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[d@DCC] Market failure of "DRM" applications on non-DRM platform.

From: Russell McOrmond <russell _-at-_>
To: "David Fewer [c]" <dfewer (at)>
Cc: General Copyright Discussions <discuss -_at_->
Date: Thu, 13 Jan 2005 11:04:37 -0500 (EST)
References: <>


(David is Legal Counsel at CIPPIC) 

  I hope it is OK if I copy the DCC forum on this message.  I would like
to get other people thinking about this issue as well.  Before our
conversation I had not understood the need to talk about these issues
publicly and try to get everyone on the same page.  It would be great if 
you could join that forum and participate with us, at least for this type 
of thread (if you have time).

  I'd like to explore with you one of the details you brought up.  While I
was exclusively talking about compete DRM environments (DRM applications
on a DRM platform, where there is no "market" for competing DRM given the
DRM companies will want to exclusively control the DRM platform), you
brought up an entirely different environment.

  You spoke of the market in DRM-applications running on a non-DRM
platform (IE:  A generic computer under the control of the user where they
can install any software they wish, including multiple competitive media

  My reading is that this isn't DRM at all, and wouldn't (or rather,
shouldn't) qualify as "effective protection" under the treaty, but lets 
ignore that for the moment.

  You suggest that in this situation there would not likely be a market 
failure.  You defined the "consumer" of DRM as being the copyright 
holders, and that there would be competition between DRM vendors which 
would disallow any single DRM vendor to dictate terms to copyright holders 
rather than the other way around.

  The issue is: the company with the most valuable intangible property
(captive audiences of DRM vendors vs. works under copyright owned by
content industry) will be able to dictate terms to the other.

  I asked CBC radio why when they moved away from RealNetworks streaming
that they moved to proprietary Microsoft streaming.  (That title is a laugh)

  I got many answers about market share of Microsoft Windows desktops and
other such things that were largely irrelevant, given Microsoft Media
player plays open standards-based file formats as well as proprietary
formats.  The use of Microsoft file formats did not add to, but only
subtracted from their potential audience.  I agreed with their decision to
drop proprietary RealNetworks file formats (RTSP is an open standard , but the RealAudio/RealVideo codecs are not), I strongly
disagreed with their movement to Microsoft Media (proprietary streaming
protocol, file format and codecs).

Note:  Parliament also uses Microsoft Media to stream debates, and has a
number of Microsoft advertisements on their site.
  While this vendor promotion should probably be investigated by the House
Ethics Commissioner, all my messages to parliament on this issue have gone
unanswered.  The question then becomes: would I be found guilty of
violating interface copyright or patents using a non-Microsoft platform to
interact with the Federal government?  Can the Government of Canada
mandate that I be a Microsoft customer?  Why are more Canadians not upset
at this issue which looks like corruption to me, and yet so many were
worried about the petty cash lost in the so-called "sponsorship scandal".

  File formats have a tie to the brand of applications in the consumers
brain, even when this tie doesn't exist in the technology.  We have all
lived in a world with "save as"  options in office suites, and yet people
fundamentally believe you must have the right BRAND of word processor in
order to open a specific document.

  While it is true that Microsoft Word version X is most compatible with
itself, when you try to mix versions you end up finding that is interoperable with more versions of Microsoft Word than
Microsoft's own products.  None of this matters as people incorrectly
believe you need to have the right BRAND of software to interact with
files created by the same BRAND of software.

  What Legal protection for DRM adds to this mix is a back-door to
interface copyright. Today when a vendor creates a new file format, any of
their competitors are able to reverse-engineer that file format to add
compatibility in their own software.  As an example, all the Microsoft
Media format has been reverse-engineered in a "free country" (IE: a
country without interface copyright or software patents) and released in
Open Source applications such as mplayer and xine which CBC references on
their site "For Unix users:"  (Note: I currently use Xine to watch DVDs and VCDs as 
well as stream media over the net).

  These applications are also part of various PVR's where the *Personal*
part is more truthful than the TiVO's there are under the control of the

  In a "legal protection for TPM" country all a vendor needs to do is
encrypt their file format and then any reverse engineering is considered
"circumvention of their TPM" and thus prohibited.  This is effectively a
back door to interface copyright, and a circumvention of the right to
reverse engineer interfaces to create compatible products.  This is a
right that was explicit in the 1991 EU directive on the protection of
computer software.  Unfortunately Canada is so far behind on technology
law that it didn't declare this right at all.

  I believe if you combine the virtual "tie" between a media format and a
vendor in the consumers mind, with the legal "tie" which the WIPO treaty
back-door to interface copyright grants, you will find that we are set up
for a full market failure in TPM-enabled media players on non-DRM
platforms.  While this isn't directly DRM, it is a market failure that
will be able to be leveraged to grant full DRM given the vendor who
commands the current monopoly for desktops is also the vendor offering an
end-to-end complete DRM platform (Microsoft's Trusted Computing

What do we need to do?

  - We need to oppose government protection of DRM.  This should be the
case whether we are talking about non-DRM platforms where there will be a
market failure, or full-DRM platforms where there can never be a "market"
at all.  We shouldn't narrow our opposition to the effects on consumers,
but also recognize the negative effects on creators as well given their
rights will be "managed" by the DRM intermediaries as much as citizens
rights will be "managed" (IE: revoked).

  - We need to oppose any front or back-doors to exclusive rights on
computing interfaces, and instead have the Canadian government declare a
legal right to reverse engineer to implement compatible interfaces.  
Computing interfaces should not be offered *ANY* type of exclusive right,
whether it be copyright, patent or even trademark.

  - We need to get the Government to be doing adequate legal analysis in
this area of policy.  We need to somehow get the Competition Bureau and
other relevant parts of Industry Canada extremely active in all policy
around exclusive rights, including copyright.  This is not policy that can
be left to Heritage as they have thus far seemed uninterested in
initiating the required economic analysis of policy proposals.

  - (and my favorite) Start using FLOSS software, buying music and movies
from independents, etc.  It is hard to protect a right that far too many
people aren't exercising.  By using and/or purchasing the "products" of
the alphabet soup (RIAA/MPAA/BSA in the USA, CRIA/CMPDA/CAAST in Canada)
you are funding and/or supporting their lobbying efforts against us.  It
is important to realize that you are supporting their efforts whether you
are paying or infringing, with possibly those who infringe their copyright
providing them with greater benefit.
  They need to be told the most important message we as consumers can:

 Russell McOrmond, Internet Consultant: <> 
 Happy Hacking, Eh! (My BLOG)
 Sign the Petition Users' Rights!
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