Session 2: Future of Technology: Licensing and Usability
Professor Dorothy Glancy, Santa Clara University School of Law
Niel Smith, Howard Rice Nemerovski Canady Falk & Rabkin
Kevin Saul, Apple Computer, Inc.
(moderated by Professor June Carbone, Santa Clara University)
Read on for some interesting comments about the Apple music store and viral licensing . . .
Glancy focusing on digital commons, open source, and viral licensing. Digital commons are populated by contentious concepts: public domain, freeware/shareware, copyleft, open source software, creative commons and viral licensing. Public domain is everything out there that isn't in the IP realm. Contentious because copyleft and CC prevent IP from moving into the public domain. Points out loss leader and/or standards strategies behind freeware/shareware and notes that this is still not a commons resource. She describes copyleft as a political movement more than any specific participant within it. Open source software (obviously) is software where the source code is available to the users. Viral licensing is a licensing scheme and is a feature of both CC and Open Source.
Glancy> Open Source Software Licenses vary tremendously and need to be carefully scrutinized. Open source licensing is "tight fisted" due to the challenge of openness while maintaining control of material to prevent copyrighted derived works. Uses Mozilla versus Debian as a control issue example, where trademarks conflicts exist. Debian wanted to call "Firefox" "Debian Firefox." Mozilla was concerned about modifications to the Firefox code, so there is conflict between exercises in control even between open source companies.
Glancy> Disaggregation of rights, such as allowing modification without claiming authorship. Attribution rights are often a real issue with authors of the code. However, open source software often allows dual licensing, where specific enterprises give users a choice about which license they choose. This trades cost versus flexibility and support.
Glancy> Creative Commons allows flexible licensing schemes that allow authors different choices. Can be viral to ensure that derivative works are licensed in the same way. Glancy feels that viral licensing can be an epithet. Some people feel like viral marketing or viral infection. Viral licenses raise legal issues because of perpetual proprietary control over both source code, artistic material and their progeny. Property lawyers don't believe that perpetuity aren't really permanent. Viral schemes are different because of the continuous derivation of new works that continue to include viral licenses. May lead to long term claims far in the future.
Glancy> Also feels that the automatic forfeiture and termination for noncompliance with conditions. Not clear if these forfeiture terminations are enforceable, because they are forfeiture of property rights. Especially in light of uncertainties that may apply down the road due to the inclusion of multiple open source issues. Choice in the context may be a curse as it leads to more confusion.
Saul> Thinks of the crown jewels of software companies is the source code. For entertainment companies, its the assets. So for music, it is the copyright to the music. Points out the it is funny that music CDs don't actually point out that you're just buying the CD not the music. Big issues for digital music distribution are whether old contracts have any sections covering digital distribution.
Saul> Asserts that the 30% drop in music sales is because "we're competing with free."
Saul> Goes into a fair amount of detail on fee structures of sales about whether it is a license or a finished good. Apple purchases wholesale and then resells it. Tension between subscriptions, finished goods, what rights the labels are granting. Apple's goal is convince users to purchase permanent downloads rather than CDs. Feels (shockingly) that permanent downloads are superior to subscriptions and that it is 1-2% of total music business. Originally thought that music store was pure loss leader but that is changing. More into specifics of mechanical rights versus performance rights. Problem is that everyone with a right (whether mechanical, performance or transmission) tries to get a piece of downloads.
Saul> Took 18 months for Steve Jobs to get a meeting with the music industry. Industry looked at Apple because hardware and software are both made by Apple so therefore they could have DRM. "We call those security solutions" "We do not represent the efficacy of DRM" "We just need to keep honest people honest" "Security of digital content is security through obscurity"
Saul> "DVD Jon has made lives miserable"
Saul> Apple convinced music industry that their engineers could solve security flaws. It was important that their agreements didn't breach on a security flaw, only a pervasive flaw. So, they wanted to get labels to agree that it was an attempt to "keep honest people honest." Talked about the weakness of software licensing agreements. Thinks that more and more CDs will have agreements on the shrinkwrap. Use of software currently deemed consent to licensing agreement.
Saul> Had to convince labels about types of use. Wanted to define usage rights to allow for limited use, but not commercial. So, the idea of transfer rights. Motorola cell phone, like iPods, is a non-transfer device, so it can play the music but not transfer the rights.
Saul> Thinks that the strength of Music Store is the sale of tracks rather than the sale of albums. Some artists aren't willing to break up the albums. Studies from music store is that consumers think that if there are only 2 good tracks on the album, they buy just those tracks. At 3 good tracks, they are 50:50 to buy the tracks or the album. 4 or more, and they buy the album.
Saul> Apple didn't sign onto any Grokster briefs individually. "Grokster is the most important case since Betamax, maybe more so."
Smith> End User Licenses. Restrictions places on end users that come with the service. Contracts between the seller and the user. Used as an adjunct to technical means. So why do companies do this?
Smith> Presumption is that companies are just controlling the product for profit-making purposes. Some legitimate reasons beyond those. Warranty rights, for example (muck up taking care of your own car, lose your warranty coverage, for example). The principle basis for end user restrictions are contractual restrictions. Discussed the legal basis of contracts. Meetings of the minds . . . blah blah . . . ascent and understanding . . . some latin . . . blah blah . . . sorry, a lawyer should be taking notes :-)!
Smith> Introduced shrink wrap contracts that maybe made sense when they were short and simple, so contracts extended and moved onto the disk, so you were agreeing prior to reading them. Courts still enforced them. Digital delivery leads to click through license that nobody reads. So, companies make it harder to copy, make them longer, put them in small windows, and generally ensure that nobody reads them, and courts STILL enforce them.
Smith> Public finally starting to complain a bit. Often these licenses conflict with first sale, but maybe first sale doesn't really fit into digital items. The tension becomes the problem of trying to deal with the legal restrictions and enforcement in the digital world. Perhaps DRM etc can reduce the contracts. Uses the XBox example of bouncing people out of XBox Live for using hacked XBoxes, since this is in the EULA.
Smith> Praises the 9th circuit for being good at recognizing the tensions between copyright, trademark and technology. For example, reverse engineering and compatibility.
Smith> Competition is possible in the area of DRM, so buy our music because you don't have to have use Hymm to move it another computer might be a selling point.
Saul> Initial deals were only for the Mac so that it was an experiment with "a group of fanatical technology users who are used to adopting technology earlier." If it was a failure, they saw it as only burning up 1 - 2% of their market.
Glancy and Smith> Long term enforcement of viral licenses is very unclear at this point.
Glancy> Some tension in EULAs between whether they are contracts or property rights.
Smith> Tells anecdote about eBay's use of trespass to block email spam
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