Silicon Valley vs. Hollywood

· Requires anyone selling—or creating and distributing—“digital media devices” to include government-approved security standards.
o “Digital media devices” are defined as any hardware or software that can reproduce or display copyrighted works (potentially includes every piece of software, PC, hard drive, CPU, motherboard, PDA, DVD, or CD player, and every monitor manufactured or distributed in our country!) o Information technology, consumer electronics, and media industries would have one year to arrive at consensus security system standards—or else the Federal Communications Commission could impose security standards with which all manufacturers of “digital media devices” would have to comply.
· Bans importing software or hardware without government-approved security standards · Prohibits knowingly removing copy-protection markers from digital content · Prohibits knowingly distributing or sending someone any digital content that has been purged of its this-is-copy-protected marker.

Key Advocates from Industry:

· Motion Picture Association of America (MPAA)/Jack Valenti
· Recording Industry Association of America (RIAA)/Hilary Rosen
· Walt Disney/Michael Eisner & Robert Iger
· News Corp/Rupert Murdoch

Arguments Made in Favor:

· Important step to cracking down on online privacy

o Piracy is a disincentive for content creators who are hesitant to release content digitally without copy-protection standards.

· Force the IT and consumer electronics industries to work with the entertainment industry on establishing copy-write protection standards. Claim that IT industry hasn’t been willing to come to the table in the past.

According to Hilary Rosen of RIAA: "…sends an unmistakable signal about the importance of protecting digital music and other content from piracy. Without stringent protections, online piracy will continue to proliferate and spin further out of control. We appreciate that [the sponsoring] Senators … have sent a wake-up call to the information technology and consumer electronics industries that the time has come to achieve a voluntary marketplace solution to the growing threat of online piracy. We have been, and continue to be, eager to work out a voluntary solution, for that is in the best interests of everyone involved, especially the American consumer.”

According to Jack Valenti of MPAA: “Simply put, theft is theft, whether one pilfers a videocassette from a Blockbuster store, or distributes bootleg software or ‘knock-off’ Pentium chips, or downloads a movie from the Web without any compensation to its creators. At this moment, the film industry confronts a broad assault of movie theft over the Internet. Estimates are that over 350,000 films are being downloaded illegally every day. Moviemakers are eager to enlarge consumer choice by offering movies on the Net, to present a legal alternative to stealing—that is, making digital movies available to consumers at a fair and reasonable price.”

Key Opponents from Industry:

· Software & Information Industry Association
· DigitalConsumer.org
· Business Software Alliance
· Consumer Electronics Association
· Technology Industry Council
· Computer Systems Policy Project
· Electronic Frontier Foundation
· AOL Time Warner & Sony leaning against the bill
· Nearly every high-tech company/CEO, including:

o Intel CEO Craig Barrett & Chairman/Founder CEO Andy Grove
o Compaq Chairman & CEO Michael D. Capellas
o Dell Chairman & CEO Michael S. Dell
o IBM Chairman & CEO Louis V. Gerstner, Jr.
o Intuit President & CEO Steve Bennett
o Microsoft CEO Steven A. Ballmer
o Motorola Chairman & CEO Christopher B. Galvin

Arguments Made Against:

· Would impose intrusive and unwieldy government regulations to the detriment of the copyright community, the high-tech community and consumers.

o The bill requires the government to be involved in every step of the process and gives the Government the ultimate say in determining what Digital Rights Management (DRM) standards will be adopted and how they will be implemented today and into the future.

· The marketplace - not the Government - should determine who the winners and the losers in the DRM space are.

o Only through competition in the DRM industry and the stakeholders working together to develop mutually acceptable standards for DRM solutions to the piracy problems will we get the best DRM technology solutions.

· Does not protect fair use. Although section 3(e)(2) discusses personal use copies, it narrowly defines personal use as just one copy “at the time [the program] is lawfully performed.” This exemption for personal use is substantially narrower than the legal rights that consumers have had in the past.
· It just won’t work. A government mandated technology standard would not be any more effective at preventing piracy. Instead, the consumer will lose as another technology that deprives them of control and flexibility is forced upon them.
· Isn’t good for consumers. In 1998 Hollywood went to Congress with a proposition: give them greater copyright protection and they would unleash a tidal wave of legal, downloadable digital movies and music for consumers to enjoy. As a result, Congress passed the Digital Millennium Copyright Act (DMCA). But four years after the passage of the DMCA, the only outcome has been media company lawsuits against innovative companies and threats against consumers. Now, Hollywood is back with the CBDTPA making the same claims they made in 1998: "Give us more protection and great things will happen." We have no reason to believe that the CBDTPA will be any different than the DMCA.
· The CBDTPA undermines innovation. The CBDTPA will inevitably prevent innovation because it is the most sweeping regulation of the information technology sector in history. The CBDTPA gives content companies the ability to veto devices like the VCR and the digital Walkman. To work, this copy-protection technology has to "know" the legal and illegal uses of a consumer's media. Then it needs to allow the legal uses and prevent the illegal ones. That requires content companies to anticipate ahead of time all possible legitimate uses. It also gives them effective veto control over all unanticipated uses.
· It is a break with precedent, since we have not heretofore insisted that consumer technology be government-approved.
· It imposes costs on technology manufacturers unfairly. (It's not their fault that the music industry makes CDs that are easy to copy.)
· It's insulting: The entertainment industry is treating its customers as presumptive criminals.

Quotes from Andy Grove’s strongly worded article in the Wall Street Journal:

· CBDTPA “is a bigger threat to America's information technologies industry than the recession or any external challenge yet encountered in its history.”
· “The infrastructure required to perform this task [required by the bill] boggles the mind. The costs would be staggering. Legal questions abound. Imagine the post office being required to open every envelope to inspect it for contraband.”
· “Assuming effective protection schemes are possible, who should implement them? Is it the responsibility of the technology industry to protect other industries from the challenges that a new technology can bring? Were the manufacturers of printing presses forced to protect the monks? Was the PC industry forced to protect the mainframe computer industry? Why is this case any different?”
· The “biggest question is, should such protection be done at all by anyone? There is an alternative, although the entertainment industry has been reluctant to pursue it with any degree of conviction. That is, to embrace what the technology offers and provide legitimate content to their consumers with even greater ease of use than the illegitimate alternatives that they are fighting.”

What the politicians & the administration say:
Senator John McCain’s (R-Arizona): “I believe the concerns of content providers are justified. They invest creativity, effort, and capital into producing high quality films and programming and should be able, adequately, to protect their investments. I am apprehensive, however, of proposals that select technological winners and losers and mandate government intervention in the marketplace.”

Senator Sam Brownback (R-Kansas): “While I do believe government has a role to play in the development of a converged digital environment, I would be extremely hesitant regarding any proposal for government to mandate copy-protection technology.” Brownback said he was “comfortable on relying on existing law to address copy protection issues raised by the onset of digital convergence and the use of content by law abiding consumers in their own homes. In my view, federal regulation of these issues will simply ensure that technology is tied to those regulations. Innovation will be sapped. This does not benefit consumers, IT and consumer electronic companies, nor will it ultimately benefit content providers. The marketplace, not Congress, should find an answer.”

Senator Pat Leahy (D-Vermont): “A government-mandated technical standard may produce a one-size-fits-all technology that may not suit the purposes of all content owners and end up stifling innovative new technologies and implementations.”

James Rogan, the Commerce Department's undersecretary for intellectual property: “negotiations are presently underway among hardware manufacturers and content owners to develop improved means for protecting online content… Before Congress rushes into the imposition of a legislative solution I hope its members will grant more time for the free market to find its own middle ground.”

Rep. Howard Coble (R-North Carolina): “… concerned that this approach is too interventionist and could lead to standards which favor certain brands of software over others, and which could quickly become obsolete as technology improves or changes.”

Rep. W.J. "Billy" Tauzin (R-La.): “I'm very encouraged today. The studios are coming around to the notion that the Internet is a friend. They are being proactive…. I understand Hollings is using the legislation as a vehicle to pressure the various parties, and that's fine and a goal I support, but the hammer is what concerns me. If the Congress ends up defining the standards of protections, I think that's the worst of all worlds."

BACKGROUND Reading

Text of the bill at www.senate.gov, and enter “S.2048” into the “Bill Search” window.
Senator Holling’s Statement
Rep. Adam Shiff’s letter asking for support
Andy Grove’s WSJ editorial in opposition
Jack Valenti’s WSJ editorial in response to Grove
Jack Valenti’s Statement
Hilary Rosen’s Statement
Tech industry leader’s letter to Hollywood urging inter-industry cooperation
Software & Information Industry Association letter in opposition
DigitalConsumer.Org argument in opposition
Intel’s Letter to Senator Hollings

Legal Opinions
Lawrence Lessig Q&A about CBDTPA in BusinessWeek
Lessig in NY Times: Jail Time in the Digital Age
Roger Parloff, The American Lawyer

Articles

o Salon.Com
o Variety: MPAA takes its time on Piracy Bill
o Washington Post
o National Review piece on Senator Hollings’s hostility to Tech
o Sonia Arrison, Tech Central Station
o Wired Articles:

Ø Anti-Copy Bill Hits DC
Ø Content Spat Split over Party Lines
Ø Feinstein Chooses Hollywood over Silicon valley
Ø House Cool to Copy Protection
Ø White House Cool to Hollings Bill
Ø Primer on bill
Ø High-Tech out of Hollywood