BCLT co-sponsored this conference with the Berkeley Technology Law Journal (BTLJ) and the Institute for Information Law at the University of Amsterdam (IViR). This symposium was underwritten, in part, from a generous grant by the Microsoft Corporation.

Audio, PowerPoint slides, and photos from the conference are available here ! Links below go directly to mp3 audio files of the panels.

The conference facilitated cross-disciplinary and cross-industry discussion on this important topic, bringing together speakers from all over the world, including industry representatives, prominent scholars, law practitioners, government representatives, and non-profit organizations’ representatives. The panels discussed different aspects of the subject.

In-house counsels for major corporations, practitioners and academics, discussed business models enabled by DRM technologies. Dean Marks from Warner Brothers discussed new business models enabled by DRM for the film industry, arguing that technology trends result in greater consumer choice. Victoria Bassetti, Vice President for Legal Policy for North America at EMI Music, provided an overview regarding the music business, pointing to the alarming decline in the sale of physical albums combined with the robust digital marketplace. She offered the view that DRM should be viewed as a tool that offers a variety of new products and new distribution mechanisms. Todd Albertsone from RealNetworks, Inc., also discussed the music industry, arguing that the goal of DRM in this sector is to provide the best possible consumer experience across platforms, and suggesting that the evolving distribution chain in this sector is going in that direction. Tom Rubin, Associate General Counsel at Microsoft Corporation, suggested that DRM technologies should be explored broadly, paying attention not only to the music and motion picture industry, but also to its applicability in many other areas, such as in TV, satellite radio, website subscription, cell phone services, and libraries. Looking at the subject from such a broad perspective suggests that although DRM has limited access, the overall consumer experience in these areas has also been positive. He suggested that efforts should be dedicated to finding mechanisms to balance competing interests in the marketplace. Andrew Bridges from Winston & Strawn LLP offered a different perspective concerning DRM technologies, viewing them broadly as third party mandates that are license-, statute-, court-, and government-agency-based. Hal Varian from UC Berkeley iSchool discussed the economics of DRM, arguing that competition is at work with regard to the content industry and that transaction costs of DRM are the biggest problem for efficiency. However, with regard to the device industry he pointed to the danger of capture by proprietary DRM technology and special interests, even with open systems, and suggested that there is a need in an ongoing system of checks and balances to maintain an open platform.

A different panel discussed private sector initiatives to design technology to enable (some) privileged uses. Susan Landau from Sun Microsystems Laboratories discussed Sun’s approach to DRM as illustrated by the company’s “Project DReaM,” Sun’s DRM architecture that is committed to openness and has implemented Creative Commons licenses. Dr. Rene van Buuren from Telematica Instituut in The Netherlands discussed the MESEC research project that aims to devise a DRM solution that balances the interests of content providers and ‘fair-use’ experience for the users. David Sohn from the Center for Democracy and Technology focused on the impact of informed users on the DRM marketplace, arguing that a public that is well informed about DRM can exert pressure on DRM developers for more choices and more flexibility. Julie Cohen discussed different models of consumer protection in DRM.

FTC Commissioner J. Thomas Rosch delivered the David Nelson Memorial keynote lecture, offering “A Different Perspective on DRM.” Discussing the Sony BMG case, Commissioner Rosch opined that the case “provides an excellent roadmap for the many consumer protection issues raised by DRM.” Rosch emphasized that “the Commission has the tools to handle many of the emerging consumer protection issues raised by DRM under its existing statutory authority to prohibit deceptive or unfair practices” and that “therefore, at this point, I do not think that we need specific DRM legislation from a consumer protection standpoint.” He did, however, point out that existing remedial tools with regard to breaches of privacy and other harms attributed to defective DRM are not adequate. Commissioner Rosch also discussed some of the antitrust issues implicated by DRM, focusing on interoperability concerns. Discussing Apple’s iTunes, Rosch opined that he was “not sure that antitrust-at least at this point in time-should be used to force . . . companies to make their products interoperable with their competitors,” pointing to the facts that the market for devices is still in its infancy so it is unclear whether the lion’s share of device customers will ultimately be locked into Apple’s product and also because the vast majority of music on iPods today is not purchased from iTunes. Commissioner Rosch concluded that “DRM technology may be relatively new. However, the ‘pure’ consumer protection issues, as well as the antitrust issues that are implicated are not new. “

Another panel discussed the question what role the government should play in enabling or regulating DRM technologies. Daniel Carson from the U.S. Copyright Office discussed the Office’s rulemaking authority under Section 1201 of the Digital Millennium Copyright Act, discussing examples for exemptions granted as exceptions with regard to “classed of work” under this regulatory scheme. Richard Owens from the World Intellectual Property Organization (WIPO) then discussed the different approaches at the international level concerning DRM technologies and outlined WIPO’s agenda in that regard, pointing to WIPO’s commitment to providing access to public domain content. Justin Hughes from Cardozo Law School then discussed the positive shift in the Copyright Office’s rulemaking, from one of “fear and exhaustion” from regulating private entities to a more daring approach. Gigi Sohn from Public Knowledge joined Hughes, praising the Copyright Office for considering types of uses and users. However, she pointed to the difficulties posed by the Office in the process of getting an exemption under Section 1201, noting the heightened burden of proof that applicants have to meet. Molly Van Houweling from UC Berkeley went farther and argued in favor of keeping an open mind concerning government regulation in this context, especially given government intervention in other contexts, such as in the digital TV area.

Yet another panel discussed the question can anti-circumvention rules be made consistent with privileged uses. Nic Garnett from Interight.com discussed domestic and global issues relating to DRM. He expressed the view that privileged uses can be made consistent with anti-circumvention to an extent greater than what most people think. However, he was pessimistic with regard to whether it will actually happen. He opined that a global approach to the issue is required so privileged uses are applied universally. Jerome Reichman from Duke Law School stressed that what is at stake in this context is public access to public domain materials and access to materials under certain exceptions and limitations. He raised the novel idea that courts adopt the reverse notice and takedown procedure in order to attenuate the barriers to entry that Section 1201 creates to public interest users. Graeme Dinwoodie from Chicago-Kent Law School discussed Reichman’s suggestion in the context of European Union’s copyright law policy. Ian Kerr from the University of Ottawa Law School discussed Canadian legal issues relating to anti-circumvention. He suggested that anti-circumvention rules can be made consistent with privileged uses, but with great difficulty. He discussed the Canadian experience concerning DRM and mentioned the uniqueness of Canadian law in that the fair dealing exception is understood as an integral part of the copyright act rather than simply a defense. It is in fact a user’s right in Hofeldian terms. Thus, user rights imply corresponding copyright duties. Kerr concluded with a legislative “balance sheet,” proposing some circumvention rights that should be part of any future legislation.

The second day of the conference was as exciting as the first. Lynne Brindley, the Chief Executive of the British Library, delivered the keynote lecture on “Balance in Copyright – The British Library Perspective.” She provided a short overview concerning international repositioning around DRM, describing the WIPO 2006 Report, activities in Europe, and activities within industry. She also discussed the development of DRM in the UK during the past two years. She discussed the British Library IP Manifesto, pointing to its endorsement of achieving a balance between users’ and owners’ rights. Lastly, she pointed to the primacy of contracts over copyright law in the UK and the ineffectiveness and inappropriateness of remedies against technological measures, concluding that there is a need to continue the dialogue at the government level based upon consideration of public policy, not just commerce or technology.

The first panel discussed what consumer protection issues are posed by Sony BMG copy-protected CDs. Cindy Cohn from the Electronic Frontier Foundation provided an overview of the DRM at issue in the Sony BMG case and how it played out in the resolution of the litigation and the regulatory procedure. She emphasized that there exist no significant federal tools to address issues such as those posed by the Sony-BMG case, suggesting that the State of California Legal Remedies Act proved to be the most valuable cause of action in this case. She also discussed the three settlements that were reached, praising the states attorney generals’ achievements. Natali Helberger from the University of Amsterdam took the participants on a European tour, looking at the tools of consumer law in the European Union and how they would apply in the DRM context. She argued that consumer law and not copyright law is the right way to deal with issues posed by DRM because consumer law regulates the relationship between consumers and enterprises. She discussed the economic and ideological rationales of consumer law, discussed the two approaches of consumer law: information-based approach and the invention-based one and what she phrased as the iConsumer under each model. She then suggested viewing DRM-protected CDs as defective products that do not meet consumers’ reasonable expectations. She also pointed out that consumer law is limited in what it can do in that it cannot create more choices for consumers and also cannot set standards for fair DRM use. Jane Winn from the University of Washington offered a non-copyright law perspective on the Sony-BMG case. She discussed problems with reliance on contract law and alternative self-regulatory mechanisms. She suggested that the model in which users are generally authenticated can be replicated in the context of DRM. She also suggested that there is a room for government intervention in this area, arguing that harmonization of standards in this area can be an important step forward. Lastly, Deirdre Mulligan from UC Berkeley’s Samuelson Law & Technology Clinic traveled through the minds of content providers, DRM makers and the consumers to try to understand the dynamic between the different players with regard to DRM. She showed that consumers’ expectations are set by different factors, not only by the legal rules in place. She discussed ways to avoid similar future disaster, such as disclosures, exchanges that should be prohibited and the need in sandboxes, virtual machines and ability to uninstall. She also discussed different lines of defense and concluded that there is a need to find a way to standardize the language of contracts.

The next panel discussed interoperability concerns about DRM technologies. Julien Dourgon from Que Choisir raised the question whether DRM is a neutral tool which helps performers. He discussed the UFC-Que Choisir/Sony case in which consumers rights did not prevail over intellectual property rights. He also discussed the switching costs that the absence of interoperability raises as well as the effects of DRM on freedom of exchange and value creation and the diminishing effects such restrictions can have on global well-being. Lastly, he discussed the risks of concentration and segmentation of culture due to alliances formed between the information industry and the entertainment industry. Stefan Rechtold from the Max Planc Institute discussed some of the antitrust implications of DRM’s interoperability concerns, discussing the Apple case. He argued that antitrust law might be the right way to address interoperability concerns, but only in the long run. He suggested that it is hard to distill general guidelines concerning when interoperability is a good thing and that it is advisable to support technological attempts to create standards for interoperability. If this approach does not work, there is still hope that consumers can be trusted to demand interoperability. Mitch Singer, Vice President for Digital Policy and Chief Technology Officer at Sony Pictures, discussed the development of the digital market and the disruption caused by new technologies. He explained how the film industry is responding to digital challenges and is forming a digital market that avoids the music industry’s experiences. He argued that the reality in which we live, where many offer different products that require different devices, makes little sense and gives tremendous advantage to first movers. He argued for a move to a service-managed domain model that can give consumers flexibility. A domain is a set of registered devices on which a consumer may freely access purchased content. Operating in a service-managed domain guarantees both digital flexibility and content protection. However, he also emphasized that this model can be possible today only if operators do not perform the two functions of both a store and a domain. Migrating to an open market model in which there exists such separation of stores and domain will produce, in his opinion, more choices of stores and devices to consumers.

Pamela Samuelson from UC Berkeley’s iSchool and Boalt School of Law discussed software interoperability from an historical perspective, discussing several challenges in the late 1980s/early 1990s in U.S. case law to interoperable software on copyright grounds and the resolution as to software which ultimately rejected the copyright claims. She also discussed the question whether the same copyright principles apply to data-to-software or data-to-data as to hardware-to-software or software-to-software interoperability, discussing DMCA caselaw and the question whether data is different. She also provided her predictions with regard to this question, opining that outside of the anti-circumvention context, courts would likely say that data interoperability is fine under copyright law, discussing the Apple example. However, forcing a company such as Apple to disclose its interfaces to enable interoperability by other vendors is a different matter and might be only an antitrust violation. The more plausible consumer protection approach in the U.S. in her opinion would then be to require notice of DRM restrictions that are affecting interoperability. In the context of copy-protected CDs, she suggested that labeling would give purchasers notice of restrictions, may create some competition among vendors, as consumers prefer less restricted products. She concluded that the FTC is an appropriate agency to conduct hearings and develop rules for notice about TPM restrictions. Notice should pertain not just to interoperability restrictions, but also as to privacy intrusions, security, altered functionality and self-help features. She even suggested a more direct approach, that no (or inadequate) notice should constitute an unfair trade practice that should result in no Section 1201 enforcement.

The final panel discussed the question whether consumer protection should be inside of copyright law or outside. Bernt Hugenholtz from the University of Amsterdam discussed the utilitarian rationale to copyright and the natural rights rationale, suggesting that the traditional actors in copyright are authors and other right holders as well as users, but that consumers are outside the scope of copyright law. He also discussed ways in which consumers entered the copyright world: through digitization and DRM. He described the consumer friendly responses in European copyright law under which exceptions to use rights were created. He also described similar trends with regard to protecting consumers against DRM. Lastly, he explained why copyright law is not really suitable to protect consumers, discussing its systemic and political bias as well as its normative limits and limited scope. He concluded that internalization of consumers’ interests in copyright may warrant some consumer freedoms but that consumers are generally best protected by specific consumer law framework. In contrast, Niva Elkin-Koren from the Haifa Center for Law & Technology suggested that there is a need to make room for consumers under the DMCA. She concluded that there is a need to limit anti-circumvention law to copyright scope and develop a consumer notion under copyrigh law. She also offered a new distinction between three kinds of consumers: the consumer-shopper, the consumer-author, and the consumer as participant. Joseph Liu discussed illustrative areas of consumer protection law and its underlying framework, suggesting that there exist disparities between consumers and producers. He also discussed consumer protection goals and suggested that copyright law and consumer law should support a minimum set of consumer rights. Peter Swire explored how the Internet changed “consumer protection.” He discussed the idea of “consumers as producers”: individuals that own information age factories. He then discussed the question whether consumers as producers have to comply with consumer law and whether they should gain protection even when in commerce.