Re: [DMCA-Activists] Copyright Versus Consumers' Rights

[Ruben Safir]

How about copyright versus HUMAN rights?

Ruben

NY Fair Use http://fairuse.nylxs.com/


On Mon, Mar 31, 2003 at 10:28:29AM -0500, Seth Johnson wrote:
> 
> (Forwarded from DMCA Discussion list)
> 
> -------- Original Message --------
> Subject: [DMCA_Discuss] Copyright Versus Consumers' Rights
> Date: Mon, 31 Mar 2003 14:18:45 +0400
> From: Vladimir Katalov <address@hidden>
> To: address@hidden
> 
> Copyright Versus Consumers' Rights:
> How Companies are Using the Digital Millennium Copyright Act to Thwart
> Competition
> By CHRIS SPRIGMAN 
> Tuesday, Mar. 25, 2003
> 
> http://writ.news.findlaw.com/commentary/20030325_sprigman.html
> 
> Back in 1998, Congress rewrote copyright law to address the entertainment
> industry's concern that digital piracy would destroy the ability of content
> owners to profit from copyrighted books, films and music. The statute that
> Congress passed, the Digital Millenium Copyright Act (DMCA), makes illegal
> both the circumvention of technical measures that control access to
> copyrighted material, and "trafficking in" any tools or technology that can
> be used in the process of circumvention.
> 
> The DMCA immediately became controversial - in part because its broad
> language swept in even the limited forms of copying (for example, for
> comment, criticism, or parody) that have traditionally been allowed as fair
> use.
> 
> Early DMCA cases were also controversial. They targeted the circumvention of
> access and copy controls in various media, from streaming audio, to DVD
> films, to computer games, to e-books. Like the statute itself, the results
> in these cases arguably trampled fair use, and inhibited innovation.
> Nonetheless, in all of these cases the claims were at least related to
> Congress's intent in enacting the DMCA - the protection of independently
> marketed copyrighted works against digital piracy.
> 
> Recently, however, Lexmark - the Lexington, Kentucky company that is the
> world's second largest manufacturer of computer printers and printer
> supplies - filed a new kind of DMCA case that arguably does not track
> Congress's intent.
> 
> Unlike in prior DMCA disputes, the object of Lexmark's DMCA claim is not to
> prevent piracy of a copyrighted work. Instead, it is to prevent rivals from
> offering cheaper cartridges for Lexmark's printers. This is not copyright
> protection, but profit protection.
> 
> Looking at the DMCA's legislative history, it's easy to see what Congress
> had in mind - protecting Hollywood's profits from pirates. Unfortunately,
> the text of the statute is so broadly drawn that all sorts of companies will
> be tempted to use suits like Lexmark's to shut out legitimate competitors.
> 
> The Basis for Lexmark's DMCA Suit
> 
> In Kentucky federal court, Lexmark has sued Static Control Corp. - a North
> Carolina firm that makes over 3,000 parts for 70 models of printer
> cartridges, so that other companies can recycle used cartridges and sell
> them at substantially discounted prices. Lexmark asserts in its suit that
> Static Control has infringed Lexmark's copyrights, and violated the DMCA.
> 
> To understand the conflict, a bit of background on the economics of the
> printer business is necessary. Printer manufacturers sell their machines on
> the cheap. They make most of their profits selling the replacement ink and
> toner. (It's somewhat like the razor industry, which makes its money off
> expensive razor blades, not relatively cheap shaver handles.)
> 
> Lexmark itself is no exception: Its sale of printer supplies grew 19 percent
> last year, and accounted for more than half of the company's $4.4 billion in
> sales. In contrast, revenue from its printers rose less than 1 percent.
> 
> Predictably, however, high prices for printer ink and toner led to a huge
> business opportunity for firms that collect used printer cartridges;
> refurbish and refill them; and sell them at steep discounts.
> 
> Here's what I mean by "steep": Suppose you have a Lexmark Optra T622 laser
> printer. A Lexmark printer cartridge for that model costs about $375. A
> remanufactured cartridge costs about $165--yet is basically the same in
> terms of both longevity and print quality. Obviously, no one in their right
> mind would buy the $375 cartridge.
> 
> Sensing doom, Lexmark responded this way: It installed tiny computer chips
> on its printer cartridges. And it designed its printers to function only if
> they complete an authentication sequence - also known as an "electronic
> handshake" - with a program residing on the chip.
> 
> (The program on the Lexmark chip also tells the printer when toner is
> running low. Interestingly, Lexmark also sells a version of its cartridges
> that does not use a chip - and can therefore be remanufactured - but charges
> an additional $20 to $50 per cartridge.)
> 
> In response, Static Control designed its own "Smartek" chip that allows
> remanufactured cartridges to work in some of Lexmark's printers.
> 
> Lexmark sued, bringing both copyright infringement and DMCA claims. Soon, it
> moved for a preliminary injunction, and won its motion.
> 
> Lexmark's Initial Win: The Preliminary Injunction
> 
> A "preliminary injunction" is a temporary injunction that commands the
> defendant to do, or desist from doing something, for the remainder of the
> case. It requires proof both of likelihood of success on the merits - that
> is, proof the defendant is likely to win at trial - and proof of irreparable
> harm - that is, harm money damages cannot fully compensate.
> 
> Finding that Lexmark has proven both points, the Kentucky federal court
> granted the injunction, ordering Static Control to cease making and selling
> its Smartek chip. In so doing, it made a number of important findings of
> fact.
> 
> First, on the copyright claim, it found that that Static Control had copied
> wholesale the programs stored on the Lexmark chip - rather than reverse
> engineering them as it had claimed. (Indeed, embarrassingly for Static
> Control, its code even contained a non-functional ASCII code sequence
> spelling out Lexmark's stock market ticker symbol!) That, the court held,
> suggested Static Control had likely violated the copyright laws.
> 
> Second, on the DMCA claim, the court found that the Smartek chip was an
> illegal "circumvention device" because it effectively mimicked the Lexmark
> authentication procedure - giving the very same handshake the Lexmark chip
> gave.
> 
> The DMCA has a specific exception for reverse engineering. (As I detailed in
> an earlier column, reverse engineering - here, using programming methods to
> reconstruct an approximation of the underlying source code of the Lexmark
> chips - can sometimes be legal as "fair use" under copyright law.) To fit
> within the DMCA's exception, the reverse engineering must be geared to
> achieve interoperability, by way of an "independently created computer
> program." But, the court held, Static Control's copied program was plainly
> not an independently created one. Thus, it did not qualify for the DMCA's
> reverse engineering exception.
> 
> Back to the Drawing Board for Static Control? 
> 
> How great a loss was the preliminary injunction ruling for Static Control,
> from a business standpoint? Interestingly, not as great as it might seem.
> 
> The court made a specific finding that Static Control could have figured out
> by reverse engineering how to write a different program that passed the
> authentication test. So if Static Control now does so in a "clean room"
> environment - that is, one where none of Static Control's engineers ever see
> Lexmark's source code - the resulting chip may be perfectly legal.
> 
> In sum, the problem, the court suggested, was not Static Control's result,
> but its process. If a reverse engineering process produces the same result -
> the same kind of chip as the Smartek chip - that's fine from a legal
> standpoint.
> 
> Meanwhile, for now, Hewlett-Packard, the world's largest printer
> manufacturer, has refused to follow Lexmark's lead. And the European
> Parliament, which is concerned about the amount of "electroscrap" - that is,
> computer-related waste - headed to landfills, recently approved a law that
> is likely to promote third-party remanufacturers of printer cartridges.
> 
> The Chips in Your Future: Other Industries the Ruling May Affect
> 
> What's the larger relevance of the suit? If Lexmark is successful, the suit
> may cause a significant shift in the balance between intellectual property
> rights, and free and open competition. Not only the printer industry, but
> others, may be profoundly affected.
> 
> Consider the multi-billion dollar U.S. market for car parts. About 75
> percent of cars with expired warranties are repaired by independent repair
> shops that regularly use cut-rate parts manufactured by aftermarket firms.
> Many of these parts - for example, antilock brakes, ignition systems,
> airbags, emissions sensors - contain microchips. Car manufacturers could
> re-design these parts, and others like them, to contain DMCA-protected
> software programs that interact with a car's on-board computers to allow
> only manufacturer-approved parts to be used.
> 
> If car manufacturers followed that route, price competition from independent
> repair shops and parts manufacturers could vanish - at least until the
> independents figured out a way to reverse engineer the necessary "electronic
> handshake" to get the cars to accept their parts, too.
> 
> The computer industry, too, could take a similar course, with even more
> damaging results. The near ubiquity of computers and the Internet have given
> rise to an overwhelming need for interconnection between different elements
> of computer systems.
> 
> If hardware or software companies can add access controls to their
> interfaces - as Lexmark did with its printers - then those companies will be
> able, in effect, to determine which products made by other firms could
> interoperate with their products.
> 
> If a dominant company or group of companies uses access controls to limit
> interoperability, competition and innovation may be seriously harmed. Even
> the temporary delays caused by the need for reverse engineering to occur
> could be very harmful to competitors; by the time reverse engineering is
> complete, the dominant company may have moved on to next year's model - and
> another, harder-to-reverse-engineer chip.
> 
> The DMCA could also cause mischief in the markets for consumer electronics
> by limiting the availability of both replacement parts and third-party
> accessories. One might imagine, for example, a cell phone manufacturer
> applying technological measures to exclude competition in replacement
> batteries.
> 
> Or consider a case that has already arisen, involving remote control
> garage-door openers. Chamberlain is a manufacturer of both doors and remote
> control openers for them; its openers have a feature that guarantees that
> they work only when certain software codes are received. It has sued
> Skylink, a company that makes universal remote controls that circumvent this
> feature, under the DMCA.
> 
> Static Control Seeks a DMCA Exemption
> 
> What should be done to protect competition? Static Control has already begun
> to explore one possibility.
> 
> In passing the DMCA, Congress adopted a safeguard provision directing the
> United States Copyright Office to undertake a triennial review relating to
> the statute. The purpose of the review is to exempt from the statute's
> anticircumvention provisions classes of works where the Copyright Office
> found that technological protection measures had impeded lawful uses.
> 
> Static Control has filed a petition with the Copyright Office asking for an
> exemption that would cover its Smartek chip. Specifically, it has asked the
> Copyright Office to exempt from the DMCA small, embedded computer programs
> that "do not otherwise control the performance, display or reproduction of
> copyrighted works that have an independent economic significance."
> 
> Put more simply, if Static Control gets its wish, only circumvention done
> for the purpose of copying an independently valuable piece of expression
> like a book or a film would still come within the DMCA. That makes perfect
> sense: Indeed, it would mean that the DMCA would be restored to its original
> purpose.
> 
> Twisting the statute beyond Congress's intent works to no one's advantage,
> except that of corporations who seek to squelch competitors. Static
> Control's request should be granted. If it isn't, consumers will predictably
> suffer.
> 
> _______________________________________________
> 
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