This statement is also available in PDF format.

Presentation by Rashmi Rangnath
Staff Attorney, Public Knowledge

Digital Rights Management Conference

March 25, 2009

Sponsored by the Federal Trade Commission and Technology Law and Public Policy Clinic at the University of Washington School of Law
Seattle, Washington

Thank you Stacey. I also want to thank the FTC for holding this hearing and for giving me an opportunity to present Public Knowledge's views on DRM. Public Knowledge is a Washington D.C. based nonprofit organization that represents the public's stake in the emerging digital culture.

Digital Rights Management (DRM) is a form of restriction on consumer uses of goods and services most often cited as a means of protecting copyrighted works from unauthorized reproduction. But the term has also been applied to other forms of "digital locks" that are being used for a variety of purposes.

While copyright owners should be able to protect their rights, DRM has also been abused to severely harm the interests of consumers and competition. The Digital Millennium Copyright Act or the DMCA, which imposes a blanket ban on circumvention, has been mainly responsible for this harm. Alex and Chris have done a great job explaining some of these harms. I want to address two other concerns:

1. First, the harm caused to consumers and competition because of lack of interoperability among devices and services and

2. Second, the inability of consumers to use devices in the lawful ways they have become accustomed to and expect when buying products.

Let me address the first point: lack of interoperability. Consumers expect that when they buy a device that works with another device, for example a DVD player that plugs into a television set, the device will work with any brand or model. That's how it's always been. Someone who spent thousands of dollars on a High Definition Television expects it to work with their Blu-ray or HD-DVD especially if no one tells them otherwise. However, a content protect scheme called high-bandwidth digital content protection or HDCP prevents these players form interacting properly with older high-definition television sets because older HDTVs do not have HDCP compliant inputs. As a result, content from blu-ray and HD-DVD players are displayed at a much lower resolution than the HDTV's capacity. The consumer either learns to live with a device that doesn't live up to its potential or buys a new HDTV--which may become just as incompatible with the next consumer device.

At present, no one has the responsibility to warn the consumer about potential compatibility problems. One traditional way to alleviate consumer harm from surprise is to require manufacturers to provide clear and conspicuous notice of the presence of DRM; provide information as to whether DRM would cause their devices not to interoperate; and inform them about the limitations that would be placed on uses of content. Such notice must be provided before purchase and not for instance, as part of a post-purchase End User License Agreement that a consumer signs by logging on to the vendor's website.

Lack of interoperability also harms consumers, and competition generally, by creating lock-in. For example, until recently Apple wrapped music from its iTunes Music Store in DRM called Fairplay. Music from the store could be played only on the fairplay-compatible iPod. Because iTunes is the market leader in digital music sales many iTunes customers are locked into the iPod market. Customers who wanted to use other portable players because they were cheaper or had other features were deprived of a choice. The iTunes-iPod lock in thus prevented effective competition in the MP3 device market.

DRM has also been used to achieve lock-in preventing competition in aftermarket products. Thus, in one case a garage door manufacturer sued a maker of universal garage door openers, claiming that the third-party products, were circumventing DRM in violation of the DMCA. In another case, Lexmark used technological measures to prevent third parties from providing compatible replacement ink cartridges, and sued replacement manufacturers. In both cases appellate courts upheld the principle that technological measures must be protecting a copyrighted (and copyrightable) work in order to receive the additional legal backing of the DMCA. Despite these decisions, so long as a colorable argument exists that a piece of DRM is protected by the DMCA, DRM will have a disproportionate power to force lock in on consumers. Consumers and smaller market providers who lack sufficient legal resources will be priced out of testing their defenses in court.

The FTC should investigate such lock-in and its effects on competition. If necessary, the Commission should institute a policy of treating use of DRM to prevent after market competition as an unfair trade practice.

The second harm I want to address is the inability of consumers to make lawful uses of copyrighted content. Copyright law aims to promote the progress of culture by balancing rights of copyright owners and the public. The DMCA upsets this balance by giving legal force to technological restrictions – enabling digital locks to have the force of law. For instance, while the Supreme Court has recognized time shifting as a fair use, consumers using DRM-equipped media, are unable to legally make these fair uses if they require circumventing DRM.

Similarly, the law permits teachers to make use of clips from movies and other media in the course of classroom instruction. However, DRM prevents teachers from making compilations of clips from DVDs thereby preventing valuable educational use. Although the Copyright Office has permitted educators in media studies departments to circumvent such DRM, educators in other fields note that they need this exemption just as much as media studies professors.

DRM prevents persons with disabilities from gaining access to content they have lawfully purchased. For example, access control technologies used in digital publications, such as e-books, prevent the visually impaired from using tools (such as synthetic speech, screen magnification software, and Braille devices) in a way that enables them to access such works. Like the media studies professors, the Copyright Office granted an exemption to the visually impaired to circumvent DRM on eBooks. But the usefulness of the Copyright Office exemptions is limited because third parties are not allowed to provide the tools of circumvention to those who are granted an exemption. In other words, users have to create their own circumvention tools – an impossible task for ordinary users.

In order to alleviate this imbalance between owner and user rights the DMCA should be amended to permit circumvention when it is done to engage in lawful uses. While that should be the long-term goal, a temporary solution would be to amend the DMCA to permit the Copyright Office to extend the triennial rulemaking exemptions to trafficking in devices that permit circumvention. The Commission can play a vital role in recommending that Congress adopt these changes. Thank you.