TechLaw

HR 1201 is back. And this time, it is has been repackaged with a host of narrow exemptions.

The Freedom And Innovation Revitalizing U.S. Entrepreneurship Act of 2007 (FAIR USE Act), introduced by Reps. Rick Boucher and John Doolittle on Feb. 27,  adopts a multi-prong approach to correct perceived imbalances in the way the DMCA handles fair use.

The bill drops the broader fair use exemption of HR 1201--no DMCA violation for circumventing a DRM to make a noninfringing use--in favor of a series of specific, limited exemptions. No DMCA liability would attach where the circumvention is carried out solely for the purposes of:

1. Making a compilation of portions of audiovisual works for educational use in a classroom. (While the Librarian's latest rulemaking included a similar exemption, that exemption is limited to film scholars.)
2. Skipping commercials or "personally objectionable content" in an audiovisual work.
3. Transmitting a work "over a home or personal network," but only to the extent that the circumvention does not interfere with DRM restrictions that prevent the uploading of the protected content to the Internet. (Thus, this exemption could not be used as a loophole to bypass the proposed broadcast flag content protection system.)
4. Gaining access to public domain works contained within a compilation "consisting primarily of works in the public domain."
5. Gaining access to works of "substantial public interest solely for purposes of criticism, comment, news reporting, scholarship, or research."
6. Enabling a library or archive to preserve a copy or replace a copy that is lost or stolen.

Conspicuously absent from this list is an exemption for making backup copies, a feature that has long been cited by proponents of the measure as a legitimate activity that the bill would enable. In an explanatory document accompanying the legislation, the authors do address the issue, though not in the way one would expect. They point out that the scene-skipping exception "does not authorize consumers to make back up DVDs for archival or any other purpose."

This is an important concession to content owners, who have argued previously that giving consumers the tools to make archival copies would lead to rampant piracy. The Copyright Office reached a similar conclusion in its recent recommendation during the last triennial rulemaking, concluding that making backup copies of DVDs would sanction widespread circumvention and, in any event, is probably not a fair use. Undoubtedly, this took the steam out of the backup copy argument.

Though, in practical effect, it is hard to see how enabling the other exceptions Boucher does call for could be accomplished without the same technology that would allow for the making of backup copies. For this reason, the content industries will likely reiterate many of the same piracy concerns they have previously raised.

The consumer electronics industry will certainly benefit from the bill. Once again, Boucher's bill would codify the Sony-Betamax innovation principle: no secondary liability for designing, making, or distributing a hardware device or component that "is capable of substantial, commercially significant noninfringing use." What is noteworthy here is the addition of the words "commercially significant," a key qualification contained in the Supreme Court's opinion but omitted from HR 1201. Further insulating the consumer electronics industry from secondary liability is a provision in the measure that would foreclose the possibility of statutory damages against secondary infringers except where the secondary infringement occurs "under circumstances in which no reasonable person could have believed such conduct to be lawful."

Finally, the FAIR USE Act provides permanent exemption status to the classes of copyrighted works identified in the most recent triennial rulemaking by the Librarian of Congress. This removes the possibility of the Librarian later having a change of heart and ejecting these exemptions from the list the next go-around.

On the one-year anniversary of the launch of the Xbox 360, Microsoft unveiled a new video download service available through the Marketplace section of Xbox Live, the online service component to the Xbox and Xbox 360 video game consoles.

Much of the publicity about this development has focused on the fact that Microsoft is the first console maker to offer digital downloads of movies and TV shows. Perhaps less well publicized is the interesting approach that Microsoft has taken on the issue of space shifting.

Under the applicable terms, movies are for rental only and must be viewed within 14 days (or 24 hours after initial playback). They can only be viewed on the Xbox console to which they were downloaded. But the approach on TV shows is more flexible, allowing users to keep a permanent copy on their Xbox hard drive, in what Microsoft refers to in its Terms of Use  as "Retained Rights Content."

In discussing the scope of use of Retained Rights Content, Microsoft uses language that, while not quite space shifting in the traditional sense, is functionally similar:

Although you are not permitted to copy or move the Retained Rights Content from its originally stored location, you will be permitted to download any previously obtained Retained Rights Content from the Service to another Xbox 360 console ("Roaming Xbox 360 console"), for no additional cost, by logging into the Service . . . . You shall only be permitted to download and playback such Retained Rights Content for so long as you are logged into the Service via such Roaming Xbox 360 console. You may not copy or move the Retained Rights Content from any Roaming Xbox 360 console to which it has been downloaded.

Other attempts by the entertainment industry to regulate space shifting of downloaded content have focused on complicated rules that try to limit the making of copies, such as whether the sister unit is located within a defined geographic region relative to the original unit. Microsoft's approach is simpler: allow further downloads, but limit access to those downloads.

I spoke with Ross Honey, Senior Director of Microsoft's Media, Content & Partner Strategy Group, who offered further details on the situation described in the legal terms. Honey explained that the rationale behind the "Roaming Xbox" is to give gamers the flexibility to enjoy their purchased downloads at a friend's house.

Microsoft enables this through tethering the content to the user's gamertag, the online ID used to log in to Xbox Live. To download Retained Rights Content to another Xbox, the gamer needs a Memory Unit, a plastic plug (basically, a memory stick) used to store the gamertag. Typically, players use the MU so that they can record achievements earned while playing on a friend's Xbox or pick up a game from the last saved checkpoint. The MU does not contain the game itself but rather data about the player's status.

By inserting the MU into a sister Xbox, the visiting user can log in to Xbox Live under his or her gamertag and request that another copy of the TV show be downloaded to that friend's Xbox at no additional charge.

In theory, a user could be digitally promiscuous and go from one friend's house to another, downloading multiple copies of the show along the way. What stops this from becoming a piracy problem is the fact that ems.bna.com of those copies are playable except when the original purchaser happens to be logged on to Xbox Live from that particular console.

At most, Honey said, only two copies could be played at once: one on the Xbox 360 that received the original download (log in to Xbox Live not required for playback); and another copy on a sister Xbox 360 where the original purchaser is logged in through an MU to Xbox Live. As for the other copies, they are just inert, encrypted files that are useless without the proper authorization.

"From a standpoint of managing leakage, it's not a big deal," Honey said.

This approach seems to make a lot of sense. Basically, the MU becomes a dongle for unlocking the content. And it's a safe bet that a hardcore gamer is going to look after that dongle carefully. It contains the player's reputation, score, and achievement points – his or her calling card to the community of Xbox gamers.

We would be curious to hear from those of you out there who handle content licensing for online distribution. Is restricting use privileges rather than limiting downloads a workable strategy for balancing piracy and portability concerns?