Criminalising the consumer

IS IT legal to make a copy of that DVD you’ve just bought so the family can watch it around the home or in the car? In one of the most watched copyright cases in recent years, a judge in northern California ruled last month that copying DVDs for personal use was legal, given the terms of the industry’s licence and the way the copies were made.


The wider implication of the ruling remains clouded—not least because the DVD Copy Control Association, the loser in the case, has 60 days to appeal. But whatever the video industry may like to think, the writing is on the wall for copy protection.

Copyright is a tricky thing. It protects only the way that an author, designer, photographer, film-maker or composer has expressed himself. It does not cover the ideas or the factual information conveyed in the work.

What constitutes fair use or an infringement is trickier still. Much depends on the purpose and character of the borrowed material’s use. Limited reproduction for the purpose of criticism, comment, news reporting, teaching, scholarship and research is considered fair game. But the wholesale repackaging of the content for commercial use is a flagrant infringement.

In America, the Audio Home Recording Act of 1992 made it legal for people to record copyrighted radio broadcasts for personal use. But while the act said nothing about making digital recordings, ripping copyrighted music tracks off CDs and storing them on an iPod has become an everyday occurrence. Despite the number of iTunes downloaded for a fee, Apple would be in trouble if people were prevented from transferring legitimately owned CDs to their iPods. The software Apple gives away to iPod customers is designed to let them do just that.

Most people think it ludicrous that they can’t do the same with the DVDs they own. Now it seems, despite squeals from the movie industry, the law is finally moving in the video fan’s favour.

The issue in the recent case was whether Kaleidescape, a maker of digital “jukeboxes” that store a person’s video and music collections and distribute the entertainment around the home, had breached the terms of the DVD Content Control Association’s CSS (content scrambling system) licence.

A Kaleidescape server stores digital content ripped from CDs and DVDs on its hard drive. The content is then encrypted and fed to various screens and speakers around the home by a secure cable. Kaleidescape claimed that content distributed this way was even safer than it was on the original polycarbonate disks. The judge not only agreed, but couldn’t find any breach of the copy-protection licence either.

If the case ends there, to all intents and purposes the notion of fair use would appear to apply to DVDs as well as CDs. The movie industry, which nowadays depends as much on DVD sales as on box-office receipts, still seems to think that making life difficult for its customers is a recipe for success.

After likewise shooting itself in the foot for ages, the record industry is now falling over itself to abandon DRM (digital rights management) on CDs. A number of online music stores such as eMusic, Audio Lunchbox and Anthology have given up using DRM altogether. In a recent survey by Jupiter Research, two out of three music industry executives in Europe reckoned that dropping DRM would improve sales.

The latest music publisher to do so is EMI, which announced in January that it had stopped producing CDs with DRM protection. “The costs of DRM,” it declared, “do not measure up to the results.”

In an open letter entitled “Thoughts on Music”, even Steve Jobs, Apple’s charismatic boss and chief evangelist, recently called for the elimination of DRM. From this month, Apple’s iTunes will sell EMI’s highest quality recordings (those with sampling rates of 256 kilobits per second) without DRM for a small premium.

Belatedly, music executives have come to realise that DRM simply doesn’t work. It is supposed to stop unauthorised copying, but no copy-protection system has yet been devised that cannot be easily defeated. All it does is make life difficult for paying customers, while having little or no effect on clandestine copying plants that churn out pirate copies.

Now the copy protection on DVDs is proving just as easy to bypass. The biggest flop has been the CSS technology featured in the recent Kaleidescape case. It was first cracked back in 1999 by a Norwegian programmer called Jon Lech Johansen, who showed, in a few short lines of elegant code called DeCSS, just how trivial such lauded protection systems really were. Since then, even the DRM used to protect the new high-definition video disks (the Blu-ray format from the Sony camp and its HD-DVD rival from the Toshiba alliance) have been cracked wide open.

While most of today’s DRM schemes that come embedded on CDs and DVDs are likely to disappear over the next year or two, the need to protect copyrighted music and video will remain. Fortunately, there are better ways of doing this than treating customers as if they were criminals.

One of the most promising is Audible Magic’s content protection technology. Google is currently testing this to find the “fingerprints” of miscreants who have posted unauthorised television or movie clips on YouTube.

The beauty of such schemes is that they don’t actually prevent anyone from making copies of original content. Their purpose is simply to collect royalties when a breach of copyright has occurred. By being reactive rather than pre-emptive, normal law-abiding consumers are then left in peace to enjoy their music and video collections in any way they choose. Why couldn’t we have thought of that in the beginning?

WASHINGTON, April 7 — Senior members of Congress from both parties are working feverishly on legislation that could give consumers access to lower-cost copies of biotechnology drugs that now cost tens or hundreds of thousands of dollars a year.

Prospects for the legislation have increased since Democrats took control of Congress this year. Consumer groups, employers and insurers are lobbying for the bill, which they see as a way to hold down health costs.

The proposal faces formidable scientific and political obstacles. Brand-name pharmaceutical companies contend that biotechnology products, made from cells and living organisms, are so complex that a copy will never be identical to the original and therefore cannot be certified as safe without testing in humans.

Biotech medicines are the fastest-growing category of health spending, with sales of $40 billion last year, up 20 percent from 2005, according to IMS Health, a market research company. More than 400 biotech products are in the pipeline, for more than 100 diseases, including cancer, AIDS, diabetes and Alzheimer’s.

Conventional drugs are synthesized by putting atoms together from basic chemicals and are often in pill form.

Biotech drugs, also known as biologic products, are typically proteins made by modifying the DNA of bacteria, yeast or mammal cells, and they are often given by injection or infusion.

Supporters of the legislation received an unexpected boost when the chief medical officer of the Food and Drug Administration, Dr. Janet Woodcock, told Congress last month that the agency had the expertise and experience to decide what types of human and laboratory tests were needed to ensure that copies of a biotechnology drug worked as well as the original.

Brand-name drug manufacturers have urged Congress to require human trials before allowing the sale of any products billed as comparable or equivalent to biotechnology medicines already on the market.

But Dr. Woodcock said: “Where trials are not needed, it is of questionable ethics to repeat them. The use of human subjects for trials that are not needed is not desirable.”

Many biotech drugs are effective but expensive. Avastin, a cancer treatment made by Genentech, can cost $4,400 to $8,800 a month, with a maximum cost of $55,000 a year for people who qualify for the company’s patient assistance program.

Cerezyme, a drug made by Genzyme for Gaucher disease, costs $200,000 a year. Enbrel, made by Amgen for rheumatoid arthritis and psoriasis, costs an average of $16,000 a year.

Biotech treatments for multiple sclerosis range in price from $16,000 to $25,000 a year. “Many patients are denied access to these important drugs because even the co-payments can reach thousands of dollars a year,” said Arney Rosenblat, a spokeswoman for the National Multiple Sclerosis Society.

Consumers save billions of dollars a year by using low-cost generic versions of conventional drugs, which are approved by the government under a 1984 law.

One author of the 1984 law, Representative Henry A. Waxman, Democrat of California, is pushing a bill that would authorize the Food and Drug Administration to approve safe, lower-cost versions of biotechnology drugs.

Senators Charles E. Schumer and Hillary Rodham Clinton of New York, both Democrats, have introduced an identical bill, with support from several Republicans, including Senators Susan Collins of Maine and David Vitter of Louisiana.

The chief lobby for makers of biotech drugs, the Biotechnology Industry Organization, strongly opposes the bill, saying it would endanger patients and kill incentives for research and innovation.

The debate over biotech drugs is filled with paradoxes. Brand-name drug companies, which have for years criticized the regulation of drug prices in Europe, now point to Europe’s strict regulation of “follow-on biologics” as a possible model for the United States. Democrats, who have often criticized the F.D.A. as lax in enforcing drug safety laws, now say they trust the agency to decide whether copies of biotech drugs are safe and effective, without the full range of tests required for new products.

Patents Over Patients

WE could make faster progress against cancer by changing the way drugs are developed. In the current system, if a promising compound can’t be patented, it is highly unlikely ever to make it to market — no matter how well it performs in the laboratory. The development of new cancer drugs is crippled as a result.
The reason for this problem is that bringing a new drug to market is extremely expensive. In 2001, the estimated cost was $802 million; today it is approximately $1 billion. To ensure a healthy return on such staggering investments, drug companies seek to formulate new drugs in a way that guarantees watertight patents. In the meantime, cancer patients miss out on treatments that may be highly effective and less expensive to boot.
In 2004, Johns Hopkins researchers discovered that an off-the-shelf compound called 3-bromopyruvate could arrest the growth of liver cancer in rats. The results were dramatic; moreover, the investigators estimated that the cost to treat patients would be around 70 cents per day. Yet, three years later, no major drug company has shown interest in developing this drug for human use.
Early this year, another readily available industrial chemical, dichloroacetate, was found by researchers at the University of Alberta to shrink tumors in laboratory animals by up to 75 percent. However, as a university news release explained, dichloroacetate is not patentable, and the lead researcher is concerned that it may be difficult to find funding from private investors to test the chemical. So the university is soliciting public donations to finance a clinical trial.
Potential anticancer drugs should be judged on their scientific merit, not on their patentability. One solution might be for the government to enlarge the FDA's “orphan drug” program, which subsidizes the development of drugs for rare diseases. The definition of orphan drug could be expanded to include unpatentable agents that are scorned as unprofitable by pharmaceutical companies.

Digital lock's rights and wrongs

When a piece of music is purchased you might assume you can listen to it in on any number of different devices: at home, in the car or on a portable music player. But, in the UK at least, you would be wrong.

"You can't copy any form of music or film without the copyright owner's consent," explained copyright lawyer Hamish Porter.

"So if you buy a CD from a record shop, even copying that CD onto your iPod is unlawful unless you have the copyright owner's consent."

In practice, stopping consumers making CD backups has proved impossible to enforce. But our habits are changing; around 10% of purchased music is now downloaded. This raises different issues.

"When you download an electronic copy of a musical work or a film from a website," said Mr Porter, "the copyright owner, as part of the contract under which you have downloaded it, has allowed you to copy that file onto a laptop or an iPod or onto a hard disc.

The problem, some believe, is that the music labels have made these contracts pretty restrictive by using something called Digital Rights Management (DRM).

Flaws

David Roundtree, the drummer with Blur told us: "The idea is that DRM is supposed to allow you to control the copying of your music.
"That's the point of it all. You're supposed to be able to sell something to somebody and restrict what they do with it after that."

Software is embedded in downloaded music, restricting which devices it can be used with and how many copies can be made.

Many in the recording industry claim DRM is necessary to fight music piracy.

"The problem that we really face at the moment is unfettered filesharing, free copying of MP3s," explained Richard Gooch from the International Federation of Phonographic Industry which represents all the major record labels.

"MP3 is fine, but what is not fine is taking artists' work and then swapping it with a large number of people over the internet for free."

DRM is the solution, the music industry says.

But Simon Wheeler, the Director of Digital Beggars Banquet Records, disagrees.

"DRM can allow copyright holders to protect their intellectual property but considering that over 90% of the music sold in the music market today is on a non-DRM format called the CD, then that's not necessarily an answer."

David Roundtree also has misgivings: "I think the fundamental problem with it is that it doesn't work. If it did work we would be having a rather different conversation.
"It's best summed up by the old computer security maxim: whatever you can do in software, you can undo in software. In the case of music, whatever complicated system you have in place, the music has to come out of two wires that you have plugged into a loud speaker.
"I can just as easily plug those into a recording device as a loud speaker, so the whole concept is fundamentally flawed."

Incompatible

There are two main kinds of DRM. One is based on Microsoft code and is used by most of the major download services.
But the one store which dominates the market, Apple's iTunes, uses a completely different and incompatible DRM system called FairPlay.
FairPlay allows music downloaded from the iTunes store to be played on computers running iTunes that have been authorised by the consumer and only one portable device, iPods.

Users can copy downloaded songs to a CD and then copy the disc back on to the computer so that the songs can then be moved to other portable devices - but the quality of the music is affected.

"I think the problem that we've got with DRM at the moment is the most popular music player on the market, the iPod," said Mr Wheeler.
"If you buy digital music outside of iTunes or an MP3 based service then you're not going to be able to put the music on your iPod. I think that confuses consumers more than anything else."

The fight back against DRM has already begun. In Europe, Apple's system is under fire for being anti-competitive and is facing legal action in various European countries.

Consumers are also making their voices heard through various organisations which oppose DRM, which they term Digital Restrictions Management.

While the major labels are still largely behind DRM, the independent sector prefers a different approach. Sites like E-Music and Audio Lunchbox sell DRM-free tracks, all of which come from Indie labels.

"I believe that if music was sold without DRM there would be less confusion for the consumer," said Mr Wheeler. "They wouldn't have to worry whether the track they brought from service X would play on player Y."

"They could buy with confidence knowing that they could take their music with them on whatever portable device they wanted.

"I think this growth in confidence for the consumers would lead to market growth and I think that's a real benefit for the industry."

DRM-free or otherwise, at least some more imaginative approaches to music services have been appearing. Spiralfrog promises ad-supported downloads - when or if it eventually launches.

Aime Street has launched. Here, the price of each track is decided by its popularity. Less popular or new tracks are free, rising to a maximum of 98 cents if their popularity increases. At the moment it deals almost exclusively in independent music.