The Digital Millennium Copyright Act and the European Union Copyright Directive: Next Steps
by Daniel P. Homiller
The development of digital media and digital communication technologies has fostered a revolution in the manner that we seek entertainment, communicate with others, and otherwise express ourselves. Because of the obvious problems created by the fact that digital content is easily reproduced and distributed, revisions to the law have been necessary to clarify the scope and substance of protection of intellectual property rights, particular the copyright, in the digital age. Industry has also responded with self-help measures, including digital rights management technologies, to further protect its interests.1 This has led in turn to a first wave of legislation to protect this protection, most notably in the form of “anti-circumvention” statutes that prohibit tampering with digital media or devices in order to gain access to or otherwise make unauthorized use of the protected digital content.
A second wave of legislation, aimed at extending even further the protections for digital media and culminating with the passage of the European Union’s Enforcement Directive and the failure of the INDUCE Act in the United States, has recently concluded. But additional proposals directed at enhancing digital copyright protection are still under discussion. At the same time, opposing proposals, premised on the notion that we have already gone too far in protecting digital copyright, have begun to emerge.
This paper begins by reviewing the first wave, the anti-circumvention provisions of the Digital Millennium Copyright Act in the United States and similar provisions in the European Union Copyright Directive. I then discuss the second wave: efforts embodied in the European Union’s Enforcement Directive and the United States’ proposed INDUCE Act to provide even more protection for owners of digital copyrights. After discussing the proper balancing of interests between copyright holders and the public, and suggesting that the first and second waves are based on a fundamental misunderstanding of the proper balancing of interests, I review some of the possible next steps, highlighting the emerging movement opposed to enhanced digital copyright protection.
THE FIRST WAVE
A. The DMCA
The passage of the Digital Millennium Copyright Act2 (the “DMCA”) in 1998 ended a round of fractious debates and negotiations that had extended at least since the creation of the Information Infrastructure Task Force by President Clinton in 1994.3 The results, characterized by one commentator as the “most sweeping revisions ever to the Copyright Act of 1976,”4 spanned fifty pages and consumed almost thirty thousand words.5
The most controversial aspects of the DMCA are its anti-circumvention provisions, ultimately incorporated into 17 U.S.C. § 1201. Section 1201 first defines a basic prohibition against circumventing acts: “No person shall circumvent a technological measure that effectively controls access to a work protected under this title.”6 Next follow two distinct, but almost identically worded provisions banning the “trafficking” of products or services that are intended to either (i) “circumvent a technological measure that effectively controls access to a work”7 or (ii) “circumvent protection afforded by a technological measure that effectively protects a right of a copyright owner.”8 The first of these two anti-trafficking provisions corresponds directly to the anti-circumvention provision of Section 1201(a)(1), which prohibits the act of circumventing technology that controls access to a work. However, there is no corresponding provision to the anti-trafficking provision, so acts of circumventing technology that protects a right of a copyright owner are not expressly prohibited.9
Exceptions and exemptions
The DMCA contains a number of complicated “exemptions” to one or more of its restrictions. Several of these exceptions appear to be effectively meaningless. For example, while exceptions are provided for libraries (but only for the purpose of previewing a work before making a purchase decision) and for individuals seeking to disable technology that collects personal information (e.g. “cookies”), the exception in each case applies only to the act of circumvention. Since the trafficking of products or services to facilitate these circumventions is still prohibited, only a very technologically adept librarian or computer user is likely to benefit from these exemptions. Other exemptions, including exemptions for law enforcement, intelligence gathering, and encryption technology research are somewhat more meaningful, in that the exemptions include at least partial exceptions to both the anti-trafficking bans and the anti-circumvention prohibition.10
In addition to these exemptions, Congress also provided what it called a “fail-safe” mechanism: a rule-making proceeding under which the Librarian of Congress may exempt from the anti-circumvention ban a “particular class of copyrighted works” if he concludes that users are “adversely affected . . . in their ability to make noninfringing uses” of those works. This rule making is to occur every 3 years (after an initial 2-year period ending in 2000), and the resulting exemptions are effective for the succeeding 3-year period. 11 In the results of the first rule-making procedure, the Librarian explained in detail the rationale and procedure behind the rule making, and announced the two categories of works exempted for the following 3 years. Both were narrow categories; the first covered encrypted lists of websites blocked by commercial filtering software, while the second included digital works protected by access control mechanisms that either fail or become obsolete.12 In 2003 (in a much shorter report), the Librarian renewed the exemption related to website filtering software (although the exemption was slightly narrowed) and announced an exemption addressed to obsolete or malfunctioning access controls, this time limited to hardware locks, or “dongles.” Two completely new categories were also announced, one relating to computer programs and video games that are effectively locked to obsolete hardware, and the other covering “e-books” that completely disable features offered by e-book hardware or software to facilitate use by the blind or visually impaired.13
A few features of the rule-making procedure are worth noting. First, any resulting exemption must target a “particular class” of works, not a category of users or category of uses.14 In the latest rulemaking, the Librarian rejected several proposals because they failed to define a proper class. Rather, these proposals attempted to define a class by its use, such as “fair use works,” “per se educational fair use works,” or “any work to which the user had lawful initial access.”15 Second, the exemption applies only prospectively, and is only certain to last 3 years – an exemption might expire if evidence of an adverse effect of the DMCA on a particular category of works is not presented during each 3-year rule-making period.16 Finally, and perhaps most significantly, the exemption applies only to the anti-circumvention ban, not to the anti-trafficking bans. So, distribution of products or services to help a user access an exempted category of works is prohibited.17
Congress intended that the DMCA exceptions, and especially the rulemaking procedure for creating additional exemptions, provide a “fail-safe mechanism” to ensure that access to copyrighted works for non-infringing purposes, such as fair use, remains available.18 Given the extremely limited scope of the exceptions, as well as the fact that in most cases exceptions to the anti-trafficking bans are unavailable, the DMCA appears to provide scant comfort for those seeking to make fair use of digitally protected material.
Despite David Nimmer’s claim that “Congress evinced great solicitude for the role played by judicious application of the fair use doctrine,”19 the rulemaking procedure, in particular, turns the traditional approach to fair use on its head. Under the traditional approach to fair use, a user might make what he considers a fair use until a copyright owner successfully challenges him in court. This approach encourages flexibility and experimentation with new uses in a couple of ways. First, a use of copyrighted material in a manner that causes little or no financial harm to the copyright owner is likely to continue unabated, since the owner has little economic incentive to bring a costly lawsuit. Second, the fair use doctrine, and its statutory support in the Copyright Act of 1976,20 encourage flexibility: rather than treating exceptions to the exclusive rights of copyright owners as an exhaustive list, courts are required to analyze each case on an individual basis, weighing economic harm to the copyright holder against the public benefits of the new use.21 Finally, unlike the outcome of the DMCA’s rule-making procedure, once a particular use is determined by a court to be fair, it is presumptively fair; it is not subject to expiration every 3 years.
In contrast, under the DMCA circumvention for any purpose other than the narrowly defined exemptions is not only presumptively disallowed, but is explicitly illegal. A proponent of a new exemption bears the burden of showing actual adverse impact, not with respect to his ability to make fair use, but with his ability to access the material at all. To sustain this burden, he must show a “substantial adverse impact”; “mere inconveniences, or individual cases” will not suffice.22 Accordingly, the analysis of exemptions under the DMCA rule-making procedure is quite different from the individualized analysis available to a defendant under a judicial fair-use determination. As a result, the DMCA is likely to discourage experimentation, since the very first circumvention for an unlisted purpose is explicitly illegal, even if that purpose is later determined to warrant an exemption. Further, because even a granted exemption does not apply to the anti-trafficking bans, it also seems clear that new fair uses that depend on circumvention of digital protection measures are unlikely to be very useful to any except a very small number of particularly sophisticated users.
One consequence of the DMCA’s focus on access rather than fair use is that courts are likely to regard fair use analysis as largely irrelevant to interpreting the DMCA and its exemptions. The United States Court of Appeals for the Second Circuit took exactly this approach in Universal Studios, Inc. v. Corley, calling Corley’s fair use challenge “extravagant,” and noting that “the Supreme Court has never held that fair use is constitutionally required. . .”23 The court implied that so long as a user could make fair use of the material by some technique (in this case, dealing with digital video, perhaps by “pointing a camera, a camcorder, or a microphone at a monitor as it displays the DVD movie”) then fair use concerns were irrelevant to a DMCA claim.24
B. The EUCD
Unlike the DMCA, with its complex proscriptions and exhaustively detailed exceptions, the European Union Copyright Directive (the “EUCD”) addresses its anti-circumvention measures in just a few paragraphs.25 Like the DMCA, acts of circumvention must be prohibited:
Member States shall provide adequate legal protection against the circumvention of any effective technological measures, which the person concerned carries out in the knowledge, or with reasonable grounds to know, that he or she is pursuing that objective.26
The EUCD defines “effective technological measures” as any technology that “in the normal course of its operation” restricts acts unauthorized by the copyright holder.27
Similarly, the EUCD’s prohibition of trafficking in anti-circumvention devices is relatively brief:
Member States shall provide adequate legal protection against the manufacture, import, distribution, sale, rental, advertisement for sale or rental, or possession for commercial purposes of devices, products or components or the provision of services which:
(a) are promoted, advertised or marketed for the purposes of circumvention of, or
(b) have only a limited commercially significant purpose or use other than to circumvent, or
(c) are primarily designed, produced, adapted or performed for the purpose of enabling or facilitating the circumvention of,
any effective technological measures.28
One key difference between the anti-circumvention provisions of the EUCD and those of the DMCA is that the EUCD does not distinguish technologies that control access to copyrighted works from those that protect other rights of the copyright owner. In fact, the prohibited acts can presumably be any acts not authorized by the copyright owner, regardless of whether they relate to rights held by the copyright holder.29 Accordingly, only a single anti-trafficking provision is required – member states may prohibit even technologies that solely permit circumvention for non-infringing uses.
Like the DMCA, the EUCD contains a built-in “fail-safe” mechanism to mitigate abuse by overzealous copyright owners whose technology prevents the exercise of various exceptions to the copyright. Rather than mandating an administrative procedure for creating exceptions to the anti-circumvention ban, the EUCD encourages “voluntary measures” on the part of copyright holders, providing that in the absence of such voluntary measures, “Member States shall take appropriate measures to ensure that rightsholders make available . . . means of benefiting” from exceptions or limitations.30 Although the EUCD leaves the exact means for implementing this requirement to the individual states, this provision permits a state to mandate that a protection technology be modified to permit a copyright exception to be exercised by consumers.31
C. Reaction to the First Wave
Both the DMCA and the EUCD have provoked strong criticism. In the United States, the Electronic Frontier Foundation has documented a number of examples of over-reaching by copyright owners, as well as several cases where the DMCA appears to have chilled legitimate scientific activity, such as research in cryptographic techniques.32 In Europe, Bernt Hugenholtz has gone so far as to suggest that the EUCD might be invalid, since (in his view) it fails completely to achieve its stated goal of promoting competition, while undermining “essential user freedoms.”33
Criticism of the DMCA and EUCD largely emphasizes two objections: first, that these measures threaten free speech (and, especially in the United States, fair use), and second, that these measures chill competition and technological innovation. With their narrow focus on protection, the DMCA and EUCD tend to eliminate much of the “breathing room” traditionally provided under copyright law. This breathing room is critical to both artistic creativity and technological innovation, since creativity depends on a healthy, accessible supply of raw material from which to create new works. As we shall see, the second wave of digital copyright legislation poses an even greater threat to this supply.
THE SECOND WAVE
With the passage of the DMCA and the EUCD, copyright holders possess substantial new protections, against circumvention of copy protection and access-control schemes. But from the perspective of copyright holders, is this enough? Do the DMCA and the EUCD provide enough protection to stimulate the creation and dissemination of new digital works? Judging from recent legislative responses in both the United States and Europe, the answer appears to be no. In the United States, this response appeared in the proposed legislation known as the “INDUCE Act.”34 In Europe, the recently enacted Enforcement Directive35 likewise purports to fill critical gaps in protection of digital works.
A. The INDUCE Act
The “Inducing Infringement of Copyright Infringement Act” (the “INDUCE Act”) was introduced in Congress in 2004. Although the bill has apparently “died,”36 the proposed language provides clues as to persisting gaps in the protection of digital works, at least as perceived by some copyright owners, and clearly indicates the next battleground between proponents and opponents of enhanced protection for digital works.
According to at least one commentator, the INDUCE Act was intended to correct a federal court decision in MGM v. Grokster.37 In that case, the court refused to impose liability on the distributor of a peer-to-peer file-sharing program because liability for contributory copyright infringement requires that the defendant “[have] specific knowledge of infringement at a time at which the defendant contribute[s] to the infringement and fail[s] to act upon that information.”38 Against that backdrop, the goal of the INDUCE Act appears clear: to impose liability on the distributors of technology that facilitate copyright infringement, even in the absence of elements that might otherwise prove contributory infringement. While nominally focused only on extending liability for copyright infringement, a traditional and justifiable aim of copyright law, the INDUCE Act’s potential impact on technology extends beyond that of the DMCA. Under the INDUCE Act, developers of new technology could find themselves liable for infringing activities of users of their technology, even if the technology has beneficial non-infringing uses.
The INDUCE Act proposes that anyone who “intentionally induces” infringement of a copyright shall be civilly liable.39 “Induces” is defined as “aids, abets, induces, or procures” – a somewhat circular definition. The bill bases the standard for intent on the “reasonable person” – “[I]ntent may be shown by acts from which a reasonable person would find intent to induce infringement. . .” A key factor for this “reasonable person” to consider is “whether the activity relies on infringement for its commercial viability.”40 In a different version, the bill explains that intentional infringement does not require actual knowledge of infringement, or even an actual awareness that infringement is likely, rather the fact that a “reasonable person would expect” widespread violations is sufficient.41
This definition of intentional inducement creates a serious dilemma for developers of technology. Even if the technology in question has important non-infringing uses,42 the developer must determine up front whether the technology might be used for illicit purposes, and thus expose the developer to a finding (after the fact) that a “reasonable person” should have expected the illicit use.43
B. The Enforcement Directive
Enacted in April of 200444, the Enforcement Directive is generally targeted at enhancing the civil remedies available to injured copyright holders, rather than at expanding the scope of potential liability. The Enforcement Directive addresses three key areas: the persons entitled to seek relief, the scope of evidence that may be sought in a civil action, and the availability of extraordinary remedies, including preliminary injunctions, seizures, and mandatory recalls.
Like the EUCD, the Enforcement Directive justifies its provisions with a lengthy series of recitals. The baseline proposition is simple: “[W]ithout effective means of enforcing intellectual property rights, innovation and creativity are discouraged and investment diminished. . . [T]he means of enforcing intellectual property rights are of paramount importance. . .”45 Similarly: “The current disparities [in European Community law] also lead to a weakening of the substantive law on intellectual property and . . . a consequent reduction in investment in innovation and creativity.”46 Thus, the drafters of the Enforcement Directive assume that without an enhanced scheme for enforcing copyrights, the creative sector will produce less. The EUCD says nothing about whether too much protection could have an adverse impact on creativity and technological innovation.
The first problem addressed by the Directive is a standing issue: who may seek remedies for alleged infringement of intellectual property rights? In addition to the obvious parties, i.e. the holders of the rights, Article 4 adds several others: “all other persons authorised to use those rights” (i.e. licensees); “intellectual property collective rights-management bodies” (i.e. collecting societies); and “professional defence bodies.”47 Accordingly, individual authors can depend on other parties to enforce their rights; indeed, even a publisher can rely on collection societies or “professional defence bodies” to pursue legal remedies on its behalf.
Next, the Enforcement Directive mandates broad discovery provisions, extending to “banking, financial or commercial documents under the control of the opposing party.”48 Under the heading “Right of Information,” the Directive specifies that information related to the distribution of allegedly infringing material may also be subject to court-ordered production, including the names and addresses of each entity that may have handled the infringing material. This right to production of information is applicable against third parties, although the complaining party must demonstrate that the third party was involved with the infringing goods or services on “a commercial scale.” 49 However, a person who “was found to be providing on a commercial scale services used in infringing activities” may also be subject to court-ordered production;50 this clause would appear to apply to internet service providers.
Finally, the Enforcement Directive mandates that member countries make available a number of remedies in addition to damages, including preliminary injunctions,51 seizure of allegedly infringing goods,52 seizure of financial assets,53 recall of goods found to be infringing,54 and permanent injunctions.55 “Precautionary” measures (including preliminary injunctions and seizure of both allegedly infringing goods and financial assets) may be ordered on the basis of an ex parte proceeding.56 Coupled with the ability to subpoena information possessed by internet service providers and the right of collection societies to enforce their intellectual property rights, copyright holders appear to have available a broad set of tools to enforce their rights and prevent further harm to their interests. Indeed, the availability of preliminary remedies allows copyright holders to interrupt an allegedly infringing activity early and quickly, provided only that it is occurring on “a commercial scale.”