[Ecommerce] TGDaily: Apple must disclose iTunes DRM to competitors, but can charge for it

[Thiru Balasubramaniam]

http://www.tgdaily.com/2006/07/31/apple_must_disclose_drm_but_can_charge/


    Apple must disclose iTunes DRM to competitors, but can charge for it

By Scott M. Fulton, III
<http://www.tomshardware.com/site/submission/feedback.html>
Published Monday 31st July 2006 11:31 GMT

*Paris (France) - In a decision reached late last week that has since
been widely misinterpreted in the English-speaking press, the
nine-member French Constitutional Council struck down portions of a law
that required Apple, and other players in the digital download market in
France, to disclose its digital rights management mechanism to enable
interoperability. Those reading the entire decision learned that the
Council left in place the compulsory licensing mechanism the law had
instituted.*

Even with key provisions of the law (referred to by the French
abbreviation DADVSI) having been struck down, it will still mandate a
DRM Regulation Authority which will oversee the mandatory licensing of
all DRM for all file-sharing networks available to French consumers.
What's different now, however, is that the licensing can come with a
fee, to be determined not by the network proprietor but by the Authority
itself, on a case-by-case basis.

"The DADVSI is by far the hardest internet Law ever passed in the
world," writes French intellectual property attorney Jean-Baptiste
Soufron. "It seriously impedes the development of French startups in
this sector." Soufron is legal director for the Association of
Audionautes, which advocates the open disclosure of all DRM systems to
enable interoperability.

Soufron interprets the Council's decision
<http://soufron.typhon.net/spip.php?article150>
(http://soufron.typhon.net/spip.php?article150) as having struck down a
major portion of French fair use law. Up to this point, DADVSI had
upheld that software authors collaborating in the course of their work
could share methodologies that helped them to produce software. Under a
very loose interpretation which the Council nullified, transactions
taking place over P2P networks were examples of such collaboration, and
thus qualified as fair use. Citing the Declaration of Human Rights of
1789 - as honored within France as is the Bill of Rights in America -
the Council proclaimed that such mandatory sharing was a violation of
intellectual property, and that such property was to be respected just
as much as personal property.

According to a press release dated last Thursday, the Council faulted
DADVSI's unclear definition of the term "internetworking," citing such
passages which translated into English as "the ends of internetworking"
which were apparently supposed to refer to the parties to a P2P
transaction whose rights were to be protected. Apparently criticizing
the law for mixing its metaphors, the statement implied it would be
legally impossible to attribute human rights, as defined by the
Declaration, to an "end."

The Council's harsh language in striking several provisions of DADVSI
led many in the American press to conclude the entire law was struck
down. But as Soufron interpreted the Council's decision in English, it
actually had no problem with the creation of the Authority in principle.
It took issue with Parliament taking away a company's right to be justly
compensated for handing over its trade secrets. Though many are
interpreting the law's upset as a limited legal victory for Apple, the
Council did, in effect, uphold DADVSI's restrictions eliminating a
proprietor's right to negotiate the terms of intellectual property
licensing.

Writes Soufron, "I am not certain that Apple will be satisfied to obtain
financial compensation for the loss of their control on iTunes and the
iPod."

Also eliminated completely from DADVSI was the exclusive provision
protecting free software developers, whose right to access a download
service's DRM scheme specifications would have been protected. Parties
seeking to obtain a DRM license are still required to petition the DRM
Regulation Authority, but now those petitioners are referred to as
/competitors/, implying that a valid petitioner must have the implicit
capability to compete with the company whose scheme it wishes to license.

As Soufron sees it, under the current wording, Apple may be compelled to
license its FairPlay DRM scheme for iTunes to, for instance, Microsoft,
but not to an open source developer who either might not be able to
afford the fee, or might not qualify as a legitimate "competitor."

Another provision of the law struck down last week enabled judges to
sentence illegal file traders with misdemeanor penalties, within the =8038
- 75 range, which is on a par with parking tickets. As the law now
stands, the fine for violators may now range up to =80500,000 plus five
years' imprisonment, regardless of whether it's a company or an individual.

The French Constitutional Council was established in 1958 for the
express purpose of reviewing legislation, with the power to overturn
laws passed by Parliament, as well as to review the legitimacy of
presidential elections and public referendums. The Council is comprised
of nine judges appointed by the French President, and may include former
presidents. Their term of office is limited to nine years, with three
judges replaced every three years.