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Beyond IPRs: strategy around DRM

by Andrew Watson on 14 October 2008

I just finished reading the analysis by EFF‘s Fred von Lohman of the RealDVD case, Why Hollywood Hates RealDVD, and it highlights pretty well other strategies beyond using intellectual property laws directly to try to protect a position, specifically around DRM.

The case involves software that creates a back up copy of a DVD onto a hard drive for later playback. DVDs are protected by an encryption framework called CSS, or “Content Scramble System” (and not Cascading Style Sheet). This is a kind of Digital Rights Management (DRM) or Techincal Protection Measure (TPM), and circumvention of these kinds of technical restrictions is protected by laws such as the DMCA (in the US), the EU Copyright Directive, and the WIPO Copyright Treaty.

CSS has been hacked (DeCSS) and so there is no shortage of decryption/ripping software available online (for example Mac the Ripper and Handbrake) that allows for copying a DVD to a hard drive. CSS is thus hackable with ripping software freely available, but in the US under the Digital Millennium Copyright Act (DMCA) there are court cases that say this kind of circumvention of a DVD’s CSS encryption (to make a personal back up copy) is against the law.

The DVD Copy Control Association (DVD-CCA) officially controls descrambling CSS through licensing the CSS technology. DVD manufacturers (and software developers) must agree to the DVD-CCA’s terms to make DVD players – which incidentally include Regional Playback Control (RPC). RPC is the reason why your US DVDs won’t play in your UK DVD player. So if you create and distribute an unlicensed DVD decryption tool, you risk a lawsuit from the DVD-CCA and if you get a licence from DVD-CCA, you have to agree to all the terms that they impose, which include restrictions on other ways a DVD can be used (such as playing a British DVD in America).

RealDVD, a product of Real Networks, copies a DVD’s contents to your hard drive (while you keep the DVD itself) to allow for convenience of playback off your computer or other device. RealDVD is licensed by the DVD-CCA for the CSS decryption elements, so it’s a consortia member. So the set up from a wider market/legal perspective is:

  • People can freely, easily, (and illegally) download movies from places like The Pirate Bay over the internet [a big source of copying and infringement for content creators];
  • People can freely, easily, (and potentially illegally) obtain software that decodes CSS and rips DVDs to their hard drives (using programs such as Handbrake) [also a big source of copying – though not always infringing];
  • A DVD-CCA licensee (RealDVD) is making a program that allows users to copy DVDs that they own to their hard drive (format shifting) for convenience (which is likely fair use in the US).

Even though RealDVD has a licence, the DVD-CCA views the licence as requiring the physical DVD to be present on playback (thus the lawsuit and RealDVD being taken offline). Real disagrees and believes that the DVD-CCA agreement allows for their product. Fred von Lohman thus asks the question, in light of widespread piracy and infringement in other areas:

Why does Hollywood [DVD-CCA] care so much about RealDVD in the first place?

Fred’s answer (emphasis mine):

DRM systems like [CSS] used on DVDs are not principally about preventing piracy. Rather, DRM is the legal “hook” that forces technology companies to enter into license agreements before they build products that can play movies (Hollywood lawyers candidly admit this “hook IP” strategy). Those license agreements, in turn, define what the devices can and can’t do, thereby protecting Hollywood business models from disruptive innovation.


So that’s the real story here. It’s not about piracy. It’s about Real defecting from the DRM licensing cartel, building what consumers want now instead of negotiating endlessly for a spot in Hollywood’s next Five Year Plan for the DVD format.

So DRM weaves a web of legal protection that guides hardware manufacturers and software developers in the DVD space to sign on to a set of restrictions (the DVD-CCA licence) on how they innovate. This system is backed up through litigation against those that develop without a licence and those with a licence but try to develop “off plan”.

From a strategy standpoint, I’m wondering:

  • How well does this strategy work with if you have less emphasis and less resources on litigation? Generally the US content industry has been very litigious, which can be very resource intensive and can have negative consequences in other areas (such as PR and customer relations).
  • Related to above, how well does the litigation component – which funnels innovators and manufacturers into the consortia – work outside of the United States? The United Kingdom, for example, does not have civil statutory damages for copyright infringement, which is a big weapon in the US when threatening a copyright lawsuit.
  • If Real wins, what options do DVD-CCA have for maintaining their position?

What do you think?