Congress
Ponders Internet Piracy
Digital Rights Management
by Jonathan Yarowsky
NATO Washington Counsel
In previous
editions of In Focus, we have provided brief updates on an issue
that increasingly looms as a major concern of content providers,
of consumer electronics manufacturers and technologists and of policymakers
here in Washington and abroad: the protection of digital content
or digital rights management. The concern has only intensified with
the expansion of the online marketplace.
For NATO members, digital rights management is not merely a distant
policy fight between other interests. Theatre owners have always
been on the interactive “front line” with the viewing
public, and have thrived on the primacy of theatrical release of
motion pictures. There is a reason why studios release movies in
the theatres first – they are the best venues for viewing movies.
That being said, studios are constantly looking for ways to increase
their revenue intake from films, and the Internet and digital technology
provide an additional avenue for additional release. On the one
hand, this development has the potential to help theatre owners
because it would allow studios to make stronger investments in making
better movies as they increase their revenue from this additional
source. On the other hand, studios seeking to move forward the release
date of first-run motion pictures on other “platforms”
could impact moviehouse attendance. This is precisely why the digital
revolution needs to be closely watched – and embraced as new
uses of the theatre venue provide a welcomed “next stage”
in the business model for many of our members.
Copyright piracy is an abiding issue for theatre owners. Piracy
of movies destroys the incentive for artists and creators to bring
fresh visions and products to U.S. consumers and certainly denies
theatre owners the revenue stream justly earned by their enterprise.
As Congress and the private sector consider how to defeat piracy
in an ever-changing technological world, theatre owners must be
willing to do their part to protect entertainment product at a cost
that is not prohibitive.
For all of these reasons, we are closely tracking the developments
briefly described below.
Prompted by calls from a diverse range of content creators seeking
to provide their product online to the growing number of consumers
utilizing the Internet, a number of committees in both the House
and Senate have begun hearings regarding the protection of copyrights
in the online marketplace.
The Senate Foreign Relations Committee moved quickly in the second
session of the 107th Congress to focus attention on how to protect
copyrights in the international arena, and whether additional international
agreements or protocols are required to prevent piracy. Meanwhile,
the Senate Commerce and Judiciary committees have focused on whether
a technical standard for digital rights management should be established
for the protection of intellectual property online. The debate centers
on the tension between those in Congress seeking to encourage the
private sector creation of uniform standards, and those who fear
that valuable time will be lost unless the federal government moves
actively into the area and helps direct and enforce the standards-setting
process. In the near future, we expect the House Judiciary and House
Commerce Committees to move into the policy debate over digital
rights management as well.
As is often the case, the policy struggle is as much about “jurisdiction”
as it is about the substance of the issue. Sen. Fritz Hollings (D-S.C.),
chairman of the Senate Commerce Committee, has already introduced
legislation to address the subject. Two buildings away on Constitution
Avenue, Sen. Patrick Leahy (D-Vt.), chairman of the Senate Judiciary
Committee, has already stated publicly that no digital rights management
legislation “will pass Congress this year without the significant
investment of Judiciary Committee.” Given this jurisdictional
conflict, as well as the substantive issues that will need to be
debated, it will be difficult for Congress to move legislation this
year without significant agreement from content providers, the electronics
equipment industry and consumers about the proper approach.
As noted above, on the copyright owner side, Hollings has introduced
S. 2048, the Consumer Broadband and Digital Television Promotion
Act. This bill, which is supported by a number of movie studios
and record companies, gives “representatives of digital media
device manufacturers, consumer groups, and copyright owners”
one year to create a standard for online copyright protection. If
one is not created by the private sector in that timeframe, the
bill grants the Federal Communications Commission (FCC) the authority
to move forward to create those standards itself. While S. 2048
also provides consumers with the right to make a copy of a file
(for audio or video home use), it clearly strengthens the control
and protection of copyrighted material for the owners of such works.
By contrast, on the consumer and consumer electronics side, representatives
Rick Boucher (D-Va.) and Chris Cannon (R-Utah) have introduced H.R.
2724, the Music Online Competition Act of 2001. H.R. 2724 seeks
to create a new system that would ensure that online music services
not owned by the major labels have “non-discriminatory”
access to all copyrighted music at a fair price. Following Boucher’s
strong support of fair use of copyrighted material by consumers,
the bill also addresses the new practice of placing copy protection
on CDs so they cannot be played or copied onto a computer’s
hard drive.
You can be sure that as the policy debate unfolds, we will be watching
closely to ensure that movie theatres – which stand at the
crossroads of both content and technology – continue to grow
and thrive in a digital world where “public policy” struggles
to keep apace with technological change. 
