Anyone got a copy of Rep. Berman's draft bill? Confidentiality guaranteed, if you want it. Shorter press release: http://www.house.gov/berman/pr062502.htm News coverage: http://www.infoworld.com/articles/hn/xml/02/06/26/020626hncongressman.xml?0628fram Berman's contributors -- top industry is tv/movies/music: http://www.opensecrets.org/politicians/indus.asp?CID=N00008094&cycle=2002 -Declan --- http://www.house.gov/berman/p2p062502.html Speech by the Honorable Howard L. Berman to the Computer and Communications Industry Association Regarding Solutions to Peer to Peer Piracy June 25, 2002 Thank you for inviting me to address you today. I know it is a difficult time for many in the technology sector to focus on issues other than survival. Further, with so many issues critical to national security on the congressional agenda, it is difficult for policymakers to focus on the future of technology. However, it is important that the technology sector and government look beyond their immediate crises and make a concerted effort to remain engaged. Disengagement between the technology sector and government could stall your sectors, and the nations, recuperation and recovery. Engagement, on the other hand, could actually accelerate the recovery. The future and fate of the technology sector is also inextricably tied to that of the entertainment industry. Unlike those who present a vision of Hollywood vs. High-Tech, I believe the entertainment and technology industries have a symbiotic relationship. The technologies many of your companies produce, and the services they offer, present creators, artists, and media companies with untold new opportunities. Interactive television, massively multiplayer computer games, computer animation, ebooks, digital photography, Internet music distribution, and P2P networks promise to greatly benefit creators and media companies alike. Likewise, entertainment and media products create demand for many of the technologies your companies produce. Demand for the next generation of PCs - with faster chips, more processing power, and bigger hard drives - will come from consumers who want to play lifelike computer games, watch premium movies, and store music libraries. Demand for broadband connections - and the routers, fiber, and wireless technologies that enable broadband - will be spurred by consumer demand for online movies, music, games, photographs, books, and software. Thus, the next growth cycle for many technology companies depends, to a certain extent, on the availability of media products and services desired by consumers. While the symbiotic relationship between technology and media companies is self-evident, it must be nourished. There are many obstacles to technology and media reaching their full symbiotic potential. Primary among these obstacles, I believe, is piracy of copyrighted works. There is no doubt that piracy causes substantial harm to copyright owners. The evidence is everywhere and the numbers are staggering. In 2001, the U.S. recording industry lost $4.2 billion to hard-goods piracy worldwide, the U.S. movie industry lost $3 billion to videocassette piracy, and the U.S. entertainment software industry lost $1.9 billion due to piracy in just fourteen countries. In 2000, hard-goods piracy cost the U.S. business software industry alone $11.8 billion. These numbers only reflect hard-goods piracy. Internet piracy losses are almost impossible to calculate, but by all indications these losses are even more staggering. A recent report by Viant estimates that 400,000 to 600,000 pirate versions of movies are downloaded every day over the Internet. In April 2002, 1.1 billion files - the vast majority containing copyrighted works - were downloaded through the KaZaA peer-to-peer file trading network. Piracy is also widespread through FTP sites, IRC channels, and auction sites, but cannot effectively be quantified. Internet piracy threatens to undermine the symbiosis between the technology and media industries. The widespread availability of pirate works online makes it difficult for copyright owners to develop viable Internet business models. No matter what bells and whistles they add, copyright owners cannot compete with unauthorized Internet services that make their works available for free. There is no justification for Internet piracy. There is no difference between pocketing a CD in a Tower Records and downloading copyrighted songs from Morpheus. Theft is theft. Internet piracy is not promotional. This argument is laughable sophistry. There may be some who just want to try before they buy, - I dont question that - but the vast majority of illegal downloaders just want free stuff, and dont intend to purchase legitimate copies. Do I have proof? Yes, I have both common sense, a rudimentary grasp of economics....and a college-age daughter. Internet piracy hurts consumers by undermining the incentive to create great new digital works and to offer consumers new opportunities to access and use those works. Perhaps a little closer to home for me, Internet piracy threatens the jobs of the session musicians, actors, carpenters, seamstresses, writers, photographers, retailers and other folks in my district. Among Internet piracy problems, the most vexing is that presented by peer-to-peer, or P2P, networks. P2P networks represent as much of an opportunity as a threat to copyright creators. P2P represents an efficient method of information transfer, has the potential to greatly reduce the costs associated with server-based distribution systems, and can support a variety of legitimate business models. Unfortunately, the primary current application of P2P networks is unbridled copyright piracy. The owners and creators of these copyrighted works have not authorized their distribution through these P2P networks, and P2P distribution of this scale does not fit into any conception of fair use. Thus, there is no question that the vast majority of P2P downloads constitute copyright infringements for which the works' creators and owners receive no compensation. Simply put, P2P piracy must be cleaned up. The question is how. The answer is most likely a holistic approach relying on a variety of solutions, none of which constitutes a silver bullet. At least one of these solutions may require congressional action to make it effective. Many believe that an important part of the solution to piracy involves digital rights management, or DRM, technologies, which protect copyrighted works from unauthorized reproduction, performance, and distribution. I support the use of strong DRM technologies. Such technologies not only help deter piracy, but are pro-consumer and pro-technology. Through DRM technologies, copyright creators can allow each consumer to make optimal use of the copyrighted work at a price that reflects the value of that use to the consumer. No longer is a consumer forced to pay $150 for a permanent copy of software, or $13 for a music CD, if he wants just a one-time use, or a one-time listen. DRM technologies are pro-technology for the very reason that they represent a new technology industry unto itself. The development of strong, effective, consumer-friendly DRM technologies is not a foregone conclusion. Significant debate swirls around the appropriateness of such technologies, the appropriate role of government in their creation, and the state of industry development efforts. I am not a fan of government mandates on technology, including government interference in the developing marketplace for DRM technologies. The marketplace and copyright holders are most competent to pick the winners and losers among competing DRM technologies. The marketplace and industry technologists are best suited to quickly adapt when DRM technologies are cracked. There are clearly times, however, when government can play an appropriate role in technology development. When industry fails to create adequate technologies to serve a government need, the government must sometimes commission creation of such technologies. Similarly, when technologies obstruct a policy objective, the government must sometimes outlaw or limit such technologies. My impression is that there is a growing frustration in Congress with the apparent lack of progress in creating adequate and interoperable DRM standards. This frustration does not bode well for those who oppose government mandates on DRM standards. No matter who is at fault for the failure to arrive at a consensus on DRM solutions, continued delay will result in increasing pressure to legislate. Regardless of who is actually doing the foot-dragging, the failure of the marketplace to create adequate solutions will convince more and more Members of Congress that government intervention is necessary. While the development and deployment of DRM technologies should be encouraged, DRM technologies do not represent a complete solution to P2P piracy. DRM solutions will not address the copyrighted works already in the clear on P2P networks. DRM solutions will never be foolproof, and as each new generation of DRM solutions is cracked, the newly-unprotected copyrighted works will leak onto P2P networks. Shutting down all P2P systems is not a viable or desirable option. P2P systems have many positive uses and could actually benefit those copyright creators who choose to utilize them. Shutting down all P2P networks would stifle innovation. P2P networks must be cleaned up, not cleared out. The day for cleaning up P2P networks through court action may now be past. While the 9th Circuit could shut Napster down because it utilized a central directory and centralized servers, the new P2P networks have engineered around that court decision by incorporating varying levels of decentralization. It may be that truly decentralized P2P systems cannot be shut down, either by a court or technologically, unless the client P2P software is removed from each and every file trader's computer. Copyright infringement lawsuits against infringing P2P users have a role to play, but are not viable or socially desirable options for addressing all P2P piracy. The costs of an all-out litigation approach would be staggering for all parties. Litigation alone cannot be relied on to clean up P2P piracy. One approach for dealing with P2P piracy that has not been adequately explored is whether it could be addressed, at least partially, through technological self-help measures. Copyright owners could employ a variety of technological tools to prevent the distribution of copyrighted works over a P2P network. Interdiction, decoy, redirection, file-blocking, and spoofing technologies can help prevent unauthorized P2P distribution. Technological self-help measures are not particularly revolutionary. Satellite and cable companies periodically employ electronic countermeasures to thwart the theft of their signals and programming. Software companies have experimented for decades with a variety of technologies that disable software being used in violation of a license. When deployed to thwart P2P piracy, however, such technological self-help may run afoul of common law doctrines and state and federal statutes, including the federal Computer Fraud and Abuse Act. In other words, while P2P technology is free to innovate new, more efficient methods of P2P distribution that further exacerbate the piracy problem, copyright owners are not equally free to craft technological responses. Congress should free copyright creators and owners to develop and deploy technological tools for addressing P2P piracy. We could do this by creating a safe harbor from liability for copyright owners that use technological means to prevent the unauthorized distribution of their copyrighted works via P2P networks. Obviously, such legislation must be narrowly crafted, with strict bounds on acceptable behavior by the copyright owner. Such legislation should not allow a copyright owner to damage the property of a P2P file trader or any intermediaries, including ISPs. For instance, a copyright owner shouldnt be allowed to introduce a virus that disables the computer from which infringing works are being made available to a decentralized, P2P network. Such legislation should also provide for strong penalties against abuse of the authority provided by the safe harbor. For instance, such legislation should ensure that a P2P file-trader who has been subjected to technological self-help measures has effective remedies if he believes a copyright owner has acted improperly. I believe such legislation would have a neutral, if not positive, effect on privacy rights. A P2P user has no expectation of privacy in computer files that she makes publicly accessible through a P2P file-sharing network. A P2P user must affirmatively decide to make a copyrighted work available to the world before any P2P interdiction would be countenanced by the proposed legislation. Thus, to the extent a copyright owner is scouring these publicly accessible files to find copyright infringement, there is no privacy violation. No legislation can eradicate the problem of peer-to-peer piracy. However, enabling a content owner to take action to prevent an infringing file from being shared via P2P is an important first step toward a solution. Through this legislation, Congress can help the marketplace more effectively manage the problems associated with P2P file trading without interfering with the technology itself. In order to stimulate dialogue on this issue, I intend to introduce legislation creating such a safe harbor for technological self-help measures. I will, of course, be happy to work to address any reasonable concerns expressed about such legislation. I am hopeful that the Subcommittee on Courts, the Internet, and Intellectual Property will mark up this legislation in the remainder of the 107th Congress. Thank you for giving me the opportunity to share my thoughts with you this morning. I look forward to taking whatever questions you have. ### ------------------------------------------------------------------------- POLITECH -- Declan McCullagh's politics and technology mailing list You may redistribute this message freely if you include this notice. To subscribe to Politech: http://www.politechbot.com/info/subscribe.html This message is archived at http://www.politechbot.com/ Declan McCullagh's photographs are at http://www.mccullagh.org/ ------------------------------------------------------------------------- Like Politech? Make a donation here: http://www.politechbot.com/donate/ -------------------------------------------------------------------------
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