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Symposium:

Digital Rights Management Systems and Public Interests

The Baker & McKenzie Cyberspace Law and Policy Centre

University of New South Wales

Date: Monday 18 March 2002, 4–10 pm

Venue: Baker & McKenzie Board Room, AMP Tower, 50 Bridge Street, Sydney

Transcript of proceedings

Introduction – Dr Lee Bygrave, Co-Director, Baker & McKenzie Cyberspace Law

and Policy Centre

Welcome to the inaugural event of a series of symposia in which we shall investigate aspects of cyberspace in light of various public interests. An aim of these symposia is to largely dispense with the usual conference-style format, where we have prepared and lengthy speeches, and where real discussion tends to get sidelined if not eliminated. With these symposia we want to facilitate open-ended, wide-ranging discussion of issues that are of interest to experts in the field, and to disseminate the results of the discussions to the broader public. Accordingly, we shall be recording most of what is said, with a view to making this initially available – in a slightly edited format – over the Web. Further down the track, we hope to publish a series of books in which the respective symposium proceedings are included, together with related papers, articles and the like. In order to encourage participants to freely express their views, we shall anonymise their identities when publishing the transcripts of proceedings.

Before I introduce the themes of the present symposium, I’d like to make some brief remarks about the Baker & McKenzie Cyberspace Law and Policy Centre. The Centre has been up and running for about 2 years. It is attached to the Law Faculty of the University of New South Wales (UNSW). We are generously supported financially by Baker & McKenzie, from which we derive the bulk of our funding. Bakers supports the Centre in other ways, such as allowing us to use its facilities for events like the one this afternoon. I should emphasise though that we are otherwise independent of Bakers; we are not a loudspeaker for the views of the firm; we are free to pursue our own academic and public policy interests.

The Centre runs a variety of events in addition to this sort of symposium. For instance, it arranges conferences under the framework of the Continuing Legal Education (CLE) program of UNSW. The Centre has a relatively small secretariat; its activities are driven mainly by a relatively large group of research associates, several of whom are here this afternoon.

In addition to these Centre associates, we are fortunate to have participating at the symposium a considerable number of persons from a broad range of sectors – government, industry, academia, the legal profession and public interest groups. Fortunately too we have a nice mix of ‘technologists’ and lawyers. So we should get some interesting cross-cultural and cross-organisational exchanges. I for one, being primarily a lawyer, have only a rather superficial and slippery grasp of what Digital Rights Management Systems (DRMS) really involve in practice, and I look forward to hearing more from the technologists about what is actually going on behind the hype that we often are fed about such systems.

The first part of the symposium will begin with a presentation by Professor Bernt Hugenholtz from the University of Amsterdam who will focus mainly on the way in which DRMS are provided for under the recently adopted EU Directive on harmonisation of copyright. The second part of the symposium will be kick-started by presentations from Peter Higgs and Dr Renato Ianella, both from IPR Systems. Peter will talk about the interest-balancing involved in developing DRMS, while Renato will talk about recent initiatives aimed at ensuring that DRMS respect public interests. The third part of the symposium will consist of relatively free-ranging discussion.

This symposium is aimed at discussing the implications of DRMS – and the new legal protections accorded them – for the interests of all parties concerned: most notably, both information creators and information consumers. What do we mean by ‘Digital Rights Management Systems’? This is the fairly new nomenclature for what up until a year or so ago were commonly termed ‘Electronic Copyright Management Systems’. Basically, these systems attempt to enforce the rights of copyright holders in an online environment by use of technological and, to some extent, organisational mechanisms with the following overlapping functions: namely, controlling access to information products; preventing their unauthorised copying; accurately identifying the products and those who own copyright in them; and ensuring that these identification data remain authentic. A variety of technologies support these functions, including ‘digital watermarking’ and other forms of stenography, encryption software, and electronic agents.

The emergence of DRMS is being lent a helping hand through the recent trend by legislators around the world to introduce strong statutory protection for copyright-protective technologies, particularly in the wake of the WIPO Copyright Treaty of 1996. Taken together, DRMS and the attendant legal reforms are leading to a profound change in the way in which intellectual property rights are enforced. It is a change that many people claim is affecting the fragile interest balances inherent in traditional copyright law. There is little doubt that DRMS and attendant legal reforms have considerable potential to enlarge the scope of intellectual property in hitherto unseen ways. There is also little doubt that this potential has serious implications for a variety of public interests including the privacy and autonomy of information consumers, the extent of the ‘public domain’ and ‘digital diversity’, and the long-term status of copyright law particularly with respect to contract law.

Hopefully, the symposium will be able to cast a penetrating light on these implications.

I now give the podium to Professor Bernt Hugenholtz.

Professor Bernt Hugenholtz

What is on today’s agenda, at least as far as I’m concerned? I’d like to take a look at the protection of Digital Rights Management Systems, with a particular focus on user freedoms and protecting those freedoms. This is a very difficult subject involving a whole mix of legal and not so legal considerations. I will tackle it primarily from a European perspective, partly because I’m European and partly because the EU Directive on copyright adopted less than a year ago provides an interesting albeit not uncontroversial input to the issue. My agenda for the next 40 minutes or so will involve, first, giving an example of a very rudimentary DRMS which illustrates the kind of difficulties we will be facing and the inherent threat of any DRMS to do away with freedoms that users, end users or intermediaries have enjoyed under traditional copyright law. This very rudimentary, almost abstract management system that I will show you soon definitely does not exist, nor does it illustrate in any way that I have even the slightest knowledge of the technology behind it – I’m just here as a lawyer; the technologists will be speaking later on. Next, I will look at how difficult the issue of protecting user freedoms is, particularly since there is a variety of legal regimes applying to content delivered over DRMS. Then I will focus on the European Copyright Directive, the way it treats user freedoms and the way it does not treat one of the most essential questions posed here: the problem of reconciling copyright exemptions with the freedom of contract. The final part of the presentation will deal with the legal protection of technological measures pursuant to the legal regimes coming out of the WIPO treaties, particularly as implemented in the European Directive, and look at how users might be protected against this ‘onslaught’.

That’s my agenda.

First, what is a simple example of a DRMS. Take an online digital bookstore. You can buy a book or let’s say a chapter of a book or let’s say a scientific article – perhaps that is a more realistic example in fact. Using Digital Rights Management tools it will be possible and in fact it is already possible to price discriminate while licensing users to various degrees. If you pay a small licence fee, you get to read the article or the book only once, and nothing else – no right to copy, no right to quote, no right to distribute. If you pay more, you may get an unlimited right to read the book but still no right to copy. If you pay more than that, you may have the right to make copies, only once, and even a right to quote from the book in digital form. If you pay a lot of money, you get a site licence – like the kind of licence that universities have negotiated with scientific publishers – which allows unlimited uses within a limited designated amount of terminals. And if you pay a whole lot, you may get the right of super-distribution, meaning a right to re-exploit the work in any way you see fit. The example shows you how DRMS can override existing user freedoms in a way that is not congruent with how copyright laws, as we know them today, are written. I’m not saying that’s bad; what I’m trying to show here is that there may be a problem. […]

Of course, no presentation on Digital Rights Management is complete without the obligatory reference to Professor Larry Lessig – formerly from Harvard, now at Stanford – who has written the ultimate book about the gradual replacement of the law by software-based rules or ‘code’. ‘In the well implemented system’, Lessig warns us, ‘there is no civil disobedience, law as code is as stark to the perfect technology of justice.’ The problem here is, of course, that a well implemented system may not know what the law is, or in fact that it may overwrite the law.

So what about user freedom? That is the basic question I will be discussing with you today and one that I would really like to raise, because I certainly do not know the answer.

The problem is Digital Rights Management Systems enjoy an increasingly and increasingly enjoy and benefit from a multiplicity of protection regimes, regimes that deal with protecting content and respecting user freedoms in a variety of ways that that are not necessarily compatible with each other. In fact they are totally incompatible.

The first layer, the deepest layer on top of the content itself, is the Intellectual Property layer consisting of copyrights, neighbouring or so-called related rights, rights neighbouring the copyrights such as rights of phonograph producers that in most countries are not considered copyrights; database rights, you don’t have them in Australia but they may come to you sooner than you would like them to come to you. Those are rights in collections of non-original, non-copyrightable collections of data that have been recognised in Europe as a consequent of the European database directive, and that are now being discussed in United States and elsewhere in the world.

So there is quite a sizeable amount of intellectual property that protects the content delivered over the DRMS. On top of that there is a contractual layer, the contractual layer that basically restricts or allows certain users or uses under the terms of user licence agreement often imposed by content providers upon end users in the form of standard form contracts.

Then there’s the technological layer, which by itself already provides for quite a sizeable amount of protection. We have technological measures that serve different functions, including controlling access to an online database for instance, protecting against serial copying, enforcing regional marketing strategies that basically undermine parallel imports, the so-called regional coding that you see nowadays in DVDs and Sony Playstation software, and technological measures aimed at monitoring use, at watermarking the digital content as a form of evidence of further control, as a means of evidence of further control.

And then on top of all this there is this new regime, the legal protection of technological measures protecting copyright protected works, article 11 of the WIPO copyright treaty.

The problem is how to reconcile all these different regimes with each other and how to maintain the so-called delicate balance between the protection on the one side, protection that is necessary to ensure exploitation of copyright protected works, and at the same time respecting user freedoms, user freedoms that may have their basis in very fundamental legal principles, free speech for instance.

How does the European copyright directive deal with user freedoms? The copyright directive merits in itself a whole afternoon and perhaps a whole year of discussion, we will not enter into that, I will limit myself to discussing the user freedom, the limitation part of the directive.

The directive has been adopted on the 22^nd of May last year in attempt to harmonise horizontally a whole bundle of copyright and copyright related issues including the scope of protection, including for instance a definition of what constitutes reproduction, what constitutes communication with the public, and others.

The largest part of the directive, which of course still has to be transposed to the law of the member states, deals with user freedoms and limitations. It is a rather loose form of harmonisation of copyright limitations that includes just one mandatory limitation – a limitation that is obligatory on all the member states which allows for certain amounts of caching and browsing without rightholder’s permission, a limitation that basically allows for normal digital transmission of normal copyright works without entailing necessary liabilities under copyright law. This would allow Internet providers for instance to use proxy caching tech to speed up the delivery of digital content without paying royalties.

The largest part of that article 5 dealing with user freedoms is however devoted to a extremely very long list of permitted optional limitations, limitations that members states may have to transpose into their national laws, or in many cases, maintain in their national laws. The original idea of the European commission was in this increasingly global information market, it is a bit awkward to have limitations/exemptions varying wildly from one European country to the next. This would make it very difficult for content providers and for users to know what their rights are from one country to the next. So the original idea was make it a very short list, basically do away with most limitations because in a digital environment at least according to the European commission, who really needs limitations in the first place? Digital Rights Management: pay per use – that is the future.

This plan, however, has failed miserably. In the process of negotiations between the Member States and the European Commission, the list of permitted limitations became longer and longer. Basically, every European country managed to include its own favourite limitation. We from the Netherlands, for instance, included a right to sing songs – copyright-protected songs – in church, and Germany managed to include a right to play copyright-protected movies on televisions in retail stores just to demonstrate that these televisions actually really worked. But still, the list does not include, and I think that is the bad news from a user perspective, any general fair use or fair dealing type of provision. That means that if the technology and new business models develop, there’s a new need for exemptions not known today, not realised today, the copyright directive and subsequently the national member states’ law, has to be changed time and time again. So it is not really a flexible system at all. In some cases (I’ll show you what the limitations are on the next slide) fair compensation is required. For instance, in the case of private copying exemptions, fair compensation meaning compensation to the right owners. Already in 12 of the 15 member states we have so-called levy systems in place providing a right to remuneration originating from the manufacturer or the distributor of analogue media, audio and video tapes, for instance, or in some countries for instance the manufacturer or importer of equipment primarily intended for copying purposes. In Germany, there’s a levy, a copyright tax on photocopying equipment, and in most countries blank audio and video tape.

There’s a tendency, an understandable tendency, for these levy schemes to proliferate into the digital area as well and in fact particularly in Germany and also in France, the colleting societies have been making a strong argument for extending the levy schemes to cover CD burners, PCs, mobile phone with mp3 playing capability. In fact, just about anything digital that you can imagine and that has storage capabilities.

The European copyright directive promotes that model by providing for a right to fair compensation in case of private copying. However at the same time (and this exemplifies the problems the drafters of the directive have experienced) the directive embraces the model of Digital Rights Management which of course points in a totally different direction, and does not fit in well at all with a levy scheme where payment is made on a collective forfeitary basis. The idea behind Digital Rights Management Systems of course is that every single use is paid for, every act of private copying even on minor scale, well at least theoretically, will be paid for.

So levies and Digital Rights Management Systems don’t work very well together. And the directive realises that by referring to the use of technological measures in article 5(2)b and in recital 35, where in calculating the level of fair compensation, account should be taken of the degree of use of technological measures…

In other words in those markets where DRMSs are in place, fair compensation would obviously not be required because there wouldn’t be any copying in the first place, and if there were copying it would be illegal. So that may be one of the points of discussion later on today. What vision of the future of copyright do you have? A Digital Rights Management vision where every individual act of usage is controlled or a more open oriented model perhaps offset with a levy system such as the levy system existing today with analogue in Europe.

All these limitations mentioned in the copyright directive are subject, but we will not have time to discuss that today, to the famous or infamous 3 step test in the TRIPS agreement article 13. The 22 special cases mentioned in the directive only apply, if they do not conflict with the normal expectation of the work and only if they do not unreasonably prejudice the interests of the rightholders. So that’s an extra safety measure from the rightholder’s perspective.

What’s on the list? I’ve tried to squeeze them all on the one slide. We’re not going to discuss all these limitations. These are the kinds of limitations under the directive as you can see there is lots there you are familiar with from an Australian viewpoint, and there are also some very weird limitations you may not know. For instance, the parody limitation. Arguably this is not that weird, and it’s a very good idea, but most countries deal with that issue without expressly codifying a parody defence. Spain, France and Belgium already have a parody limitation, that’s why it’s in the list, presumably other countries will now follow in Europe.

The asterisk denote fair compensation rules that means for photocopying, for private copying, for so-called prison taping, making copies of football matches for prisoners who have to go to bed very early, fair compensation is required. The rest may need a levy scheme.

Now how does the directive deal with the interplay that I would like to focus on next between limitations and contract? As we saw before contract user licences can basically override any existing limitations making this extremely long list of copyright directive completely devoid of any practical implications if contract rules: who cares about limitations

Here’s an example of a rather radical, a rather over-the-top example of a user licence that actually does away with just about any limitation imaginable. I’m not so sure this is not a hoax but it’s pretty funny anyway. This is an opening screen from an e-book published by volume 1 and it’s an e-book which is Alice in Wonderland. What it says in the blue part is permissions on Alice’s adventures in Wonderland where permission is slightly ironical

Copy: no text or selections can be copied from this book to the clipboard.

Print: no printing is permitted on this book

Lent: this book cannot be lent or given to someone else

Give: this book cannot be given to someone eels

Read aloud: (you guessed it right) this book cannot be read aloud.

In fact you can’t do anything with it but read it, silently that is. What this demonstrates it is a radical example and the more I look at it the more I am sure that it is actually a hoax. But it’s one of those nice Internet hoaxes that we enjoy. What this illustrates is that user freedoms may be seriously jeopardised even if they are codified.

How does the directive deal with that problem? Well, the answer is disappointing: it does not deal with it. In article 9 of the directive it expressly states that rules of the directive are without prejudice to a whole range of legal areas including access to government information and what have you and also the law of contract. It doesn’t say that the law of contract or freedom of contract always wins but it simply doesn’t deal with it. It doesn’t exclude solutions under national law either including solutions we all know from Belgium where limitations have been declared, all copyright limitations have been declared mandatory, non-overridable, 3 or 4 years ago already. This is a unique situation, I know of no other country in the world where the lawmaker has expressly codified such a rule and we know that in the software and database directives of 1991 and 1994, already a number of mandatory user freedoms were included such as a right which is non-overridable which you cannot do away with under a licence to decompile a work, a computer program, that is to reverse engineer it, a right to make backup copies et cetera. It’s a bit disappointing in view of these earlier European directives that the present copyright directives do not deal with this issue. On the other hand it is understandable, this is a difficult problem and the Belgium solution certainly is oversimplifying. If I’m not mistaken, this is a problem that the Australian Copyright Committees, or the Australian Copyright Councils currently, is dealing and struggling with but maybe the Australian experts here can tell more about that later on in discussion. I know they have big problems dealing with it.

How could you deal with it? We’re now stepping outside the directive and just thinking about the problem out loud. These are possible approaches reflected in the book that I promoted earlier to great length. You could apply general doctrines, the first one actually would be a bit difficult for an Australian audience, the application fundamental human rights but in continental Europe that might work very well. There are certain rights so fundamental that you cannot dispose of them by contract in the first place such as your own right to privacy, another problem in Australia. But other doctrines might solve at least in part the problem raised here of reconciling user freedoms with freedom of contract. The doctrine of unconscionability for instance or doctrine of misuse (I don’t know if it exists in Australia, it does exist in many other countries), misuse of copyright in this case. What you could also do, the Australia example, is designate mandatory limitations in your copyright act. Then again, you could approach the problem from a contractual perspective and for instance include a chapter on user licences in your own civil code if you have one. That has actually happened in respect of many other types of sector specific contracts so why not in information user licensing regulation in contract law?

What you can also do is extend existing law on unfair terms to extend to the information licences. In fact there are many different approaches and the copyright paradigm is definitively not the only way to deal with it. This is a matter for discussion later on.

But having solved, presumably even if we could, the problem of making copyright limitations respect user freedoms in the light of increasing online licensing, you would still have the problem of overbroad protection by technology to deal with. And that’s the last part of my presentation – how to create this equilibrium between the legal protection of technological measures and respect for user freedoms. It is a very difficult one, much more difficult than the contractual issue I just dealt with, and it’s made particularly difficult since national legislatures are compelled under article 11 of the WIPO copyright treaty to provide an additional layer of legal protection to existing technological measures. According to the WIPO copyright treaty “companies and parties shall provide adequate legal protection……. A rather loosely formulated instruction that many contracting parties are in the process or have already dealt with in different ways. In fact every country I know of has its own approach of interpreting article 11 of the WIPO copyright treaty as well as protecting user freedoms. We will see that later on.

How does the directive deal with this? Well, it has taken article 11 very seriously and in fact it has protected more than what is really necessary. Under the WIPO rule the circumvention of technological measures requires adequate legal protection. The European Directive however also prevents the manufacture, the trade, the sale, the advertising and what have you, of devices that enable circumvention. I believe that’s the only thing that the Australian law prohibits. Europe we have both circumvention and trade in circumvention enabling devices prohibited. The device rule of course, immediately triggers the question of how to distinguish between devices that enable circumvention and general purpose devices such as PCs that can do just about anything you like including circumvention. For that the directive develops a primary purpose test, if the primary purpose of the device is to circumvent then it is prohibited. So called dual use technologies are allowed. The definition of effective technological measures is rather broad and it includes presumably both access control and copy control mechanisms.

How does it deal with limitations? The WIPO copyright treaty prohibits acts of circumvention that restrict acts that are authorised by the rights holders or permitted by law. Look at article 11 last couple of words.

So there’s a relationship in the copyright treaty between the scope of copyright and the scope of this new legal protection regime. Acts that are permitted by law, in other words, that are covered by existing copyright exemptions therefore remain outside the scope of this legal protection regime. You might hack your way into a protected Digital Rights Management system to enable you to exercise your user freedoms. Professor Ginsberg from Columbia University has termed this ‘a right to fair hacking’ – a regime that follows the contours of copyrighting. That is what the WIPO copyright treaty in fact demands, but then again the copyright directive, the European’s have gone one step further. By providing in article 6(3) that the acts that are protected by the new regime (restrict) are not authorised by the rights-holder. What you see here is that words ‘permitted by law’ have disappeared and that in fact, any unauthorised act, whether or not they constitute copyright infringement, that are enabled by the act of circumvention become prohibited. What that means is that this new legal regime, this extra legal layer, does not respect copyright limitation in anyway. There is under the European system no right to fair hacking. You are not allowed as a bona fide librarian for instance to remove technological protection measures even if it is simply to invoke your rights as a fair as a bona fide user. The only small exception to this no limitation approach is that there is a reference in recital 50 (15?) that clarifies that circumvention to decompile a computer program to enable inter-operability is permitted. But for the rest, even if you are the most bona fide user in the world you can never circumvent. That’s a much further reaching approach, which in fact might lead to the conclusion that this new legal regime has lost its relationship to copyright in the first place – it is in fact a new property right in the encryption layer if you look at it differently.

So how to preserve user-freedoms in this world of Digital Rights Management?

The copyright directive, having recognised that there are at least 22 types of user freedoms that are important does deal with the question, but in a very different way. What is says in Article 6(4) is that member states if content providers fail to apply voluntary measures, that member states must take so-called ‘appropriate measures’ to protect qualified users from being excluded. This is the entire, well not quite the entire rule, but almost the entire rule. In the absence of voluntary measures ….., member-states shall take appropriate measures to ensure that right-holders make available to the beneficiary of an exception or limitation. Note that this does not apply to all exceptions or limitations, only a limited number including limitations enabling classroom copying, scientific uses, certain library and archival functions and what have you. But not the whole lot, not the whole packet of 22. What are the qualified uses? I mentioned them already, library use, archival use, educational use, broadcasting, hospitals, etc etc. 6, 7 in all – not 22.

But what are these appropriate measures, or what are the voluntary measures that should be taken in the first place. The directive doesn’t tell us. The recitals don’t tell us. There is no way of knowing what the European legislators had in mind so these are just lucky guesses. One measure could be, and is being contemplated in national implementing legislation as we speak, obligations on content providers to provide not technologically protected copies in, for instance, the national library where bona fide users can go and make their fair use copies - a deposit requirement in other words. Another similar option is a [key-ask role] approach, where there would be a trusted 3^rd party (possibly again the national library) where content providers must deposit their encryption keys and where bona fide users, qualified users may go to receive a copy of the key to enable certain fair users. And then there’s the third possibility of providing unprotected copies on demand by the same qualified users. Three possibilities – there may be others that might be the end result of this rather complicated rule of the copyright directive. What makes it even more complicated is that the final part of Article 6(4) is not, compromised within article 6(4), excludes all the previous solutions in case of online services provided on demand on agreed contractual terms. In other words, at least that’s the way I read this, if content providers and users have negotiated an agreement providing the terms of user-licence - in that case, there is no obligation on the part of the content owners to provide unprotected access. That may do away with a lot of the appropriate measures previously required.

There are of course other ways to reconcile Digital Rights Management and the possibility of encroaching user freedoms by using Digital Rights Management systems and user freedoms on the other hand. The first one we will be talking about later on which is basically, building the freedoms into the system. But from a legal perspective there are of course other remedies outside the right to fair hacking approach, which I personally think is not a very realistic one. Even if hacking were permitted, you must still be able to hack. The idea of having professional hackers employed by librarians and universities just to hack their way into protected content simply does not appeal to me. There are other legal ways to look at it as well. One would be if a consumer law approach does not solve all the problems, but certainly, the problems that consumers are encountering nowadays when in Europe they are buying copy protected CDs that are in fact inherently defective. Very rudimentary protected CDs that are basically full of digital mistakes. Such a way that CD burners will not be able to play them, CD players and PCs will not be able to play them but that normal CD players will because they are, let’s say, less critical of the digital content that they get delivered. More and more consumers are getting very angry with these CDs, and perhaps sooner or later consumer groups will start waking up and demanding that these kinds of inherently defective CDs are to be banned from the market. Perhaps consumers should simply not buy them in the first place. This solution would definitely make Phillips, the inventor of the CD format, very happy. Phillips has complained recently and rather loudly of this tendency to corrupt the CD format to produce CDs that don’t work on PCs and that don’t work on Phillips produced CD burners either.

There’s another approach which is evident in a proposal that is not yet really tabled but is on its way to the US Congress by Congressman Bouche, who is also fed up with these CDs that disable forms of fair use that he considers to be so crucial that they cannot be, should not be, disabled. Simply prohibit the use of technological measures that do away with user freedoms.

And then there’s a third approach that is also interesting which is already evident in an existing piece of legislation in fact the European television directive of 1989 already provides for it. It prohibits the exclusive exploitation in a conditional access system, pay television service, of certain sort of important events. Every country of the European Union has now in its legislation a list of important events that should always remain in the clear that may not be monopolised by providers of encrypted pay television services. What kind of important events are these? Well, in the Netherlands of course, 30 April, Queens Birthday, but you can bet on it that 90% of these lists constitutes sporting events. Highest on the list – football. Real football that is, not Aussie Rules.

Thank you very much.

L: I might start the discussion by making the comment that you (Bernt) didn’t deal with Rights Management Information. Although RMI, as it’s often known, is a fairly central part of DRMS and there is specific provision for it in much of the digital agenda legislation, including the EU Directive on copyright. Is the omission of consideration of RMI on your part because you don’t see it impacting so much on user freedoms as do the other elements of DRMS?

B: Yes, I’ve left that discussion out partly because I know that I already have a tendency to speak too long – as I have demonstrated – and partly because I don’t think the problem of reconciling protection and respecting user freedoms really comes up that much in the context of RMI. But maybe I’m wrong and maybe this is an area that needs more exploring.

L: I myself think that RMI does raise problems from a user freedom perspective, but it’s primarily in relation to privacy. We can perhaps return to that issue later on in the symposium.

B: I was going to raise the Alice in Wonderland example. It is in fact not a hoax, but misunderstood. It was released by Adobe and a commercial publisher as a showcase for the technology. What “not read aloud” refers to is that there’s a feature in the e-book technology which allows the text to be turned into electronic speech that has been switched off in this case. So it doesn’t purport to refer to the human voice box, which a lot of people think it does, but it does demonstrate the range of permissions that can be switched off by the e-book technology and apparently was switched off as result of an error, they claim. So it was intended to be public domain, it was not intended to be used as a commercial work, but it did have that effect.

N: It’s real, did you know.

B: So it’s real. Is that good or bad?

L: It certainly got a lot of praise.

I: I tend to look at these things from a sort of market or competition perspective but I am taken by the Belgium example because what you don’t get in this debate most of the time is any sense of the counterfactual. What’s interesting about Belgium is – has anyone ever done any empirical research as to rightsholders fleeing Belgium in large numbers? Do licences cost more there?

B: Would be interesting. I think rightholders don’t even know that this rule exists. It’s a small country and it’s where the European Commission resides but for the rest, it’s not that much of a market. But your point of course is well taken. What you’re saying is that what we want to know is the law and economic side of this coin.

I: Would the sky fall if some of these things were not done?

B: Yes, and implicit in your question is, would the users really be worse off in their situation in their limitations and in their freedoms. There is of course the perennial point made particularly by content owners that it’s actually better for the consumers because the systems of digital rights management allow for price discrimination and that means you’re not subsidising, as an end user, your neighbour’s mega-use at the same time. Unfortunately there’s hardly any empirical research at all about the economic side of price discrimination, even the basic economics of the copyright system in the first place, it remains underexplored, so I don’t really have an answer to that. But Belgium could be an interesting example.

I: Coming from another small country, there’s something to be said for keeping more open regimes as a kind of game preserve which you could do as a private study, perhaps.

B: Maybe you could abolish copyright in New Zealand.

FP: Bernt, I was wondering whether you could go and shape how the final text of article 6(4) is arrived at, given it’s quite different from the Commission’s original proposal in terms of the definition of ethical measures. I know the parliament has different views the current text basically treats the limitations in a different way from what we originally put forward.

B: Well there’s not much transparency in the European legislative process unfortunately. This only exists with official documents, including the various proposals, the amendments by the European parliament, and the final thing. If you follow the debates closely, you also get plenty of these non-papers that do not exist, but take up a lot of space in your cupboards. I think it becomes clear that the Europeans originally wanted to follow the WIPO model and the contours of the copyright model, but in the very late stages of negotiations, dropped the final strand connecting the protection of technological measures with copyright. They dropped the “or permitted by law” words, and some members states started to protest. These states started to see that user freedoms were really being disposed of, so in the very final stages of the negotiations, it was recognised that there were certain user freedoms that should be dealt with. But there’s simply no language in the directive which refers to it and all those non papers aren’t worth the paper they’re written on. You cannot go before a court and say “look at these non papers that meant that and that”. So the history’s very small.

Lee: Was there a fair amount of lobbying, between the initial proposal and the final version from certain industry sectors?

B: Yes

L: And was that along the lines of the lobbying that went on in the states?

B: Yes, well it took longer for the user groups to wake up in Europe and in fact they haven’t totally woken up yet. For instance the consumers are still totally absent from the debate in Europe, which I think is a big mistake. The Consumer union in Europe still think that what’s really important is buying washing machines. Information products of course are increasingly seen as important from a consumer law perspective. The initial lobbying was mostly done by the content providers, collecting societies, and in particular the photographic industry. The first user groups that woke up were the libraries; they became quite active and successful. The telecommunications industries were also relatively active, particularly in pushing for the caching and browsing exception, although they couldn’t care less about the other exceptions. Some member states became more active and aware of the fact that the directive had the tendency to distort the balance between protection and limitations. This is where the 22 limitations arose. However it is still not anywhere close to the United States situation, where user groups are really very powerful.

LB: I have a question about the UK fair dealing exceptions, which I feel is not specifically referred to in the directive. Where do they fit in under the 22 exemptions and is there any application of the fair dealing provisions that might be put by the exception and uses, which have been free, but may now be subject to fair compensation?

B: Yes. Dealing with the last part of the question first. There has been lots of hesitation on the part of the United Kingdom to agree to an obligatory remuneration for private copying and the way fair remuneration has been phrased in the directive recital, does allow for situations where fair equals zero. That is an example of the kind of compromises that you will find in the directive. There is also some language in the statements accompanying the agreement between the member states and the commission. The common position is that some of the existing fair dealing exemptions may not necessarily lead to fair remuneration. For the rest, many of the fair dealing exemptions have to be divided up and categorised into one of these 22 allowed categories. If they fit in there then it’s okay, if not they have to be disposed of, with one exception. If these are pure analogue exemptions that already exist and have no internal market effects, which is where the economic effects remain limited to one member state, then the directive doesn’t care, and you can keep them.

R: How would any circumvention measures allow for researchers, for example those who are studying the adequacies of the measures?

B: That’s the question of whether cryptography research is not unduly restricted by this new regime. Well, if you only look at article 6 of the directive, cryptography research would probably not be allowed since there is a no limitations rule there. However in the final stage of the negotiations, the directive recital, which does have legal status, was added to the directive and refers to cryptography research. It says in recital 48 that legal protection should respect proportionality. It then goes on to say that in particular, this protection should not hinder research into cryptography. So although there’s no express recognition of a right to circumvent for that purpose, it would presumably be allowed in respect of the recital. In the United States however, there are express rules allowing cryptography research. In my opinion, it is not really dealt with in the directive in a clean way.

RM: Bernt, in our debates here in Australia, we don’t have a general fair dealing exception to the circumvention provisions. It was put that this would create a very large loophole and could open the floodgates in Australia. Have you seen in Europe or in the States, ways of putting a general exemption that will deal with that owner concern?

B: Well in Europe we have never had any. We have always been used to very limited exceptions in fact (when I say Europe I mean Continental Europe). The continental European approach to copyright exceptions has always been very minimalistic. This follows the author’s rights approach towards copyright, which basically sees limitations as exceptions to a rule, the rule of maximum protection. If you look at the directive, you will also see that limitations are in fact described as exceptions, not described as exemptions. So we’ve always had this very limited number of exceptions, the fact that the directive has in the end resulted in such a long list has to do with cultural diversity more than anything else. Many countries have a limited number of exceptions, but if you add them all up you will come to 22 or possibly even more. The only exception to this situation was in the United Kingdom, where there is really a long list of limitations and that is because here, user freedoms have always been more prominent.

In the Netherlands we’ve tried to introduce a general fair use rule. In fact the ministry of justice endorsed the idea. We wanted to have a flexible American style fair use provision, which obviates all these specific exemptions and which defies technological development. However, halfway during the process, the directive came out and it has not allowed for this exception. The initiative has now been taken care of. I’m not sure if this answers your question

RM: I’m just wondering in our exception, to allow for the library licences, the educational statutory licence are exceptions for the benefit of perhaps an institution so that they can manage perhaps the exposure to the copyright owner to leaks and widespread infringement as a broad fair useful. Whatever your fair dealing rules are, once you have fair dealing exception, the concerns you ventilated is that this lets the cat out of the bag, the manufacturer can set a circumvention device to a member of the public who says “I need that to exercise my fair dealing right”. That’s rather different than giving a right to a library or a whatever, but I just wonder whether you’ve seen models that try to deal with that ‘letting the cat out of the bag’ type of argument that seems to drive the narrowness of the exception.

B: Well I’ve definitely seen from the rightholder’s perspective attempts to simply do away with all exemptions with exactly the ‘cat out of the bag’ argument. And there’s some validity to it, I must admit. But letting the cat out of the bag, it doesn’t really matter how big the bag is, if it’s out of the bag in the context of the small exception, it’s out of the bag too. So it’s not that good an argument in fact. What really would be a good argument is, look, we’re now in the digital environment, in the digital age, and any legitimate copying will result in serial illegitimate copying and therefore no limitations at all would be allowed. I would be very against that approach but from the ‘cat out of the bag’ argument that would be the correct approach. It’s very difficult to reconcile the existence of limitations. I think it cannot be done, and I think all these attempts at reconciling these various regimes are doomed to fail, it doesn’t work. In other words, we have to accept leakage if we want to respect user freedoms. If we envision a world where the marketplace functions perfectly according to DRMS lines then we don’t.

S: I might just make a comment in relation to approaches that are doomed to failure. The government and I think all governments which are trying to implement the WIPO treaties obviously don’t take that approach, and that’s why they are trying to implement these copyright systems. I mean, it’s always very difficult in this online world especially where you’ve got business models evolving to determine exactly how you’re going to try and legislate, to determine a balance between copyright owners and users. In relation to the permitted purpose exceptions, to the technological protection measures which we have in the Australian legislation as RM said when the government was looking at that issue, it wanted to strike a balance but at the same time it didn’t want to create an exemption which would allow too much use of circumvention devices or too much manufacture and dealing, and one of the areas where the government thought it couldn’t allow the supply and manufacture of circumvention devices was in relation to fair dealing because fair dealing in itself is quite a broad exception. So for instance fair dealing for purposes of research or study, if you allowed someone to supply or manufacture a circumvention device simply on the request of the consumer or the user saying it’s for their research and study purposes, then that would apply to a very large group of people with the potential for further dissemination. So that’s one of the reasons why the government took the approach in having very specific exceptions, identifying qualified persons where the risk of that further dissemination was thought to be significantly lower than, say, a person asking for a circumvention device for their research and study. So that’s why the government specifically identified qualified persons who come from library and archive institutions, educational institutions, officers of the crown and persons undertaking decompilation for security testing, interoperability and error correction. So I just thought I’d add those comments.

I: Just one comment on the Netherlands position. What I find slightly alarming is that when you have these systems of legally propping up Digital Right Management, it doesn’t just affect digital rights, it affects the whole letter of copyright. What happens is you’re locked into a particular kind of fair dealing regime which you can’t then easily re-examine in copyright in general. I mean there’s an argument from a civil law perspective, Australia and New Zealand look as though they have very generous fair dealing rules. From an American perspective our fair dealing rules are weak and timid things. What I would worry about in this exercise is putting it out of your control to actually re-examine the width of a fair dealing defence. Arguably that happened in Australia but perhaps not for this reason.

S: In terms of actually the width of the fair dealing defence, it’s interesting you raise that because the Copyright Law Review Committee actually looked at that issue in the Simplification Report which the government is responding to and in its recommendation it stated that Australia should have an open-ended fair dealing exception similar to the fair use system as you have in the US where you don’t have it limited to certain exclusive purposes as we do here?

L: I’ve got a more general question which follows on I think from what has just been said, and that is to what extent is Australian law with the digital agenda amendments following the existing contours of copyright law? Is there for example a right to fair hacking in Australian law? It seems to be that there isn’t, from a reading of the new provisions, but maybe other people can cast light on that question. I’m sure people have their own interpretations.

S: Under the Australian approach we don’t specifically go to prohibit use of circumvention devices, we prohibit the high end, the manufacture and commercial dealing in devices and services. What we try to do is we want to provide strong protection measures, so we want to allow copyright owners to exploit online markets.

At the same time we want to facilitate the operation of the exceptions so in doing that as I’ve said a bit earlier we allow permitted purposes, specific purpose exemptions to facilitate specific exceptions where you allow the manufacture and supply of a circumvention device or service to a qualified person on the provision of a signed declaration. So if the use of a device is for a specified exception and it is within the operation of that exception then you are permitted under the law to use a circumvention device or service for that purpose.

LB: Perhaps there’s a right of fair hacking. But you have to either make the device or service yourself, or get it from outside Australia. If you can get hold of it, then you can use it.

I: Is there a big policy reason for that distinction, getting it from outside the country or making it yourself?

S: Only in terms of regulating jurisdictions outside of Australia. This is one of the reasons why there’s an approach of implementing the WIPO treaties where you need all countries to meet a minimum set of standards because as an Australian Government, we can’t legislate for other countries.

I: But it wouldn’t be happening in another country would it?

S: Why couldn’t it be happening in another country? Those sorts of issues of how jurisdiction applies across international boundaries in internet cases is quite a grey area and I don’t think many people are confident as to say how the law of one country would apply to another country in an internet law related case.

B: May I ask a question about Australian Law? Every country has its own approach to reconciling technological measures and user freedoms. The Australian approach is ‘you’re allowed to sell this stuff, the circumventing device to certain good guys’. My question is to qualified users / qualified persons; has this ever happened already or is the law already in place? [general agreement] Is there anyone selling these devices to bona fide users?

S: The law is subject to a review where we’re looking at these practical issues but in relation to the decompilation exceptions where you’ve got at least the manufacture of devices for security testing and those types of issues I think you will now actually have people undertaking activities under the permitted purpose exemptions. In relation to the other exceptions the government’s looking with interest at the way copyright owners and users use these devices and services and seeing how that fits in with the scheme it’s set up. The purpose of the review is to look at how the Digital Agenda amendments operate against their primary objectives, and these objectives basically are to facilitate creation and provide incentives to produce, and also to allow reasonable access. So I mean in looking at how it works in the real world, at the end of the review it will allow the government to see whether or not any changes are needed, not in terms of reassessment of the basic policy objectives but in terms of whether the original objectives have been properly implemented.

BF: I would like to make a number of points. Some of them flow out of Bernt’s presentation and some of them are more general. The points are fairly disjointed but I want to broaden the discussion a bit and move a little bit away from circumvention law.

The first point that I think should be made is that the distribution of information, and generally the distribution of information under DRMS, is a constitutional issue as well. And Bernt you gave us a list of layers: IP law, contract, technology, and to that list I would add constitutional values or constitutional law, at the very least in Australia, the US and Canada for example. A major part of IP law emanates from the enumerated IP power under our federating constitutions and IP legislation has to be checked, if you like, against the constitution, at least in enactment. In the United States, the First Amendment has been raised in recent litigation in relation to the distribution of information and an interesting question was raised at a copyright conference late last year about whether constitutional law, particularly free speech rights, actually can restrain contract. Contract being a private right, and constitutional law sometimes thought of as being a public right. And Bernt, I know you have written on this idea of what’s called ‘horizontal constitutionalism’ which is the concept that a private obligation can be subject to a constitutional value. Many people categorise contract as a form of private legislation especially when it acts in a mass-market manner and when it imposes terms with little negotiation. So there is a very interesting and I think unrecognised, perhaps undeveloped issue there as to the level which constitutional law and contract intersect. In this country it’s pretty hard to see because our entrenched constitutional rights are very limited, the implied right to free political speech which obviously is one of them, but in the United States I think we’ll see that issue raised more strongly before too long. It was raised briefly in Bunner, the Californian DVD case.

The second point I’d like to make and move on to is the notion of code as market segmentation.

Bernt made this point fairly clearly and it’s one we really need to stress. We need to look more closely at this area more broadly, and I think this is an issue that should interest competition lawyers. What we’re seeing, and the Sony Playstation case is a good example, is notion that the segmentation of markets throughout the world is becoming much more an issue of contract and technology, and perhaps less an issue of legislative restriction on parallel importation. So we need to understand that technology or code is now a primary method of market segmentation and that raises very interesting issues of competition law.

The third point that I would like to make is to do with contractual licences and distribution of information. DRMS are founded upon the notion of contract and technology – the contract we’re talking about is the licensing of information. Licensing creates an elliptical form of property in the sense that it keeps recurring; it’s very hard to see sometimes what’s actually being divested in a licence of informational goods. In a broad sense it’s hard to see whether there’s been a first sale of anything, and I think when we talk about DRMS we have to look at the whole notion of contractual licences very closely. We need to consider whether they legitimate, do they stand up in relation to competition law, are they the kinds and forms of informational contracts and distribution methods that we want to support? They’re very much entrenched at the moment and the issue of critique and questioning certainly has not progressed too far. The CLRC’s issues paper on Contract and Copyright draws some of these issues to the fore. And I think we shouldn’t forget the fact that we sometimes don’t start with copyright, sometimes it’s the licence that actually creates and commodifies the informational right that we’re considering. And the example about the Alice in Wonderland ‘public domain’ work creating the informational property right either through technology or contract is something that we need to be mindful of.

Now a couple of final points that I suppose coalesce in the case Sony v Stevens which is currently before the Australian Federal Court but I don’t think that we should forget Larry Lessig’s slogan that comes out of his second book that “we’re at risk of content controlling technological innovation” and what we should be mindful of in any discussion of DRMS is the notion that copyright and content do not necessarily control the way we manufacture and distribute communication technologies from now into the future and that’s very much the subject of his second book “The Future of Ideas”.

Building on this is my last formal point, which is this notion of culture and it relates very much to the Sony v Stevens case. The Sony v Stevens case is the simple fact scenario that Sony put out a Playstation that will only play games that are coded according to their geographical regional coding. If I want to go into a computer store and want to buy what is called a modification-chip, is the person who sells me that chip at risk of breaching the law in some manner. Now the interesting issue in this case which is currently before the courts is that Sony will argue that the distributor, Stevens, is distributing a circumvention device under the s116A of the Copyright Act. Stevens, I haven’t seen his submissions, but I have seen the submissions of the intervening party which is the ACCC, and they will argue that the geographical or regional coding is not a technological protection measure and therefore the selling of the mod chip is not actually dealing in a circumvention device. The legal niceties of this case will be very interesting to follow. What comes out of this case is that we now have a generation of information users, and Justice Laddie made this point at a conference late last year, that we now have a generation of information users that find the whole notion of intellectual property a little hard to fathom. And when I look in the Saturday newspapers in the advertisements to buy a computer, I see the advertised package now comes with a scanner and a CD burner. So we have bred a generation, grown on Napster, weaned on the internet, that think that the commodification and I suppose the legal commodification enforcement of intellectual property rights is a hard thing to stomach, and to some extent interferes with the way they want to live their lives. So I know we think that that attitude is a little too naïve, but I don’t think we’ve really fully understood that we now have a generation of information users that want access, and good access, as opposed to locking up information through digital architecture. I think we have a long way to go.

I thought this may add to some of the discussion, but also draw on some of the points made in Bernt’s presentation.

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L: I have great pleasure in introducing Mr Peter Higgs, who is the chief executive officer of IPR systems. Peter is not a lawyer, he is a marketer with many years of experience in marketing in distribution strategies. He is a developer of multimedia, who is known to me primarily for his involvement with the ‘propagate’ project, which led on in a way from European commission funded project which went by the name of imprimatur. He is now involved with IPR systems and he is going to talk to us today about some of the interest balancing that goes on in DRMS systems development.

Peter Higgs: Just very quickly a bit of context so you know where I am coming from and where Renato is going to follow. I will give you the marketing bits and Renato’s going to be taking you deeper into the technology from a strategic point of view. IPR systems is a continuation of the Propagate project, which came out of two co-operative multimedia centres. It was a project where 10 universities, the NSW department of education, TAFE and various people working within libraries dealt with the issue of copyright management and multimedia. We did a lot of work in consensus forums and also technical modelling. At the completion of that project at the end of 1999, we started IPR systems to commercialise that work. IPR systems is a privately held, privately funded Australian Company, and indirectly has 10 universities as shareholders. One of the very first things we did was engage with the Australian Society of Authors to develop a service called OzAuthors to manage and trade the intellectual property of authors.

Some of the lessons that we’ve brought in to this is that rights management is an ecosystem, it’s about how do you create a fertile ground for creators to get their rewards, for end users to be able to attain the material and the rights to the material that they need.

The traditional approach to IP in the past has been what we call the creation waterfall, this is where a creator creates a work, trades it and then moves it onto an end user. The creator obviously has this great big amorphous mass of rights they can control, and they pass on a subset of those rights to a trader, and then that trader passes on a tiny sliver of rights to the end user.

So in this movement from the creator to the trader to the end user, the rights get more finely attained. One of the issues now in moving into the digital environment, where you have the possibility of digital files and everything else moving, is that copyright protection is applied at the stages of when it moves into trading, you apply a bit of protection with a key, when it moves from the trader to the user, someone else locks it even more. So you’ve got increasing copyright enforcement.

We would actually challenge that creation waterfall because we think the market is going much more, particularly in some areas, to what we prefer to think of as a creation life cycle. There is less and less a passive consumer sitting on the end. The point was made before about audio CDs, both my sons sit on the web all the time listening to MP3s but you’ve never seen such a stack of purchased audio CDs and yes they recut those CDs into different mixes and take them to parties and bring them back and whatever else. So they’re not settling for the passive consumption of a mix as the record companies are doling it out, but they’re also buying an awful lot of content.

We’re seeing this happen so much more in the education markets where a university will acquire some content, add to it, manage it, deliver it to users within the university confines and then exchange and pass it on in what’s called a learning object down to another university then mixes it with some other content that they’ve acquired from stuff that they’ve built themselves, deliver it to their own students internally and then trade it off to another university. You end up - and we’re involved in the standards associations that are dealing with these learning objects – you are now in the next 5 years going to be having massive trading of an exchange of learning objects, and these learning objects will contain bits of books, chapters of books, images, voice, scientific diagrams, simulations, and anything that can impact on learning. But the cost of creating this material is so great that you have to share it, you actually have to be able to get credits with other providers of it so that you develop accounting 101 and they develop accounting 102 and swap it. There is no point in 38 universities in the Australia all delivering and developing accounting 101 courses.

Now in this creation’s life cycle, creation cycle as we like to call it, where creators are also users they are also re-creators, and the trading becomes small. In this creation life cycle, you actually have to manage the upstream rights and the downstream rights – what was referred to before as rights management information. And at only some of the sectors do you apply, I mean, you don’t even have to do it all the time, but apply a copyright enforcement technology. For instance, if you have a user who is off-campus and not constrained by the local land of the university, you may put a copyright enforcement technology, it could be watermarking, it could be needing of a key-server that will use it, it could be proper full-blown fairly intrusive copyright enforcement technology such as intertrust.

We therefore come up with a broader definition of DRM. DRM traditionally has been what really should be called DR enforcement. It’s about locking up usage so that only those people that have a particular key can use it. Rather, DRM involves description, identification, trading, protection, monitoring, tracking of all forms of rights usages over both tangible and intangible assets including the management of the rightsholders relationships. It’s really about rights management information, ease of providing the correct deal and the delivery of the material, the content, in the right format, at the right time, at the right price. You have to manage both the upstream rights – what have we got, what are the rights that we possess - and the downstream rights – what am I licensing to this person under these circumstances to do? And of course the downstream rights that we’re licensing are someone else’s upstream rights but that’s beside the point.

If we have an eco-system where you’ve got multiple parties and moving things across from one to the other, you actually have to find a way of communicating the rights management information in a structured way that computers can understand. Now in the past you haven’t needed that. You had a rights language called a lawyer that used to go and talk to you and give you a contract but it’s very difficult to get a computer to execute a legal contract. It’s not structured the right way. The first generation of rights management sites were all about single points so that the computer system of the web-sites were interacting with someone else, a human being on the other end and they could interpret the text. They didn’t actually have to understand – the computer of the other people didn’t have to understand too much. They weren’t passing it onto another computer, so it was very much just point to point. But a rights management language is a way of communicating between computer systems, structured information that can be used by for instance by e-book, e-video, e-commerce servers on one hand and online learning delivery devices. It should be understood this has been the situation back for the last 2000 years, you’re embedding copyright in the physical production process. If I own the production process I can control the usage of the copyright. Coming into the digital world, you have all these side channels, back channels every other way of going through it and if the owner/manufacturer doesn’t produce the goods to the market at the right time and the right price, the market goes around it. So, it’s a threat, which is why the record companies, the film production companies and the movie studios are quite nervous at the moment.

This diagram illustrates the creation cycle which is happening now in the universities environment. It’s a complex life cycle of uni trading with another uni, creating additional content themselves, using it internally, trading it to another university and only sometimes and most likely the last possible moment, applying copyright enforcement technology, identification or tracking.

A rights management language also has to be understood by non-computer devices for instance, printers, mobile phones, PDAs, digital home video recorders, things like the home digital TV recorder or Sonic Blue’s Replay that are causing such concern in the US market. It might be there saying, “oh ok well, you have a right to use this material 25 times, you’ve purchased 25 players, let’s put a tick on the counter every so often.” That is a form of rights management, including counting, reporting and necessarily respecting anonymity and privacy. Rights languages are inherently based on XML, extensible mark-up language almost lingua franca now of computers. They’re going through everything. Legal XML, e-commerce XML, library XML and now, rights management XML. But you can make small tight implementations in XML and one of the core characteristics of a rights language is that you shouldn’t have a rights language that’s ten times the size of a media asset you want to be sending out to someone. And there’s no point in putting ten acres of exclusions and everything else that are mandatory if all you wanted to do was say that you can play this and do whatever you want with it. So you should be able to send out a little subset of a long rights language to allow the sorts of things you need to do. So don’t use a sledgehammer if all you need is a little nutcracker.

Interestingly enough, the prime point that we got out of all the research with Propagate, and the engagement with the European IMPRIMATUR project was that rights languages have to be business model neutral. The market cannot establish a standard on the basis that all content is locked, that every purchase is for a fee and that all content is passively consumed because all of those assumptions are absolutely false.

Yet, most copyright enforcement technologies and the other rights language that we now know about assumes that all things are free, all things should be locked and everyone’s a passive consumer then you’re going to end up with some massive horrible distortions down the line.

One of the other characteristics we see for a rights language is that it actually has to be open source and free. If the language you are using to describe the usage and ownership of content is patented, proprietary and not free then it’s very, very difficult for content delivered over the top of that to be free, open source or freely available because your very foundations are proprietary and locked up. This is one of the debates that the MPEG 21 community is going to have now that they’ve decided to go after much beating up with content guide which requires a licence for usage of their language, their XML language.

Rights management, to echo the point that both Bernt and Brian were making, is a complex interaction between – we see four competing/complimentary biases:

- social – fair dealing, give a gift, social norms;

- business governed by accounting practices, transfer of dollars, making a deal at the right price at the right availability for the value that customer, the market sees as fair;

- legal – obviously laws of copyright, contract, privacy, and that’s governed variously by jurisdiction; and

- techies – you actually shouldn’t ever let the techies decide on those other things as well because you’ll end up with some great distortions, and just because you can do something technically, doesn’t necessarily mean you should do it, but technical boundaries are:

o can it be done in a combination of programming, applying various technical techniques, XML descriptions, whatever else, and there are probably lots of things that you can do, some things you can’t do, and some things you shouldn’t do.

Apologies to some of people who have seen these next few slides. This is just a little bit of a summary of how we’ve divided up the concepts of copyright into something that a computer can understand. And we’ve been talking a little bit about upstream rights and there are 3 concepts in upstream rights:

1. degree of evolution of the work;

2. degree of granularity; and

3. layers of rightsholders.

Degree of evolution is based on the library model. IFLA is the international federation of library associations, and they categorise works into the concept, the expression, the manifestation and the instance. Media asset management systems deal in moving around manifestations and instances. A concept is think of War and Peace – the story, the characterisations, the plot development, the names of the characters. Then you have the expression which is the novel or the screenplay or the movie or the play. You then have a manifestation which could be the Novels hardcover first edition, then you could have the first edition that I hold in my hand, which is the instance. You have different contributors at each of those levels and different characteristics.

Degree of granularity is a lot easier. This is components within components within components. I mentioned before about IMS (the Instructional Management Specification) for education. This is where you have photos put inside containers of code, in this case, it’s a zip file, with a manifest. It’s a bit of XML expression that describes what’s in that container, and you can open up that zip file and there’s a text file that says, “here, I’m a book, I’m chapter 10, I can be used for this for this sort of education or used in here and here are my rights”. So when you’re bundling together a dozen different learning objects into a bigger learning object you get all of this nesting. So granularity is really nesting of objects within objects within objects. And if you had an object with 25 components, one from a library, one from a museum, one from a commercial developer, one from Channel 9, you cannot take easily an aggregated approach, you actually have to build up the understanding of the works and the rights from the components, other wise you end up with nonsense.

The third concept of upstream rights is layers of rights-holders. This is where you can split the revenue or levels of ownership but you can’t actually disaggregate it into various components. So when you’re baking a cake, you can’t go back to the flour and the eggs but you can say “you’ve got a slice, I’ve got a slice”. This approach can help solve problems within universities where they can say, “well okay, we’ll share the revenue in the digital publishing right, we’ll share the revenue in the pre publishing right but the commercialisation right is owned by the university. In the case of the layers of rightsholders in the OzAuthors service we’ve implemented digital book exchange we’ve got various parties that can split the revenue, and in fact we have one case where we have 30 rightsholders specified and when the average price of a book is 8 dollars you could have some very small splits between rightsholders. But that’s fine, that’s what computers are for.

Downstream (and this is most relevant to digital rights management): we conceptualise this as looking at 3 axes:

- type of user;

- type of usage; and

- the degree of trust of type of user and type of usage.

For instance, type of user could be: is it a student, is it a scientist, is it Joe Citizen. Type of usage: is it research, is it passive consumption, is it for study.

Degree of trust: is it an authenticated user with a smartcard so that I know absolutely that it’s this student is in his role as student? And that could also be anonymous.

Is the type of usage constrained by the fact that it’s on the university campus, or within a library where you have no printers and there’s no email going out so you can let them do anything within there because their environment is constrained? So degree of user trust or degree of usage trust can be applied in various different technologies.

The difficulty of rights languages - we’ve got this shift. Graham Greenleaf and I had a very long argument one evening over a bottle of red about the shift in copyright. It traditionally, he asserts, and I’ve got no reason to doubt him, that everything was permitted except that which is expressly prohibited. A bit like the Swiss laws. And with that comes the potential for compensation for the act of publishing. But currently copyright is this uneasy balance between commercial “property” and fair use: Social growth versus rewarding creators. It’s interesting though, most of the outrage over MP3 is not from the creators, it’s from the channel owners.

The easiest approach to solving this problem in a computer sense is ‘lock everything, and I’ll dole out the keys to unlock it, really, really carefully’. This is not letting the cat out of the bag. Unfortunately that’s not really a very practical way of reaching the marketplace. And it’s very interesting that in the US, you’ve got the other debate going on in congress with the Security System Standard Certification Act. My assertion is that it won’t work. It may work in the States but you’re going to find it very popular with computer systems sellers, operating systems developers and applications developers from every other country in the world . This is something that you cannot damp down, you cannot stop, you have to solve it with a combination of approaches, not just technological and not just legal. Marketing is actually quite useful.

A reasonable approach is to manage the content with the right assertions attached. You lock the content or apply some sort of technology only if and when needed. Do not do it across the whole board, because if you do, you could end up with problems. And my assertion is, echoing I think Bernt’s comments is that you actually have to design fair dealing, fair usage, into the systems. It’s dead easy as I said to code it out and Larry Lessig’s points are made in his books that the trend at the moment is that you could end up with a totally frictionless economy where there is no such thing as fair dealing. But you pay for everything.

But the origin of fair dealing, of fair usage is to overcome the friction or the inefficiencies or the gaps in market forces from traditional medias and distribution structures. This is why you have educational exceptions, because it would take you forever to try to get permissions to photocopy or reproduce 10 pages into a classroom. Some fair dealing is fundamental to a healthy, growing, thriving society both scientifically, socially and for general democracy.

One of the issues here is that fair dealing is very complex. It needs a lot of modelling, and when I’m talking modelling, I’m saying let’s take the common scenarios of fair dealing and put those into a language that the computer can understand. But I don’t think modelling fair dealing into commercial offerings is going to be cost effective for any ecommerce providers to do by themselves for the moment at all.

The other aspect of this is: how does society ensure a safe harbour? The preservation and access role of libraries and museums is dramatically under threat. If I was a library or museum, if I was curator, I would not allow any encrypted content into it because it is hard enough today managing encrypted content with unlocking keys, on 25 computers even 10 computers within the library, but how are you going to ensure access in 200 years? It’s impossible. And once you start letting encryption within a library, it’s cuts into the heart of preservation. However, you can apply things such as watermarks, with personalised licences that ensure that there is minimal friction behind the library wall, or you apply a technology, as a work leaves the library, if it’s out on interlibrary loan or loan to end users. And one of the aspects there is that fair dealing business rules should override commercial rules within a safe harbour sanctuary of a library or a museum or a research institution.

The best approach by far, (I’m a marketer and therefore I would say this) is to encourage efficient markets which deliver the right goods at the right price and that don’t require blanket enforcement of everything to everyone.

After all, the world survived radio, that was deemed to kill off musicals and live performances. Radio stations survived TV, movie studios survived TVs. Business models evolve but there is a big debate at the moment about throwing out the baby with the bath water because the movie studio and the software companies, don’t particularly want to shift their business models into the new markets created by the new technologies.

It is important to recognise, taking Larry Lessig’s point, the “creative commons”, and again it’s very easy to code out the creative commons. Having commons work in a viable way is complex. We will see that working most strongly in the educational sector because there is a culture of create, trade, manage, sometimes for free, sometimes for recognition, whatever, and they are struck with declining budgets but a very very technically savvy audience, being students, who say “I want it digitally”, but the universities don’t have the funds for that. And just as a little bit of a side, because we are all in software struck by this war of patents going on, how do you have a competitive edge without relying on patents? Companies are forced into having patents around their software processes or their software designs, because if they don’t patent it, their competition will and they’ll be out of business. And I’ve seen some discussion about having a public trustee for patents and copyright, to keep these things effectively in the public domain and registered pre-emptively.

So where is this going? You are going to be seeing lots and lots of commercial offerings that use digital rights languages to deliver both free and fee content. There will be other applications for managing organizations upstream rights as in the IP Stocktake prototype [referring to slide]. The other screen shot is from the learning object exchange where most of the content will be free, but just because it’s free doesn’t mean you don’t have to manage the licences to the other universities, or to the other sectors of schools.

You will also in the near future see the metadata travelling with the object and not in a nasty way constraining everything that I do, but rather saying, “look, you are perfectly licensed to use this video in your classroom, but if you want to put it up onto channel 10 TV, website of the year, then you need a little bit of additional rights, why don’t you just click here and we’ll organise it for you”, which should be dead easy to do.

I’m now going to pass over to Renato who is going to talk a bit more about how those languages can put that together. Renato Ianella is IPR’s chief scientist, he comes to us with a worthy background in working on standards groups, he’s a member of the World Wide Web Consortiums, the Advisory Board, he’s a co-founder of Dublin Core Metadata initiative, sits on the working committee for AGLS and is also spending half of his week on standards committees around the world.

Renato:

I will now move into sort of the more technical part of the talk and how it all works. I will give you an example of what currently happens on the Internet or the web, for managing rights, then I’ll talk more about the standards efforts that are going on, and some of the studies that we have done. I’ll look in more detail about the modelling behind digital rights, and in particular the model behind the open digital rights language, and the examples of how that works. Then I’ll look at some more e-book examples within the education framework and I’ll finish off with a demo of the editor behind the learning object exchange.

Okay, so just to give you an idea as to what currently happens, here is an example of “Cartoon Bank” where you can go ont