Business Strategies in Digital Rights Management Eric Baron

Business Strategies in Digital Rights Management Eric Baron University of Connecticut School of Law May 2007

Introduction to DRM ¨ Growth of Digital Content and Internet – Perfect copies – Widespread distribution ¨ WIPO Copyright Treaty of 1996 – Article 11: Adequate protection against circumvention of effective technical protection measures (TPMs) – Article 12: Adequate remedies against alteration or removal of rights management information (RMI) E. Baron Business Strategies in DRM 2

U. S. – DMCA of 1998 ¨ 17 U. S. C. § 1201 – TPM – Proscribes circumvention ¨ 17 U. S. C. § 1202 – CMI – Proscribes removal or alteration ¨ 17 U. S. C. § 1203 – Private Right of Action ¨ 17 U. S. C. § 1204 – Criminal Offense • 5 years / $500 K (first offense) • 10 years / $1 M (subsequent offenses) E. Baron Business Strategies in DRM 3

EU Copyright Directive ¨ Each Member State to implement laws ¨ Article 6 – TPM – Tools and acts of circumvention ¨ Article 7 – RMI – Removal or alteration ¨ Country Specific Differences – Varying exceptions – Labeling requirement (Germany) E. Baron Business Strategies in DRM 4

DRM Options ¨ Contract Based – EULAs and Technology Licensing ¨ Technology Based – TPM: Restrictions • Basic Access Controls • Rights Expression Language • Secure Containers – RMI/CMI: Identifiers • Watermarks • Fingerprinting E. Baron Business Strategies in DRM 5

Access Restriction Example ¨ Content locked at source ¨ Unlocked by user with proper credentials Source: Cunard et al. , Current Developments in the Field of Digital Rights Management, WIPO SCCR 10/2 Rev, p 38 (2004). E. Baron Business Strategies in DRM 6

Watermark Identifier Example ¨ Source identifier – Added to digital content – Can be visible or encoded – Extracted by a monitoring / analysis application Source: Cunard et al. , Current Developments in the Field of Digital Rights Management, WIPO SCCR 10/2 Rev, p 28 (2004). E. Baron Business Strategies in DRM 7

CMI: What’s really necessary? ¨ US case law says: – © notice next to original images is not good enough. Kelly v. Arriba Soft Corp. – A trademark does not qualify as CMI. IQ Group Ltd. v. Weisner Publishers LLC. – Placing an author's name and copyright notice electronically on a digital photo is sufficient. Mc. Clatchey v. Associated Press. – BUT: Only District Court cases. E. Baron Business Strategies in DRM 8

Possible Identifier Regimes ¨ Levy System – Levies paid by those who produce products that are enhanced adaptation of © works via file swapping systems. ¨ Tax and Royalty System – Government tax ISP access, and tax paid to © holders based on access of works. ¨ Digital Retailers Model – ISPs monitor and bill based on download of © works. E. Baron Business Strategies in DRM 9

RMI/CMI with User Identifier ¨ Add user identifier to digital content upon purchase or access event. ¨ Monitor peer-to-peer sites for unauthorized copies. Source: Cunard et al. , Current Developments in the Field of Digital Rights Management, WIPO SCCR 10/2 Rev, p 29 (2004). E. Baron Business Strategies in DRM 10

DRM in Action E. Baron Business Strategies in DRM 11

DRM Criticisms ¨ Not Fully Effective – Analog Hole – Protection schemes are broken ¨ Component compatibility ¨ Privacy ¨ Creation of security loopholes E. Baron Business Strategies in DRM 12

DRM Criticisms (cont. ) ¨ Fair Use / Exceptions ¨ Public access rights – Physically impaired ¨ Bootstrapping – TPM on products not traditionally covered by ©. E. Baron Business Strategies in DRM 13

Business Strategies 1. Select a preferred format of distribution. 2. Consider a blended approach of contract plus technology based DRM. 3. Using simple RMI/CMI may be good enough, especially for small businesses. 4. Consider identifiers instead of TPM. 5. Partner with an established company for packaged solutions, particularly for TPM. E. Baron Business Strategies in DRM 14

Business Strategies (cont. ) 6. Consider a tiered TPM, RMI/CMI, and/or DRM-free approach. 7. For contract-based DRM, review potential enforceability issues in countries of distribution. 8. Examine potential patent infringement issues when creating “home grown” DRM solutions. E. Baron Business Strategies in DRM 15

Business Strategies (cont. ) 9. Consider adding a user identifier to digital content upon purchase. 10. Avoid bootstrapping non-copyrightable works with TPMs. E. Baron Business Strategies in DRM 16