The Committee for Economic Development
a 60-year-old pro-business think tank. This group has recently dedicated
some of its resources to the problems associated with intellectual property
rights in a digital setting. The resulting report could easily have become
another rabid missive on the evils of "piracy" and the need for heavy
governmental involvement. But the CED took a different approach. The
report (available as a 100-page PDF
) takes a surprisingly broad view of the situation. It contains
little that is truly new for people who have been following
the situation, but it does show that the business community is beginning to
figure out that there is more to think about than the entertainment industry's
The introduction talks about the challenges posed to publishers by
ubiquitous computers and high-speed networking. It notes that sales of
audio CDs have dropped significantly, but also discusses a number of
(non-piracy) reasons for why that is happening. Movie sales, in contrast,
are better than ever; bandwidth limitations have something to do with that,
but the fact that movie customers feel they are getting their money's worth
also is relevant.
Potential responses to
unwanted copying of copyrighted materials are discussed. The report notes,
New business arrangements have consistently emerged in response to
new technologies. Over the long term, the creators of advances in
science and the arts have profited from advances in new production
and distribution technologies. And attempts to protect existing
production and distribution arrangements by law have failed.
The report then goes into a detailed history of copyright law. The authors are
clear on the fact that the real purpose of modern copyright law is to promote
artistic and scientific advancement; the provision of certain monopoly rights to
copyright holders is simply a means to that end. It is often repeated that
creators of copyrighted materials rely heavily on work that was done
before; there is little that is truly and completely original. The
importance of fair use rights and the public domain is discussed several
There is a discussion of responses to piracy which covers most of the usual topics: the
DMCA, various other legislative efforts (broadcast flag, the CBDTPA),
enforcement actions, digital rights management schemes, etc. The authors
are not enthusiastic about legislative "solutions" to the problem; they see
laws like the DMCA and state "super DMCA" proposals as anti-competitive,
inimical to fair use rights and the public domain, and ineffective. Among
other things, they point out that legally-required copy protection schemes
can enshrine weak technology and inhibit the development of stronger
The report has little good to say about digital rights management (DRM)
systems. For starters, DRM systems usually fail in the long term; once a
DRM system has been broken, the exploit code can be spread far and wide
over the net. DeCSS is used as an example - and the authors even note that
DeCSS was created to play DVDs on Linux systems rather than as a piracy tool.
Privacy issues with DRM systems are mentioned. The report talks about the
innovation which has resulted from the widespread dissemination of
general-purpose computers, and how legally-mandated DRM threatens to put an
end to that.
There are a few paragraphs dedicated to the effect on
The role of open source software is being systematically ignored in
many of the proposals under discussion in this report, and
particularly in the broadcast flag context. Open source software
is increasingly important as a source of innovation; it can be
far more reliable and secure than proprietary software because
talented programmers around the world can examine the code and try
to break its security, without having to worry about hidden
backdoors or holes. Yet such examination and the resulting
improvement appears incompatible with a prohibition on tampering.
There are also societal costs to be paid. Widespread use of DRM systems
threatens the public domain and fair use rights, and will thus inhibit
We grant limited privileges to creators because we want them to
create and to share their works for the benefit of society as a
whole, not in order to give them total control over how their works
are used. The central problem with broad use of DRM is not that
software code will be regulating users, but that content creators
will be unilaterally regulating private uses of content and
controlling the course of subsequent innovation.
Almost every innovation is "subsequent" to many others, and, as the authors
point out, this subsequent innovation is usually done by new, unrelated
creators. Allowing creators to choke off subsequent works will thus result
in fewer works being created, which is contradictory to the original
purpose of copyright protection.
The biggest complaint that
the authors have with DRM, however, would appear to be the fact that such
systems shift copy protection costs from copyright holders to consumer
electronics manufacturers and users.
Finally, the report points out that oppressive DRM (and rights enforcement
in general) is bad for the social contract which holds the whole system
The existence of private license agreements containing
"unreasonable" terms -- terms inconsistent with shared values --
undermines the societal interest in self-enforcing contracts. The
self-enforcement aspect of private agreements is essential; after
all, voluntary compliance with private agreements is what makes a
society livable. If we create a world where license terms do not
appear to represent a fair bargain, and are contrary to shared
values, we are likely to have built a world where there is little
inclination for voluntary compliance and much delight taken in
rule-breaking. Such a world will be filled with obtuse letters
threatening dire legal consequences, or (more likely) widespread
remote disabling of the machines upon which we rely.
One might well argue that we have already proceeded far down that path.
The report concludes with a set of recommendations:
- No quick legislative schemes. The report proposes a two-year
moratorium in legal "fixes" while a broader consensus on digital
copyright protection is worked out.
- A high priority should be placed on the development of new business
models around creative content. There should be no legal protection
for any particular business model.
- Existing enforcement and education efforts should continue. In
particular, the industry should use the legal tools it has against
- Despite the report's criticism of DRM systems, it recommends that DRM
efforts should continue, but that such systems must respect the fair
use and first sale rights of users. The report suggests that the DMCA
anti-circumvention clause should be reconsidered.
- There should be "economic incentives" for copyright holders to
facilitate further use of their works. Compulsory licensing is one
idea mentioned in the report. It should also be easier for works to
enter the public domain; the report mentions the idea of requiring
periodic, low-cost renewals to keep copyrights in force.
For those of us who are concerned about ever-increasing copyright terms,
criminal charges against software developers, and the lack of ability to
use and control our computers as we see fit, this report will fall short of
what we would like to see. It is, however, a clear sign that the wider
business community is starting to become aware of the costs of unrestricted
copyright rights. We are seeing the beginning of a real debate where,
before, there was only the illusion of consensus.
That can only be a step in the right direction.
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