Apple Shows Us DRM's True Colors

Commentary by Richard Esguerra

At this week's Macworld Expo, Apple announced that by April, music from the iTunes Store will no longer be shackled by digital rights management (DRM). Finally, DRM is good and fully dead for digital music -- gone from CDs, gone from downloads, and largely dead for streaming.

Apple's announcement comes nearly a year after Amazon.com's DRM-free MP3 deals went live, demonstrating that the record labels were holding the DRM card until they could wring business concessions from Apple (in the form of variable pricing). This just underscores that DRM is not really about stopping piracy, but rather about leverage over authorized distributors.

In fact, an inventory of Apple's remaining DRM armory makes it vividly clear that DRM (backed by the DMCA) is almost always about eliminating legitimate competition, hobbling interoperability, and creating de facto technology monopolies:

• Apple uses DRM to lock iPhones to AT&T and Apple's iTunes App Store;
• Apple uses DRM to prevent recent iPods from syncing with software other than iTunes (Apple claims it violates the DMCA to reverse engineer the hashing mechanism);
• Apple claims that it uses DRM to prevent OS X from loading on generic Intel machines;
• Apple's new Macbooks feature DRM-laden video ports that only output certain content to "approved" displays;.
• Apple requires iPod accessory vendors to use a licensed "authentication chip" in order to make accessories to access certain features on newer iPods and iPhones;
• The iTunes Store will still lock down movies and TV programs with FairPlay DRM;
• Audiobook files purchased through the iTunes Store will still be crippled by Audible's DRM restrictions.

The majority of these DRM efforts do not have even an arguable relation to "piracy." And even where things like movies and audiobooks are concerned, DRM is not only futile, but will likely be counter-productive, making the "legitimate" alternative less attractive than the Darknet options.

This week's announcement is another step in the meltdown of DRM for music. But it is also a stark reminder that Apple remains at the forefront of employing DRM to shove competitors to the fringes and wrest control out of the hands of users.

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UMG v. Veoh: Another Victory for Web 2.0

Legal Analysis by Fred von Lohmann

Over the holidays, video hosting site Veoh won another victory under the DMCA safe harbors, this time against Universal Music Group (UMG). The ruling should put to rest the argument that transcoding and other activities necessary for making content accessible on the web are not covered by the DMCA's Section 512(c) safe harbor for storing material on behalf of users (i.e., hosting user-generated content). This is good news not just for Veoh, but also for YouTube and every other site that hosts material uploaded by users.

Like many other companies that host content on behalf of users, Veoh has been bedeviled by copyright lawsuits. The copyright owners make the same argument in each of these suits: the hosting service should be liable for every infringing bit uploaded by naughty users and responsible for the full cost of policing for infringement. Fortunately, Congress enacted the DMCA's safe harbor provisions back in 1998 to protect service providers from exactly these risks, offering immunity from copyright damages to those who implement a notice-and-takedown system. In August 2008, Veoh won a big victory against adult video purveyor Io Group, relying on these provisions.

Veoh's latest victory was against UMG, which sued Veoh because Veoh users allegedly uploaded UMG music videos without authorization. The issue before the court was whether the DMCA safe harbor for hosting only covers the actual act of storing bits on a server, or whether it also covers related activities, such as:

1. automatically transcoding video files uploaded by users into Flash format;
2. automatically creating copies of uploaded video files that are comprised of smaller “chunks” of the original file;
3. allowing users to access uploaded videos via streaming;
4. allowing users to access uploaded videos by downloading whole video files.

Relying on the statutory language, as well as the legislative history, the court concluded that all of these activities are covered by the DMCA Section 512(c) safe harbor. Lots of online service providers will greet this ruling with relief. If the court had accepted UMG's arguments, every web host would lose the safe harbor as soon as it made web pages available to the public. The ruling should also help YouTube in its ongoing battle with Viacom, which also turns on the continuing strength of the DMCA safe harbors.

But the Veoh ruling also points out a surprising irony: while YouTube and Viacom are fighting their interminable litigation trench war, many interesting DMCA legal questions are being resolved in smaller, faster-moving cases involving companies like Veoh. At this rate, the highly-anticipated Viacom v. YouTube lawsuit may end up a footnote in the legal fights that define the rules governing user-generated content.

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Is it Patentable?

Legal Analysis by Michael Kwun

Two months ago, in In re Bilski, the Federal Circuit rejected the notion that anything that produces a "useful, concrete, and tangible result" is potentially patentable. Instead, to be patent-eligible, an idea must be "tied to a particular machine or apparatus," or it must "transform a particular article into a different state or thing." (To qualify for a patent, it also has to meet various other requirements, such as being novel.)

As to transformation, the court noted that not just any transformation will do. The transformation "must be central to the purpose of the claimed process," and the "articles" transformed must either be "physical objects or substances" or "representative of physical objects or substances."

Today, in a one-paragraph decision in Classen Immunotherapies, Inc. v. Biogen IDEC, the Federal Circuit put those words into practice:

In light of our decision in In re Bilski, 545 F.3d 943 (Fed. Cir. 2008) (en banc), we affirm the district court’s grant of summary judgment that these claims are invalid under 35 U.S.C. § 101. Dr. Classen’s claims are neither "tied to a particular machine or apparatus" nor do they "transform[] a particular article into a different state or thing." Bilski, 545 F.3d at 954. Therefore we affirm.

Here is a claim from one of the patents that was at issue:

1. A method of determining whether an immunization schedule affects the incidence or severity of a chronic immune-mediated disorder in a treatment group of mammals, relative to a control group of mammals, which comprises:
    
• immunizing mammals in the treatment group of mammals with one or more doses of one or more immunogens, according to said immunization schedule, and
• comparing the incidence, prevalence, frequency or severity of said chronic immune-mediated disorder or the level of a marker of such a disorder, in the treatment group, with that in the control group.

The claimed method is not tied to a particular machine or apparatus, but surely "immunizing mammals" transforms particular articles. Why, then, isn't this patent eligible?

The key is that the immunizing of the mammals is not "central to the purpose of the claimed process." While of course the mammals must be immunized in order for someone to ascertain whether the immunization schedule used is effective, that immunizing isn't the point of the claimed invention. Rather, the invention is directed to analyzing the results of the immunizing. The immunizing itself is (to borrow more language from Bilski) "insignificant extra-solution activity" or merely a "data-gathering step" that cannot convert the claim into patentable subject matter.

(As an aside, this decision was issued as a "non-precedential" ruling, which means the judges did not think it added significantly to the body of law. The Classen patents reminded many patent practitioners of the patent in Lab. Corp. of Am. v. Metabolite Labs., Inc. [pdf], the 2006 case where the U.S. Supreme Court agreed to consider the scope of patent eligibility, but then dismissed for technical reasons. Perhaps the Classen judges concluded that even if the legal issue was significant in 2006, post-Bilski it was an easy call.)

It's good to see that the Federal Circuit is taking steps to ensure that the Bilski machine-or-transformation test has teeth, and cannot be avoided by mere artful drafting.

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RIAA v. The People Turns from Lawsuits to 3 Strikes

Commentary by Fred von Lohmann

The lawsuits are ending. It's about time.

According to the Wall Street Journal, the recording industry has halted its mass litigation campaign against music fans for Internet file-sharing, a campaign that has targeted more than 35,000 Americans over more than 5 years (for a complete history of the lawsuits, see our RIAA v. The People white paper).

Ending the lawsuit campaign is long overdue. The campaign has been, by any measure, a failure. The lawsuits have not reduced unauthorized file-sharing and have not gotten a single artist paid.

But the news today is not all good. First, the recording industry will continue to press the thousands of pending lawsuits, presumably pushing for the usual four figure settlements. How is it going to feel to be the last college student to settle in a fight that the recording industry has now admitted isn't worth the candle?

More troubling is the news that the RIAA is pressuring U.S. ISPs into adopting some sort of "3 strikes" approach, similar to those it's been seeking in Europe (see, e.g., the French "digital guillotine" proposal). According the the Wall Street Journal article:

[T]he Recording Industry Association of America said it plans to try an approach that relies on the cooperation of Internet-service providers. The trade group said it has hashed out preliminary agreements with major ISPs under which it will send an email to the provider when it finds a provider's customers making music available online for others to take. Depending on the agreement, the ISP will either forward the note to customers, or alert customers that they appear to be uploading music illegally, and ask them to stop. If the customers continue the file-sharing, they will get one or two more emails, perhaps accompanied by slower service from the provider. Finally, the ISP may cut off their access altogether.

This means more music fans are going to be harassed by the music industry. As Wired's Elliot Van Buskirk points out:

Due process has been prohibitively expensive for the RIAA. The organization has long sought a more efficient way to exert pressure on suspected file sharers, and these new agreements will grant it that wish, saving it money and allowing it to pressure far more suspected file sharers, all without filing a single subpoena.

The recording industry's efforts to push "3 strikes" legislation in Europe have been definitively rejected by the European Parliament and by Sweden. While UK ISPs have agreed to send notices for rightsholders, they've stopped short of automatic Internet disconnection. This leaves France as the sole European aberration.

The problem is the lack of due process for those accused. In a world where hundreds of thousands (or millions) of copyright infringement allegations are automatically generated and delivered to ISPs, mistakes are going to be made (just look at the innocents, 1, 2, 3, 4, who were swept into the RIAA litigation machine). Anyone who has ever had to fight to correct an error on their credit reports will be able to imagine the trouble we're in for.

And being added to a nation-wide "Internet blacklist"—like that in the pending French legislation—is a disproportionate punishment, even for those who are "caught" file sharing. By conservative estimates, 1 in 5 American Internet users is an active file-sharer. Does the recording industry really think that banning 20% of Americans from the Internet is the right answer? Do ISPs? Or will the millions of ISP "warnings" just give rise to more encrypted and anonymized file-sharing mechanisms, all the while getting no artists paid?

We still need a better way forward, that legalizes file-sharing and gets artists paid. So, while today's news is long-overdue, the more interesting development is the recording industry's recent willingness to discuss collective licensing with universities.

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MPAA Asks Obama for More Copyright Surveillance of the Internet

Legislative Analysis by Tim Jones

As part of their commitment to transparent and open government, the Obama Transition Team is posting the lobbying agendas of the groups it meets with for public review and comment. One of the more interesting documents to be found there is the Motion Picture Association of America's "international trade" agenda.

Some of the MPAA's agenda is reasonable, such as cracking down on commercial optical disc piracy. But much of it, if adopted, would result in a substantially less free and safe internet, at little or no actual benefit to the artists and workers the MPAA claims to represent.

Of course, this may not be immediately clear when reading the document, since it's all couched in DC lobbyist-speak. Here, then, is a guide to understanding what's really being talked about.

First:

"Achieving inter-industry cooperation in the fight against online piracy, including through automated detection and removal of infringing content is imperative to curb the theft of online content...

This kind of automated-detection technology has long been a favorite fantasy of the MPAA and affiliates. They've pushed for it on US campuses, in US states, in US trade law [PDF], and in Europe, so it's hardly surprising to see them pushing for country-wide requirements at the federal level.

The MPAA's faith in "filtering" is pure magical thinking. It presupposes invading the privacy of innocents and pirates alike by monitoring every packet on the Internet (which is bad enough when the NSA does it). And it ignores the reality of strong encryption, which will utterly defeat network filtering techniques (thus necessitating more intrusive alternatives — how about a copyright surveillance rootkit on every PC?). Sacrificing our privacy for the pipe-dreams of one industry is a bad idea.

These reasons and more were outlined by EFF in a 2005 white paper, and again last January in a memo to European lawmakers [PDF].

Next up:

"MPAA views recent efforts by the Governments of France and the United Kingdom to protect content on-line and facilitate inter-industry cooperation as useful models.

Here, the MPAA is advocating for a number of things, the most problematic of which is a "three strikes" internet termination policy. This would require ISPs to terminate customers' internet accounts upon a rights-holder's repeat allegation of copyright ingfringement. This could be done potentially without any due process or judicial review. A three-strikes policy was recently adopted by the French Senate, and may become the law if adopted by the French National Assembly next year.

Because three-strikes policies do not guarantee due process or judicial oversight of whether the accusations of copyright infringement are valid, they effectively grant the content industry the ability to exile any individual they want from the internet. Lest we forget, there is a history of innocents getting caught up in these anti-piracy dragnets. (Copyfighter Cory Doctorow has wondered what would happen if the MPAA's erroneous notices were subject to a similar three-strikes law.)

Thankfully, members of the European Parliament vehemently rejected these measures, resolving that "The cut of Internet access is a disproportionate measure regarding the objectives. It is a sanction with powerful effects, which could have profound repercussions in a society where access to the Internet is an imperative right for social inclusion." Let's hope the US government's decisions on this are as wise.

EFF outlined these concerns and more in our September 2008 comments to the US Trade Representative [PDF].

And, finally:

"MPAA has identified the following countries for priority trade policy attention in 2009: Canada, China, India, Mexico, Russia and Spain.

Translation: Not satisfied with wrecking the internet for US citizens alone, the MPAA would like the US government to pressure foreign governments to adopt the same harmful measures. This is made explicit by a look at, for instance, the International Intellectual Property Association's 2008 one-sheets on Canada [PDF] and Spain [PDF]: The MPAA wants these governments to institute mandatory internet filtering and three-strikes laws. Canada is being singled out by the MPAA because of its sensible rejection of the Canadian version of the US's deeply flawed Digital Millenium Copyright Act. In Spain, the MPAA is frustrated with rulings in 2006 that failed to punish Spanish citizens sufficiently harshly for file-sharing.

This week in the San Jose Mercury News, Ed Black, CEO of the Computer & Communications Industry Association, described how adoption of the MPAA's international trade demands would deeply set back US innovation and foreign policy.

---

How the Obama administration will react to these demands remains to be seen. The adoption of a Creative Commons license for Change.gov content indicates that there just might at long last be a seat at the table in the White House for smart thinking on copyright issues. Hopefully the Obama Administration will prove strong enough to stand up to the MPAA's lobbying, and instead institute positive reforms of US copyright law.

If you'd like to share your thoughts on this matter with the Obama Transition Team, the MPAA's agenda is open to public review and comment on Change.gov.

Updated Dec 15: The original post mistakenly indicated that France's three-strikes law had already gone into effect.

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Labels Open to Collective Licensing on Campus

Commentary by Fred von Lohmann

Finally. The major record labels are coming around to voluntary collective licensing, as we've been urging (and predicting) since 2003. Last week, TechDirt posted a set of leaked slides suggesting that Warner Music Group has opened a discussion with several major U.S. universities about creating a collective licensing solution for on-campus music file sharing. Wired got more details, TechDirt hates it, Ars Technica is cautiously optimistic, and Portfolio urges more transparency.

Here's what we know so far. Apparently Warner Music opened this discussion with universities some months ago. There is no concrete plan yet, but EMI and Sony-BMG are apparently open to the general idea (leaving Universal Music as the hold-out, which is no surprise, given their reputation as the most backward of the major labels). It's not clear whether or to what extent independent labels have been involved. And the project has a name—Choruss. The chief negotiator for Warner appears to be Jim Griffin, who is a long-time advocate of collective licensing (and member of EFF's advisory board).

Universities would pay Choruss, a new nonprofit collecting society, in exchange for an end to the "John Doe" subpoenas seeking student identities, DMCA notices, lawsuits against students, and legislation mandating copyright surveillance of campus networks. Students who pay will be free to download whatever they like, using whatever software they like, in whatever format they like (and presumably keep it all when they graduate, since there would be no way to claw back DRM-free MP3s). The monies collected would be divided up among artists and rightsholders, based on relative popularity. The rest of the details are still to be determined, including whether it would be a mandatory fee for all students, or an opt-in fee (complete with continued lawsuits for those who fail to pay?). It's also not clear what the fee would be, although those familiar with the talks suggest less than $5 per student per month.

EFF has been pushing for a voluntary collective licensing solution for P2P music file sharing for over five years. And we've noted as well that this approach makes much more sense for universities than the current "sue - surveil - expel" approach urged by the recording industry. So the news that Warner Music has begun discussing this approach is music to our ears.

We have written extensively (1, 2, 3, 4, 5) on why we think this kind of collective licensing approach makes sense. This could be the beginning of a big win for everyone. Fans come in from the copyright cold; artists and rightsholders get paid; the music industry stops the litigation war machine. And it will unleash a new tide of innovative start-ups (who no longer need licenses) to help us find, manage, and get the most from our unlimited libraries of music.

It's not just the music industry and music fans who will be better off. Everyone who cares about creativity and innovation should be eager for a truce between the RIAA and the Internet. The 10 year trench war between the the major record labels and digital technology continues to jeopardize the free and open Internet. In addition to suing more than 30,000 people (including innocents caught in the net) and distorting copyright law in their efforts to kill off P2P software makers, the industry continues to push for ubiquitous network-based copyright surveillance, an idea that already has traction with AT&T and policy-makers in several European countries. Across the world, the push is on now for "3 strikes" policies that will cut people off from the Internet on the basis of unproven infringement allegations. A collective licensing solution could seriously undercut the principal arguments for these policies.

So we are cautiously optimistic. There are lots of hard issues that will need to be addressed. How will a collective licensing approach protect user privacy? What will universities do to stop "leakage" to ISPs whose users have not opted in? Will independent artists get a fair shake from Choruss? But it sounds like the labels are, for the first time, interested in having the right discussion.

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Remixers, Unlockers, Jailbreakers, Oh My!

Legal Analysis by Fred von Lohmann

Yesterday, EFF filed petitions (1, 2) with the Copyright Office seeking DMCA exemptions for three categories of activities that do not violate copyright laws, but that are still jeopardized by the DMCA's ban on bypassing technical protection measures used to control access to copyrighted works (i.e, DRM). The three exemptions are for:

• Noncommercial video creators (like YouTubers and vidders) who rip DVDs in order to use clips for fair use remixes;
• Cell phone owners who want to unlock their phones to use them on cellular networks of their choosing;
• Cell phone owners who want to "jailbreak" their phones in order to use applications of their choosing (e.g., iPhone owners who want apps from sources other than the iTunes App Store).

The exemption for remix video creators is necessary to protect fair use in a digital world where visual literacy (what Larry Lessig calls RW culture) is increasingly important. Today, if you rip a DVD, the MPAA takes the position that you've broken the law, even if you are making a video that comments on the latent racism in Disney films or the sexualized violence in 300. This is what free speech looks like in the 21st century, and a DMCA exemption is necessary if we want to avoid driving millions of amateur creators into the copyright underground.

The cell phone exemptions (unlocking and jailbreaking) are necessary to protect your "freedom to tinker" with products you own. Cellular carriers lock their phones not to protect their copyrights, but rather to discourage customers from switching carriers. This is not only anti-competitive, but puts millions of used cell phones into landfills each year. More recently, cell phone makers have started locking phones to a single source for applications -- which is why more than 350,000 iPhone owners have "jailbroken" their iPhones in order to get the apps they want, instead of just the ones Apple is willing to let them have.

Others are seeking exemptions for computer security researchers who want to investigate DRM on videogames (SecuROM, we're looking at you); documentarians, film professors, and media literacy educators who need to take clips from DVD; and consumers who have been left high and dry by vendors who retired their DRM authentication servers (e.g., Walmart, Yahoo, Microsoft). All of the proposals have been posted on the Copyright Office website. Comments supporting or opposing the proposed exemptions are due by Feb. 2, 2009. Hearings will follow in the Spring, and the Copyright Office will announce its final determinations in October 2009, as the last set of exemptions expire.

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Apple Confuses Speech with a DMCA Violation

Legal Analysis by Fred von Lohmann

Slashdot reports that Apple has sent a "cease and desist" email to bluwiki, a public wiki site, demanding the removal of postings there by those who are trying to figure out how to write software that can sync media to the latest versions of the iPhone and iPod Touch.

Short answer: Apple doesn't have a DMCA leg to stand on.

At the heart of this is the iTunesDB file, the index that the iPod operating system uses to keep track of what playable media is on the device. Unless an application can write new data to this file, it won't be able to "sync" music or other content to an iPod. The iTunesDB file has never been encrypted and is relatively well understood. In iPods released after September 2007, however, Apple introduced a checksum hash to make it difficult for applications other than iTunes to write new data to the iTunesDB file, thereby hindering an iPod owner's ability to use alternative software (like gtkpod, Winamp, or Songbird) to manage the files on her iPod.

The original checksum hash was reverse engineered in less than 36 hours. Apple, however, has recently updated the hashing mechanism in the latest versions of the iPhone and iPod Touch. Those interested in using software other than iTunes to sync files to these new iPods will need to reverse engineer the hash again. Discussions about that process were posted to the public bluwiki site. Although it doesn't appear that the authors had yet figured out the new iTunesDB hashing mechanism, Apple's lawyers nevertheless sent a nastygram to the wiki administrator, who took down the pages in question.

Here are just a few of the fatal flaws in Apple's DMCA argument.

Where's the "technology, product, service, device or device"?

The DMCA provides that:

No person shall manufacture, import, offer to the public, provide, or otherwise traffic in any technology, product, service, device, component, or part thereof, that ... is primarily designed or produced for the purpose of circumventing protection afforded by a technological measure that effectively protects a right of a copyright owner....

The information posted on the wiki appeared to be text, along with some illustrative code. Nothing that I saw on the pages I was able to review would appear to constitute a "technology, product, service, device, component, or part thereof." In fact, the authors had apparently not yet succeeded in their reverse engineering efforts and were simply discussing Apple's code obfuscation techniques. If Apple is suggesting that the DMCA reaches people merely talking about technical protection measures, then they've got a serious First Amendment problem.

Who owns the copyrighted work?

The iTunesDB file is not authored by Apple, nor does it appear that Apple has any copyright interest in it. Instead, the iTunesDB file on every iPod is the result of the individual choices each iPod owner makes in deciding what music and other media to put on her iPod. In other words, the iTunesDB file is to iTunes as this blog post is to Safari -- when I use Safari to produce a new work, I own the copyright in the resulting file, not Apple.

So if the iTunesDB file is the copyrighted work being protected here, then the iPod owner has every right to circumvent the protection measure, since they own the copyright to the iTunesDB file on their own iPod.

Where's the access control?

The contents of the iTunesDB file is not protected at all -- any application can read it. So, as a result, the obfuscation and hashing mechanisms used by Apple to prevent people from writing to the file cannot qualify as "access controls" protected by Section 1201(a) of the DMCA.

Apple might argue that the checksum hash prevents people from preparing derivative works, which means that it's a "technological measure that effectively protects the right of a copyright owner" (as noted above, however, it's the user, not Apple, who owns any copyright in the iTunesDB file). The DMCA, however, does not prohibit circumvention of technical measures that are not access controls, although it does restrict trafficking in tools that circumvent these measures. But, as mentioned above, there are no "tools" on the bluwiki pages.

What about the reverse engineering exemption?

Apple's lawyers also appear to have overlooked the DMCA's reverse engineering exception, 17 U.S.C. 1201(f), which permits individuals to circumvent technological measures and distribute circumvention tools "for the purpose of enabling interoperability of an independently created computer program with other programs, if such means are necessary to achieve such interoperability, to the extent that doing so does not constitute [copyright] infringement."

Enabling iPods to interoperate with "independently created computer programs" (like gtkpod, Winamp, and Songbird) is precisely what the reverse engineering exception was intended to protect.

Where's the nexus to infringement?

Finally, Apple's DMCA theory fails because any "circumvention" that might be involved here has no connection to any potential copyright infringement. Two decisions by federal courts of appeal (1, 2) have held that without a nexus to potential infringement, there is no violation of the DMCA. And here, it's hard to see how reverse engineering the iTunesDB checksum hash can lead to any infringement of the iTunesDB file -- after all, the reverse engineers presumably aren't interested in making piratical copies of the iTunesDB file. Instead, they just want to sync their iPhones and iPods using software other than iTunes. No infringement there.

Of course, without more than the bare "cease and desist" emails sent by Apple's lawyers to bluwiki, we can't know for certain what other DMCA arguments they may have had in mind. But I certainly can't see any DMCA violation here based on Apple's nastygrams thus far.

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Apple Downgrades Macbook Video with DRM

Commentary by Fred von Lohmann

Once again, thanks to DRM, a new product ends up less useful than the one it replaces. This time, it's the new family of Apple Macbook laptop computers that gets the downgrade.

When it launched the new Macbooks, Apple announced that they would sport a new digital video output connector, known as Mini DisplayPort. What Apple failed to mention, however, is that those connectors allow movies studios to force the computer to authenticate any external monitor before allowing playback of programs purchased or rented from the iTunes Store (Microsoft's Windows Vista does something similar). In other words, the HDTV monitor or projector that worked for you yesterday, won't work with your new computer tomorrow if Hollywood has embedded a flag in the iTunes content you paid for.

This is a remarkably short-sighted move for both Apple and Hollywood. This punishes existing iTunes customers: several have reported that iTunes purchases that played on external monitors on their old Macbooks no longer will play on their new Macbooks. In other words, thanks to the Macbook "upgrade," Apple just "downgraded" everyone's previous investment in iTunes content (if we've told you once, we've told you a dozen times -- when you buy DRMd content, the vendor can snatch your investment from you at any time).

And it's still not clear how bad this will be for purchasers of new Macbooks -- if Apple has deployed DPCP content protection on its DisplayPort implementation, there are virtually no display devices that support this new-fangled lockdown standard (it's not clear from news reports whether the Macbook DisplayPort will work with HDCP-compatible display devices over DVI or HDMI connectors).

As for the movie studios, this gives legitimate customers one more compelling reason to avoid "legit" sources of content in favor of downloading from The Pirate Bay or ripping DVDs using Handbrake. So this is just another example of the way in which the MPAA companies use DRM not to stop piracy (since this will, if anything, encourage people to opt for the Darknet), but rather to control those who make devices that play movies.

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Google is Done Paying Silicon Valley's Legal Bills

Commentary by Fred von Lohmann

[I wrote the following op-ed, which appeared in the Nov. 14 issue of The Recorder. Because that publication's website is not publicly available, I'm posting a copy here, with their permission.]

For most of the decade, Silicon Valley technology startups have assumed that Google would pay their legal bills. Not literally, mind you, but rather by taking on the big, high-profile cases about fair use, interoperability, and other digital intellectual property issues that would set precedents that all disruptive innovators could rely on.

Well, Google just put the Valley on notice that the free ride is over, which means more legal burdens for smaller technology companies that previously depended on Google clearing a path for them.

Late last month, Google announced a settlement in its lawsuit with book publishers and authors over its Google Book Search offering. At the heart of the dispute is the question of whether scanning copyrighted books in order to index them violates copyright law, as the publishers argued, or is permissible as a fair use, as Google argued. If approved by the court, the $125 million settlement would buy Google — and only Google — permission not just to scan books for indexing purposes, but also to expand Book Search to provide more access to the scanned books.

The Book Search case is just one of a series of high-stakes lawsuits that Google has taken up in the name of the disruptive innovation that fuels the Internet economy. Others include the billion-dollar suit brought by Viacom over copyrighted video clips appearing on YouTube, as well as cases brought by trademark owners attacking Google's right to sell trademarks as keyword triggers for those "sponsored links" that appear when you use Google's search engine. Google has also fought copyright owners to defend its search engine, news aggregation, image search and Web caching activities.

Google, assisted by its expensive, top-drawer legal team, has a track record of winning these precedent-setting Internet cases. And by winning, Google sets a precedent that other innovators can rely on, as well. In essence, Google's legal investments have paid dividends for the entire Internet innovation economy.

Until now. By settling rather than taking the case all the way (many copyright experts thought Google had a good chance of winning), Google has solved its own copyright problem — but not anyone else's. Without a legal precedent about the copyright status of book scanning, future innovators are left to defend their own copyright lawsuits. In essence, Google has left its former copyright adversaries to maul any competitors that want to follow its lead.

Google will doubtless be considering the same endgame for the Viacom lawsuit against YouTube. If Google can strike a settlement with a large slice of the aggrieved copyright owners, then it solves the copyright problem for itself, while leaving it as a barrier to entry for YouTube's competitors.

But when innovators like Google cut individual deals, it weakens the Silicon Valley innovation ecology for everyone, because it leaves the smaller companies to carry on the fight against well-endowed opponents. Those kinds of cases threaten to yield bad legal precedents that tilt the rules against disruptive innovation generally.

For better or worse, it looks like tomorrow's cutting-edge Internet law precedents are going to be left to smaller companies to set. That means smaller startups (and their venture capital backers) need to start planning strategically to pick up the slack left by Google's gradual retreat from the field of battle. To put it bluntly, they need to set aside real money for litigation and find ways to cooperatively invest in the legal precedents that all of them collectively need.

Reproduced with permission from the Nov. 14, 2008 edition of The Recorder, copyright 2008 ALM Properties. Further reproduction without permission prohibited without permission of ALM Properties.

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