Friday, March 15, 2013

DMCA conference: Bruce Lehman: yeah, we did an end run around Congress

Santa Clara High Tech Law Institute

15 Year Retrospective of the Digital Millennium Copyright Act

hashtag #htli; plenty of resources/papers/etc. at conference website.


Eric Goldman, Santa Clara University School of Law: Genesis in similar conference on §230, which plays a huge role in the internet ecosystem.  That conference was almost uniformly enthusiastic, but this one is unlikely to do so—we’ll talk about what worked and what didn’t.  Using DMCA without disambiguation is bad—there were 5 major provisions. We aren’t going to talk about Vessel Hull Design Protection aspects.  Not going to discuss computer repair provision, though there is a lot to say. And we’re not going to discuss super-interesting web provisions (not that anyone knows what it says).  Instead, anticircumvention/CMI and 512, the online safe harbors. Capture for history people who were making the sausage and how they think about how it tastes 15 years later.

Corynne McSherry, Electronic Frontier Foundation

Couldn’t be better timing.  Controversy right now over cellphone unlocking, hopes to spark a larger conversation about 1201. Yesterday, we had a new UMG v. Veoh decision on 512.

Bruce Lehman, former U.S. Assistant Secretary of Commerce (author of Green and White Papers, many of whose proposals made it into the law)

Clinton and Gore in 1992 made a campaign theme that economic growth would depend on moving away from traditional industrial infrastructure into areas like the “electronic superhighway.” Internet at the time connected academia and the military.

AOL provided a “walled garden” and popular chatrooms. Its business model was threatened by the WWW, allowing connections w/out AOL, but AOL solved that problem initially by becoming the primary mechanism people used to get online through their local dialup service (or later broadband).

Al Gore did in fact do a huge amount, more than any other policymaker, to create an environment for the internet to thrive.  As Assistant Sec. of Commerce and Commissioner of PTO, Lehman was asked to create a working group to look at IP implications of emerging electronic infrastructure—patents, TM, international situation. 

Started out with public hearings, consultations.  At the end of the white paper, offered a draft bill, whose primary reforms were few.  Concluded that existing copyright law of US was for the most part satisfactory.  But now everyone could have a printing press, creating enforcement difficulties (continuing and accelerating erosion caused by existence of photocopying machine).  US law did cover dissemination of copyrighted works in this new environment, because of the distribution right.  Footnote: most European countries didn’t have a recognized distribution right, but rather reproduction and public performance were at the core of their rights. 

We felt no significant changes were needed, but that for all practical purposes once a copyrighted work was “out” online it would be virtually impossible to keep control of it in the way people historically had been able to do unless they used technology to do so coupled with licensing.  We understood that even though historically we have always had a business model of paying for copies, we’ve also always had other business models involving free provisioning and the economics were supported by ads or by an incentive to spread the word.  But anticircumvention came in to make it an infringement to attempt to disable a box or open a package in which the copyright owner had put a work.  That was the most important part of the proposed act.

That’s what we sent to Capitol Hill.  Concurrently, we were engaged in negotiations at WIPO, taking long-time negotiations (the Berne Protocol and the Phonograms protocol) and turned them into negotiations over what the internet should look like.  Most of our trading partners didn’t really recognize this broader distribution right, so one of the most important aspects of the emerging treaties in 1996 was, in addition to anticircumvention, a right of making available to the public.  Gave copyright a much broader footprint—an exclusive right under WIPO Copyright and Phonograms Treaties.  Adhered to by most countries. 

At the time, many people accused Lehman of making an end run around Congress and negotiating the treaty and then coming back and telling Congress we had to act that because we agreed to do so. They’re right; it was a deliberate end run. But we had both a domestic and international problem, because the internet knows no national boundaries. This legislation, in the end, implemented an international treaty obligation.  The 12-page proposal in the White Paper became a statute over 60 pages long, which is what happens when lobbyists get their hands on any proposal.  West Coast people think that Silicon Valley is the center of the universe, look down on DC; useful to educate people that what happens in DC affects your business (ed. note: I believe they know that; that education is not what’s necessary to overcome their contempt, though I’m with Evgeny Morozov in thinking we should be suspicious of that self-serving contempt in many circumstances; rather we need a conversation about the good that politics as politics can do, which is not immediately apparent in what Lehman is about to describe).  Final statute is a contract among many parties, in essence written into the law. More meetings on K Street than on Capitol Hill; different interest groups negotiate with each other about what the law should look like; if they agree people on Capitol Hill won’t say no.

By far the most significant provisions were the ISP provisions—we used service provider rather than access provider deliberately, in order to broaden the scope of the provisions.  All the telecom lobbyists, extremely powerful forces, descended like locusts and wanted out of any responsibility. 

We wanted to see the content industry bloom and expand; that was a US comparative advantage and we wanted to push such areas, so we supported Hollywood and the record industry.

Of course it was a disaster for the record industry, largely their own fault. Head of then-biggest record company in the world, Warner Records, wrote a book a few years later confirming what Lehman thought about record executives: they’re impresarios. The most successful are 45-year-old men who can think like 17-year-old girls and like to hang out at 3 am and do drugs with rock stars. But that’s not the mindset that does well at evolving new business models for highly complex technologies.  Now, though, they are starting to come out of the tank.

Some of the other content industries had more time—Hollywood has never really suffered; book publishing a bit, but other people like Amazon came up with new business models; Steve Jobs.

Now seeing maturation of business models that will be with us for quite some time. Business models are also contracts between groups.  Comcast now owns Universal; Viacom owns broadcast; they’re all intertwined.  Now everyone’s gotten together and the ISPs are going to cooperate with content owners, more gently than perhaps initially content owners wanted, in policing the internet. Finally seeing a settling down of the system.

In retrospect, a lot of the sturm und drang and paranoia has been much ado about nothing; the changes of the DMCA were quite modest. There were major adjustment problems adjusting, not to the DMCA, but the new technological and business environment, but we’re beginning to see old industries with robust new business models and fabulous industries that didn’t even exist when we first talked about the electronic superhighway.

Q: what’s the biggest unintended consequence of the DMCA?

A: For him, the ISP exception emerging from the White Paper—that was not what he intended.  This was part of a larger effort to adjust the US to an emerging new postindustrial, globalized economy.  We’re all better off if countries can take maximum advantage of their comparative advantages.  If everyone can trade that way, we’re all better off.  But WTO and TRIPS have been a huge failure—Special 301 reports from USTR are the same as they were before. The reason is that we did our part—you can’t buy cheap manufactured goods/textiles made in this country any more—but the jewel of the US economy is in Silicon Valley.  Google: one of the most successful American enterprises, doesn’t like DMCA much, but anyway can’t do business in China because of censorship.  Cheating and failure to enforce IP made that original vision not a reality.  The thing that he didn’t anticipate and is most disappointed about is that this construct we tried to create domestically and internationally hasn’t been effective on a global scale.

Q from Tyler Ochoa: if you agree that record industry’s problems were largely its own fault, what did it do wrong?

A: Give him three hours.  He thought what would happen would be that internet access providers controlling the pipe would cooperate. In the past, you’d get a phone bill with every call on it.  Likewise, he thought we’d rapidly move to digital diffusion/making available of works that were historically print/CDs/etc.  We’d move to distribution via broadband, with micropayments. Everyone could just get into the system, and a little content producer would get a small check as a small composer gets one from ASCAP/BMI.  He realized this would be a problem when, at a conference, a bunch of record VPs got up and said “the consumer will never give up the browsing experience of going to the record store.” 

One business transaction characterizing the problem was the merger/acquisition of Time Warner by America Online—internet upstart, then the giant.  Their market cap was so high it could acquire the biggest content company in the world.  Steve Case would use AOL to make all this stuff available through AOL! Had he done it at that time, which could have been done with music even with limited bandwidth, would have been different—but instead the idea was that AOL would put some articles from Time on AOL.  They had everything.  Napster never would’ve happened, because 80% of people online were going through AOL. If you’d made it really easy for them to get music that way, a la iTunes, history would’ve been a lot different.

Captains of industry, sadly, lack the wisdom they often attribute to themselves.  Many things in the US are the result of utterly incompetent CEOs who are more interested in the next quarter’s pay than in taking care of shareholders.  Catastrophe for music industry is one example.

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