...[section] IV. THE BEAT GOES ON WITH DIGITAL BUSINESS MODELS: DRM ENABLES, THE DMCA PROTECTS A. DRM-Enabled Price Discrimination 1. Price Discrimination 2. DRM Enables Price Discrimination in the Digital Domain 3. The DMCA Protects DRM-Enabled Price Discrimination B. DRM and Market Failures 1. Market-Failure Fair Uses 2. DRM Cures Market Failures C. The Nexus of Price Discrimination, DRM and the Elimination of Market Failures D. The DMCA's View of Fair Use V. THE DMCA'S PRESUMPTION OF PRICE DISCRIMINATION AS A TEMPLATE FOR INTERNATIONAL COPYRIGHT LAW. A. International Inconsistency in Protecting Business Models 1. Australian Digital Agenda 2. European Union Copyright Directive 3. Japan Anti-Circumvention Law B. Tentative Proposal for an International DMCA-type Framework VI. NOTICE FOR RESTRICTED CONTENT VII. CONCLUSION

I. INTRODUCTION

The Internet allows hundreds of millions of people across the globe to communicate instantaneously. (2) It erases geographical boundaries and provides a global civic center for individuals to share their culture, knowledge, and resources. Along with these possibilities, the Digital Age spurs numerous challenges to the existing ordered society. One challenge involves adapting business models designed for the analog world to a digital world. Another difficulty, the result of the current laissez-faire landscape of the Internet, (3) is to provide a system in which individuals' and entities' rights are protected from one another, including copyrights.

Digital Rights Management (DRM) enables copyright holders to accomplish both of these goals for their works. The usage of the term DRM varies in the literature; (4) however, the central concept behind DRM, as one commentator explains, is to "[allow] a copyright holder to define a set of rules attached to a work in a digital format that controls consumer access, use, and manipulation of that work." (5) In other words, DRM allows the copyright holder to control the ways consumers access and use the holder's work once the work is made available in a digital format. With that control, a right holder is able to both offer a uniquely efficient business model and to protect his work from infringing uses. (6) DRM alone, however, cannot fully realize these aims because it is vulnerable to the hacker community which is able to circumvent DRM protections. (7) Thus, the force of the law is needed to prevent circumvention, which, in turn, bolsters DRM technology. Enter the World Intellectual Property Organization Copyright Treaty (WCT) as the law that provides such support against circumvention. (8)

The WCT anticircumvention provision was passed in 1996 at the World Intellectual Property Organization (WIPO) conference in Geneva. (9) The signatory countries to the WCT recognized the immediate need for international digital protection of copyrighted works. (10) The WCT specifically directs the countries that adopt it to provide protection against circumvention of technological protections. (11) It is clear that the WCT intended to take a minimalist approach to the issue of anticircumvention. (12) allowing member countries to use this baseline as a means of further developing their own interests in dealing with DRM.

The Digital Millennium Copyright Act (DMCA), the United States' implementation of the WCT anticircumvention obligations, (13) has not been received without debate. (14) Critics of the DMCA argue that its strong protection of DRM technology will lead to a "digital lock-up" (15) in which content providers have total control over the way consumers interact with creative works. This, the critics propose, will freeze innovation and leave the purpose of copyright law, "to promote the progress of science and useful arts," (16) in jeopardy of being eradicated. (17)

These critics fail to recognize the evolving landscape of copyright law. The power of digital technology erases many of the constraints that exist in an analog copyright world in the same way it erases the geographical boundaries that have historically isolated countries and continents. Arguing from the premise that all analog rights must necessarily exist in a digital world fails to realize the fresh opportunities that a digital world provides. The United States, in implementing its WCT obligations, recognized the needed transition that copyright is currently facing. (18) The DMCA assures copyright holders that their works will be adequately protected from piracy in the digital context. (19) More distinctively, it provides the framework to support a new system of copyright in which works are more freely distributed and consumers have more use options. (20) Without these DMCA protections, copyright would be unable to progress into this Brave New World. (21)

There are two concerns that this Comment will address. One concern is that while DMCA-type legislation addresses the realities of copyright in a digital world, it does not go far enough. The reason explicitly lies in the previous statement--it is a digital world, not distinct countries like the analog world. The Internet connects individuals globally without respect to political boundaries. Thus, when a copyright holder makes his content available on the Internet, the world is his marketplace (22) (and hopefully his oyster). Any law that protects digital content in an international marketplace must address this reality. The DMCA, while protecting U.S. copyright holders from U.S. citizens, does not protect U.S. copyright holders from foreign injury. Therefore, DMCA-type legislation needs to be implemented globally, such as by amending the WCT which spurred the DMCA.

An additional concern with DMCA-type legislation is that, while it does protect copyright owners, it does not equally protect consumers. Specifically, the DMCA currently does not require that copyright distributors notify consumers as to when and to what extent content is restricted. (23) If consumers are informed about the terms of the limitations that attach to the content, they can then influence the degree of restrictions in the marketplace by choosing restricted content that matches their value. (24) Without such notice, consumers will make ill-informed decisions, and the extent to which content is restricted will not sufficiently reflect consumer value. Therefore, immediate legislation requiring notice of content restriction needs to be enacted. Again, because of the global nature of the marketplace, content notice legislation should be implemented internationally so that U.S. consumers are protected globally.

Part II of this Comment addresses the factors that led to the initial development of DRM. Part III discusses the WCT and DMCA anticircumvention provisions that provide support for DRM. Part IV explains how and why the United States went beyond its WCT requirements in enacting the DMCA. Part V shows the global inconsistency in anticircumvention legislation and proposes an adoption of an international agreement consistent with the advanced protections in the DMCA. Part VI briefly discusses the importance of consumer notice in dealing with digital technologies and proposes an international consumer notice provision. Part VII concludes that the DMCA provides an international model to propel copyright law into the Digital Age both by protecting copyright holders from digital piracy and by enforcing digital business models.

II. DRM DEVELOPS AS A TOOL TO PROTECT COPYRIGHT IN THE DIGITAL AGE

A. Digital Piracy

Digital technology enables exact duplication of a creative work and the Internet allows for rapid distribution of such a copy on a global scale. (25) As a result, conditions are ripe for copyright holders to introduce their content into a global marketplace. Currently, however, that global marketplace---the Internet--is largely unregulated, at least in comparison to the analog business world. (26) Therefore, along with the opportunity for copyright holders to reach an expansive marketplace comes the risk of decreased protection for copyrights when entering that marketplace. Copyright holders and distributors have felt the weight of this risk in dealing with illegal file-sharing. (27)

File-sharing, in its original form, was not designed for illegitimate purposes. (28) The Napster revolution, however, soon transformed file-sharing networks into global forums where creative works were traded, often illegally. (29) One of the network formats that Napster used, and that many networks currently use, is a peer-to-peer network. (30) The format of the peer-to-peer network makes it much harder to pinpoint liability on the software provider. (31) Napster was eventually shut down as a result of its centralized file-indexing nature, (32) but as the Phoenix rises, a whole new generation of decentralized peer-to-peer networks (33) arose specifically designed to evade copyright infringement. (34) These decentralized networks have thus far escaped liability in the United States (35) and abroad. (36) Unable to pursue the software providers, (37) the content industry has more recently focused on other measures to curb illegal file-sharing. (38) Most of these measures have proven ineffective in minimizing digital piracy because of practical limitations and their failure to realize the international dimension of digital piracy. (39) While the current effect of peer-to-peer networks on the content industry's revenues is debatable, (40) most authorities conclude that if a system which allows illegal trading of virtually perfect copies of copyrighted works is left unchecked, the balance of copyright--to provide incentives for creators while facilitating future creation through public access to works (41)--will eventually be endangered. Therefore, an effective tool needs to be developed to maintain this balance.

B. DRM Combats Digital Piracy

DRM provides a realistic means to limit digital piracy while recognizing the global nature of file-sharing. It must be noted that the aim of content providers is not to eliminate digital piracy; (42) such a goal would be unrealistic. Instead, content providers want to limit piracy to a sustainable level. (43) Below are two common DRM technologies that help to accomplish this goal. (44)

1. Watermarking

Watermarks are digital identifications that can be inserted into a work, (45) akin to Digital ID badges. Watermarks either function as tracking devices, (46) or they can serve to restrict access to copyrighted content. (47) An example of watermarks that serve a tracking function are those that are embedded in a copyrighted work so that the work can be identified on a peer-to-peer network. (48) In this context, watermarks are often used in conjunction with web crawlers, which are programs that search the Internet for specified material (such as a watermark ID) and report when and where that material is found. (49) This allows the copyright holder to identify and take action against an infringer. (50)

The Secure Digital Music Initiative (SDMI) exemplifies another function of watermarking, which is restricting access to copyrighted content. (51) The idea behind SDMI is to attach watermark IDs to all music files and require that all audio players recognize the IDs. (52) Therefore, the technologies are bound together--digital players can only play watermarked digital files and digital files can only be played on players that recognize those digital watermarks. (53) Thus, if a file is not watermarked (because it has been obtained illegally on a filesharing network), the audio player will not be able to read and subsequently play the file. (54) Through tracking and restricting access functions, watermarks provide a realistic means to combat digital piracy.

2. Encryption

Encryption is essentially a "digital lock." (55) An encrypted work requires an access key or password to open the lock and access the work contained therein. (56) It prevents piracy by only revealing the key or password to an authorized user. (57) For example, many e-Books require an access key to view the writing. (58) Without the key, pirates are unable to access the work if it is made available on a network, (59) thus restricting access only to authorized users.

C. Hackers

The problem with DRM is that it alone cannot prevent piracy. Hackers can easily circumvent most of the technologies. (60) For example, encryption is limited by the fact that it can be decrypted using certain mathematical algorithms, (61) and once decrypted, a creative work is left completely unprotected, (62) Some have envisioned the battle between those who create protections and those who crack the protections as a perpetual digital "arms race" (63) in which the only winner is the DRM industry. (64) Thus, a legal framework was needed to protect DRM from being compromised by hackers seeking to illegally access and distribute copyrighted works. In realizing this need, it became clear to policymakers that such a legal framework should not be limited by geographical boundaries because file-sharing is not limited by such boundaries. If the United States alone enacted legislation protecting DRM, U.S. copyright holders would still face the possibility of DRM-protected work being circumvented on foreign soil and distributed globally via file-sharing (including to U.S. citizens). With that in mind, the WIPO member nations sought to provide an international scheme for the protection of susceptible DRM technologies.

III. ANTICIRCUMVENTION LAW

A. WCT Article 11

In December of 1996, WIPO adopted the WCT, (65) which was generally aimed at adapting copyright law to the Digital Age. (66) Article 11 of the WCT provides that:

Contracting Parties shall provide adequate legal protection and effective legal remedies against the circumvention of effective technological measures that are used by authors in connection with the exercise of their rights under this Treaty or the Berne Convention and that restrict acts, in respect of their works, which are not authorized by the authors concerned or permitted by law. (67)

Short but sweet, Article 11 provides a uniform plan to combat digital piracy. It requires that every signatory country to the WCT enact legislation protecting DRM technologies. (68)

B. DMCA [section] 1201

The United States enacted the DMCA to fulfill its obligations under the WCT. (69) The DMCA provides a realistic solution to protect DRM and combat digital piracy. It contains an access-controls provision and a rights-controls provision. (70) Not surprisingly, access controls are any controls restricting or preventing access to copyrighted content. (71) Under the access provisions, individuals are prohibited from both directly circumventing an access control (72) and from trafficking (73) devices enabling circumvention of an access control. (74) For example, if a copyright holder encrypted a DVD so that only a certain DVD player could decrypt and play the...

NOTE: All illustrations and photos have been removed from this article.



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