Digital Rights Management Conference

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8:30-8:55
David Nelson Memorial Keynote Address: A Voice from Congress on DRM
Rep. Zoe Lofgren, (D-California)

Representative Zoe Lofgren: Thank you very much for that gracious introduction. It's an honor to be here to deliver the David Nelson memorial address and I'd like to thank Pam Samuelson for her gracious invitation to be here today and for her help and her expert input on so many of the topics that face us as a nation and I see a lot of friends here this morning too so that you for being here. As we all know a massive digital media revolution is really unfolding before our eyes. From mp3 players to p-to-p networks, from digital televisions to personal video recorders like replayTV and Tivo, from e-books to web casting, digital media is changing the way we listen to and view our favorite movies, songs, and books. And like most technological breakthroughs in the past, from the player piano to the VCR, the revolution has aroused deep emotions within the so-called content community. While Jack Valenti has sometimes been the blunt of unkind comments in the technology community, Jack is someone who I actually like very much and whom I respect even though I do not always agree with him and I want to read you a quote from Jack, which he has since admitted was incorrect, but if you substitute digital technology for VCR in the quote, it could have been made yesterday. It actually dates back to 1982. Quote: "I say to you that the VCR is to the American film producer and the American public as the Boston strangler is to the woman home alone. We are going to bleed and bleed and hemorrhage and with the congress at least protect one industry that is able to retrieve a surplus value of trade and whose total future depends on its protection from the savagery and ravages of this machine."

This content industry…the content industry is actually singing the same tune today. In fact, one of Jack's recent quotes was very reminiscent of the 1982 quote I have just read to you. Quote: "It's getting clear, alarmingly clear I might add, that we are in the midst of the possibility of Armageddon." Networks are worried that people will automatically skip commercials with personal video recorders; the studios and the music labels are worried that people will take perfect digital copies of their movies and songs instead of going to the movies or buying CDs, and a few years ago Congress enacted the Digital Millennium Copyright Act to address their concerns. In return, content owners were supposed to embrace digital technology. Now, almost five years later, content owners are just starting to experiment with new business models that include digital distribution and in my opinion their progress has been very slow and is at the very least a contributing factor to the huge piracy problem that we face today. But what's even more troubling is that while content owners have failed to deliver on their promise to embrace digital distribution, after the DMCA, the law has also had a number of adverse affects on consumers and entrepreneurs.

Now, as I was thinking about what to say this morning, I took a trip down memory row. I have been on the House Judiciary Committee for eight years and I've been a member of the Intellectual Property subcommittee for six. I do believe that protection of intellectual property is important. Copyrights with patents do deserve respect, but I also know that intellectual property isn't like Whiteacre and Blackacre and, in fact, you really need to go back to the constitution to look at what it is we're protecting. In Article 1, Section 8, Congress is asked to…or invited to secure for limited time rights to the artists and authors in order to promote the sciences and useful arts. So this is not a permanent Whiteacre-Blackacre fee simple ownership…it is part of a deal between society and inventors and artists to stimulate creativity and inventiveness but also use that as a basis for the advancement of science and culture. There are problems with the DMCA if you look at fair use and actually non-infringing use, it's not just fair use, that I don't think that any of us really had in mind when we drafted the bill. It cedes the DMCA, I think cedes too much power to copyright owners who have no limits on what technical restrictions they put on content. For example, online publishers don't just set the price of digital books, they can control where consumers read books and for how long they can read the books. They can even prevent a consumer from sharing their copy with a friend or a family member. Publishers never had this power before. If I buy a book at Barnes and Noble, which I do a lot, a publisher can't control what I do with my copy. I can read it over and over, I can lend it to my son, I can read it at home, on a plane, on vacation.

Copyright holders must recognize that my expectations don't change just because I choose to purchase their product in another format. Another example occurred last year when music fans were shocked to learn that they couldn't play some of their store-bought CDs on their computers. The new CDs even made some Mac computers just lock up completely. At the same time, consumers are prevented from circumventing restrictions for any reason, including fair use. It is unlawful to disseminate information about how to evade an encryption, punishable by up to five years in prison and a $500,000 fine. So what is fair use? It's an important face guard that's been recognized, as you know, by Statute and by the United States Supreme Court that tries to balance the competing interests of copyright holders, the interest they have in protecting their work, and the public, which needs to have access to information and to be able to share ideas and to innovate. Really it's what the constitution envisioned when they asked congress to find that balance. But the copyright law never gave control before to copyright owners, but digital rights management, backed by section 1201 of the DMVA, potentially gives them that power.

They could put a lock, content holders could, on content and restrict fair use in legitimate expectations and other non-infringing uses and the public can't do anything about it because it's a crime. The authors of the DMCA I don't think really intended to create such a dramatic shift in the balance. The House Judiciary report accompanying the DMCA stated, and I quote: "an individual should not be able to circumvent in order to gain unauthorized access to a work," but here's the important part, "but should be able to do so in order to make fair use of the work that he or she has acquired lawfully." That's what members of congress thought they were voting to do, however we didn't. We've destroyed the first-sale doctrine. The current system has the potential to destroy, and actually has already destroyed, the first-sale doctrine. It also has the potential of extending copyright in perpetuity. I know, actually I had the privilege of watching Larry Lessig argue the Eldred case before the Supreme Court. I was really intrigued to watch it and I noticed that Larry was very disappointed in the results and actually, it may seem strange for a member of congress, but I thought the result was bizarre. If we can't regulate guns in junior high schools, the Eldred case really makes no sense whatsoever, but in any case the point is that given section 1201 of the act, even though material that is in the public arena and no longer protected under copyright act is the law to technological means, one can, in effect, control content forever and that is something that I think we really must address.

We've also had an impact of dampening technological development and competition through the DMCA and I know that this was not something that we really had in mind. I come from Silicon Valley, represent Silicon Valley, and every week I come home and every week I try and visit a new company, usually start-ups or small guys and see what are they doing, what's new, how can I help, and some of them become big guys. Some of the people I've visited in the past are now running into big problems with the DMCA, like Sonic Blue, which created Replay TV. Twenty percent of their quarterly spending is now on litigation. They're trying to lead in innovation but they get sued everywhere they turn. DMCA is chilling competition. Take the case of Lexmark and this is something I know none of us had in mind. Lexmark-brand printers now have a cryptographic handshake so that the printer can recognize the cartridge and a company called Static Control had figured out how to defeat the handshake and build a competing cartridge that worked with Lexmark printers. Lexmark sued under 1201 of the DMCA, claiming that the handshake is a technological measure that effectively controls access to Lexmark's printer software, but there is no content that is being protected by the handshake.

Now some would say in Washington, and have told me, not a problem because the case is yet to be resolved, but the point is that in Silicon Valley and in the world at large, it's hard to get venture capital if you're going to spend half of your venture loan on litigation and people are afraid to proceed on innovative measures. I recently met with a company in my district that is working on some, actually they were working on some technologies to stream the digital video from the desk, the desktop to the flat panel on the wall. Pretty soon even those of us who aren't rich are going to be able to buy flat panels and hang it on the wall. I think that'll be really cool except it's not going to work if we can't get the signals to the flat panel. They've had to stop that because that violates the DMCA as well and the question is why would we do that to ourselves and to society. In addition to the DMCA chilling innovations, there are things that, other things that are being chilled.

Recently I met with another constituent who no longer is pursuing technology to screen songs over cell phones because of the difficulties and the litigations that would be the product of that innovation. In addition to the technology innovations that are being chilled, I think there are some other things that are just going to tick off consumers and I'm going to, this is quick, but I gave this to John Connors on the floor on Thursday. Dateline Detroit, February 24th. WDET 101.9 FM, it's Detroit public radio. They have had to suspend streaming their music program from their website because the RIAA says it violates the DMCA. The RIAA has established these rules: the station is not allowed to play more than two songs in a row by the same artist, not allowed to play more than four songs by the same artist within a three hour period and so WDET has just stopped streaming their show. Now how does that help advance the course of culture. John Connors read this on the floor while we were busily outlawing, actually making it a felony for scientists to conduct somatic cell nuclear transfer research and said, "My God, that's my town." Yes indeed. We need actually to address these issues and I think a small reflection on how the DMCA became adopted may help us understand the challenges that we face in making the changes.

I was sworn into Congress in January of 1995. As you recall that was the famous moment when Dick Gephardt handed the gavel to Newt Gingrich and it was contract with America time. Shut down the government. It was chaos, the revolutionaries were going to change the world and so we didn't have time for something as mundane as copyright in the 104th congress. But by the 105th congress, there was great concern on the part of, very large interest, I mean the movie business, the recording industries, they were at risk because of this digital revolution and they basically helped put together the outlines of the DMCA. Now I met with a brand new member of the Intellectual Property subcommittee and I looked at the bill and I saw some problems, but the bigger problem in retrospect that I see was on the committee I was the tech expert, I mean we're in trouble when that occurs. I'm a lawyer, not a techie, I mean I like to play with technology and try to understand it, so I did at least understand that one of the first drafts outlawed web-browsers and I remember calling John Quade, who was then general counsel of Yahoo, who I had met, and I said, John you need to pay attention to this bill because it outlaws web-browsing, and I think that would have an impact on Yahoo, but they were busy. I mean they were, you know, when I was elected Jerry Ying was still in a dorm room at Stanford, Mark Edgresen was in the mid-west, and so these were people who were building companies rapidly, they were on the cutting edge of technology, they were young and they didn't know Washington and they didn't think what Washington did really would matter to them.

And so in the end we did sort out the web-browser problem, but we didn't have any counter force against the Hollywood people, the RIAA people, and the publishers, and you have to understand that these are industry groups who have established ties over decades. They are known, they are friendly, they are great lobbyists and so we ended up with some real problems, even I could see, in the bill then and I remember Rick Boucher, who was the senior member of the subcommittee, offering an amendment that indicated that section 1201 would not apply if the intent was to pursue a non-infringing use. That amendment got two votes: me and Rick. So this is the situation that we find in Washington today. Fortunately some in the tech world now, after Yahoo went through that experience and realized that most companies wouldn't have a member of the committee call them four or five times to tell them that they need to pay attention.

They actually hired somebody who's a good guy, a smart guy, to represent their interests and so now you do have a little bit of counter availing and I'm hopeful that the bill that I introduced last congress, and I'm trying to introduce again next week, could be a vehicle for correcting some of the problems in the DMCA. I think that the bill would ensure that consumers would be able to buy content that is compatible across platforms that would encourage technological development and competition. Specifically, it would allow consumers to make backup copies and to play digital works on the preferred digital media devices. It also maintains the first-sale doctrine in the digital age allowing consumers to sell in legal way their copy of digital works just like they can in the analogue world. It also protects fair use rights and other non-infringing rights in a world where technology gives copyrighters the power to control all downstreamings of the content. Under my bill consumers would be allowed to circumvent technical descriptions if those restrictions impeding their rights to make non-infringing use of what they lawfully obtained and they are given no other choice. In that vein, unlike other proposals, my bill would provide flexibility for content owners to protect their content so long as they enable users to make legitimate uses of the content that they obtained. I believe that contrary to the claims of some in Washington, this bill does not destroy the DMCA. It would still be illegal to circumvent it or to gain unauthorized access to illegally distribute content. It provides a defense to consumers and I don't think the content industry should be afraid of it.

A Norwegian court recently said in its DECFF ruling, you shouldn't be prohibited from breaking into your own property and copyright holders would argue that a consumer hasn't bought any property, but I think they missed the point. The legal content, access to content they're concerned about is not breaking encryption on the CD that you purchased, it's creating a million CDs in Brazil and selling them and that is something that I think is legitimately a concern. I'm not hostile to the need to provide financial incentives to those who create content. I think that is very important. But I also equally believe that we need to respect the rights of not just the properties, but the rights of the consuming public and really the culture to have information flow. Finally, I think we should understand that this is a battle that is not limited to the United States. Recently, I read in Tech Daily that Mr. Zelic, our trade negotiator, has made a trade deal with Australia contingent on their adoption of our version of the DMCA so we need to be very alert to make sure that that is opposed and that we get our congress to listen up and correct the defects in the Digital Millennium Copyright Act. I think this conference is part of doing that. Thank you for being part of it and I look forward to hearing more. Thank you very much.