Intellectual Property Solicitor Paul Massey of Wragge & Co LLP sees greater cooperation amongst new media companies as the best weapon in the fight against online piracy on the path to convergence…

By Paul Massey

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Digital media is hitting the mainstream. New media businesses are building legitimate markets by employing a two-pronged carrot and stick strategy - taking legal action against illegal file sharers while providing their own legitimate download services to attract consumers. 

Successful legal actions have been brought against file sharers and peer-2-peer (P2P) file sharing platforms across the globe, such as Grokster in the US. However, the Supreme Court decision in Grokster may leave open a defence where there are substantially non-infringing uses of a platform – the same argument which helped to protect Sony’s VCR from an attack by Universal Studios in the 1980s.

 

If filesharing is here to stay - where next?

 

A report by CacheLogic suggests legal action has not lead to a dramatic reduction in illegal file sharing. The reality of the “Wild Wild Web” is that where one platform is shut down, a more sophisticated one springs up to replace it. It seems illegal file sharing is here to stay. The question is, can legitimate download services provide the carrot to entice more users away from illegally downloading and sharing media?

 

The majority of legitimate digital media incorporates a Digital Rights Management (DRM) mechanism. In broad terms, DRM involves associating rights with a digital file allowing certain authorised uses and prohibiting others. Microsoft uses and licenses its WMA and WMV DRM while Apple’s itunes employs Fairplay. Such systems may allow you to create CD back-ups or transfer files to authorised media players.

 

Distributors justifiably hope DRM will avoid more media files being added to the torrent of content already shared illegally online. However, DRM is controversial and not without its problems:

Different DRM systems are not interoperable.

With few exceptions itunes downloads currently only work with ipods. Conversely, an ipod cannot play files downloaded from the majority of online stores, which offer WMA protected content. Inadequate information and warning requirements means many people realise this too late.

 

DRM may restrict fair use under copyright law.

For example, the right to parody copyrighted works.

 

DRM may make digital media impossible to archive.

While copyright law allows material into the public domain after a set time, a DRM mechanism may expire meaning material held by libraries becomes inaccessible.

 

DRM may infringe consumer protection codes

For example, placing spyware onto hard drives, potentially exposing consumers and making computers susceptible to viruses. The Royal National Institute for the Blind also complain DRM restricts accessibility options in e-books.

Unpopular DRM mechanisms are easily circumvented

Legal and illegal circumvention methods abound.

 

These drawbacks may ultimately subvert the goal of DRM, driving the public back to illegal sources of digital content free of user restrictions. Indeed, online debate shows growing discontent directed towards DRM restrictions. In this context, the All Party Internet Governance Group (APIG) is due to publish a report considering DRM. APIG may recommend further legislative safeguards. For example, they may recommend that companies in a dominant market position are subject to compulsory licensing of their DRM technology or may suggest empowering a trusted intermediary such as the British Library to ensure digital content is accessible in the future.

 

Competition law may also be a stumbling block for companies shoring up digital markets using DRM. However, the French Competition Commission recently rejected a complaint brought by VirginMega against Apple for abuse of its dominant position and refusing to license the Fairplay DRM.

 

Hackers also influence corporate strategy by illegally circumventing the technological protection measures of DRM mechanisms. One notorious Russian programmer, Dmitry Sklyarov, was imprisoned in the US following a presentation on how to circumvent DRM for e-books. Meanwhile, companies are finding ways of subverting the intended protections of DRM mechanisms. RealNetworks reverse engineered Apple’s Fairplay technology to create its own DRM compatible with ipods. Such tactics are by no means legally or technically fireproof and digital licences may restrict the right to reverse engineer DRM code.

 

DRM usurped, DRM remixed…

 

Alternatively, sites such as eMusic and Bleep.com offer music in MP3 format free of DRM and compatible with all devices. This successful philosophy demonstrates that displaying trust gains respect, which is reciprocated by loyal customers.

 

These forces are shaping the market into a form consumers will be happy with in the future. However, the key to creating a legitimate download market to compete effectively with online piracy is to offer interoperable DRM formats and digital devices. To this end Microsoft’s Playsforsure scheme identifies compatible devices. Another solution may be standards based rights languages and interoperable DRM mechanisms such as the forthcoming Coral Consortium standard with backing from the likes of Warner Bros, Twentieth Century Fox, Sony and Sun Microsystems.

 

However, industry leaders will need to shake hands on DRM before the carrot really takes root and the overall market potential of legitimate digital media is released. An acid test will be the impact upon itunes’ of the anticipated Microsoft/MTV foray into online media – urge.com and Windows Media Player 11. The mind-blowing cross-marketing opportunities of this alliance could transform the digital arena.

 

This article was first published in the March 2006 Wragge & Co LLP IP newsletter

 

About the Author:

Paul Massey is a solicitor practicing in Intellectual Property at leading UK practice Wragge & Co LLP. His specialist fields include new media, mobile telecommunications, European standardisation bodies, patents, copyright, trade marks and commercial legal contracts. www.wragge.com e: paul_massey@wragge.com. Outside of law he has been involved in film making and website development.