Copyright, Fair Use, Competition and the Digital Millennium Copyright Act

COPYRIGHT © 2006 Adam Hobson. ALL RIGHTS RESERVED. No part of this work covered by the copyright hereon may be reproduced or used in any form or by any means–graphic, electronic, or mechanical, including but not limited to photocopying, recording, taping, Web distribution, information networks, or information storage and retrieval systems–without written permission of the author.

This paper is now copyrighted. In fact it would be copyrighted even in the case the disclaimer above was not present. Copyright is a valuable tool for an author, musician, artist or anyone else to protect their creative work and to secure the rights to publish, re-publish and distribute said work. Copyright creates an incentive for creative people, and one must assume non-creative people, to… well… be creative. If an author is not compensated for their creative works, if anyone could distribute and use works of another without paying or without permission, why would an artist spend the time and effort to create? Copyright is used to ensure creativity. However the situation proposed before, the immediate distribution of a creative work without compensation, is in fact a real occurrence.

Thanks to computers, technology and of course the Internet, copyrighted materials are being “shared” right now. And not just a few copies are exchanging hands; millions, perhaps billions of copyrighted files are being copied and distributed. Limewire, a peer-to-peer program that allows users to share their audio and video files, has been downloaded over 80 million times from download.com, Morpheus, another file sharing program, has been downloaded over 150,000,000 times. What is one to do? Lobby Congress!

Well that is exactly what was done in the later ’90s and the result, The Digital Millennium Copyright Act of 1998, increases the monopoly copyright creates and stifles competition. Fair use rights, guaranteed by the 1st Amendment, are infringed. Third party vendors are locked out of the competition, or rather lack there of. Not to be so pessimistic, but piracy is still flourishing. The statistics for the down loading of file sharing programs is for today, not pre-DMCA. In fact file sharing, for the most part, did not exist before the DMCA, and efforts to use the DMCA to curtail Internet piracy, despite victory in legal battles, are loosing the overall war. The Digital Millennium Copyright Act of 1998 greatly infringes upon fair use rights and competition, criminalizes average citizens, and is entirely ineffective at stopping piracy.

Some History and Philosophy of Copyright and Fair Use

Ethan Katsh, in his book Electronic Media and the transformation of Law, argues that copyright is not a universal feature of all societies, but is instead a feature of a print-based society. In the time of oral tradition and scribes there was no need for copyright, for within a society information was freely shared and could not be owned be any individual.^[1] It was not till the printing press and the Statute of Anne in England that copyright entered society. James Madison worked copyright into the United States Constitution under Article 1, Section 8, The Congress shall have Power… To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.

It is important to note that the power to establish copyright was granted to Congress and not to the courts. In many modern rulings the courts have interpreted laws strictly and have understood that though the laws may be outdated, it is not the purpose of the court to legislate, but to interpret what the current laws state. This has become an important distinction in recent times as a new era, the digital age, has challenged the principles of copyright. Courts have deferred to Congress and copyright law for guidance in proceeding with their decisions. It has thus been left to Congress to pass laws that protect intellectual property rights, while respecting other rights, such as freedom of speech and its derivatives.

One might imagine that copyright and the freedom of speech guaranteed by the 1st Amendment may contradict. However, as Justice Ginsburg states, The First Amendment securely protects the freedom to make-or decline to make-one’s own speech; it bears less heavily when speakers assert the right to make others’ speeches.^[2] Thus copyright does not contradict freedom of speech. However, there arises situations where lines between copyright and free speech blur. The Copyright Act of 1976 was a major revision of United States copyright policy that dealt with copyright and its implications to freedom of speech. The act served to replace various practices of state common law with federal jurisdiction.^[3] Of the greatest importance was the common law of fair use.

The practice of fair use is where the realm of copyright and the realm of free speech merge. Section 107 of Title 17, the Copyright Act, deals with fair use,

Notwithstanding the provisions of sections 106 and 106A, the fair use of a copyrighted work, including such use by reproduction in copies or phonorecords or by any other means specified by that section, for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include–

1. the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;
2. the nature of the copyrighted work;
3. the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
4. the effect of the use upon the potential market for or value of the copyrighted work.

The fact that a work is unpublished shall not itself bar a finding of fair use if such finding is made upon consideration of all the above factors.^[4]

Fair use allows for a fair market of ideas, even in cases when some of those ideas may be copyrighted. This article is in fact taking advantage of fair use through the use of quotations taken from copyrighted books and manuscripts. This is possible because this article is intended for an informative and educational purpose, uses copyrighted material from published, non-fiction articles and books, quotes only a few lines at maximum, and does not decrease the value of any copied material, and therefore abides by fair use guidelines.

Since the Copyright Act of 1976, fair use has also been used to grant customers permissions to backup, “shift” and otherwise use the copyrighted material in ways in which it was not intended for, but by which Congress or the courts have determined does not affect the market value of the material. For example in 1984 the Supreme Court used fair use in their decision regarding Sony Corporation of America el al. v. Universal City Studios, Inc., et al. (1984). Universal and Walt Disney sued Sony for copyright infringement damages for manufacturing technology that can be used to record copyrighted material. The Issues involved in this case include (1) whether recording a copyrighted program with the intention of viewing it privately at a later time or date, known as time-shifting, constitutes a copyright infringement and (2) whether the manufacturer of a product that is used in copyright infringement is also liable for that infringement.

Regarding the first issue, the Supreme Court recognized that time-shifting increases program audiences and that the methods Universal and Disney use to collect royalties, the ratings system, is still effective when the program is recorded. Thus it is shown that Universal and Disney do not loose any profit from Betamax, VHS or by the practice of time-shifting. Regarding the second issue, Justice Stevens in his opinion recognized that, The Copyright Act does not expressly render anyone liable for infringement committed by another. Taking these details into account the Court ruled in favor of Sony and overturned the decision of the Court of Appeals.

Thus the principle of fair use was used to permit “shifting,” in this case time-shifting, of a copyrighted material without the author’s permission. However, remember that Congress has the ability to alter, counteract, or affirm this rule of law through actual legislation, since copyright is a domain of Congress as granted by the Constitution. In fact, practically immediately after the ruling, Universal and Disney began lobbying Congress for changes in copyright law.^[5] The Digital Millennium Copyright Act is a product of that lobbying, in which the right of fair use established by The Copyright Act of 1976 and reaffirmed in the Sony decision has been practically overturned.

The Digital Millennium Copyright Act

After the Copyright Act of 1976 and the Sony ruling, the world of copyright and fair use was for the most part settled. However new technologies and old business practices led those in the entertainment industry, the industry affected most by copyright, to continually lobby Congress for further copyright protection. In 1998 Congress passed and President Clinton signed into law the Digital Millennium Copyright Act. The DMCA was modeled after the WIPO (World Intellectual Property Organization) Treaty (1996). The DMCA is divided into five titles:

Title I, the WIPO Copyright and Performances and Phonograms Treaties Implementation Act of 1998, implements the WIPO treaties.

Title II, the Online Copyright Infringement Liability Limitation Act, creates limitations on the liability of online service providers for copyright infringement when engaging in certain types of activities.

Title III, the Computer Maintenance Competition Assurance Act, creates an exemption for making a copy of a computer program by activating a computer for purposes of maintenance or repair.

Title IV contains six miscellaneous provisions, relating to the functions of the Copyright Office, distance education, the exceptions in the Copyright Act for libraries and for making ephemeral recordings, webcasting of sound recordings on the Internet, and the applicability of collective bargaining agreement obligations in the case of transfers of rights in motion pictures.

Title V, the Vessel Hull Design Protection Act, creates a new form of protection for the design of vessel hulls.^[6]

Title II builds on the precedent of the Sony decision, which found that Sony was not liable for actions of its costumers. Likewise, on-line service providers or OSPs are not liable for the actions of their users when the services offered have legitimate use.

Of important note, to gain the protection of Title II the on-line service provider must have a legitimate non-copyright-infringing purpose. Napster, the original peer to peer (P2P) music sharing network, became a casualty of the DMCA, after the decision of A & M Records, Inc. v. Napster, Inc. (2000) found that Napster was not protected under Title II of the DMCA. The court found that Napster had little to no legal use, and that the company had direct knowledge of the piracy that occurred on its network and had done little to stop the infringements.^[7]

The record industry’s victory over Napster was not a victory over Internet piracy or even over P2P networks, instead new networks began with two large differences than Napster. First, the actual networks were not owned by a corporation or person, thus proving difficult to target with a copyright infringement suit. Second, the new P2P networks allowed sharing of more than just music, but of any type of file such as video or software. New technologies and methods for file sharing such as bittorrents as well as older methods such as IRC are also increasing in popularity.

Due to the inability of the Recording Industry Artists Association (RIAA) to stop the use P2P networks and other file sharing techniques, the RIAA has been taking advantage of another element of the DMCA to target individual users. The RIAA has been suing individual file sharers for copyright infringement, including students of my alma matter, Hamilton College, in their various rounds of law suits.^[8] Recent court decisions have involved the subpoenas used to force the Internet service providers to reveal the identities of their clients who are alleged to be copyright infringers.

In order for the RIAA law suits to impede Internet piracy, the RIAA requires the help of Internet service providers to determine the identities of the file sharers. The music industry uses the P2P networks to search for users sharing an arbitrary number of music files, records their IP address and the date and time of infringement and the subpoenas the ISP associated with the IP address for the identity of the customer assigned to that IP address at that given time.^[9]

However, a somewhat recent decision of the U.S. Court of Appeals for the District of Columbia has called this methodology into question. The key issue is that the actual infringement is occurring on private client computers, rather than on the ISP’s servers. The Digital Millennium Copyright Act was passed previous to the existence of peer to peer networks, and thus does not directly apply to such networks. [The DMCA] betrays no awareness whatsoever that Internet users might be able directly to exchange files containing copyrighted works, was written in the opinion of the court.^[10] The case, Recording Industry Association of America v. Verizon Internet Services, Inc (2004), ruled in favor of Verizon, Inc. and its wish to respect the privacy of its clients. As in similar previous decisions, such as the Sony case, the rule of law created by this decision can be overturned by Congress through actual legislation on peer to peer networks.

The music industry, as well as the motion picture industry that is following in the RIAA’s footsteps, need to realize that their problems are not legal in nature, but instead are of the medium. The Internet, and the free information flow it creates, will not be bound by laws and regulations. The entertainment industry should focus instead on bettering their products, rather than on disenfranchising their costumers.

The DMCA and Fair Use

Of particular interest contained within the DMCA is what has been known as anti-circumvention clause that prohibits the circumvention of any effective technology protection measure installed to restrict access to a copyrighted work and prohibits the manufacture of any device, composition of any program, or offering of any service that is designed to defeat technological measures.^[11] This may seem to be insignificant or perhaps common sense but has far reaching affects.

The first affect of the anti-circumvention clause is that it infringes upon fair use rights. One can not quote a manuscript, sample a short piece of music or a clip of a movie if it is not protected by effective technology protection. For a concrete example imagine that a teacher wants to show a short clip of the movie Jurassic Park in a biology presentation about genetic engineering. The teacher wants to integrate the clip into a flash file for the presentation, but thanks to the DMCA, cannot do so legally. The movie is on a DVD which is protected by CSS encryption, which somehow counts as effective technology protection. However, CSS is not very effective considering it was broken within months of the first widespread DVD releases. DeCSS is such a program that would allow one to “break” the protection of CSS and copy all or portions of a DVD into a computer file. Obviously, there are illegal uses for such a program. Yet, there are also legitimate fair use reasons, such as the example above, for the use of DeCSS to copy a clip of a movie off of a DVD for use in a presentation. However, DeCSS is a program that breaks the effective technology protection and by the anti-circumvention clause is illegal.^[12]

Even more perplexing is that it has legally been recognized that CD owners have the right to make digital backups of the music, but according to the anti-circumvention clause DVD owners do not. The Sony case acknowledged that VCR owners have the right of fair use to “time shift” television programming through VCR recording. CD owners have the right to “medium-shift” their music from CDs to MP3s for backup reasons, or just for mobility.^[13] There is even an industry of MP3 players, led by the iPod, that base much of their functionality on the ability to convert CDs to MP3s. However, because of CSS and the DMCA such an industry would not exist for video. Some MP3 jukeboxes, the video iPod is one, have added the functionality of picture and video viewing, but are hindered by the legality of transferring DVDs to other formats and are thus limited by the offerings of the iTunes video store.

The anti-circumvention clause also inhibits innovation. One of the most effective methods to determine if a system is truly effective technology protection in the real world is to put that technology up against real world circumstances and situations. For technology such as encryption, releasing the algorithm to the general public and allowing everyone the chance to crack the scheme is the normal method for testing. In this way when errors and weaknesses are found they are reported to the manufacturer who will then update and fix them in the next release. Now, however, the anti-circumvention clause creates an environment where just trying to crack a security technology is illegal, even if no harm is intended. Professionals and academics are now less likely to post their findings on security vulnerabilities that can help improve the product.^[14] A chilling affect will now occur on security technology and the methods to improve it due to the fear of the anti-circumvention clause.

The DMCA and Competition

A recent trend in certain business sectors is to use the DMCA, particularly the anti-circumvention clause to hinder competition, particularly of after-market vendors. This practice is especially strong in the manufacturing of printer cartridges and peculiarly of garage door openers. In The Chamberlain Group, Inc. v. Skylink Technologies, Inc. (2003) the Chamberlain Group sought to prohibit Skylink Technologies from manufacturing a universal garage door remote control that would work on Chamberlain garage door openers.^[15] Chamberlain garage door openers function using a rolling code, a copyrighted technology that is meant as a security feature against criminals attempting to break into houses using garage door opener remote controls. Skylink needed to circumvent that technology in order for their universal garage door opener remote control to work for Chamberlain garage door openers.^[15:1] The Chamberlain group is thus attempting to use the DMCA to not protect a copyright, but to prevent competition. Skylink did not actually infringe any copyright of the Chamberlain Group, its only questionable activity being the thwarting of the “rolling code.” Luckily the court ruled in favor of Skylink, recognizing that stifling competition is not the purpose of copyright.^[15:2] however it is fearful to think that the DMCA can be construed to limit competition.

The use of the Digital Millennium Copyright Act to limit competition has not been limited to garage doors only. The economics of the printer market is based largely on the after-market for printer toner and ink cartridges. Lexmark, a manufacturer of printers and printer paraphernalia, uses a special chip in its printer cartridges that reads the levels of ink in the cartridge and renders the cartridges useless when the ink runs out, even if more ink is added. Thus costumers of Lexmark are forced to continue to pay Lexmark’s high prices for ink cartridges based on the virtual monopoly Lexmark has created for ink cartridges for its printers.

Static Control Components is a company that produced a chip that allowed other third party ink cartridges to be used in Lexmark printers. Lexmark sought an injunction preventing Static Control Components from manufacturing this chip. The chip, Lexmark claimed, circumvented its handshake code designed to prevent non-Lexmark cartridges [or refurbished Lexmark cartridges] from functioning in Lexmark printers. The court agreed and granted Lexmark its injunction.^[15:3] In this case the courts have allowed the DMCA to be used to prevent competition. Prices in the fields given monopolies by the DMCA would skyrocket, as manufacturers could charge whatever they wished without fear of competition charging less. If the DMCA is allowed to be further used to prevent competition in other fields, the affects could be drastic on innovation and technological progression.

Conclusion

Copyright is a protection the government grants creators that in principle is good and needed. However, copyright may just be a feature of a print society and not able to translate to a digital society. Artists and musicians, corporations and associations will need new methods to deal with intellectual property theft. Legislation like the DMCA is not the answer. Even senator John Kerry spoke out that he was open to examining [whether to change current law] to ensure that a person who lawfully obtains or receives a transmission of a digital work may back up a copy of it for archival purposes [or transfer it to another device].^[16] Creating criminals out of innovators and potential costumers is not a logical method of increasing sales and profit. A paradigm shift is needed in copyright legislation and intellectual property law, what that shift entails is what the next decade will show.