Law and Information

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.

We have just released our EUCD best practice guide. The report, sponsored by the Open Society Institute (OSI), provides a set of recommendations for transposing the EU Copyright Directive (EUCD) into the national copyright frameworks of accession states and candidate countries. The guide, which could also inform future law reform in existing member states and is related to stock-taking studies such as the Gowers Report (released yesterday) and the forthcoming official review of the EU copyright framework, is based on a peer-produced compilation and comparison of existing EUCD implementations across the EU.

The best practice guide takes a closer look at four clusters of legal issues typically associated with EUCD-implementation. First, in a cross-sectional manner, it provides recommendations regarding the implementation of the EUCD’s anti-circumvention provisions (i.e., legal protection of technological protection measures). Second, it suggests a series of principles in areas of copyright law that shape the ways in which we – as peers – can produce and distribute information. The third section deals with universal access issues, including teaching and research exceptions, exceptions for libraries, archives, and the like, and copyright exceptions for disabled people. Third, the document provides recommendations with regard to selected copyright provisions that have an impact on political and cultural participation.

Here is an overview of the recommendations we’ve made:

Anti-circumvention provisions

• In order to avoid unintended consequences in general and spillover effects of anti-circumvention legislation in particular, (a) define the subject matter and scope of TPM as narrow as possible; (b) choose a liberal approach to exceptions and limitations and make sure that beneficiaries of exceptions can enjoy them; and (c) take a minimalist approach to sanctions and remedies for the violation of anti-circumvention provisions.
• Provide a definition of the circumstances (“minimum threshold”) under which TPM are considered to be “effective”.
• To the extent possible, limit the scope of prohibited circumvention-relevant conduct to situations where circumventions would lead to actual infringement of copyright.
• Immediately establish a mechanism for the enforcement of copyright exceptions vis-à-vis TPM and in the absence of voluntary measures by right-holders. Provide for an easily accessible and effective enforcement mechanism.
• Incorporate a private copying right vis-à-vis TPM analog to traditional private copying exceptions in order to foster access to information, knowledge, and entertainment.
• Use discretion with regard to sanctions and penalties and adhere to the principle of proportionality. Consider limitations on criminal and civil liability for non-profit organizations such as libraries, archives, etc., flexible sanctions for innocent infringers, and limitations on sanctions for legitimate purposes such as research and teaching.

Peer collaboration & distribution

• Provide for a broad private copying exception that is applicable to both analog/offline and digital/online works.
• Use discretion with regard to sanctions and penalties imposed on illegal file-sharing (uploading) and adhere to the principle of proportionality. Consider limitations on criminal and civil liability for small-scale infringements.
• Provide for a private copying exception that encompasses the act of downloading copyrighted material from the Internet, including from P2P file-sharing networks, regardless of the lawfulness of the master copy or the distribution platform.

Universal Access

• Provide a broad teaching exception that not only covers materials for face-to-face use in the classroom of educational facilities, but also the use of works at home for studying purposes. The preparation and post-processing of courses at educational institutions should be included as well.
• Implementations should not (further) limit the scope of the teaching exception as stipulated in the EUCD. Instead, provide for open definitions of the limitations on exempted uses for teaching purposes.
• Transpose the quotation exception by allowing quotations in multimedia works with an educational purpose or within instructions and textbooks for educational use.
• Provide for an exception that allows publicly accessible libraries and archives as well as documentation centers to make copies of entire works for specific purposes, without respect to whether these institutions are part of an educational or scientific institution or of a museum.
• Explicitly allow the reproduction of works on any medium in both digital and analog format.
• Allow the sharing of out-of-print copies among beneficiaries if certain requirements are met (out-of-print clause).
• Explicitly regulate the question of traditional as well as advanced forms of electronic document delivery by privileged institutions such as public libraries in the national copyright act.
• Permit electronic forms of delivery (e.g. in graphic file format) of individual copies of articles in periodicals and parts of published works to patrons for private study and research for non-commercial purposes, regardless whether the relevant material is available via an on-demand service or not.
• Provide for a broad disability exception to both the rights to reproduction and communication to the public that might mention, but is not limited to, certain types of disabilities such as visual or hearing impairment.
• Consider an exception or limitation for people with disabilities without requiring fair compensation.

Political & Cultural Participation

• Provide for a current-event exception and prescribe the conditions under which the freedom of expression right trumps the exlusive author’s rights. Do not restrict the scope of the exception to traditional media, such as newspapers, television or radio.
• The quotation right should allow diverse forms of quotations. It should encompass multimedia quotes as well as texts.
• Allow private persons to disseminate public and political speeches over the internet.
• Explicitly allow creative forms of political and cultural crticism. Use caricature, parody or pastiche as exemplary forms, but do not restrict the exception to these forms.

Download the full report for detailed discussion, references to member state implemenations, and case law examples.

The long-awaited final report of Gowers Review of U.K.’s IP framework has been released earlier today and is online available here. (Summary here.) Personally, I’m particularly interested in Gowers recommendations 8-13, addressing copyright issues, and I’m thrilled to see significant similarities between the findings in the Growers report and our own recommendations in the forthcoming EU Copyright Directive Best Practice Guide (to be released within the next couple of days; draft version here.) Stay tuned.

This morning, I had the pleasure and honour to speak – “as the European voice” – at the FTC hearing on “Protecting Consumers in the Next Tech-ade” (check out the official weblog for more information and summaries of the discussion.) I was asked to report about the legal and regulatory discussions on DRM in Europe and to focus on DRM interoperability in particular. The latter question is also part of an ongoing research collaboration between the Berkman Center at Harvard Law School and our St. Gallen Research Center for Information Law. The research project is aimed at exploring the interaction between interoperability and e-innovation, an important aspect that was only briefly mentioned at today’s hearing.
Here is the longer and slightly modified (links added) written version of my statement. For a more detailed discussion, check out the excellent paper “DRM Interoperability and Intellectual Property Policy in Europe” by Mikko Valimaki and Ville Oksanen.

Over the past few years, much of the legal/regulatory debate in Europe about DRM has focused on the legal protection of technological protection measures and its ramifications for the digital ecosystem, because EU member states have faced the challenge to transpose the rather vague EU Copyright Directive into their national laws and comply with the relevant anti-circumvention provisions of the WIPO Internet Treaties.

Introducing and harmonizing anti-circumvention laws across Europe has been a long and an enormously controversial process. As far as DRM is concerned, three topics in particular have caused heated controversies:

• DRM and its legal protection vis-à-vis traditional limitations on copyright such as the “right” (or privilege) to make copies for private purpose;
• DRM and “fair compensation”;
• DRM and interoperability.

Given our panel’s topic, please let me address the interoperability issue in some greater detail – a topic that has gained much attention in the context of iTunes’ penetration of the European market, esp. in France.

At the European level, though, no coherent DRM interoperability framework exists, although DRM interoperability has been identified as an emerging issue by the European Commission, which has established – among other things – a multi-stakeholder High Level Group on DRM that has also addressed DRM interoperability issues.

The lack of specific and EU-wide DRM interoperability provisions leaves us with three areas of law that address this issue more generally, both at the EU level as well as the level of EU member states. The areas are: copyright law, competition law, and consumer protection law.

Copyright Law

The EU Copyright Directive, mandating the legal protection of DRM systems, does not set forth rules on DRM interoperability. Recital 54 only mentions that DRM interoperability is something member states should encourage, but does not provide further guidance and seems to trust in the market forces. However, one might argue that the anti-circumvention framework itself allows the design of interoperable systems – e.g. a music player able to play songs encoded in different DRM standards – by outlawing only trafficking in such circumvention devices that are (inter alia) primarily designed and marketed for circumvention of effective TPM. Along these lines, at least one Italian Court has ruled – in one of the Bolzano rulings – that the use of modified chips aimed at restoring the full functionality of a Sony PlayStation (incl. its ability to read all discs from all markets despite region coding) is not illegal under the EUCD’s anti-circumvention provisions.

At the EU member state level, France has taken a much more proactive approach to DRM interoperability. A draft of the revised copyright law (implementing the EUCD) introduced an obligation of DRM providers to disclose interoperability information upon requests without being compensated. This “lex iTunes” has triggered strong reactions by the entertainment industry, and the final version of the law softened up the original proposal. Current French law states that a regulatory authority mediates interoperability requests on a case-by-case basis. Under this regime, too, DRM providers can be forced (under certain conditions) to disclose interoperability information on non-discriminatory terms, but they now have the right to reasonable compensation in return.

Competition Law

The baseline is: Competition law in Europe may become relevant in cases where a company with a dominant market position refuses to license its DRM standard to its competitors. However, to date, there exists no case law at the EU level where competition law has been applied to the DRM interoperability problem. But there are important cases (IMS Health and Magill, but also the anti-trust actions against Microsoft) illustrating how competition law — at least in exceptional circumstances — can give the need for interoperability more weight than the IP claims by dominant players. In France, Virgin Media tried to use competition law as an instrument to enforce access to iTunes FairPlay system. The French competition authority, however, has ruled in favour of iTunes, partly because it considered the market for probable music players to be sufficiently competitive (click here for more details).

Consumer Protection

From a consumer protection law perspective, three issues seem particularly noteworthy. First, the Norwegian Consumer Ombudsman has been very critical about Apple’s iTMS interoperability policy in response to a complaint by the consumer council. The Ombudsman argues that iTMS is using DRM and corresponding terms of services to lock its consumers into Apple’s proprietary systems.

Second, a French court fined EMI Music France for selling CDs with DRM protection schemes that would not play on car radios and computers (check here and here). EMI violated consumer protection law because it did not appropriately inform consumers about these restrictions. The court obliged EMI to label its CDs with the text: “Attention – cannot be listened on all players or car radios”.

Third, a recent proposal by the European Consumers’ Organisation proposes to include DRM in the unfair contract directive. The idea behind it is that consumer protection authorities should also be able to intervene against unfair consumer contract terms if the terms are “code-” rather than “law-based”.

A team of experts is currently working on a resource site and best practice report on the implementation of the EU Copyright Directive (EUCD). A draft version of the best practice guide will be presented and discussed at the Wizards of OS conference in Berlin (with wonderful speakers, BTW, including Hal Varian, Claudio Prado, Larry Lessig and Yochai Benkler) and further explored at the WOS4 EUCD workshop on September 17th. A final report – based on the Berlin feedback – will be released in November.The guide is based on a peer-produced collection of particularly good (or bad!) examples of EUCD implementations in various
EU member states (and beyond). It takes a closer look at four important clusters of legal issues typically associated with EUCD-implementation. First, in a cross-sectional manner, it provides recommendations regarding the implementation of the EUCD’s anti-circumvention provisions (i.e., legal protection of technological protection measures). Second, it suggests a series of principles in areas of copyright law that shape the ways in which we – as peers – can produce and distribute information. The third section deals with universal access issues, including teaching and research exceptions, exceptions for libraries, archives, and the like, and copyright exceptions for disabled people. Third, the document provides recommendations with regard to selected copyright provisions that have an impact on political and cultural participation.
Together with the St. Gallen team, Ian Brown, Volker Grassmuck, and other colleagues, I have started working on the best practice guide, taking a first cut at TPM on the one hand and teaching exceptions on the other. Much more needs to be done, though, so please contact Ian Brown (I.Brown [at] cs.ucl.ac.uk) or me (ugasser [at] cyber.law.harvard.edu) if you would like to contribute to the country reports and/or the best practice guide.

I’ve spent the past two days here in Berlin, attending an expert workshop on the rising power of search engines organized by Professor Marcel Machill and hosted by the Friedrich Ebert Stiftung, and a public conference on the same topic.

I much enjoyed yesterday’s presentations by a terrific group of scholars and practitioners from various countries and with different backgrounds, ranging from informatics, journalism, economics, and education to law and policy. The extended abstracts of the presentations are available here. I presented my recent paper on search engine law and policy. Among the workshop’s highlights (small selection only):

* Wolfgang Schulz and Thomas Held (Hans Bredow Institute, Univ. of Hamburg) discussed the differences between search-based filtering in China versus search engine content regulation in Germany. In essence, Schulz and Held argued that procedural safeguards (including independent review), transparency, and the requirement that legal filtering presupposes that the respective piece of content is “immediately and directly harmful” make the German system radically different from the Chinese censorship regime.

* Dag Elgesem (Univ. of Bergen, Department of information science) made an interesting argument with regard to the question how we (as scholars) perceive users as online searchers. While the shift from passive consumers to active users has been debated in the context of the creation/production of information, knowledge, and entertainment (one of my favorite topics, as many of you know), Dag argues that online searchers, too, have become “active users” in Benkler’s sense. In contrast, so Dag’s argument, much of our search engine policy discussion has assumed a rather passive user who just types in a search term and uses what he gets in response to the query. Evidently, the question of the underlying conception of users in their role as online searchers is important because it impacts the analysis whether regulatory interventions are necessary or not (e.g. with regard to transparency, market power, and “Meinungsmacht” of search engines.)

* Boris Rotenberg (DG Joint Research Center, European Commission, Sevilla) linked in an interesting way the question of the search engine user’s privacy – as expression of informational autonomy – with the user’s freedom of expression and information. He argues, in essence, that the increased use of personal data by search engine operators in the course of their attempts to personalize search might have a negative impact on freedom of information in at least three regards. First, extensive use of personal data may lead to user-side filtering (Republic.com scenario). Second, it might produce chilling effects by restricting “curious searches”. Third, personalization tends to create strong ties to a particular (personalized) search engine, hindering the user to use alternative engines (“stickiness”-argument).

* Benjamin Peters (Columbia University) used the Mohammed cartoon controversy to explore three questions: (1) As to what extent do search engines eliminate the role of traditional editors? (2) Do algorithms have any sort of in-built ethics? (Benjamin’s answer, based on David Weinberger’s notion of links as acts of generosity: yes, they have). (3) What are the elements of a “search engine democracy”?

* Dirk Lewandowski (Department of information science, Heinrich-Heine Univ.) provided a framework for assessing a search engine’s quality. He argues that the traditional measurement “precision” – as part of retrieval quality – is not a particularly useful criterion to evaluate and compare search engines’ quality, because the major search engines produce almost the same score on the precision scale (as Dirk empirically demonstrated.) Dirk’s current empirical research focuses on the search engine’s index quality, incl. elements such as reach (e.g. geographic reach), size of the index, and actuality/frequency of updates.

* Nadine Schmidt-Maenz (Univ. of Karlsruhe, Institute for Decision Theory and Management Science) presented the tentative results of an empirical long-term study on search queries. Nadine and her team have automatically observed and analyzed the live tickers of three different search engines and clustered over 29 million search terms. The results are fascinating and the idea of topic detection, tracking, and – even more interestingly – topic prediction (!) highly relevant for the search engine industry, both from a technological and business perspective. From a different angle, we also discussed the potential impact of reliable topic forecasting on agenda-setting and journalism.

* Ben Edelman (Department of Economics, Harvard Univ.) empirically demonstrated that search engines are at least in part responsible for the wide spread of spyware, viruses, pop-up ads, and spam, but that they have taken only limited steps to avoid sending users to hostile websites. He also offered potential solutions to the problems, including safety labeling of the individual search results by the search engine providers, and changes in the legal framework (liability rules) to create the right incentive structure for search engine operators to contribute to overall web safety.

Lot’s of food for thought. What I’d like to explore in greater detail is Dag’s argument that users as online searchers, too, have become highly (inter-)active, probably not only in the sense of active information retrievers, but increasingly also as active producers of information while being engaged in search activities (e.g. by reporting about search experiences, contributing to social search networks, etc.)

The Yale Journal of Law and Technology just published my article on search engine regulation. Here’s the extended abstract:

The use of search engines has become almost as important as e-mail as a primary online activity. Arguably, search engines are among the most important gatekeepers in today’s digitally networked environment. Thus, it does not come as a surprise that the evolution of search technology and the diffusion of search engines have been accompanied by a series of conflicts among stakeholders such as search operators, content creators, consumers/users, activists, and governments. This paper outlines the history of the technological evolution of search engines and explores the responses of the U.S. legal system to the search engine phenomenon in terms of both litigation and legislative action. The analysis reveals an emerging “law of search engines.” As the various conflicts over online search intensify, heterogeneous policy debates have arisen concerning what forms this emerging law should ultimately take. This paper offers a typology of the respective policy debates, sets out a number of challenges facing policy-makers in formulating search engine regulation, and concludes by offering a series of normative principles which should guide policy-makers in this endeavor.

As always, comments are welcome.

In the same volume, see also Eric Goldman‘s Search Engine Bias and the Demise of Search Engine Utopianism.

Two new documents by OECD on digital media policy. The first report is the official summary of the OECD – Italy MIT Conference on the Future Digital Economy: Digital Content, Access and Distribution (see Terry Fisher’s main conclusions and the interesting policy items at the end – monopoly of search engines, DRM, user-created content).

The second report is an OECD study on Digital Broadband Content: Digital Content Strategies and Policies. As complement to the above conference, this OECD study identifies and discusses six groups of business and public policy issues and illustrates these with existing and potential OECD Digital Content Strategies and Policies.

My wonderful Berkman colleague Tim Armstrong has just released his great – and, finally, optimistic – paper on DRM and fair use via SSRN. Here’s the abstract:

Different in design, scope, and tone, but equally interesting, Doug Lichtman‘s short piece on DRM, also on SSRN. Also check Jay Dratler’s piece on Sec. 1201, although only the abstract is available by now.

Professor Terry Fisher has the difficult job, as the Day 1 Rapporteur, to present in 10 minutes the OECD conference conclusions. Here are the main points he made a few minutes ago:

A. Points of agreement (or at least substantial consensus)

(a) Descriptive level:
o We’re entering a participatory culture, active users, explosion of blogs; differences in web usage.

(b) Predictive level:
o Consensus that we’ll see a variety of applications that will florish; the shift to biz models that incl internet distribution will have long tail effects, increase diversity

(c) Level of aspiration:
o We should aim for a harmonized, global Internet – single, harmonized global approach (vs. competing legal/regulatory frameworks)
o Governments should stay out, but broad consensus of 6 areas where governmental intervention is desirable: (1) Stimulating broadband; (2) fostering universal access (bridging dig.div.); (3) educating consumers; (4) engage in consumer protection against fraud, spam; (5) fostering competition; (6) promoting IP to achieve an optimal balance
o We should attempt to achieve “biz model neutrality” (TF’s personal comment: appealing idea, but infeasible, there’s no way to achieve it.)

B. Points of disagreement

(a) Descriptive level
o Whether IP currently does strike optimal balance (yes, middle ground, no – spectrum of positions)

(b) Predictive level
o Which biz strategy will prevail: pay-per-view; subscription; free-advertisement based model?

(c) Level of aspiration:
o Network neutrality: required or not as a matter of policy
o TPM: Majority: yes, smaller group: no; intermediate group: only under certain conditions.
o Should governments be in the biz of interoperability?
o Using government power to move towards open doc format?
o Government intervention to achieve an Internet that is open vs. variations of a walled-gardened net?