Managing Rights Management

2006: The Year of MP3s and Stealth P2P

The BBC Website article by Jane Wakefield quotes music  industry watchers as predicting that in 2006 at least one major music label will release music in MP3 format (presumably on CDs). The article also contains a prediction that new P2P networks will appear in 2006 whose users cannot be logged or traced. Snippets:

Mom Fights Downloading Suit on Her Own

Jim Fitzgerald's piece for the AP regarding the battle of Patricia Santangelo against the RIAA is worth a read. Check out the Recording Industry vs The People blog site as well. Lots of useful information there. Snippets from the Fitzgerald article:

Harvard Conference On IP Law

Earlier I reported on the Harvard Law School conference on IP Law cosponsor by Wilmer Hale. Now the proceedings including the agenda, presentations, audio, and the Grokster decision are now online and available to all those interested.

The Boycott Sony Blog

Tim Jarrett has established the boycott Sony blog, apparently to provide a forum for comment and discussion. Among the more recent observations is that the provider of the DRM technology that is the root cause of the Rootkit problem, first4internet, has apparently taken down their web site.

As of yesterday afternoon, most of the content was gone as observed by Jarrett and others.

Grokster Bytes The Dust

As everyone has heard, Grokster has ceased operations and paid a hefty settlement fee.  This ZDNET article summarizes the main points.

As noted, Justice Ginzburg's concurring opinion held that P2P software was not on trial.  Rather, the Court found that Grokster's  (and Streamcast's) marketing focused on uses that infringed the copyrights of others. For further legal analysis of the Grokster decision, see my summary of the recent Harvard Law School discussion on Grokster: Who Won?

HLS Conference On IP Law - Grokster

Grokster.. So Who Won?

Moderator: Thomas P. Olson, Partner,  Wilmer Hale

Panel:
William W. Fisher, Prof. of Law, HLS
Doug Lichtman, Prof. of Law, U. of Chicago
William F. Patry, partner, Thalen, Reid & Priest, LLP
Jeremy Williams, Senior Vice President and Deputy General Counsel, Warner Bros. Entertainment, Inc.

(Paraphrasing, not quoting except where powerpoints wer distributed)

Background-Thomas Olson:

Sony BetaMax case (1984):

Accordingly, the sale of copying equipment, like the sale of other articles of commerce, does not constitute contributory infringement if the product is widely used for legitimate unobjectionable purposes. Indeed, it need merely be capable of substantial noninfringing uses."

Grokster won in the District Court and in the Ninth Circuit (3-0).

The Grokster Court (the Supremes) did not like Grokster: 9-0 against.

[The opinion can be download here.]

Did Grokster intend to induce infringement?

The record is replete with evidence that from the moment Grokster and StreamCast began to distribute their free software, each one clearly voiced the objective that recipients use it to download copyrighted works, and each took active steps to encourage infringement.

Grokster's Bad Intent - Key Factor #1

Three features of this evidence of intent are particularly notable. First, each company showed itself to be aiming to satisfy a known source of demand for copyright infringement. the market comprising former Napster users.

Grokster's Bad Intent - Key Factor #2: Technological Mandate to Avoid Infringement? Or, Never Mind

Second, the evidence of unlawful objective is given added significance by MGM's showing that neither company attempted to develop filtering tools or other mechanisms to diminish the infringing activity using their software. While the Ninth Circuit treated the defendant's failure  to develop such tools as irrelevant because they lacked an independent duty  to monitor their user's activity, we think this evidence underscores Grokster's and StreamCast's intentional facilitation of their user's infringement.

Grokster's Bad Intent - Key Factor #3: Tell me again how you make your money?

Third, there is a further complement to the direct evidence of unlawful objective. It is useful to recall that  StreamCast and Grokster make money by selling advertising space, by directing ads to the screens of computers employing their software. As the record shows, the more the software is used, the more ads are sent out and the greater the advertising revenue becomes. Since the extent of the software's use determines the gain to the distributors, the commercial sense of their enterprise turns on high-volume use which the record shows is infringing.

This evidence alone would not justify an inference of unlawful intent, but viewed in the context of the entire record its import is clear.

The unlawful objective is unmistakable.

Harvard Law School Conference On IP Law

Today I'm at The Harvard Law School Conference on IP Law. I'll be blogging the morning sessions which are about to kick off.

The various welcoming speeches are underway.  Elena Kagan, Dean, Harvard Law School.

(Paraphrasing selected comments, not quoting.)

Patent Litigation - A View From The Bench
Moderator: William F. Lee

Panel:
Hon. Arthur J. Gajarsa, former patent examiner, Court of Appeals for the Federal Circuit (CAFC),
Hon. Alan D. Lourie, Court of Appeals for the Federal Circuit (CAFC),
Hon. Pauline Newman, Court of Appeals for the Federal Circuit (CAFC),
Hon. Pattie B. Saris, US District Court, Massachusetts,
Hon. William Young, US District Court, Massachusetts

Some background:

Number of patent litigation cases filed has increased each of the past 4 years.

More than 70% of patent cases survive until a court action is taken, but only 15-18% see the pretrial phase.  Only 4% are actually tried. 70% jury trials / 30% bench trials.

Median cost of litigating a patent case has jumped 33%; is now $2M on average.

Question posed: what change in the patent system would you most like to see?

Australian Court Rules Against Kazaa

Numerous sources including Reuters, the NYTimes,  and CNet have reported that Sharman Networks, the makers of P2P file sharing software have been found guilty in an Australian (home of Sherman) of promoting copyright infringement. Snippets from the CNet article:

Sony to launch P2P music swapping network

The Channel Register (UK) reports on a Sony / BMG deal to bring music to market via P2P.
Snippets:

Defending Content Owners

Writing on ZDNet, John Carroll defends the interests of content creators. My views are a bit different. I strongly believe that DRM tools should be available to everyone, not just big companies. Nonetheless, this is some of what Carroll  had to say:

Post-Grokster

There are, of course, numerous comments in the blogosphere and press on Grokster. Raymond Blijd comments on the consequences of Grokster for software vendors and content distributors. Although I think this position is vastly overstated, Blijd says this about Grokster's impact on innovation:

Justice Ginsburg Says Grokster is Not About P2P Technology

From  the concurring opinion:

Even if  the absolute  number of  noninfringing files  copied
using the Grokster and StreamCast software is large, it does
not follow that the products are therefore put to substantial
noninfringing uses and are thus immune from liability.  The
number of  noninfringing  copies may be reflective of, and
dwarfed by, the huge total volume of files shared.  Further,
the District Court and the Court of Appeals did not sharply
distinguish between uses of  Grokster’s and  StreamCast’s
software products  (which  this case is about) and uses  of
peer-to-peer technology generally  (which  this case is not
about).  [emphasis added]

Supremes Side With RIAA, Studios - 2nd Update

The New York Times says:

Two lower courts previously sided with Grokster without holding a trial. They each based their decisions on the 1984 Supreme Court ruling that Sony Corp. could not be sued over consumers who used its VCRs to make illegal copies of movies.

The lower courts reasoned that, like VCRs, the file-sharing software can be used for "substantial" legal purposes, such as giving away free songs, free software or government documents. They also said the file-sharing services were not legally responsible because they don't have central servers pointing users to copyright material.

But in Monday's ruling, Souter said lower courts could find the file-sharing services responsible by examining factors such as how companies marketed the product or whether they took easily available steps to reduce infringing uses.

"There is substantial evidence in MGM's favor on all elements of inducement," Souter wrote.

Indipendent Online Music Stores Avoid DRM

According to a Boston Globe article, independent online music stores are not imposing rights management on most tunes. Snippets:

Shear Brilliance

Various publications are reporting that Microsoft is developing a P2P application not unlike BitTorrent and the less well known Kontiki. This article in PCPRO (UK) is typical:

Software giant Microsoft is developing an alternative to BitTorrent, the high-speed p2p software driving the sharing of video through broadband connections. The twist is that with the Microsoft version, code-named Avalanche, downloading will not be possible without a 'publisher's certificate'. In other words, it will have built in DRM technology.

In the late '80s and early '90s, InterTrust founder Victor Shear had the vision to see that the world would have to become P2P. There were too many advantages. And rights management would have to be P2P rather than client/server as well.

Filesharing in Canada - More From Michael Geist

Law professor, columnist, and blogger Michael Geist has published another article on filesharing law and policy in Canada. One version of the article is here. Snippets:

Interview With UMG's Barney Wragg

Barney Wragg, vice president of the eLabs arm of Universal Music Group, was interviewed by TheFeature's Justin Pearse. [TheFeature is funded by Nokia but claims editorial independence.) Snippets:

'Share it!' - Watch What You Want, When You Want!

According to this article on PhysOrg.com,  an EU funded project has developed a system that provides seamless access to on-line, broadcast and personally stored information by allowing easy sharing of information among devices on home-2-home networks. Snippets:

Open Media Network

Open Media Network announced yesterday a free consumer service for viewing public service content on the internet, launched in public beta .  The  service  uses  Microsoft DRM.  I  had  trouble making it work, but it's a beta,  so  no problem.

Some comments and perspective  on the OMN release can be found on p2pnet.net here.

Another perspective, this an article in the San Francisco Chronicle can be found here.

Digital Containers: P2P DRM

I recently spoke with Chip Venters, CEO of Fairfax, VA-based Digital Containers, Inc. (“DCI”), a company that licenses intellectual property and reference implementations of its P2P DRM-enabled commerce software.

History

DCI is a restart of Deskgate Technologies, a company active in the 1990s. DCI's management team is comprised of many of the original Deskgate founders, architects and inventors of its technologies. DCI says that over $9.5 million has been invested in the technologies to date.

In the Fall of 2003 Venters and many of the original Deskgate team members bought the Deskgate IP from the bank that had been holding the assets of the predecessor company.

Venters says DCI is partnered with ThinkFire Services USA Ltd, an IP licensing and advisory services firm that was co-founded by Nathan Myhrvold, who stepped down at the end of 2004. Venters says, as would be expected, ThinkFire and Digital Containers entered into a relationship only after ThinkFire had completed substantial diligence on DCI’s IP portfolio.

Cerf: Hollywood interested in BitTorrent

CNet has another interesting article, this one by Renai LeMay in which Vint Cerf is quoted as saying that Hollywood is interested in P2P BitTorrent as a distribution channel. Snippets:

"I know personally for a fact that various members of the movie industry are really getting interested in how to use the Internet--even BitTorrent--as a...method for distributing content," said Cerf, who is chairman of the Internet Corporation for Assigned Names and Numbers, or ICANN. "I've spoken with several movie producers in the last month."

Cerf was adamant, however, that the entertainment industry still does not understand the online environment.

Avoco Secure: UK-based Enterprise P2P DRM

I recently had a conversation with Sandy Porter, Business Development, at Avoco Secure (“Avoco”), an Enterprise DRM company based in the United Kingdom.  Avoco competes in the document security and rights management space. The company is presently in the early customer adoption phase and is approaching general availability with its document DRM solution, secure2trust (“s2t”).

Before discussing the company and its s2t DRM product, here is some broader background that establishes some context.

Enterprise DRM In The 21st Century

The Enterprise IT world has started to recover from the collapse of the dot com bubble and the consequences of 9/11. We are now witnessing, I believe, the 3nd Coming of DRM. Several Enterprise DRM companies either were founded or got funding and achieved momentum after the turn of the century. There is now a lively and apparently growing international market for Enterprise DRM software products.  Specific competitors are addressed later in this blogicle.

P2P Revisionism

Check out Barry's Ritholtz blog  posting on revisionist arguments concerning the legality and morality of P2P file sharing. While there is much to like about his comments, I strongly disagree with the following assertion:

Indeed, knowledgeable observers have long since figured out that P2P is not about copyright at all. Instead, its about disintermediation -- getting the Labels out of the middle, removing them from between the artist and the listener.

This statement would be true, in my opinion, only if artists and indie labels had convenient access to DRM packaging technologies and chose to use it at least some of the time. The problem, in my view, is that there is too little rather than too much DRM. Artists working in all media need to have access to DRM. Some of them might want to get paid and/or to know who's using their content. Then we would have real disintermediation.

Interested parties might want to check out my series last week on the Future of the Music industry, which can easily be accessed here.

Bertelsmann Launches New Peer-to-Peer Service

According to several sources, including  PC World via Yahoo News,  Bertelsmann announced today a new P2P service named GNAP.

German media giant Bertelsmann, a former investor in the Napster file-sharing network, is taking another stab at peer-to-peer technology with a new service for downloading and sharing movies, games, and other content over the Internet.

Peppercoin picked by Wurld Media for P2P payments

According to Mass High Tech, Waltham, MA-based Peppercoin will provide Wurld Media with it's microtransaction software, enabling Wurld Media to legally sell digital content through its Peer Impact P2P Network.

More Grokster Before The Supremes

Lots of media coverage, of course.

Nina Totenberg's NPR commentary is here.

This Washington Post article is useful (registration may be required):

The entertainment industry yesterday took its campaign to stop illegal sharing of music and videos to the U.S. Supreme Court, telling the justices that popular online services such as Grokster and Kazaa should be held responsible for the unlawful acts of their users.

But several of the justices expressed concern that doing so could chill the incentive of inventors to develop new technologies, for fear they would face lawsuits if their products or services were used for illegal purposes.

The Things You Can Do With Skype

CNET reports that Voice-over-IP service Skype is being used for P2P filesharing and Skype-casting.

There's a growing number of people sharing their iPod digital music using freely available software and Skype, a free Internet phone service.

The enthusiasts are borrowing heavily from another personal broadcasting phenomenon called podcasting, in which digital recordings are posted on a Web site for download to Apple's popular digital music players. Skypecasters, as they call themselves, use Skype's peer-to-peer telephone network to distribute recordings over the Internet directly to each other for free.

Happy P2P Day

Today is the day the Supremes hear oral arguments regarding P2P networking and copyright infringement. The Electronic Frontier Foundation's MGM vs. Grokster resource page is a good place to begin to better understand what is at stake and for whom.

Yesterday's NYT's coverage is here.

Armageddon For Video

In the mid to late 1990s, Albhy Galuten and others then with Universal Music were very much concerned with the coming music industry Armageddon: broadband to the home, advanced audio compression techniques (MP3 but perhaps more significantly, AAC), and high capacity writable storage devices (writable DVD drives).

Now Armageddon for video may on the horizon: gigabit cable modems and high capacity writable storage devices.

Check out David Burstein's  article on (shared) gigabit cable .

 

P2P Covered On News Hour

The News Hour ran a segment on the legal cases regarding P2P software before the Supreme Court. The video is here.

NASA BitTorrents

Wired says that NASA is using P2P to distribute Earth imaging data.

The download page points to BitTorrent.

[tip of the hat to John Parres' posting on Dave Farber's list]

Pointed Commentary on P2P File Sharing

Check out Lauren Weinstein's 60 second commentary on the efforts to hold P2P software companies responsible for piracy.

His blog his here and the audio feed is here.

The Chilling Effect - Maybe

According to Reuters via CNN Money, the Motion Picture Association of America has filed suit against a number of John Doe's alleging that they misappropriated copyrighted movies. Excerpts:

Studios sue traders of illegally copied films traded online, seek up to $150,000 per download.

LOS ANGELES (Reuters) -

The civil suits against unnamed "John Doe" defendants seek up to $150,000 per downloaded digital file and come as the film industry prepares for its annual Oscar telecast in Hollywood where awards for top films and stars are given out.

The studios, represented by the Motion Picture Association of America, took the opportunity of the Oscars to again press the case that the illegal copying of films and their black-market distribution on the Internet is costing them millions of dollars a year in lost revenue.

The studios claim they lose $3.5 billion worldwide in annual revenues from sales of illegally copied movies on video and DVD formats in street bazaars and black markets.

Hollywood's major movie studios filed a new round of lawsuits nationwide Thursday against people who trade illegally copied films and TV shows on the Internet.

It's unlikely that these suits by themselves will make much of a dent, let alone eliminate, blackmarket videos and DVDs. The suits may have some chilling effect on file sharing and downloading, but that, too, remains to be seen.

One wonders how much of the $3.5 billion is in pirated videos and DVDs and how much is attributed to file sharing and downloading.

MPAA members, consumer electronics and computer industries have been debating from time to time in various private and public forums, such as the DVD Copy Protection Technology Working Group meetings, tradeoffs between ease of use for the consumer and effective digital rights management.

The original Content Scramble System (CSS) copy protection technology was understood at the time as being reasonably weak, likely to be broken, and difficult, but not completely impossible, to update or fix one widely used.

More on this theme in subsequent comments.

Doonesbury and Barlow

In case you've been missing it, Gary Trudeau's Doonesbury comic strip this week has been addressing the music industry. Strip stalwart Jimmy Thudpucker  in today's strip (February 24, 2005) being interviewed:

"So Jimmy, You really think the collapse of the recording industry would be good for music?

Absolutely. Without record sales to worry about, musicians can focus on performance careers. In this new world, talented musicians will prosper and bad ones will have plenty of time to practice.

And the suits?

The suits will die off, and Pepperland will be free again!"

John Perry Barlow, Grateful Dead lyricist, rancher, cyberspace activist, and co-founder of the Electronic Frontier Foundation, has said that "Information Wants To Be Free," which may be taken as a rationalization for unauthorized use and misappropriation of digital assets. All of us prefer free. Me too. But Barlow's assertion may be rooted in the Dead experience as well.

The Grateful Dead was perhaps the worlds premier concert band. They encouraged Dead Heads to make recordings of concerts because their business model was rooted in concert (and perhaps merchandise) revenue, but not mainly in record royalties. So it's probably no accident that Barlow asserts that Information is Experienced, Not Possessed.

Some musicians may wish to adopt the Grateful Dead / Barlow business model. But for those who don't tour -- Steely Dan during the many years when they were just a fabulous studio band -- and those who are not the blockbuster stadium acts, royalties from recordings may be their main livelihood revenue.

DRM technologies should be a foundation for giving consumers and musicians choice among business models.

Barry Ritholtz, "The False Economics of the RIAA

Do people mainly P2P download songs they wouldn't otherwise buy? Do musicians make most of their money from performances? Economist and blogger Barry Ritholtz answers these and other questions and in doing so, does a couple of numbers on The False Mathematics of the RIAA and ignited a small firestorm of comments on his blog as well.

Worth a read.

Gizmo Extinctions

An article published by BBC news says that legal actions are threatening the very existence of a broad range of CE appliances, computing, and communications technologies.

Endangered animals lists are familiar to those who care about nature, but now technology has its own list of gadget "species" under threat of extinction.  High on the endangered list is the file-sharing network, Morpheus, which is about to fight for survival in court.  The Electronic Frontier Foundation (EFF) list highlights what it says is the grip industry holds over gadgets.  It says pressure from the entertainment industry for legal action over devices and technologies stifles innovation.