Digital Rights Management - the European debate begins

The Copyright Directive must be implemented by December - how well can the European system cope with digital rights?

Digital Rights Management Systems ("DRMS") are technological measures which offer the potential for copyright owners to control the exploitation of their digital assets. At a workshop in Brussels in February, the European Commission kick-started a dialogue with industry, consumer rights groups and other interested parties on achieving workable legal and commercial solutions for the use of Digital Rights Management Systems (DRMS). As the December deadline for implementation of the Copyright Directive draws closer, there are many holes which still need to be filled if workable systems are to become a reality. This article explains the key issues for debate over coming months and how businesses can become involved.

So what are DRMS?

DRMS are technological measures that aim to control copyright material so that exploitation can be licensed, reported and paid for in the networked environment. DRMS work by identifying an intellectual property right, setting the rules under which it can be used and then ensuring via encryption that digital content is only used for purposes agreed by the rightsholder. Computer-based language will thus enable rightsholders to set the parameters within which their intellectual property can be interacted with by users.

The Commission has now set up a site with information and documents on DRMS including the Commission working paper and discussion document "Digital Rights, Background, Systems, Assessment".

Why the sudden interest?

The DRMS debate has been given new impetus by the Commission in view of their concern to accelerate the eEurope 2002 (soon to become eEurope 2005) initiative, with its priorities for faster technologies, broadband, security and recognising the importance of content and applications. Speaking at the workshop on 28 February, Commissioner Erkki Liikanen, said that DRMS will play a key role in the distribution of digital content and are essential to ensuring that there are sufficient incentives to continue to produce and distribute multimedia content and services under appropriate conditions.

The other main push comes from recently-adopted legislation. The Copyright Directive which sets the legal framework in which DRMS will be administered, must be implemented by Member States by 22 December 2002. The e-Commerce Directive which seeks to provide a framework for protecting service providers from liability for hosted illegal content (therefore including material in breach of copyright) in certain circumstances, should have been implemented by 17 January although only three Member States managed to meet this deadline.

Filling in the gaps

The problem is that both Directives provide only that - a framework - and the detail is left largely to Member States and the establishment of business models, self-regulatory and standardisation schemes, to fill in. Although DRMS are identified as a solution to many of the problems raised, strong differences of opinion still remain as to how they should be implemented and what needs to be done in order to make them acceptable to all different parties. The dialogue initiated by the Commission therefore seeks to address these issues in order to make the legislation workable and effective.

The key provisions of the Copyright Directive concerning DRMS which will be the matter of much debate, deliberation and analysis over the next few months in demanding to be 'filled' are as follows: No "right" to private compensation:Member States are required to provide for "fair compensation" for private copying although the scope of such compensation is left to Member States themselves to determine. Action must be taken in the absence of voluntary measures taken by the rightsholders including agreements between the rightsholders and other parties. This requires negotiation on the mechanisms of such voluntary arrangements and begs the question as to how long Member States should wait to see if they work before then taking action. Phase out for copyright levies: Member States are required to take action to avoid double compensation where copyright levies and DRMS might be used in parallel. The ultimate aim is a move towards the gradual phasing out of levies with the availability of technical measures such as DRMS. Member States and industry are currently grappling with the criteria that should be used in assessing whether a particular DRMS is 'good enough' to be considered available. Others still argue that levies should be maintained where they have already been introduced in individual Member States. Encouraging interoperability: industry is encouraged to develop interoperable systems but it is not clear what exactly is meant by this and how far it can ever be a realistic aim. For example, data file interoperability would appear impossible, but to what extent might content interoperability be achievable? DRMS are seen as an important tool in facilitating interoperability and helping competition, but the concern is that there is insufficient incentive on industry to advance this and if Member States regulate DRMS differently, then such advances might never be possible. Standards: Member States are encouraged (but not obliged) to establish systems for compulsory standards and the concern is to strike a balance between enabling sufficient standardisation to enable the development of DRMS without inhibiting the market. The standards body CEN/ISSS is looking at possible standardisation methods and measures and their eagerly awaited report should be published in a few months time. Rightswatch, a Commission funded project, is looking specifically at the development of self-regulatory procedures to deal with the problems of copyright on the internet including "notice and takedown" schemes. The results of such initiatives will provide a significant tool for advancing DRMS and closing the gaps. Confidence: perhaps the most significant issue to be addressed, however, is that of the 'confidence gap'. Industry already has effective DRMS, but the speed of uptake is of serious concern. Worries about security, problems such as unauthorised digital P2P file sharing and consumer apprehensions that DRMS will change the consumption experience, are still widespread and need addressing. There is a particular need for the development of clear and useable business models for further dynamic discussion. What next? The Commission stated at the workshop that its aim is not to introduce further legislation (although this of course is always a possibility as a last resort), but rather to continue an open and constructive dialogue between different interests as to how the detailed operation of the Copyright Directive can be "filled in" and DRMS accepted and utilised in a practical and legally effective context that balances different interests. A series of informal working groups are planned, to facilitate more detailed discussion on certain specific issues and a further session in order to take stock of progress is also expected to be held in about six months time. The Commission is eager to hear the views of businesses on this important issue.
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