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DRAFT POSITION PAPER

LEGAL CHALLENGES FOR THE DEVELOPMENT OF DIGITAL RIGHTS MANAGEMENT SYSTEMS

by Viveca Still, independent researcher at the University of Helsinki (faculty of law), Finland
<vstill@otdk.helsinki.fi>

In this paper the legal conditions for the development (and standardisation) of digital rights management systems will be explored. The legal provision regarding digital rights management systems in the Digital Millennium Copyright Act (DMCA) and the EC directive on the harmonisation of copyright and neighbouring rights in the information society (copyright directive) as well as the conditional access directive (98/84/EC) will be explored and compared with a view to outline the general conditions for the standardisation of digital rights management systems. Last but not least, certain principles for the elaboration of digital rights management systems based on the idea of free flow of information will be outlined.

The main challenge for copyright law at present is to preserve effective protection of intellectual property while safeguarding the availability of information (content) in the society. Legal protection of technological measures (TM) was initially provided with a view to assure the effective protection of intellectual property in the worldwide digital networks. Later on it was claimed that TM could have certain harmful effects on user rights.

Both the DMCA and the copyright directive prohibit the circumvention of TM and the removal or alteration of rights management information (RMI). They also prevent the appearance of markets for circumvention products and services.

For the sake of understanding the conditions and limits for standardisation of DRMS, there is a need to understand which requirements set by these pieces of legislation affects the design and features of DRMS.

In my presentation I will argue that:

• The regulation of the protection of TM (regarding use of copyrighted works and access to content) and RMI is rather complicated (especially in Europe, where it is regulated in many different directives) and may imply different limitations or possibilities regarding the features of DRMS.
• There is no general resistance to open standards regarding DRMS. In fact, the new coyright directive clearly states the desirability of international standards which would increase the compatibility and interoperability between different systems. Additionally, the copyright directive encourages rightholders to apply technological measures, as this is taken into consideration when assessing the fair compensation to be received by the rightsholders.
• There are few limitations or requirements regarding the features of DRMS. However, the copyright directive requires that it must include privacy safeguards in accordance with the provisions in the directive on the protection of personal data (95/46/EC).
• Both the DMCA and the copyright directive tries to safeguard user rights. However, the DMCA does not provide for active protection of user rights. Instead, the extension of the legal protection of technological measures follows the normal copyright provisions regarding the balance between user rights and copyright. This does not mean that it would be forbidden to apply TM that does not take into consideration fair use or other limitations on copyright. The approach taken in the copyright directive is slightly different, as it provides for active protection of certain user rights (i.e. the application of copyright exceptions). The member states are obliged by the directive to take appropriate measures, in the absence of voluntory measures taken by rightholders, to ensure that rightholders make available to the beneficiary of an exception or limitation the means of benefiting from that exception or limitaion. The exception to which this provision applies are enumerated in the provision. The application of TM may not be restricted regarding works or other subject-matter made available to the public through on-line services (i.e. in such a way that members of the public may access them form a place and at a time individually chosen by them). This means, that the EU legislation provides for a larger protection of TM than the DMCA, but that the effectiveness of certain exceptions are safeguarded in a much more active manner. Furthermore, it should be pointed out that the EU legislation expressly prefers volontary measures to enforcement of the applicability of exceptions through active state actions.
• The provisions regarding the obligation to design devices, products, components or services to correspond to RMI are not fully developed. This is principally due to the lack of international standards regarding RMI. The provision in the DMCA are quite clear compared to the copyright directive. As a matter of fact it does not state at all whether or not devices, products, components or services need to correspond to RMI.
• At a general level all interested parties, both rightsholders, industry and consumers, benefit from the creation of a secure environment for copyright transactions. The most problematic part is the preservation of a fair balance between different interests of the parties involved, while encouraging the efficient dissemination and use of information. As there are very few limitations on the features of DRMS (in addition to those put forward here, due account should be taken to provisions on consumer protection, competition policy and legislation on financial transactions), it is up to the interested parties to achieve a common understanding on fair practice regarding digital rights management. Especially the efficacy of copyright exceptions and limitations are of great concern and rests in the hands of those applying DRMS and standards regarding these systems. Consequently, there are certain features of copyright management systems that may be more controversial than others. Standardisation regarding identification of works and rightsholders is probably among the least controversial, whereas standards (technical and/or contractual) which may affect the applicability of end user rights certainly are more prone to critique.

The principle of free flow of information is used as a point of departure for outlining certain principles for the elaboration of DRMS. The principle of free flow of information is based on (at least) the following presumptions: 1) The efficient use and dissemination of information is beneficial for the society at large; 2) The free flow of information is a basic feature of a democratic society and is an essential part (and result) of the freedom of thought, expression and communication; 3) Measures has traditionally been taken to secure the free flow of information when elaborating copyright legislation and should be protected also in the future; 4) Unnecessary restrictions on the freedom of action and contract should be avoided. This also implies that information does not necessarily need to be available free of charge. Instead, market mechanisms are the primary means to achieve optimal efficiency of the information market; 5) Market mechanisms are, however, often blind to ethical requirements, which is a reason for legal regulation.

Based on these presumptions regarding the free flow of information the following principles which DRMS should be based on may be outlined:

1. DRMS should be designed so as to enhance the secure operating environment for transactions with works and other subject-matter.
2. DRMS should enhance the efficiency of information markets. This requires seamless operating environments and a sufficient security level. The global information markets require a sufficient level of harmonisation at legal, organisational and technological level. Due regard may and should be taken to the level of standardisation and application of DRM when defining the rights and duties of the parties involved.
3. DRMS should take due regard of user interests and needs, especially so as not to unduly infringe the right of freedom of thought, expression and communication. Accessibility and usability concerns should be addressed.
4. Considering the fact that the new operating environment and the broad freedom to apply technological measures may inhibit user rights, procedures and practices for establishement of fair conditions and procedures regarding user rights should be developed. This is important so as not to upset the balance between the different interests inherent in copyright, especially with regards to the free flow of information.
5. Open standards regarding DRMS are to be favoured, since these normally implies large consultation by interested parties and reduces the risk of the measures being anti-competitive in nature. Furthermore open standards and common platforms increases the possibility to create seamless environments and enhances interoperability.