The advent of the Internet and other digital distribution technology dramatically changed the realm of entertainment. Consumers can now receive, share, copy, and distribute digital files of motion pictures, music, and other entertainment content, and they can do so instantaneously, across the world, and with near-perfect duplication. While consumers may feel empowered, those within the entertainment industry fear losing control over their intellectual property rights. Some in the industry hope that the Digital Millennium Copyright Act (DMCA) will be the magic weapon to protect their treasures.
In 1998, the U.S. Congress enacted the DMCA to address and strengthen copyright protection in the digital age. At first, much attention was focused on the DMCA's defensive shield. This portion of the law includes safe harbor provisions that immunize online service providers from copyright infringement for certain passive acts (such as an Internet service provider's hosting a Web site that displays an infringing photograph).1
More recently, the DMCA's offensive sword--its anticircumvention provisions--has seized the spotlight. These provisions make it unlawful to bypass or disable technological measures designed to impede unauthorized access to, or the copying of, a copyrighted work. The provisions also prohibit trafficking in devices or technology designed to circumvent protections against access and copying. By making these activities illegal, the DMCA empowers copyright owners to protect content with encryption codes, passwords, or other digital walls. The prohibitions against circumvention conduct and trafficking are often referred to as the anticircumvention provisions of the DMCA.
The anticircumvention provisions are far-reaching. They affect any product that can be distributed digitally, such as films, music CDs, e-books, and video games. Indeed, even intellectual property owners outside the entertainment realm are wielding the DMCA sword. In the past year, manufacturers have used the anticircumvention law to protect encryption systems for products ranging from printer toner cartridges to garage door openers.
Some have lauded the anticircumvention provisions as a key weapon in the war on digital piracy. Others have reviled them for stifling free speech, obstructing innovation, and thwarting competition. As the debate continues, the DMCA will profoundly affect the entertainment and intellectual property landscape, especially in California, where many legal battles in the digital wars are fought.
The anticircumvention provisions are contained in 17 USC Section 1201, subsections (a) and (b).2 Section 1201(a) focuses on the circumvention of technologies designed to prevent unauthorized access to a copyrighted work.3 It has two components. First, Section 1201(a)(1) prohibits the conduct of circumventing "a technological measure that effectively controls access" to a work. Specifically, it is unlawful to descramble a scrambled work, decrypt an encrypted work, or otherwise avoid, bypass, remove, deactivate, or impair a technological protection.4 Congress analogized these acts as the electronic equivalent of "breaking into a locked room in order to obtain a copy of a book."5
However, Section 1201(a)(1) does not apply to the subsequent actions of a person who has already obtained lawful access to a copyrighted work. In its report discussing these provisions, Congress explained its intention that a person who has authorized access would be permitted to circumvent other technological measures designed to protect the work (such as those designed to prohibit copying or distribution of the work).6 Nevertheless, the traditional defenses to copyright infringement, including fair use, remain fully applicable.7 Thus a person cannot circumvent a protection to gain unauthorized access to a work but can circumvent other protections to make fair use of a work that he or she has lawfully acquired.8
Second, Section 1201(a)(2) prohibits trafficking in devices with the capability to circumvent access controls. "Trafficking" is defined to include manufacturing, importing, offering to the public, or providing a circumvention device.9A device can violate the antitrafficking provisions if it: 1) is primarily designed to circumvent protective measures, 2) has only limited commercially significant purposes other than circumvention, or 3) is marketed for use in circumvention.10
Section 1201(b) applies when a consumer already has obtained authorized access to a work but the copyright owner has put in place technological measures to prevent copying or other acts that infringe a copyright.11 (In contrast, Section 1201(a) applies to unauthorized access to a work). This provision prohibits trafficking in devices to circumvent controls against copying or other violations of a copyright,12 notwithstanding whether consumers of the copyrighted work have authorized access to it.
For example, in applying Section 1201 to circumstances involving a circumvention device that breaks DVD encryption codes and permits copying of DVDs, a company that manufactures and sells the device would violate the trafficking provisions of Section 1201(b) (and possibly also Section 1201(a)(2), depending on what the device does). However, if a consumer uses that device to copy a DVD, that conduct is lawful if: 1) the consumer lawfully gained access to the DVD (such as by purchasing it at a retail store), and 2) the consumer pleads and proves a traditional infringement defense (such as a defense of fair use based on making one copy for personal use).
To address fears that the DMCA would stifle innovation and competition, Congress included several exceptions to the anticircumvention provisions. The most notable exception is for certain types of reverse engineering. Individuals may use circumvention technology "for the sole purpose" of trying to achieve "interoperability" between computer programs through reverse engineering involving, for example, the creation of computer programs that are compatible with a dominant software program.13 Congress also exempted encryption research aimed at identifying flaws in encryption technology if the research is conducted to advance the state of knowledge in the field.14
In providing civil remedies for an anticircumvention violation, the DMCA authorizes a copyright owner to receive either actual or statutory damages--but not both. Statutory damages are $200 to $2,500 per violation, which are considerably less than those for traditional copyright infringement. Copyright infringement yields statutory damages up to $30,000 and up to $150,000 with proof of willfulness.15 Like damages for a traditional copyright claim, damages under the DMCA can be reduced with a showing of innocent intent.16 Unlike traditional copyright damages, DMCA damages are not enhanced with proof of willfulness,17 but they can be tripled for a repeat offense within three years.18
The anticircumvention provisions do not replace the traditional claim for copyright infringement; they are additions to a copyright owner's arsenal. Consider a situation in which a counterfeiter cracks the code for a copy-protected music CD in order to copy it and sell counterfeits. The record company may sue for infringement of its recording copyrights and also, under the DMCA, for circumventing the encryption code. In fact, the anticircumvention provisions can be more powerful than an ordinary copyright claim because they authorize preemptive action. Instead of waiting until after infringement occurs to sue, copyright holders can implement and legally enforce mechanisms to prevent infringement before it happens.
Adding significant implications to the power of the DMCA is the fact that a party also can be criminally liable under the act. The standard of proof for a criminal charge is higher than for a civil claim: The violation must be both willful and "for purposes of commercial advantage or private financial gain."19 However, the penalties are also higher. A first offense carries a fine of up to $500,000 and imprisonment for up to 5 years. For repeat offenders, the penalties increase to a potential $1 million fine and up to 10 years' imprisonment.20
Critics have mounted three main constitutional challenges to the anticircumvention provisions. First, opponents charge the DMCA violates the U.S. Constitution's copyright clause, which gives Congress the authority to grant copyrights for a "limited time." They contend the DMCA allows copyright holders to forever lock up works (even those in the public domain) with technological protection measures. Second, computer programmers and hackers who crack encryption codes claim their code-cracking software is protected speech under the First Amendment. Third, critics argue that the DMCA eliminates the fair use of copyrighted materials. For example, some have charged that copy-protected music CDs will curtail the ability of consumers to make personal copies of the CDs they have purchased. To date, the courts have rejected all of these constitutional challenges.21
Civil and Criminal Actions under the DMCA
Just a year after the DMCA was enacted, RealNetworks, Inc. became the first entertainment company to file an anticircumvention action when it sued Streambox, Inc. over streaming technology.22 RealNetworks offers technology for streaming audio and video content over the Internet. Streaming content cannot be downloaded to the end user's computer, which gives the publisher of the content control over the distribution of the content. For example, after listening to a song via a streaming digital file, a user cannot save a copy for later listening or sharing.
Copyright owners can encode their content into RealNetworks' RealMedia format. If the copyright owner distributes files using RealNetworks' RealServer software, as opposed to simply posting the content on the owner's Web site, the end user can play the audio or video only with RealPlayer, a software program that resides on the end user's computer. However, with a feature called Copy Switch, copyright owners can allow consumers to download content files for future use. These mechanisms allow entertainment companies to control how consumers use and pay for RealMedia files.
Streambox provided two software programs that disabled the streaming protections of RealNetworks. First, Streambox VCR disabled Copy Switch and allowed users to download RealMedia files. The second, Streambox Ripper, allowed users to convert already downloaded RealMedia files to other formats such as WAV and MP3. The program also could convert a file in one of these formats to the other.
In 1999, RealNetworks sued Streambox under the DMCA for circumventing its content protections. Streambox countered that both copyright owners and end users can use Streambox to convert their content from RealMedia to other formats, so Streambox's software provides a legitimate function.
In January 2000, the Western District of Washington issued a preliminary injunction to stop the distribution of Streambox VCR. The court found that Streambox VCR violated two of the three prongs of Section 1201(a)(2)'s antitrafficking provisions: 1) The program "is primarily, if not exclusively" designed to circumvent the copy protections of Copy Switch,23 and 2) its only commercial purpose was to allow users to access and download protected content.
Notably, the court did not enjoin distribution of the Streambox Ripper (which converts digital formats). It found that Streambox Ripper had legitimate purposes and commercially significant uses, such as allowing copyright owners to convert RealMedia files to other formats.24
RealNetwork's experience provides two lessons. First, it is important to evaluate whether a product that disables copy protections has a legitimate purpose. If so, it is more likely to survive an anticircumvention attack. Second, it reinforces the pivotal roles that streaming and downloading will play in the future delivery of digital content. For an entertainment company, streaming may be the more attractive choice, because the company can better control whether digital files are copied and distributed. However, consumers may want the option of downloading and keeping files and seek out products like Streambox VCR.
The next major anticircumvention case, Universal City Studios, Inc. v. Corley,25 was a battle over DVD encryption. When DVDs came to prominence, the motion picture, computer, and consumer electronics industries banded together and agreed to the Content Scrambling System (CSS) as a standard to encrypt DVD content. This encryption system allows consumers to play a DVD but prohibits copying or manipulating the DVD's digital content.
On his Web site for computer hackers, Eric Corley posted a copy of DeCSS, a program written by a Norwegian resident to circumvent the CSS encryption system. A group of movie studios sued Corley in New York for violating the DMCA's antitrafficking provisions. The studios obtained an injunction prohibiting Corley from making DeCSS available on his Web site or providing links to other Web sites containing the software. The case made its way to the Second Circuit, which affirmed the injunction in 2001.
The Second Circuit's decision focused on Corley's constitutional challenges to the DMCA, which were rejected. Corley claimed the DeCSS program was protected speech and the injunction violated his First Amendment rights. The Second Circuit agreed that the program was speech but held the program was entitled to limited protection because it also encompassed nonspeech components and could unlawfully access copyrighted works.26 The court found that the DMCA, as applied to this case, targeted only the nonspeech component of DeCSS. It determined the injunction was content neutral and served a substantial government interest without unnecessarily suppressing speech.27 The Corley decision is significant because, to date, it is the only published anticircumvention case from a federal court of appeals.
Notably, the Norwegian who helped write the DeCSS code, Jon Johansen, fared better in Norwegian courts. At the request of the Motion Picture Association of America, Norway's Economic Crime Unit criminally prosecuted Johansen in Norway for distributing the DeCSS code on the Internet and enabling the unauthorized copying of movie DVDs. Because Norway has no specific laws (such as the DMCA) to protect digital content, the prosecutors relied on Norwegian criminal theft laws. Johansen was acquitted, and in December 2003 a Norwegian court of appeal upheld his acquittal.28 The trial court ruled that it was lawful for Johansen to use DeCSS to copy DVDs that he bought legally and saw no proof that Johansen used DeCSS for illegally acquired movies. In affirming this decision, the appellate court found it was more reasonable to make a personal copy of a DVD than a book under copyright laws because, for one thing, DVDs were more fragile and could become unusable if scratched. The court also observed that prosecutors failed to prove that other people had used DeCSS to illegally copy DVDs.
The different results in the Corley and Johansen cases underscore the power of the DMCA sword. If Norway had a law equivalent to the DMCA, Johansen may have been convicted.
Even without actually filing a lawsuit, the entertainment industry has been able to use the DMCA to halt activity that it believes impinges on its rights. One notorious incident involves the Secure Digital Music Initiative. In 2000 the SDMI, backed by the Recording Industry Association of America, challenged computer programmers to hack digitally watermarked audio content. A public relations nightmare ensued when Princeton Professor Edward Felten and a team of researchers removed the watermarks in a matter of weeks. Felten and his team tried to present their results at an academic conference, but the SDMI sent a cease-and-desist letter asserting anticircumvention violations. The researchers withdrew their paper from that conference. (Later, after filing their own lawsuit, Felten and his colleagues published a portion of the research at another conference.)
In spring 2002, a similar result came in the world of online games. Blizzard Entertainment, the online gaming arm of Vivendi Universal, runs a service called Battle.net, which hosts multiplayer games that can include thousands of players simultaneously. A group of open-source software developers created the Bnetd project, an alternative service for hosting the Blizzard online games. Its creators claimed they created Bnetd because Blizzard's system was not dependable. Unlike Blizzard's system, the alternate service does not use CD keys to confirm that players are using copies of games from authorized CDs.
In February 2002, Blizzard sent a cease-and-desist letter claiming that the Bnetd project unlawfully bypassed Battle.net's anticircumvention technology. The Bnetd team responded that it lawfully reverse engineered the Battle.net program and was not required to include every feature of the program, such as the CD keys. Nevertheless, the Bnetd team took its server and source code offline temporarily
but put the project back online in March 2002. Vivendi and Blizzard ultimately filed suit, although without a DMCA cause of action. Instead, they relied on a traditional copyright infringement claim,
alleging that their Battle.net code was copied byte-for-byte. Still, at least in the short term, the DMCA threat was enough to take the competing system offline.
The sharpest edge of the DMCA sword is its criminal sanctions. The first published criminal indictment under the DMCA occurred in 2002, United States v. Elcom Ltd.,29 a case involving Adobe Systems' eBook format. Elcom, a Russian company, developed and sold software that allowed a user to convert Adobe's eBook format into Adobe Portable Document Format (PDF) files. This removed use restrictions embedded by eBook publishers to limit the manner in which consumers can use an eBook. Those restrictions typically prevent consumers from viewing the eBook on multiple computers--which the court found to be a fair use of an eBook--as well as copying, printing, or electronically distributing the eBook--which the court considered to be copyright infringement.30
The U.S. government indicted Elcom under the DMCA for trafficking in the software. Elcom raised constitutional challenges against the DMCA that were rejected by the court. Just as in Corley, Elcom argued that the DMCA violates the copyright clause by giving copyright owners the ability to extend their copyrights indefinitely, regardless of whether the works contain public domain, noncopyrightable, or fair use material. The court was not convinced, finding that the copyright clause did not bar Congress from "extending copyright-like protection" under other clauses, such as the commerce clause.31
After a two-week trial, the jury found that Elcom's product was illegal. But it acquitted the company because it believed Elcom did not intend to violate the law. Intent is a necessary element for a criminal DMCA conviction. In an interview after the verdict, the jury foreman commented that the jurors found the DMCA confusing, which made it easy for them to believe that Elcom's executives (who were from Russia) might not fully understand it.32
Although Elcom was not convicted under the DMCA, a Florida man named Thomas Michael Whitehead, also known as Jungle Mike, was. In a case brought in Los Angeles,33 he suffered the first criminal conviction under the DMCA. Whitehead created and sold access cards designed to unlawfully decrypt and receive DirecTV and DISH Network satellite programming. Jungle Mike was one of 17 people charged by the U.S. attorney's office in February 2003 as part of Operation Decrypt, an undercover FBI operation that targeted computer programmers and hardware manufacturers who distributed software and devices used to steal satellite service. In addition to three DMCA counts, Whitehead was convicted on three non-DMCA charges. With his conviction, Whitehead faces a maximum prison sentence of 30 years and fines up to $2.75 million. At press time, he had not yet been sentenced.
Not surprisingly, both the Elcom and Whitehead criminal cases were brought in California, where the entertainment industry is most powerful and most likely to garner support from federal authorities and prosecutors. Entertainment companies will undoubtedly continue to push for such prosecutions to deter other violators.
Other intellectual property owners outside the entertainment industry have realized the power of the DMCA as a legal and competitive tool to protect their creations. It is possible that any technology with electronic and software components may be able to invoke the anticircumvention provisions.
The first notable nonentertainment case, Lexmark International, Inc. v. Static Control Components, Inc.,34 involved printer cartridges. Lexmark manufactures and sells laser printers and toner cartridges. Its printers include copyrighted computer software designed so that the printers work only with Lexmark toner cartridges. Each toner cartridge contains a microchip with software that sends an authentication sequence to the printer to let it know that a Lexmark cartridge is installed. If an unauthorized cartridge (i.e., one from another manufacturer) is installed, the printer will not operate because the cartridge cannot access the software needed to control the printer's functions.
Static Control Components (SCC) sells SMARTEK microchips, which the company specifically designed to circumvent Lexmark's authentication sequence. The SMARTEK microchips make Lexmark printers think a toner cartridge is one of Lexmark's, enabling the cartridge to work with Lexmark printers. SCC sells its SMARTEK microchips to companies that refill toner cartridges and sell remanufactured toner cartridges to the public at prices that generally undercut Lexmark's. SCC acknowledged that its SMARTEK microchips copied Lexmark's computer program "in the exact format and order."35
In 2002, Lexmark sued SCC for antitrafficking violations. At the time, Lexmark's suit was novel because the DMCA was commonly associated with prohibiting digital piracy of entertainment products. SCC countersued, arguing that Lexmark was improperly using the DMCA for anticompetitive purposes. Specifically, SCC claimed that Lexmark was trying to shield itself from competition by other manufacturers of toner cartridges and to force consumers to buy Lexmark's higher-priced cartridges. It also argued the DMCA was not intended for the kind of technological measures used by Lexmark and was instead meant to protect separately marketed copyrighted works rather than software programs embedded in an electronic product.
The federal court in Kentucky, unconvinced by SCC's arguments, granted a preliminary injunction to stop SCC from making and selling SMARTEK microchips.36 The court found that SCC's SMARTEK microchips satisfy all three tests under Section 1201(a)(2) for trafficking in devices that circumvent access controls. Indeed, SCC admitted that 1) its microchips are designed to avoid or bypass Lexmark's authentication sequence, 2) the microchips have no commercial purpose other than to circumvent that sequence, and 3) it markets the chips as capable of circumventing Lexmark's access control.37
From toner cartridges, the battle turned to garage door openers in Chamberlain Group, Inc. v. Skylink Technologies, Inc,38 the first major defeat for anticircumvention claims. Chamberlain is a company that manufactures garage door opener systems. Its systems use a rolling code, which varies the signal used to trigger the opener device each time a garage door is opened or closed. The rolling code is intended to thwart burglars from gaining access to the garage. Other garage door openers use a fixed code, which a burglar can record by using a code grabber when the garage door is opened or closed. Chamberlain's rolling code technology prevents the use of code grabbers because a previously recorded code will not activate Chamberlain's system.
Skylink is a direct competitor of Chamberlain. It markets a universal remote that consumers can use to operate their garage door openers, regardless of the openers' original manufacturer. The universal remote was capable of cracking Chamberlain's rolling code. In January 2003, Chamberlain sued Skylink for violating the DMCA's antitrafficking provisions. Chamberlain claimed Skylink's opener violated all three access circumvention provisions of Section 1201(a)(2) because 1) the opener was primarily designed to circumvent Chamberlain's system, 2) it has a limited commercial purpose other than to circumvent the system, and 3) it is marketed to circumvent the system.
The court disagreed. It denied a motion by Chamberlain for summary judgment and invited Skylink to bring its own defense motion for summary judgment. Skylink did so, and in November 2003, the court dismissed the anticircumvention claim. It found that Skylink had implied authority to make its universal remote control. Consumers set up the Skylink remote to be tuned into their specific opener's signal, thus giving their authorization for Skylink to bypass Chamberlain's rolling code.39 The court also expressed its view that homeowners have a legitimate expectation to be able to access their garage even if the original transmitter is misplaced or malfunctions. It compared garage door openers to television remote controls, which consumers should be able to replace "with a competing, universal product without violating federal law."40
Certainly, the Lexmark decision will encourage manufacturers to embed technological protections in their products to obstruct competition for replacement parts. However, the Chamberlain ruling puts limits on the power of the anticircumvention provisions. Just because a device circumvents technological measures will not render it automatically illegal. Instead, courts will likely evaluate the common sense implications of the effect of the device on consumers and the marketplace.
The tales of the printer cartridges and garage door openers foreshadow a major fight for the future: whether the DMCA can be abused for anticompetitive ends. In the Lexmark printer cartridge case, the defendant warned that manufacturers in other industries may use the DMCA as a means to thwart competition. For example, cell phone manufacturers could embed microchips with copyrighted software in their batteries, headsets, or car adapters to force consumers to use only that manufacturer's replacement parts.
In the realm of entertainment, this strategy could be employed for a wide spectrum of products: television remote controls, controllers for video game systems, parts for digital music players, television sets, radios, portable digital music players, wireless devices, and others. In fact, any media hardware that contains electronic parts or even a small amount of software can be embedded with technological protections to trigger the anticircumvention provisions. If they have not already done so, manufacturers of entertainment and media hardware will inevitably consider how to use the DMCA to advance their competitive goals.
But the DMCA has implications for all intellectual property owners, not just those in entertainment. The Lexmark court confirmed that the DMCA's antitrafficking provisions are not restricted to digital content piracy. It stated, "Quite simply, if a work is entitled to protection under the Copyright Act, trafficking in a device that circumvents a technological measure that controls access to such work constitutes a violation" under the DMCA.41 This opens the door for any copyright owner to invoke the DMCA's anticircumvention provisions, although potential abuse may occur as well.
Concerned about antitrust implications, SCC, the defendant in the Lexmark case, petitioned the U.S. Copyright Office to exempt toner cartridges, including its SMARTEK microchip and related devices, from the DMCA's anticircumvention provisions. The DMCA instructs the Office of the Librarian of Congress to determine whether certain classes of copyrighted works should be exempted from the anticircumvention provisions--and to do this every three years.42 An exemption is warranted if the DMCA prohibitions are likely to adversely affect users "in their ability to make noninfringing uses…of a particular class of copyrighted works."43 In October 2003, the Office of the Librarian of Congress completed its triennial review of the exempted classes, and rejected SCC's petition.44 For now, Lexmark and other manufacturers of toner cartridges can still invoke the DMCA to protect their markets.
The Office of the Librarian of Congress also rejected proposed exemptions that would have allowed users to skip commercials on DVDs, play CDs in their personal computers, and read e-books on a PDA without fear of violating the DMCA.45 In fact, only four classes of works were recently approved for exemption, including software or video games distributed in formats that are have become obsolete and literary works distributed in an e-book format when all existing e-book editions have certain access controls.46 Because it is difficult to get product classes exempted from the anticircumvention provisions, most copyrighted material will remain subject to the DMCA.
As digital technology continues to evolve, the DMCA's anticircumvention provisions will profoundly impact how, when and in what form digital entertainment is enjoyed. One area of intense debate is what right consumers have to shape their own entertainment experience. The key anticircumvention cases deal with technology that either transforms content from one format to another (such as RealAudio to MP3) or that allows content to be saved for later and frequent use (such as downloading audio files to a consumer's PC). Consumers like this kind of technology because it allows them to customize their entertainment experience. Content owners fear the technology because their business strategies depend on controlling their content. The steady pace of technological innovation shows no sign of abating, so entertainment companies, courts, and legislators will continue their efforts to find an appropriate balance between the protection of intellectual property rights and the rights of consumers.