Technological Protection Measures in the Draft FTAA

By Gwen Hinze


Article 21 of Section 3 of the FTAA
draft Intellectual Property chapter requires signatory countries to adopt
legal protection for technological protection measures (TPMs) added by rightsholders
to copyrighted works. Although legal protection is sought for the legitimate
purpose of protecting rightsholders' copyrights, the United States' experience
with similar provisions in the Digital Millennium Copyright Act (DMCA) demonstrates
that overbroad legal protection may have many serious unintended effects.

The FTAA November 2002 draft IP chapter
contains two versions of Article 21. While the first would extend existing
international treaty protections to broadcasters, the second formulation
is much broader and would:

(1)       supplant existing
national copyright systems;

(2)       impair access to digital
information and widen the digital divide;

(3)       entrench the use of
monopoly-priced proprietary products and services, and result in a net wealth
transfer from signatory countries' economies to U.S. copyright owners; and

(4)       potentially undermine
other important policy goals by chilling scientific research and stifling
technological innovation in domestic software and consumer electronics sectors.


Article 11 of the 1996 WIPO Copyright
Treaty and Article 18 of the WIPO Performances and Phonograms Treaty (the
OMPI Copyright Treaties) require signatory countries to provide "adequate
legal protection and effective legal remedies against the circumvention of
effective technological measures" added by copyright owners to their works.

Copyright industries in the U.S.,
however, pressed for considerably more protection. The result was the Digital
Millennium Copyright Act (DMCA), which went further than the OMPI
Copyright Treaties required. The DMCA has since become the model that U.S.
trade negotiators have urged on its trading partners.

The DMCA's TPM provisions ban both acts of
circumventing TPMs used by copyright owners to control access to their works,
as well as any device, service or technology that is primarily designed
or useful for circumvention. These prohibitions apply even if the intended
use of the copyrighted work would not infringe copyright. So, for example,
under U.S. law there is a copyright exception allowing blind persons to translate
books into Braille. Under the DMCA, blind persons are no longer able to exercise
this right in connection with e-books that are protected by TPMs.

The DMCA includes 7 limited exceptions
for certain socially beneficial activities, including security testing, reverse
engineering of software, encryption research, and law enforcement. However,
these exceptions have proven inadequate in practice to protect many of these
legitimate activities. Unfortunately, the proposed FTAA language does not
include even these limited U.S. exceptions and bans a broader range of conduct
than the DMCA.


U.S. copyright owners have lobbied strongly for the incorporation
of this type of provision in both the FTAA and in the bilateral free trade
agreements that the U.S. has recently concluded with Jordan, Singapore and
Chile, because it provides an increased level of protection for their works
beyond copyright, that is not dependent on proving copyright infringement
under each country's differing copyright laws.


1. National Copyright System Supplanted

A broad ban on circumventing TPMs,
like the second formulation proposed in Article 21 of the FTAA, is likely
to entirely supplant a signatory country's existing copyright law. In effect,
this allows U.S. copyright owners' rights to trump national sovereignty and
domestic public policy priorities.

A similar provision inserted into
U.S. copyright law by the DMCA in 1998 has displaced the careful balance
of public and private rights in U.S. copyright law created by the legislature
and judiciary over the last 130 years. It has provided U.S. copyright owners
with an increased level of protection above copyright law, by granting them
a new right to control access to, and not merely use of, copyrighted
works. This has had several results:

  • The
    various statutory exceptions to copyright law (for instance, for uses in
    the education, library and disabled persons communities) have largely been
    overridden for technologically-protected digital information.
  • Most
    importantly, it has effectively eliminated the ability to make "fair use" of
    protected digital works. In U.S. copyright law, fair use permits someone
    to make a reasonable use of a copyrighted work for a socially useful purpose
    such as education, criticism or parody, or for a consumer's personal use
    (such as home video recording of television), without having to ask prior
    permission from a copyright owner. Fair use is intended to guarantee public
    access to copyrighted material to facilitate productive uses of information
    and free speech. The DMCA bans consumers from circumventing TPMs to make
    fair use of a protected digital work, such as making a back-up copy of a
    copy-protected CD or DVD that they have purchased. In addition, technology
    vendors are banned from producing or selling technologies and devices that
    consumers need if they are to enjoy copyright exceptions that would otherwise
    apply to digital media.

In other words, U.S. copyright owners
have used TPMs backed by the DMCA to redraw the copyright balance and unilaterally
set how much protection will be given to their work. Similar results would
likely occur in FTAA signatory countries if the second formulation of Article
21 is adopted.

2. Impaired Access To Information

The second formulation of Article
21 would also have a substantial detrimental impact on the ability of educators,
students and researchers in FTAA signatory countries to access digital information
and technology. The current draft of the FTAA requires signatory countries
to extend IP protection to facts and data within databases. As information
is treated as a copyrightable product and increasingly becomes available
only in a technologically protected form, fair dealing and personal copying
exceptions that previously guaranteed access will be technologically precluded.
This will increase the cost of accessing information and ultimately result
in the widening of the knowledge gap between industrialized and unindustrialized

3. Potential For Digital Lock-in And Net Wealth Transfer
To U.S. Copyright Owners.

U.S. copyright owners have used the
DMCA's anti-circumvention provisions to obtain a monopoly over uncopyrightable
products and technologies that interoperate with their works. This has serious
anti-competitive implications for consumers in FTAA signatory countries.
For instance:

  • Geographic
    Market Segmentation:
    The motion picture and video game industries
    have used "region coding" technologies, backed by the DMCA and similar
    laws, to control the availability and pricing of DVDs and video games
    in various
    geographic regions. Other copyright industries can be expected to follow,
    potentially discriminating in both price and availability against consumers
    in various regions of the world.
  • Product
    Lexmark, the second largest printer distributor in the
    United States, has used the DMCA to ban the sale of recycled Lexmark
    printer cartridges,
    which were being sold to consumers at lower prices than new cartridges
    and Lexmark's own "authorized" remanufactured printer cartridges.
  • Attacking
    Chamberlain Group, the manufacturer of an electronic
    garage door opener, has used the DMCA in an attempt to ban the sale of
    a universal garage door transmitter imported by its main competitor, Skylink,
    which can be programmed to open Chamberlain garage door units, as well
    as several other brands of garage door units.

Under FTAA Article 21, vendors could
prevent local businesses from creating interoperable products that might
provide market competition. Consumers in FTAA-signatory countries would be
locked into purchasing products at higher, monopoly-based prices. For instance,
a U.S. automobile manufacturer could use a TPM, backed by Article 21, to
ban the sale of "unauthorized" replacement parts and services in FTAA-signatory
countries. For FTAA signatories who are net importers of U.S. informational
and entertainment intellectual property, this would result in a net transfer
of wealth
from signatory countries' domestic economies to U.S. copyright


The U.S. DMCA's anti-circumvention provisions have been used in
ways not intended by the U.S.
Congress to stifle a wide array of legitimate activities, rather than to
stop copyright piracy. In particular, the provisions have had two negative
effects on important public policy goals:

Chilling Effect on Scientific Research

U.S. copyright owners have used the DMCA's provisions
to cast a chill on free expression and legitimate scientific research.
In 2001 a music industry organization threatened to sue a team of researchers
for violating the DMCA when they attempted to publish a research paper
their findings on security vulnerabilities in digital watermark technology.
The music industry group considered that the information in the research
paper was a "circumvention tool" and publishing the paper would violate
the DMCA's ban on distributing "circumvention tools".

The chilling effect on scientific
research and publication has been profound. U.S. and foreign scientists have
refused to publish research on access control vulnerabilities, or have removed
previously published research from the Internet due to fear of DMCA liability.
Foreign scientists have refused to travel to the U.S. and several encryption
conferences have been moved outside of the United States.

In particular, there is growing concern within the U.S. about
the impact of the DMCA on computer security research. In October 2002, former
U.S. White House Cyber Security advisor, Richard Clarke, admitted that the
DMCA had chilled security research and called for DMCA reform. The U.S. Congress
is currently considering two proposals that would amend the DMCA to permit
circumvention and use of circumvention tools for scientific research.1

2. Technological Innovation Stifled

The DMCA has adversely impacted the U.S. technology sector in
two ways. First, because the DMCA defines "circumvention" of a TPM in terms
of conduct "authorized" by copyright holders,

U.S. copyright owners have been able
to extend their statutory rights to control technology that interacts with
their copyrighted work, as described above.

Second, the DMCA has had a chilling
effect on the ability of technology companies to reverse engineer computer
code in order to develop new products. Reverse engineering is critical to
encourage competition and innovation in the face of monopolistic practices
in the software industry. Legitimate reverse engineering has traditionally
been permitted in U.S. copyright law. Today, however, companies eager to
impair market competition have turned to TPMs and the DMCA in an effort to
hinder the creation of innovative interoperable products. For instance, Sony
Corporation has used the DMCA to sue the creators of reverse-engineered emulator
software programs, which allow consumers to play Playstation video games
on their computers, rather than on Sony's proprietary Playstation game console.

Although the DMCA includes an exception
for reverse engineering, the exception has proven to be too narrow to assist
those seeking to use it. It is clear that the U.S. Congress did not intend
that the DMCA would be used to stymie technological innovation, but the provisions
are too broad to prevent this sort or misuse. FTAA signatories will face
the same problems if the second formulation of Article 21, or a provision
similar to the DMCA provision, is adopted.


The bilateral free trade agreements
(FTAs) that the U.S. has recently concluded with Jordan (Article 4(13)),
Singapore (Article 16.4(7)) and Chile (Article 17.7(5)) contain TPM provisions
modeled on the DMCA provisions. The most restrictive of the FTA provisions
is in the U.S.-Singapore FTA. The Industry Functional Advisory Committee
on Intellectual Property advising the U.S. President and the U.S. Trade Representative
has recommended that the Singapore FTA language should be incorporated in
to the FTAA.

As currently worded, the first formulation
of FTAA Article 21 generally mirrors the obligation set out in the OMPI Copyright
Treaties (which many FTAA countries have chosen not to join), but extends
the ability to use TPMs to owners of broadcasting rights. This formulation
is consistent with Articles 9 and 10 of the Berne Convention and Article
13 of TRIPs and would allow countries of the South to implement TPM protection
in a way that is consistent with their existing copyright law exceptions.

However, the second formulation goes
further than both the OMPI Copyright Treaties and the DMCA provisions and
raises similar issues to the DMCA. It bans the act of circumvention, with
knowledge or having reasonable grounds to know and without authority, of
an effective technological measure added to a copyrighted work by a rightsholder.
It also bans the manufacture and distribution of devices, products or services
that are (i) advertised or marketed for the purpose of circumvention, (ii)
have only a limited commercially significant purpose other than circumvention,
or (iii) are primarily designed, produced, adapted for the purpose of circumvention.

Unlike the DMCA, it does not have any exceptions that would
preserve the existing rights of consumers and technology developers in FTAA
signatory countries.

1Digital Media Consumer Rights Act (H.R. 107, 108th Cong.)
introduced by Representatives Boucher and Doolittle; >B.A.L.A.N.C.E. Act (H.R. 1066, 108th Cong.) introduced by Representative Lofgren.

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