Research and commentary on digital technologies in public life
Next week I’ll be participating in a group discussion of Fred von Lohmann’s new paper, “Measuring the DMCA Against the Darknet“, over at the Picker MobBlog. Other participants will include Julie Cohen, Wendy Gordon, Doug Lichtman, Jessica Litman, Bill Patry, Bill Rosenblatt, Larry Solum, Jim Speta, Rebecca Tushnet, and Tim Wu.
I’m looking forward to a lively debate. I’ll cross-post my entries here, with appropriate links back to the discussion over there.
Despite J.K. Rowling’s decision not to offer the new Harry Potter book in e-book format, it took less than a day for fans to scan the book and assemble an unauthorized electronic version, which is reportedly circulating on the Internet.
If Rowling thought that her decision against e-book release would prevent infringement, then she needs to learn more about Muggle technology. (It’s not certain that her e-book decision was driven by infringement worries. Kids’ books apparently sell much worse as e-books than comparable adult books do, so she might have thought there would be insufficient demand for the e-book. But really – insufficient demand for Harry Potter this week? Not likely.)
It’s a common mistake to think that digital distribution leads to infringement, so that one can prevent infringement by sticking with analog distribution. Hollywood made this argument in the broadcast flag proceeding, saying that the switch to digital broadcasting of television would make the infringement problem so much worse – and the FCC even bought it.
As Harry Potter teaches us, what enables online infringement is not digital release of the work, but digital redistribution by users. And a work can be redistributed digitally, regardless of whether it was originally released in digital or analog form. Analog books can be scanned digitally; analog audio can be recorded digitally; analog video can be camcorded digitally. The resulting digital copies can be redistributed.
(This phenomenon is sometimes called the “analog hole”, but that term is misleading because the copyability of analog information is not an exception to the normal rule but a continuation of it. Objects made of copper are subject to gravity, but we don’t call that fact the “copper hole”. We just call it gravity, and we know that all objects are subject to it. Similarly, analog information is subject to digital copying because all information is subject to digital copying.)
If anything, releasing a work a work in digital form will reduce online infringement, by giving people who want a digital copy a way to pay for it. Having analog and digital versions that offer different value propositions to customers also enables tricky pricing strategies that can capture more revenue. Copyright owners can lead the digital parade or sit on the sidelines and watch it go by; but one way or another, there is going to be a parade.
Last week I criticized Richard Posner for saying that labeling content and adding filtering to P2P apps would do much to reduce infringement on P2P net. In responding to comments, Judge Posner unfortunately makes a very similar mistake:
Several pointed out correctly that tags on software files, indicating that the file is copyrighted, can probably be removed; and this suggests that only encryption, preventing copying, is likely to be effective in protecting the intellectual property rights of the owner of the copyright.
The error is rooted in the phrase “encryption, preventing copying”. Encryption does nothing to prevent copying – nor is it intended to. Encrypted data can be readily copied. Once decrypted, the plaintext data can again be readily copied. Encryption prevents one and only one thing – decryption without knowledge of the secret key.
It’s easy to see, then, why encryption has so little value in preventing infringement. You can ship content to customers in encrypted form, and the content won’t be decrypted in transit. But if you want to play the content, you have to decrypt it. And this means two things. First, the decrypted content will exist on the customer’s premises, where it can be readily copied. Second, the decryption key (and any other knowledge needed to decrypt) will exist on the customer’s premises, where it can be reverse-engineered. Either of these facts by itself would allow decrypted content to leak onto the Internet. So it’s not surprising that every significant encryption-based anticopying scheme has failed.
We need to recognize that these are not failures of implementation. Nor do they follow from the (incorrect) claim that every code can be broken. The problem is more fundamental: encryption does not stop copying.
Why do copyright owners keep building encryption-based systems? The answer is not technical but legal and economic. Encryption does not prevent infringement, but it does provide a basis for legal strategems. If content is encrypted, then anyone who wants to build a content-player device needs to know the decryption key. If you make the decryption key a trade secret, you can control entry to the market for players, by giving the key only to acceptable parties who will agree to your licensing terms. This ought to raise antitrust concerns in some cases, but the antitrust authorities have not shown much interest in scrutinizing such arrangements.
To his credit, Judge Posner recognizes the problems that result from anticompetitive use of encryption technology.
But this in turn presents the spectre of overprotection of [copyright owners’] rights. Copyright is limited in term and, more important (given the length of the term), is limited in other ways as well, such as by the right to make one copy for personal use and, in particular, the right of “fair use,” which permits a significant degree of unauthorized copying. To the extent that encryption creates an impenetrable wall to copying, it eliminates these limitations on copyright. In addition, encryption efforts generate countervailing circumvention efforts, touching off an arms race that may create more costs than benefits.
Once we recognize this landscape, we can get down to the hard work of defining a sensible policy.
Richard Posner and Gary Becker turn their bloggic attention to the Grokster decision this week. Posner returns to the argument of his Aimster opinion. Becker is more cautious.
After reiterating the economic arguments for and against indirect liability, Posner concludes:
There is a possible middle way that should be considered, and that is to provide a safe harbor to potential contributory infringers who take all reasonable (cost-justified) measures to prevent the use of their product or service by infringers. The measures might be joint with the copyright owners. For example, copyright owners who wanted to be able to sue for contributory infringement might be required, as a condition of being permitted to sue, to place a nonremovable electronic tag on their CDs that a computer would read, identifying the CD or a file downloaded from it as containing copyrighted material. Software producers would be excused from liability for contributory infringement if they designed their software to prevent the copying of a tagged file. This seems a preferable approach to using the judicial system to make a case by case assessment of whether to impose liability for contributory infringement on Grokster-like enterprises.
It’s fascinating that Judge Posner, with his vast knowledge about the law and about economics, avoids a case-by-case law and economics approach and looks instead for a technical deus ex machina. Unfortunately, his knowledge of technology is shakier, and he endorses a technical approach that is already discredited. Nobody knows how to create the indelible marks he asks for, and in any case the system he suggests is easily defeated by encrypting or compressing the content – not to mention the problems with malicious placement of marks. In short, this approach is a non-starter.
Becker is right on the mark here:
But several things concern me about the issues raised by this and related court decisions. I basically do not trust the ability of judges, even those with the best of intentions and competence, to decide the economic future of an industry. Do we really want the courts determining when the fraction of the total value due to legal sales is high enough to exonerate manufacturers from contributory infringement? Neither the wisest courts nor wisest economists have enough knowledge to make that decision in a way that is likely to produce more benefits than harm. Does the fraction of legitimate value have to be higher than 50 per cent, 75 per cent, 10 per cent, or some other number? Courts should consider past trends in these percentages because new uses for say a software-legal or illegal- inevitably emerge over time as users become more familiar with its potential. Must courts have to speculate about future uses of software or other products, speculation likely to be dominated by dreams and hopes rather than firm knowledge?
One of the tenets of the law and economics movement is that decisions about legal regulation of economic behavior should be grounded in a deep understanding of economics. Sound economics can predict the effect of proposed legal rules; but bad economics leads to bad law. As luminaries of the law and economics movement, Posner and Becker understand this as well as anyone.
What is true of economics is equally true of computer science. Only by understanding computer science can we predict the impact of proposed regulations of technology. As we have seen so many times, bad computer science leads to bad law. Posner seems to miss this, but Becker’s stance shows appropriate caution.
One criticism of law and economics is that it works well in a seminar room but may lead to dangerous overconfidence if applied to a hard case by an overworked, generalist judge. One solution is to teach judges more economics, and economic seminars for judges have proliferated. Perhaps the time has come to run seminars in computer science for judges.
William Patry (a distinguished copyright lawyer) offers an interesting take on Grokster. He says that the court was unable to come to agreement on how to apply the Sony Betamax precedent to Grokster, and so punted the issue.
