Protecting Digital Property Without New Legislation

Protecting Digital Property Without New Legislation
April 1, 2005

Contrast digital property with real property or other more tangible goods.

In the case of the latter, there is no continuing relationship between seller and buyer that dictates terms of use unless, for instance, by warranty. Intellectual property law attempts to define the relationship between the rights holder and the consuming public and creates a continuing obligation on the consumer to obey the rights of the intellectual property holder. For instance, a music CD purchase gives the consumer unqualified ownership of the physical CD itself, but only limited rights to copy and distribute the songs on the CD.

Intellectual contract law through digital rights management or other contractual forms can characterize the continuing relationship between copyright owner and consumer. It won’t replace intellectual property law, but it can customize the consumer experience in ways property law cannot.

Using technology to package and protect copyrighted works is a form of intellectual property self-help. Self-help dominates our entire legal system, as influenced by Thomas Hobbes and John Locke. Self-help arrangements, either contractual or self-defense, are witnessed everyday. In the case of tangible property, self-help protection is as simple as a lock and key. Likewise, copyright owners need to be free--indeed, even encouraged--to protect their digital content.



DRM and Self-Help

Digital rights management (DRM) is a form of self-help that can enforce contractual rights. As a part of the product itself, DRM addresses the product’s distribution, further redistribution, and interoperability. DRM also could be an enabling technology, in addition to one that locks up and protects certain content. It can charge a price to the consumer for each play of a song or allow for unrestricted access to a properly paid-for work.

DRM has the potential to be a tailored solution that will not be over-inclusive and indiscriminately trample on consumer preferences. Ideally, it will enforce consumer rights as well as the rights of the copyright owner. The law should view a product that employs DRM as a contractual agreement between creators and consumers.

Most consumers would welcome the benefit of a DRM contractual bargain, but only if they perceive the agreement is fair. “Fair use” is loosely defined, often associated with free speech such as for criticism or parody. Fair use, in a colloquial sense, is used as a proxy for consumer expectations and preferences--the desire for back-up copies and the ability to transfer to different hardware devices, for example.

Competition in the market will dictate that consumer preferences be met. The market--not Congress--should decide the appropriate level of contractual digital rights. Copyright law will ensure that fair use, as applied by the courts, exists.



The Peer-to-Peer Debate

The online intellectual property problems faced by copyright owners do not exist in isolation. They are rooted in the Internet’s (perceived) anonymity--but so are spam, viruses, spyware, and fraud. Indeed, to a large extent, we don’t have an intellectual property law problem; we have an anonymity/authentication problem.

A policy goal of self-help applies well to the peer-to-peer file-sharing debate. It encourages intellectual property owners to use technology protections and contracts. It reduces the need for new laws that would place liability on Internet service providers or file-sharing networks. Enforcement efforts aimed at primary infringement, instead of holding a person or network liable for the actions of another, lessen the potential for chilling effects on new technology development.

The digital property model of the future incorporates both contract and property law. Current technology standards--like the FCC’s “broadcast flag” and copy prevention technologies--limit distribution. But the evolution of the digital marketplace will undoubtedly allow for consumer involvement in the rights process. It will allow a consumer to prove ownership and transfer ownership to someone else, or transfer copyrighted data with defined usage rights in ways referred to as “superdistribution.”

Many vocal critics of the current copyright regime maintain that content creators already have a leg-up on consumers, and that DRM will only exacerbate this imbalance. A Hollywood victory in the Grokster case currently at the Supreme Court, the result of a failure to meet consumers’ use expectations, may end up hurting copyright owners in the long run. Legislated fair use, compulsory licensing, and limits on the use of DRM may be the price of “victory.”

The uses and expectations for intellectual property are incredibly complex. There is no single technological or legislative resolution to digital copyright ownership issues. If we want dynamic, consumer-driven results, we should prefer market solutions to government legislation. Digital rights management as a contractual bargain is a preferable, if not perfect, market response.


Braden Cox (bcox@cei.org) is technology counsel, and Clyde Wayne Crews Jr. is vice president for regulatory policy and director of technology studies, with the Competitive Enterprise Institute.