The DMCA and Competition

22 Mar ’06

Tim Lee of the Technology Liberation Front has written an analysis for the Cato Institute, a libertarian think-tank in Washington, titled “Circumventing Competition: The Perverse Consequences of the Digital Millennium Copyright Act”. The article is a critique of the DMCA’s role in suppressing competition and innovation by criminalizing anti-circumvention. Tim is a Very Smart Guy and the article is bound to get attention. Gist:

A lot of DMCA critics have focused on how DRM undermines fair use by narrowing the ways in which users can consume the content they have legally acquired. That’s certainly a valid argument, but I tried to focus on the implications of another type of fair use: the fair use right to use reverse engineering to build a competing product. Prior to the enactment of the DMCA, the courts had consistently turned back efforts by incumbents to use copyright law as a way to exclude competitors from their technology platforms. Most famously, IBM was not able to prevent the creation of IBM clones, because a company called Phoenix used “clean room” reverse engineering techniques to develop a compatible BIOS without directly copying any of IBM’s copyrighted software.

The DMCA throws that principle out the window, because it makes it a crime to “circumvent” a DRM scheme—that is, access the content without first getting the permission of the DRM creator. As a result, it’s effectively illegal to build third-party software that interoperates with software like iTunes or Real’s video streaming software.

Michael, Cory, and Howard all comment on the article.

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