French DRM Law Could Have Worldwide Impact

TMO recently had the opportunity to discuss the proposed French law to regulate copy protection and digital rights management (DRM) with intellectual property expert William Hart from the New York office of Proskauer Rose LLP. The bill passed the French lower house on March 21, and is now on its way to the upper house for approval. The intent of the law is to protect digital copyrights and ensure interoperability between devices, but it could also force companies like Apple, Sony and Microsoft to share proprietary digital rights management technology with each other and anyone else that asks.

TMO: Once this bill gets through the French Senate, do you expect it to have any real impact on copyright and intellectual property protection?

Hart: The bill raises any number of questions, and could have an impact not only within France, but in the rest of the world, as well. To understand the significance of the issue, you have to realize why encryption exists in the first place.

Given the ease with which digitized works can be spread and reduplicated and transmitted to potentially millions of unauthorized users, there was a strong need to protect author interests by using technological measures to prevent unauthorized access and copying of these digital files.

In addition, and based upon international treaty imperatives, participating countries are required to provide adequate legal remedies against defeating or circumventing those encryption measures.

I am not aware that the treaty imposes any obligation to make the technologies used by one company compatible with another. So, if the French legislation, as enacted, requires iopeni systems or ones which require sharing of the encryption and decryption protocols among various manufacturers of devices and software, there is certainly the potential to expose that technology to unauthorized intrusions/access.

By doing so, you invite the very risk that the technology and companion laws on anti-circumvention were designed to prevent- widespread, unauthorized access and copying of content.

TMO: Currently, music purchased from Appleis iTunes Music Store isnit directly compatible with every player on the market. The same can be said for other services, like those offered by Sony and RealNetworks. How viable is the idea that any digital music device can play DRM-protected songs, regardless of which online store they are purchased from?

Hart: I suppose, from the consumeris point of view, they would like to be able to play the tracks obtained from iTunes on other devices and/or use their iPod to play tracks obtained from sources other than an iStore.

In theory, thatis great. But, in practice, it is problematic for any number of reasons. For example, if I release a song via a secure system with the knowledge that its further copying is subject to paying me royalties, the approach works. But, if the "secure" system is no longer secure, because a law says that whatever content is made available on it also has to be playable on other systems, which may or may not have any security, the whole concept of security is lost. Itis like locking the front door, and leaving the windows open.

TMO: How do you expect companies like Apple, Sony and Microsoft - all of whom have their own proprietary copy protection technologies - to react to the law? Are they likely to comply, take some kind of legal action to protect their copy protection schemes, or simply pull out of France?

Hart: One obvious answer would be to make fully compatible systems. I donit know what the anti-trust law issues are, but assuming that some industry istandardi could be adopted -- that would be the easy way, in theory, to deal with this issue.

Of course, that means that every manufacturer of an MP3 playback device might have to sign on to a technology license and pay a royalty for use of a technology. And then, the hardware manufacturers will complain, right?

Right now, I suppose one of the "selling" points for the various technologies is not only how secure they are, but how flexible they are to change and updating, with the addition of features. I donit know that if there is one worldwide compatible system whether that can be possible - perhaps it means some device that acts as an interface between different systems - but, without getting out of my depth, technologically, I think we still have one fundamental problem: If the device is going to output to another device which does not implement a protection scheme, we are again leaving the windows open while locking the door.

TMO: What about throwing more technology at the issue? Do you see an opportunity for software developers to create technologies that are compatible with competing DRM schemes?

Hart: There may some answers in open-source technologies which keep part of the encryption secret, and part of it open for others to use. That might mean that you could download the software to play the song on your other device, but the device would still require some recognition or payment before it would allow you to play- and if it doesnit we are back to the same problem, arenit we?

TMO: Earlier you mention Franceis international treaty obligations. Can you elaborate on that?

Hart: It is theoretically possible that if France is violating its intellectual property treaty obligations that it could suffer trade consequences through official channels. I had this experience in a matter I worked on in a Scandinavian country, which - we said, and the US government agreed - was not living up to its intellectual property treaty obligations. As a result it was listed on a USTR Watch List, which is not a good thing for a country doing business in the international market.

TMO: Piper Jaffray financial analyst Gene Munster speculates that the new law will have little impact on Apple. Is he right, or is there big trouble ahead for Apple?

Hart: I think the issue may focus on Apple right now, but it is a "tip of the iceberg" problem for DRM generally. Every content owner and supplier has to be concerned about this, not just in reaction to the French step at issue here, but in the larger sense of how it can make its content available to the broadest audience possible, yet not put that content at risk to the digital duplication nightmare.