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Witness Testimony
Mr. Gary Shapiro
H.R. 107, The Digital Media Consumers' Rights Act of 2003
Before The Committee on Energy and Commerce Subcommittee on Commerce, Trade and Consumer Protection On behalf of the Home Recording Rights Coalition (HRRC), I thank you for inviting me to discuss H.R. 107, the "Digital Media Consumers' Rights Act of 2003." This vital, bipartisan bill would restore some balance to a copyright system that has recently been tilted to elevate the interests of media giants over those of ordinary people. We therefore urge you to favorably report H.R. 107, reverse this recent and harmful trend and restore the balanced copyright law that our nation has enjoyed for most of its history. In addition to my Chairmanship of the HRRC, I am also President and CEO of the Consumer Electronics Association (CEA), the premiere association representing the American technology industry. Intellectual property is our lifeblood. Each year, my members invent and introduce new and brilliant products into the marketplace. Innovation is the catalyst for growth in our industry. So let me make one thing clear: we hate piracy, and we hate pirates. We are all in favor of the vigorous enforcement of fair and balanced intellectual property laws. What has happened recently, however, is a radical departure from the balanced approach that our Constitution calls for and our public interest requires. Over the last few years, entertainment and media industry giants have persuaded Congress to restrict private and public use of books, music, and other material when it is in digital form. And now they are working through the Courts to change the laws and limit our freedoms even further. Many of these problems are a result of the 1998 enactment by Congress of the Digital Millennium Copyright Act or DMCA. The DMCA includes "anticircumvention provisions" intended by Congress to prevent copyright pirates from defeating anti-piracy protections on copyrighted works, or getting hold of "black box" devices used for this purpose. Unfortunately, these anticircumvention provisions have proven overly broad, and are not being used as Congress intended. Instead of targeting pirates, they are being directed against consumers, as well as scientists, and business competitors engaged in a range of legal activities. Here are some of the problems Americans face as a result of today's new unbalanced copyright environment:
H.R. 107 cannot and does not address all of these harms in a single bill. It does, however, take necessary steps to restore the balance that now leans so heavily against consumers, innovators, and educators. Here is what H.R. 107 would do: 1. H.R. 107 would re-affirm that the Supreme Court's holding in the Betamax case is the law of the land; 2. H.R. 107 would protect consumers, inventors, educators, librarians, and product designers from prosecution or suit for "circumvention" unless their activity also infringes the copyrighted work in question; 3. H.R. 107 would protect legitimate research from being suppressed via suit under the DMCA; and 4. H.R. 107 would require explicit warning labels on "anti-copy CDs." Let me explain why, in our view, each of these areas needs to be addressed by the Congress. First, H.R. 107 ensures that the Supreme Court's Betamax decision will remain the law of the land. Betamax is the legal cornerstone of our industry's ability to innovate and bring new products to consumers. H.R. 107 provides: "It shall not be a violation of this title to manufacture, distribute, or make noninfringing use of a hardware or software product capable of enabling significant noninfringing use of a copyrighted work." This provision embodies the Supreme Court's classic formulation in its 1984 Betamax holding. Media giants now are running a well-funded campaign to persuade the public, the Courts, and the Congress that the Betamax doctrine safeguarding all products having significant non-infringing uses should now be confined to one product - the analog VCR - and that it has no application in the digital age. Actually, the opposite is true - in the digital age consumers and innovators need the Betamax protection to be strengthened, not weakened. Some of you have visited or heard of our annual International Consumer Electronics Show or CES. Without the Betamax holding, many of the products on display at CES would simply not exist. Indeed, many of the exciting new digital products American consumers are enjoying in their living rooms today would not exist. Twenty years ago, Hollywood asked the Supreme Court in the Betamax case to ban a product from the marketplace, based on a projection that its predominant use would be to infringe copyright. The Supreme Court declined to do so. Instead, it ruled that so long as any significant non-infringing use of the product could be identified, the product deserved its place in the market. We all know, now, that this decision allowed the creation of an entirely new market - home video - that no one had anticipated. Even in Hollywood's record-setting box office year of 2003, home video generated significantly more revenue than theatrical releases. But the Betamax decision unleashed more than a single new market. It represented a turning point in American cultural and economic life. The recording and processing power of devices, long available to industry, was just starting to become available on an affordable basis to consumers, educators, and libraries. This frightened some powerful groups. The litigation against the VCR was the first shot in their effort to keep this power out of the hands of consumers. The Supreme Court changed history by resisting this over-reaching offensive. The plaintiff movie studios asked the Courts for nothing less than an injunction, to keep VCRs off the market, unless the copyright holder granted permission for the product to be marketed, and set the terms and conditions under which it might be configured and sold. The Supreme Court refused to do this. The Court observed that, were it to do so, it would be including the innovative new product in somebody else's existing monopoly. In the patent law, this would mean that a patentee would effectively gain monopoly control over any other product that might contribute to infringement of the patent. The Court said that such a rule would "choke the wheels of commerce." It said the same would be true in the case of a copyright owner asking for the power to keep a new device off the market. The Court said that such power should not be granted, even if the primary purpose of the new device is to infringe copyright, so long as the device has a significant use that is non-infringing. This outcome, in favor of a new consumer device coming to market without the necessity for a specific license from copyright owners, was not inevitable - it was the product of a vigorously argued, 5-4 decision. We can see now, with hindsight, that a contrary decision would probably have choked the wheels not only of commerce, but also of e-commerce. Without the establishment of Betamax principles, a number of common Internet applications - and perhaps the Internet itself - would have been vulnerable to legal challenge. The Betamax principles must be affirmed when you mark up H.R. 107 because, even today, it is being argued that the freedom to innovate that was established therein should apply only very narrowly - that it was OK for analog products, but is simply too dangerous for digital products. That it was OK for hardware, but too dangerous for software. Such thinking in the digital era would be a serious blow to American technical leadership, as well as to the rights of consumers. These rights should be confirmed, not circumscribed any further. Second, H.R. 107 would confirm that individuals "unlocking" digital media they own would not be liable under the DMCA so long as they did not infringe the underlying work. The bill would do so with the following language: "It is not a violation of this section to circumvent a technological measure in connection with access to, or the use of, a work if such circumvention does not result in an infringement of the copyright in the work." One of the central failings of the DMCA is that it preserved fair use as a defense to copyright infringement, but more perniciously created the new crime of circumvention without a fair use defense. As a result, even if no infringement occurs when a consumer simply unlocks something he or she owns, he or she could be held liable under the DMCA. The Boucher-Doolittle bill would bring the two statutes into harmony by imposing liability under the DMCA only when it also exists under the Copyright Act. American copyright law, unlike some in Europe, provides that those who purchase material have an unencumbered right to make private, personal or family use of it - such as simply watching or listening - without any obligation to the content owner. Yet the erosion of this important principle in the digital age has been profound. Indeed, it would be hard to go out on the street today and find a consumer who is not a home entertainment "licensee" many times over, even if that consumer owns no recording device at all. The same could not have been said 50 years ago, or even 20 years ago, at the time that the Betamax case was decided. The DMCA has severely and unnecessarily aggravated this situation. The consequences are extensive, and they range from the minor to the profound. The DMCA, for example, makes it unlawful for a parent to "unlock" a DVD to fast-forward through the multiple ads at the beginning of it. This has nothing to do with protecting copyrighted material from reproduction or public display. Under the Copyright Act, a grade school child has a fair use right to record a short excerpt from a movie on VHS for use in a school project, but has no such right under the DMCA. The Boucher-Doolittle bill would rectify this situation by providing families with the same legal right under the DMCA. But the problems go beyond the use of technology and media by families at home. It has now become routine for competitors to cite the DMCA in attempts to suppress competitive products. When the DMCA was passed, what Member of Congress could have imagined that it would be used by companies to sue legitimate competitors marketing universal garage door openers or generic printer cartridges? These competitors are not accused of infringing any intellectual property laws - not copyright, patent, trademarks, or trade secrets. The only offense they are accused of committing is reverse engineering - or "decrypting" - their competitors' products for compatibility purposes, thus arguably violating the DMCA. And in the future, we can expect to see more abuse of the DMCA to forestall legitimate competition. For example, CEA represents manufacturers of aftermarket consumer electronics for automobiles. If automobile manufacturers were to put "authentication chips" in their cars, makers of aftermarket products such as car stereos or car alarms could face suit for reverse engineering the chips merely to ensure compatibility of aftermarket products. The entire automobile aftermarket could disappear, courtesy of the DMCA. And in a world where chips are becoming cheaper and more ubiquitous, you could apply that scenario to nearly any other industry. Just imagine the destructive effect on the economy and innovation. Surely this was not the intent of the DMCA. In the unclear and hyper-litigious environment created by the DMCA, it is little wonder that venture capitalists are increasingly refusing to fund new and innovative technologies. Due to the DMCA, technology companies now routinely pay for lawyers to sit in on product design meetings. We can only guess what extraordinary products today's consumers will never get to see because of the expense and litigation caused by the DMCA. This situation cannot be allowed to stand. The impact on innovation and the economy will be increasingly severe and harmful. H.R. 107's remedy is to require a linkage between interference with a technical measure "protecting" a copyrighted work, and infringement of the copyright in the work. Without this protection, a new and vague form of legal "protection" may be drummed up toward whatever advantage the proponent of a technological measure has in mind, resulting in the creation, unintended by the Congress, of a new and unmanageable form of industrial property protection. This is exactly what the Supreme Court said in the Betamax case that it needed to guard against- so as not to "choke" commerce. I was one of several witnesses who warned of this potential consequence when the DMCA was pending; but back then we were not as creative as some lawyers have proven to be, so we could not dream up the range of abuses that have now come to pass. I also must note, Mr. Chairman, the dedicated efforts of many companies in our industry to create content protection technologies that safeguard commonly accepted consumer fair use practices. Following Congress's lead, our industry has insisted that protection technologies be accompanied by "encoding rules" such as those in Section 1201(k) of the DMCA, that respect consumers' legitimate expectations in the recording of broadcast and subscription video content. We do not anticipate that H.R. 107 will interfere with these efforts to create enforceable and more flexible DRM technologies. Notwithstanding, even the best of today's DRM technologies- and our companies constantly strive to improve them, because they do have an important place in the marketplace - can only approximate, but not fully accommodate, fair use. So, in the interests of both families and innovators, the DMCA's lack of any tie to copyright infringement - indeed, its circumlocution in defining what it does protect - needs to be reformed. H.R. 107 provides a means to do so. I urge the Subcommittee to address itself to this task when it moves this legislation forward. Third, H.R. 107 provides an exemption for activities "solely in furtherance of scientific research into technological protection measures." The last few years have been full of instances where copyright holders attempted to silence and intimidate academic researchers by brandishing the DMCA - the case of Princeton Professor Ed Felton is perhaps the most notorious. It is now clear that the DMCA's existing provisions are too narrowly drafted to avoid the intimidation of scholars and researchers.1 The HRRC has more than a decade's experience in working with content owners and distributors, to try to find balanced technical solutions that meet their needs, yet recognize and preserve the reasonable and customary practices and expectations of consumers. HRRC is a charter participant in the Copy Protection Technical Working Group ("CPTWG"), which is now entering its ninth year of meetings that bring people together to discuss these issues in an open technical forum. One thing we have learned is that technical measures must be tested as to the reliability of intended outcomes, and vulnerability to unintended outcomes. Public comment by researchers, both invited and uninvited, is vital. The DMCA should not be used as a selective sword and shield, to invite comment from some quarters but not from others. Finally, H.R. 107 requires a specific warning label on "anti-copy" CDs, with the Federal Trade Commission given jurisdiction to enforce compliance. The emergence of common products, like a Compact Disc, that suddenly will not play back in common and clearly lawful products such as automotive players, boom boxes and PCs, illustrates a problem in the digital revolution that is little remarked on: as sophisticated as digital techniques may be, they are often very blunt instruments. The primary "copy control" technique in the digital world is still to deny access. When access to the program material is denied, the user loses it not just for purposes of copying, but also for ordinary viewing and listening, as well. The DMCA does not address this problem; it aggravates it. Except for section 1201(k), which addresses an analog technology, it provides no tools to enhance consumer use, yet new obstacles may be imposed unilaterally and without warning. In the case of Compact Discs, some of the access denial measures are so crude - for example, simply introducing errors into the digital coding, so as to fool the types of circuitry used in some players - the HRRC does not regard them as "effective measures" under the DMCA at all. But whether or not circumvention is prohibited by the DMCA, the consumer who buys an ordinary Compact Disc that is copy-protected is buying a potential problem. The CD format has been stable for twenty years; consumers have invested in hundreds of millions of players, and in sound systems designed to work with those players. Consumers are entitled to know when they are buying a disc that may not be playable, or that, if playable, the disc may not be used in the ways to which consumers have become accustomed. And they are entitled to know these things right away, at the store, before they bring their purchase home. Some Members of this Committee will recall that the HRRC was involved in the negotiation and enactment of the Audio Home Recording Act of 1992 (AHRA), which was an effort to enact forward-looking legislation to deal with recording from Compact Discs in the digital age. The AHRA imposed very specific technical and royalty obligations that are still in place on consumer electronics digital audio recorders and media, in exchange for some specific consumer protections. The music industry may now take a different view of its current needs and objectives, but we have not forgotten about the AHRA. Thus far, we are not aware that any of the technical restraints imposed on copy-protected CDs would infringe on the particular recording functions that the AHRA assures to consumers - but we will continue to be vigilant on this subject. The Compact Disc labeling provisions protect consumers by ensuring that they know when they are being offered products that, as a result of added "copy protection" measures, might not play on some standard CD or DVD players and may not be recordable on a personal computer. Consumers have a right to know this. They have a right to know if the disc might not play on one of their products. They have a right to know whether they can make a home recording for private, noncommercial purposes, and if they can, what strings may now be attached to their ability to do so. Then they can make an informed choice. Mr. Chairman, let me make one final point. I understand that individuals representing the entertainment industry have told this Committee that H.R. 107 would somehow provide a haven for those who engage in piracy. That is absurd. H.R. 107 only authorizes consumers to circumvent a technological protection measure in those instances where they do not infringe a copyright. H.R. 107 takes away no intellectual property rights. It merely re-aligns the DMCA with historic copyright law by ensuring that there can be no DMCA liability without copyright infringement liability. I understand that some also have accused this bill of undermining digital rights management copy protection systems. This too is absurd. Our industry recognizes and supports the need for reasonable measures to protect against widespread piracy such as those outlined in the so-called plug-and-play agreement reached between our industry and cable operators last year. We simply argue that these systems must be balanced against the equally important and well-established fair use and home recording rights of consumers. Twenty years ago, the same entertainment representatives told you that the VCR would mean the death of the American movie industry. They were spectacularly wrong. Now, they make the identical claim about the impact of H.R. 107. I believe history shows you have every good reason to be skeptical. Clearly, Mr. Chairman, H.R. 107 addresses a number of pressing problems that were not specifically foreseen as recently as six years ago. As I said at the outset, H.R. 107 cannot address all of them, but it is a crucial start. On behalf of the HRRC, and our efforts since 1981 to achieve balance in U.S. law, I urge this Subcommittee to work on these problems so as to enable fair use outcomes for consumers, and to move this legislation forward to the full Committee. In the continuing copyright dialog between the Congress and the Courts, it is time for the Congress to restore a historic balance that protects consumers, researchers, educators, and librarians and allows consumer electronics manufacturers to continue to bring exciting, innovative and legal products to market. Thank you again for having invited us to participate today.
1. See, National Academy of Sciences, The Digital Dilemma, Appendix G (National Academy Press, 2000). Related Documents |
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