Report to Congress Pursuant to Section 104 of the Digital Millennium Copyright Act

Library of Congress Copyright Office

Department of Congress National Communications and Information Adminstration

[Docket No. 000522150-0287-02]

Report to Congress Pursuant to Section 104 of the Digital Millennium Copyright Act

Text of Presentation by Blue Spike CEO Scott Moskowitz
Delivered November 29, 2000 at the US Copyright Office, Washington

When Thomas Jefferson said, "information wants to be free," he meant freely accessible, available to the eyes and ears of people who wait to be enriched by new knowledge and experience. That concept has informed much of our politics, influenced our Copyright laws and, not incidentally, helped build robust consumer markets.

The threat to all of these advances by lock-and-key systems for securing copyrighted works is something that gravely concerns us. Access restriction systems confront all of the good things that open and free access to information has demonstratively engendered. Access restriction technologies threaten the viability of a robust and fluid market for creative works.

Blue Spike is the leading developer of secure digital watermarking technology for use in copyright management systems and other applications that can create trusted systems as a means of balancing the interests of copyright owners and information consumers. Digital watermarking, when properly implemented, enables differentiations to be made between seemingly identical digital copies.

As such, digital watermarks act as receipts for the commercial exchange of valuable information. Blue Spike has taken its place as a dissident proponent of copyright security systems. The company develops technologies that provably secure copyrights of digital assets like music while, at the same time, preserving the accessibility of those assets for consumers and users. In this way, our technology reflects the principals of First Sale and Fair Use doctrines that access restriction schemes jeopardize.

We appear today to make two principal points. First, Congress should be encouraged to amend section 109 of the Copyright Act to create the digital version of the First Sale doctrine. And second, Congress should be encouraged to adopt changes to section 117 that recognize the centrality of ephemeral copying to the operation of the Internet and more and more consumer products.

Blue Spike believes that updating copyright law in these ways is necessary for the Internet to mature as a delivery channel for digital information products. Moreover, it speaks to the preservation of copyright's balance of interests.

1. Blue Spike believes that Section 109 of the Copyright Act should be amended to include digital transmissions, as proposed in section 4 of H.R. 3054 by Representatives Rick Boucher and Tom Campbell It is a vital and commonsense extension of the First Sale doctrine that would bring relief to librarians, information curators and consumers. Today, users of digital information work under a cloud of uncertainty as to how the law applies in their handling of digital content. The Digital Millennium Copyright Act (DMCA), in addition, specifically prohibits certain transformations of digital content, provisions with the potential to impede workaday storage, archival and retrieval functions.

Blue Spike suggests that Representative Boucher's and Campbell's amendment would give relief to users and curators of digital information and update Copyright to reflect contemporary context. In respect to the concerns of the copyright holders, Blue Spike notes that the First Sale doctrine would only apply if the underlying work were actually deleted - just as it only applies when you physically hand an analog original to someone today.

The consequences of allowing the law to lag digital technology will be felt by educators, librarians, consumers and - not coincidentally - by technologists. Content owners and providers understand the marketplace of ideas. They have little interest in the archival requirements of universities and libraries that must be able to make copies of works in different formats in order to ensure continuity of access and to serve their constituents.

Moreover, leaving digital works uncovered by First Sale doctrine gives copyright holders and the technologists who develop copyright security systems little impetus to develop more nuanced, and context-appropriate means of securing their works against infringement than access restriction systems. In an environment in which certain kinds of copying were protected under First Sale doctrine, technologists and content owners would be pressed to explore more innovative means of securing copyrights than digital padlocks.

This modification of First Sale doctrine will preserve a lot of the rights that content users enjoy now. It will not change the kinds of protections that content owners can provide for their digital assets, though we believe expansion of Fair Use doctrine will spur further exploration into copyright control schemes beyond lock-and-key systems. In context of market development, if the law keeps pace with technology, content owners and consumers will benefit to the greatest extent as new communications media and Internet technologies generate recognition and demand for artists' work.

2. Blue Spike believes that Section 117 of the Copyright Act should be amended to provide that it is not an infringement to make a copy of a work in a digital format if, first, such copying is incidental to the operation of a device in the course of an otherwise lawful use of a work and, secondly, if it does not conflict with the normal exploitation of the work, as proposed in section 6 of H.R. 3048.

Adoption of this provision will simply make the law cognizant of a fact of life in the digital age. The Internet and increasing numbers of electronic devices cannot function without ephemeral copying. The Internet functions by delivering copies of documents through a publicly accessible network. Those copies are further cached on PCs and various terminal devices. Today, many consumer electronics products already use some form of caching to deliver content. Tomorrow, even ordinary radios and televisions will rely on caching functions to allow quick and convenient review of content. The law must reflect this reality.

Further, the Internet has evolved very rapidly, in ways that are historically unprecedented. There is no Vail Doctrine to synchronize development and regulation for ISPs the way there was for the deployment of our national telephone network, the Internet's most accessible analogue. Subsequently, ISPs have been placed in jeopardy on a number of different fronts, only partially ameliorated by provisions of the DCMA. Section 6 of the amendment would further reduce the risk of potential legal liability for ISPs and others, and thus would encourage greater use of the Internet to disseminate copyrighted works.

Here we see the need for greater intelligence on the movement of copyrighted works, rather than on restricting access, a task for which digital watermarking is uniquely qualified. When a watermark registers the responsible parties for possession and distribution of a digital content object - (Copy X was issued to Distributor Y) - those parties can be called to answer for their indiscretions, placing incidental ISPs out of the field of contest.

In conclusion, we believe the proposed revisions to the Copyright Act proposed by Representatives Boucher and Campbell and cosponsored by over 50 of their colleagues would represent more than wise law making. They are necessary to ensure that the digital future is at least as rich as our analogue past. Copyright and the doctrines that have extended from it have provided formidable benefits to markets and societies. They will continue to be our silent benefactors if we work to preserve the balance that defines them in law.

The lock-and-key systems that are being proposed today to control access to copyrighted digital works upsets that balance and confronts the law. Unfortunately, the DMCA has legitimized their de facto trumping of copyright law and convention. Intelligent, imaginative use of technology for content distribution and content protection within the bounds of an up-to-date copyright law - rather than the threat of litigation - will better promote the interests of content owners and society.

If there is one man-made structure that does not turn to dust, it is the temple of human knowledge. We are all products of it; we are all beneficiaries of it, profiting every day from which the culture and commerce which proceed from it. When a tollgate is being erected at the entrance to that temple, we should interrogate those who would build them and measure the true costs of the levies they would impose.

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