Law and Information

John Palfrey and I released today in Washington D.C. a White Paper and three case studies on ICT Interoperability and eInnovation (project homepage here.) The papers are the result of a joint project between Harvard’s Berkman Center and the Research Center for Information Law at St. Gallen, sponsored by Microsoft. Our research focused on three case studies in which the issues of interoperability and innovation are uppermost: digital rights management in online and offline music distribution models; various models of digital identity systems (how computing systems identify users to provide the correct level of access and security); and web services (in which computer applications or programs connect with each other over the Internet to provide specific services to customers).

The core finding is that increased levels of ICT interoperability generally foster innovation. But interoperability also contributes to other socially desirable outcomes. In our three case studies, we have studied its positive impact on consumer choice, ease of use, access to content, and diversity, among other things.

The investigation reached other, more nuanced conclusions:

• Interoperability does not mean the same thing in every context and as such, is not always good for everyone all the time. For example, if one wants completely secure software, then that software should probably have limited interoperability. In other words, there is no one-size-fits-all way to achieve interoperability in the ICT context.
• Interoperability can be achieved by multiple means including the licensing of intellectual property, product design, collaboration with partners, development of standards and governmental intervention. The easiest way to make a product from one company work well with a product from another company, for instance, may be for the companies to cross license their technologies. But in a different situation, another approach (collaboration or open standards) may be more effective and efficient.
• The best path to interoperability depends greatly upon context and which subsidiary goals matter most, such as prompting further innovation, providing consumer choice or ease of use, and the spurring of competition in the field.
• The private sector generally should lead interoperability efforts. The public sector should stand by either to lend a supportive hand or to determine if its involvement is warranted.

In the White Paper, we propose a process constructed around a set of guidelines to help businesses and governments determine the best way to achieve interoperability in a given situation. This approach may have policy implications for governments.

• Identify what the actual end goal or goals are. The goal is not interoperability per se, but rather something to which interoperability can lead, such as innovation or consumer choice.
• Consider the facts of the situation. The key variables that should be considered include time, maturity of the relevant technologies and markets and user practices and norms.
• In light of these goals and facts of the situation, consider possible options against the benchmarks proposed by the study: effectiveness, efficiency and flexibility.
• Remain open to the possibility of one or more approaches to interoperability, which may also be combined with one another to accomplish interoperability that drives innovation.
• In some instances, it may be possible to convene all relevant stakeholders to participate in a collaborative, open standards process. In other instances, the relevant facts may suggest that a single firm can drive innovation by offering to others the chance to collaborate through an open API, such as Facebook’s recent success in permitting third-party applications to run on its platform. But long-term sustainability may be an issue where a single firm makes an open API available according to a contract that it can change at any time.
• In the vast majority of cases, the private sector can and does accomplish a high level of interoperability on its own. The state may help by playing a convening role, or even in mandating a standard on which there is widespread agreement within industry after a collaborative process. The state may need to play a role after the fact to ensure that market actors do not abuse their positions.

While many questions remain open and a lot of research needs to be done (including empirical studies!), we hope to have made a contribution to the ongoing interoperability debate. Huge thanks to the wonderful research teams on both sides of the Atlantic, especially Richard Staeuber, David Russcol, Daniel Haeusermann, and Sally Walkerman. Thanks also to the many advisors, contributors, and commentators on earlier drafts of our reports.

Today, I attended a small, but really interesting conference chaired by my colleagues Professor Werner Wunderlich und Prof. Beat Schmid from the Institute for Media and Communication Management, our sister institute here at the Univ. of St. Gallen. The conference was on “The Future of the Gutenberg Galaxy” and looked at trends and perspectives of the medium “book”. I’ve learned a big deal today about the current state of the book market and future scenarios from a terrific line-up of speakers. It was a particular pleasure, for instance, to meet Prof. Wulf D. von Lucus, who’s teaching at the Univ. of Hohenheim, but is also the Chairman of the Board of Carl Hanser Verlag, which will be publishing the German version of our forthcoming book Born Digital.

We covered a lot of terrain, ranging from definitional question (what is a book? Here is a legal definition under Swiss VAT law, for starters) to open access issues. The focus of the conversation, though, was on the question how digitization shapes the book market and, ultimately, whether the Internet will change the concept “book” as such. A broad consensus emerged among the participants (a) that digitization has a profound impact on the book industry, but that it’s still too early to tell what it means in detail, and (b) that the traditional book is very unlikely to be substituted by electronic formats (partly referring to the superiority-of-design-argument that Umberto Eco made some time ago).

I was the last speaker at the forum and faced the challenge to talk about the future of books from a legal perspective. Based on the insights we gained in the context of our Digital Media Project and the discussion at the forum, I came up with the following four observations and theses, respectively:

Technological innovations - digitization in tandem with network computing – have changed the information ecosystem. From what we’ve learned so far, it’s safe to say that at least some of the changes are tectonic in nature. These structural shifts in the way in which we create, disseminate, access, and (re-)use information, knowledge, and entertainment have both direct and indirect effects on the medium “book” and the corresponding subsystem.

Some examples and precursors in this context: collaborative and evolutionary production of books (see Lessig’s Code 2.0); e-Books and online book stores (see ciando or Amazon.com); online access to books (see, e.g., libreka, Google Book Search, digital libraries); creative re-uses such as fan fiction, podcasts, and the like (see, e.g., LibriVox, Project Gutenberg, www.harrypotterfanfiction.com).

Law is responding to the disruptive changes in the information environment. It not only reacts to innovations related to digitization and networks, but has also the power to actively shape the outcome of these transformative processes. However, law is not the only regulatory force, and to gain a deeper understanding of the interplay among these forces is crucial when considering the future of books.

While fleshing out this second thesis, I argued that the reactions to innovations in the book sector may follow the pattern of ICT innovation described by Debora Spar in her book Ruling the Waves (Innovation – Commercialization – Creative Anarchy – Rules and Regulations). I used the ongoing digitization of books and libraries by Google Book Search as a mini-case study to illustrate the phases. With regard to the different regulatory forces, I referred to Lessig’s framework and used book-relevant examples such as DRM-protected eBooks (“code”), the use of collaborative creativity (“norms”), and book-price fixing (“markets”) to illustrate it. I also tried to emphasis that the law has the power to shape each of the forces mentioned above in one way or another (I used examples such as anti-circumvention legislation, the legal ban on book-price fixing, and mandatory copyright provisions that preempt certain contractual provisions.)

The legal “hot-spots” when it comes to the future of the book in the digital age are the questions of distribution, access, and – potentially – creative re-use. The areas of law that are particularly relevant in this context are contracts, copyright/trademark law, and competition law.

Based on the discussion at the forum, I tried to map some of the past, current, and emerging conflicts among the different stakeholders of the ecosystem “book”. In the area of contract law, I focused on the relationship between authors and increasingly powerful book publishers that are tempted to use their unequal bargaining power to impose standard contracts on authors and transfer as many rights as possible (e.g. “buy out” contracts).

With regard to copyright law, I touched upon a small, but representative selection of conflicts, e.g. the relation between right holders and increasingly active users (referring to the recent hp-lexicon print-version controversy); the tensions between right holders and (new) Internet intermediaries (e.g. liability of platforms for infringements of their users in case of early leakage of bestsellers; e.g. interpretation of copyright limitations and exemptions in case of full-text book searches without permission of right holders); the tension between publishers and libraries (e.g. positive externalities of “remote access” to digital libraries vs. lack of exemptions in national and international copyright legislation – a topic my colleague Silke Ernst is working on); and the tension between right holders and educational institutions (with reference to this report).

As far as competition law is concerned, I sketched a scenario in which Google Book Search would reach a dominant market position with strong user lock-in due to network effects and would decline to digitize and index certain books or book programs, for instance due to operational reasons. Based on this scenario, I speculated about a possible response by competition law authorities (European authorities in mind) and raised the question whether Google Book Search could be regarded, at some point, as an essential facility. (In the subsequent panel discussion, Google’s Jens Redmer and I had a friendly back-and-forth on this issue.)

Not all of the recent legal conflicts involving the medium “book” are related to the transition from an analog/offline to a digital/online environment. Law continues to address book-relevant issues that are not new, but rather variations on traditional doctrinal themes.

I used the Michael Baigent et al. v. Random House Group decision by the London’s High Court of Justice as one example (has the author of Da Vinci Code infringed copyright by “borrowing” a theme from the earlier book Holy Blood, Holy Grail?), and the recent Esra-decision by the German BVerfG as a second one (author’s freedom of expression vs. privacy right of a person in a case where it was too obvious that the figure used in a novel was a real and identifiable person and where intimate details of the real person were disclosed in the book.)

Unfortunately, we didn’t have much time to discuss several interesting other issues and topics that were brought up and related to the generation born digital and its use of books – and the consequences of kids’ changed media usage in a changed media environment, e.g. with regard to information overload and the quality of information. Topics, to be sure, that John Palfrey and I are addressing in our forthcoming book.

In sum, an intense, but very inspiring conference day.

Update: Dr. David Weinberger, among the smartest people I’ve ever met, has just released a great article on ebooks and libraries.