particularly good (or bad!) examples of EUCD implementations in various
EU member states (and beyond). It takes a closer look at four important clusters of legal issues typically associated with EUCD-implementation. First, in a cross-sectional manner, it provides recommendations regarding the implementation of the EUCD’s anti-circumvention provisions (i.e., legal protection of technological protection measures). Second, it suggests a series of principles in areas of copyright law that shape the ways in which we – as peers – can produce and distribute information. The third section deals with universal access issues, including teaching and research exceptions, exceptions for libraries, archives, and the like, and copyright exceptions for disabled people. Third, the document provides recommendations with regard to selected copyright provisions that have an impact on political and cultural participation.
Together with the St. Gallen team, Ian Brown, Volker Grassmuck, and other colleagues, I have started working on the best practice guide, taking a first cut at TPM on the one hand and teaching exceptions on the other. Much more needs to be done, though, so please contact Ian Brown (I.Brown [at] cs.ucl.ac.uk) or me (ugasser [at] cyber.law.harvard.edu) if you would like to contribute to the country reports and/or the best practice guide.

Jean-Baptiste Soufron writes:

Read more. (Thanks, Jean-Baptiste!)

Over the past few weeks I’ve been working, among other things, on a paper on third layer protection of digital content, i.e., anti-circumvention legislation in the spirit of Art. 11 WCT and Art. 18 WPPT and it’s counterparts in regional or national pieces of legislations (e.g. Art. 6/8 EUCD and Sec. 1201 DMCA.) The 50+ pages, single-spaced paper is very much research in progress. It is based on prior research and takes it as its baseline that many countries have already enacted legislation or will soon legislate on TPM in order to comply either with international obligations under WIPO, or with international free trade agreements involving a party that has powerful content industries such as the U.S. Thus, I argue that the immediate question before us is no longer whether the second and third layer of protection of digital works is appropriate or viable (personally, I’m convinced that it is not, but that’s another story. BTW, initial reactions to my draft paper by friends suggest that I should use stronger language and make a clear normative statement in this regard. I’m not sure whether a more radical approach will contribute to project’s goal, but I will re-consider it.) Rather, at this stage, attention should be drawn to the alternative design choices that remain with countries that face the challenge of drafting or revisiting a legal regime aimed at protecting TPM.

Consequently, the purpose of the working paper (drafted in the context of a consulting job for a government in the Middle East) is to identify different legislative and regulatory approaches and to discuss them in the light of previous experiences with TPM legislation in the U.S. and in Europe. Ultimately, the paper seeks to formulate basic design (or best practice) principles, and to sketch the contours of a model law that aims to foster innovation in digitally networked environment and minimize frequently observes spillover effects of TPM legislation.

The paper is divided into three parts. In the first Part, I provide a brief overview of international and national legal frameworks that protect technological measures by banning the circumvention of TPM. The second Part of the paper discusses three particularly important as well as generally contested elements of anti-circumvention legislation—i.e., subject matter and scope; exemption interface; sanctions and remedies—and analyzes in greater detail some of the differences among jurisdictions in order to identify alternative approaches or what we may call “design choices.” The third Part provides a brief summary of what commentators have identified as core areas of concern with this type of legislation. Based on the findings of Part II and the preceding section, basic design principles will be suggested. The final section paints in broad strokes a model law with discussion issues and some guiding principles that might be helpful to policy makers who face the challenge of crafting anti-circumvention legislation.

Today, I’d like to share with you some thoughts at the most abstract level of the paper. Against the backdrop of the analysis in the first two Parts of the paper, I tried to formulate five basic design principles for legislators that face the challenge to implement the WIPO Internet Treaties anti-circumvention provisions. These principles are further specified in the final part of the paper, which provides the rough outline of a model law. The relevant section reads as follows:

“Part II of the paper and the previous section has analyzed, inter alia, what approaches to TPM legislation have been taken and what consequences (intended as well as unintended) certain design choices might have. For the reasons discussed in Part II.C., it is not feasible to provide detailed substantive guidance as to how an anti-circumvention framework should look like without knowing the specifics of the legislative, judicial, cultural, economic, and political environment of the implementing country. However, it is possible, based on the analysis in this paper, to suggest three basic subject-matter design principles that should be taken into account by policy makers when drafting and enacting anti-circumvention laws:

• Principle 1: Get the terminology right, i.e. provide precise, clear, and unambiguous definitions of key concepts and terms such as “technological (protection) measures,” “effective” TPM, “acts of circumvention;” etc. The analysis of existing anti-circumvention laws in different jurisdictions across continents suggests that legislators, by and large, have done a poor job in defining core terms of anti-circumvention. Although it is true that laws often use abstract terms that require interpretation, it is striking how many vague concepts and ambiguous terms have been identified within the context of TPM legislation. The EUCD, as it has been transposed into the laws of the EU Member States, is particularly illustrative of this point since it leaves it up to the national courts and, ultimately, to the European Court of Justice to define some of the basic terms used in the respective pieces of legislation. In particular, legislators should avoid merely “copying and pasting” provisions as set out by international treaties or other sources of norms without making deliberative choices about the concepts and terms that are used.

• Principle 2: Recite traditional limitations and exceptions to copyright in the context of anti-circumvention provisions. The review of exception regimes under various legal frameworks as well as the overview of initial experiences with anti-circumvention legislation in the U.S. and in Europe has suggested that anti-circumvention provisions tend to change the carefully balanced allocation of rights and limitations previously embodied in the respective national copyright laws. Particularly significant shifts can be observed in areas such as research (including reverse engineering), teaching, and traditional user privileges such as fair use or the “right” to make private copies. Apparently, not all of these shifts have been intended or anticipated by policy makers. Thus, it is crucial to carefully design the exception framework applicable to TPM, provide appropriate mechanisms for the effective enforcement of exceptions, analyze the interplay of the exception regime with the other core elements of the anti-circumvention framework, and conduct an in-depth impact analysis.

• Principle 3: Use discretion with regard to sanctions and remedies and adhere to the principle of proportionality. International legal frameworks provide some degrees of flexibility in drafting civil and criminal penalties. Implementing countries should carefully consider the available design choices under the applicable framework, thereby following the principle of proportionality. Among the usual options to be considered are limitations on criminal and civil liability for non-profit institutions such as libraries, archives, and educational institutions, flexible sanctions for innocent infringers, and limitations on sanctions for legitimate purposes such as scientific research and teaching. Again, the interplay among the liability provisions and the other elements of the framework, including scope and exceptions, must be equilibrated.

The review of various controversies—both in practice and theory—surrounding the implementation and application of anti-circumvention frameworks suggests, as noted above, that both the intended effects (e.g. on piracy) as well as the unintended consequences of third layer protection of copyright (e.g. on competition, innovation, etc.) remain uncertain and contested. In this situation of uncertainty and in light of anecdotal evidence suggesting spillover-effects, policy-makers are well-advised to complement the three principles outlined above by two more general principles.

• Principle 4: Incorporate procedures and tools that permit the monitoring and review of the effects of the anti-circumvention provisions on core values of a given society. Given the degrees of uncertainty mentioned above, it is crucial to establish mechanisms that enable policy makers and stakeholders to systematically identify and assess the effects of TPM and corresponding legislation and, thus, to incorporate what we might call the ability to learn and improve based on “law in action.” Such processes and tools might include legislative, administrative, or academic review and might focus, among others, on the core zones of concern outlined above with special attention to the exception regime.

• Principle 5: Set the default rule in such a way that the proponents of a more protective anti-circumvention regime bear the burden of proof. As noted, experiences with anti-circumvention legislation so far have not (or at best, only partly) been aligned with its raison d’�tre. Instead, attention has been drawn to unintended consequences. This situation requires that the proponents advocating in favor of a more protective regime (i.e., a regime that increases, along the spectrum set by international obligations, the constraints on a user’s behavior) must provide evidence why additional protections for TPM—e.g. in form of broader scope, narrower exceptions, more severe penalties, or the like—are necessary.”

Comments welcome.

Ian Brown points to a communication by the European Commission, announcing a “recasting” (see p. 7 for a definition) of EU Copyright Law as part of the Lisbon program aimed at regulatory simplification. According to the UK Patent Office’s website, the review will focus on levies applied to equipment and media used for private copying, term of protection for sound recordings, and includes a review of co-written and musical works.

Lot’s of good stuff in the INDICARE Monitor’s November edition. Among the interesting articles a timely piece on intrusive DRM by Philipp Bohn, a report on the European Commission’s recommendation on cross border licensing by Margreet Groenenboom, and Bill Rosenblatt’s article on rights management and the revolution in e-publishing. Also check out the INDICARE blog, esp. Margreet’s recent post. She draws our attention to a speech by Commissioner McCreevy, who is quoted with the following words:

The International Herald Tribune’s weekend edition features an interesting article by David Goodman entitled “Consumers fight copy protection.” You will find references, inter alia, to a Berkman Center study on the EU Copyright Directive I co-authored with Michael Girsberger.

I’ve updated our EUCD collection of materials website. The following countries recently implemented the EUCD: Belgium, Cyprus, Portugal, and Sweden. Unfortunately, English translations are not in all cases available. Please let me know if you know about resources and/or other implementations. (Thanks to Marcella for pointers.)