Copyright Office Weighs in on Awkward Questions of Software Law
I dashed off a piece for CNET today on the Copyright Office’s cell phone “jailbreaking” rulemaking earlier this week. Though there has already been extensive coverage (including solid pieces in The Washington Post, a New York Times editorial, CNET, and Techdirt), there were a few interesting aspects to the decision I thought were worth highlighting.
Most notably, I was interested that no one had discussed the possibility and process by which Apple or other service providers could appeal the rulemaking. Ordinarily, parties who object to rules enrolled by administrative agencies can file suit in federal district court under the Administrative Procedures Act. Such suits are difficult to win, as courts give deference to administrative determinations and review them only for errors of law. But a win for the agency is by no means guaranteed.
The Appeals Process
What I found in interviewing several leading high tech law scholars and practitioners is that no one was really clear how or even if that process applied to the Copyright Office. In the twelve years that the Register of Copyrights has been reviewing requests for exemptions, there are no reported cases of efforts to challenge those rules and have them overturned.
With the help of Fred von Lohmann, I was able to obtain copies of briefs in a 2006 lawsuit filed by TracFone Wireless that challenged an exemption (modified and extended in Monday’s rulemaking) allowing cell phone users to unlock their phones from an authorized network in hopes of moving to a different network. TracFone sued the Register in a Florida federal district court, claiming that both the process and substance of the exemption violated the APA and TracFone’s due process rights under the Fifth Amendment.
But the Justice Department, in defending the Copyright Office, made some interesting arguments. They claimed, for example, that until TracFone suffered a particular injury as a result of the rulemaking, the company had no standing to sue. Moreover, the government argued that the Copyright Office is not subject to the APA at all, since it is an organ of Congress and not a regulatory agency. The briefs hinted at the prospect that rulemakings from the Copyright Office are not subject to judicial review of any kind, even one subject to the highly limited standard of “arbitrary and capricious.”
There was, however, no published opinion in the TracFone case, and EFF’s Jennifer Granick told me yesterday she believes the company simply abandoned the suit. No opinion means the judge never ruled on any of these arguments, and so there is still no precedent for how a challenge to a DMCA rulemaking would proceed and under what legal standards and jurisdictional requirements.
Should Apple decide to pursue an appeal (an Apple spokesperson “declined to comment” on whether the company was considering such an action, and read me the brief statement the company has given to all journalists this week), it would be plowing virgin fields in federal jurisdiction. That, as we know, can often lead to surprising results—including, just as an example, a challenge to the Copyright Office’s institutional ability to perform rulemakings of any kind.
The Copyright Office Moves the Fair Use Needle…a Little
A few thoughts on the substance of the rulemaking, especially as it shines light on growing problems in applying copyright law in the digital age.
Since the passage of the 1998 revisions to the Copyright Act known as the Digital Millennium Copyright Act, the Register of Copyrights is required every three years to review requests to create specific classes of exemptions to some of the key provisions of the law, notably the parts that prohibit circumvention of security technologies such as DRM or other forms of copy protection.
The authors of the DMCA with some foresight recognized that the anti-circumvention provisions rode on the delicate and sharp edge where static law meets rapidly-evolving technology and new business innovation. Congress wanted to make sure there was a process that ensured the anti-circumvention provisions did not lead to unintended consequences that hindered rather than encouraged technological innovation. So the Copyright Office reviews requests for exemptions with that goal in mind.
In the rulemaking completed on Monday, of course, one important exemption approved by the Register was one proposed by the Electronic Frontier Foundation, which asked for an exemption for “jailbreaking” cell phones, especially iPhones.
Jailbreaking allows the customer to override security features of the iPhone’s firmware that limits which third party applications can be added to the phone. Apple strictly controls which third party apps can be downloaded to the phone through the App Store, and has used that control to ban apps with, for example, political or sexual content. Of course the review process also ensures that the apps work are technically compatible with the phone’s other software, don’t unduly harm performance, and aren’t duplicative of other apps already approved.
Jailbreaking the phone allows the customer to add whatever apps they want, including those rejected by or simply never submitted to Apple in the first place, for whatever reason.
In approving the exemption, the Copyright Office noted that jailbreaking probably does involve copyright infringement. The firmware must be altered as part of the process, and that alteration violates Apple’s legal monopoly on derivative or adapted works. But the Register found that such alteration was de minimis and approved the exemption based on the concept of “fair use.”
Fair use, codified in Section 107 of the Copyright Act, holds that certain uses of a copyrighted work that would otherwise be reserved to the rights holder are not considered infringement. These include uses that have positive social benefits but which the rights holder as a monopolist might be averse to permitting under any terms, such as quotations in a potentially-negative review.
EFF had argued initially that jailbreaking was not infringement at all, but the Register rejected that argument. Fair use is a much weaker rationale, as it begins by acknowledging a violation, though one excused by law. The law of fair use, as I note in the piece, has also been in considerable disarray since the 1980’s, when courts began to focus almost exclusively on whether the use (technically, fair use is an affirmative defense to a claim of infringement) harmed the potential commercial prospects for the work.
Courts are notoriously bad at evaluating product markets, let alone future markets. So copyright holders now simply argue that future markets, thanks to changing technology, could include anything, and that therefore any use has the potential to harm the commercial prospects of their work. So even noncommercial uses by people who have no intention of “competing” with the market for the work are found to have infringed, fair use notwithstanding.
But in granting the jailbreaking exemption, the Copyright Office made the interesting and important distinction between the market for the work and the market for the product or service in which the work is embedded.
Jailbreaking, of course, has the potential to seriously undermine the business strategy Apple has carefully designed for the iPhone and, indeed, for all of its products, which is to tightly control the ecosystem of uses for that product.
This ensures product quality, on the one hand, but it also means Apple is there to extract fees and tolls from pretty much any third party they want to, on technical and economic terms they can dictate. Despite its hip reputation, Apple’s technical environment is more “closed” than Microsoft’s. (The open source world of Linux being on the other end of the spectrum.)
In granting the exemption, the Copyright Office rejected Apple’s claim that jailbreaking harmed the market for the iPhone. The fair use analysis, the Register said, focuses on the market for the protected work, which in this case is the iPhone’s firmware. Since the modifications needed to jailbreak the firmware don’t harm the market for the firmware itself, the infringing use is fair and legally excused. It doesn’t matter, in other words, that jailbreaking has a potentially big commercial impact on the iPhone service.
That distinction is the notable feature of this decision in terms of copyright law. Courts, and now the Copyright Office, are well aware that technology companies try to leverage the monopoly rights granted by copyright to create legal monopolies on uses of their products or services. In essence, they build technical controls into the copyrighted work that limits who and how the product or service can be used, than claim their intentional incompatibilities are protected by law.
A line of cases involving video game consoles, printer cartridges and software applications generally has been understandably skeptical of efforts to use copyright in this manner, which quickly begins to smell of antitrust. Copyright is a monopoly—that is, a trust. So it’s not surprising that its application can leak into concerns over antitrust. The law strives to balance the need for the undesirable monopoly (incentives for authors) with the risks to related markets (restraint of trade).
As Anthony Falzone put it in a blog post at the Stanford Center for Internet and Society, “The Library went on to conclude there is no basis for Apple to use copyright law to ‘protect its restrictive business model’ and the concerns Apple articulated about the integrity of the iPhone’s ‘ecosystem’ are simply not harms that would tilt the fair use analysis Apple’s way.”
The exemption granted this week follows the theory that protecting the work itself is what matters, not the controlled market that ownership of the work allows the rights holder to create.
The bottom line here: messing with the firmware is a fair use because it doesn’t damage the market for the firmware, regardless of (or perhaps especially because of) its impact on the market for the iPhone service as Apple has designed it. That decision is largely consistent with case law evaluating other forms of technical lockout devices.
The net result is that it becomes harder for companies to use copyright as a legal mechanism to fend off third parties who offer replacement parts, add-ons, or other features that require jailbreaking to ensure compatibility.
Which is not to say that Apple or anyone else trying to control the environment around copyright-protected software is out of luck. As I note in the CNET piece, the DMCA is just one, and perhaps the weakest arrow in Apple’s quiver here. Just because jailbreaking has now been deemed a fair use does not mean Apple is forced to accommodate any third party app. Not by a long shot.
Jailbreaking the iPhone remains a breach of the user agreement for both the device and the service. It still voids the warranty and still exposes the customer to action, including cancelling the service or early termination penalties, that Apple can legally take to enforce the agreement. Apple can also still take technical measures, such as refusing to update or upgrade jailbroken phones, to keep out unapproved apps.
Contrary to what many comments have said in some of the articles noted above, the DMCA exemption does not constitute a “get out of jail free” card for users.
It’s true that Apple can no longer rely on the DMCA (and the possibility of criminal enforcement by the government) to protect the closed environment of the iPhone. But consumers can still waive legal rights—including the right to fair use—in agreeing to a contract, license agreement, or service agreement. (In some sense that’s what a contract is, after all—agreement by two parties to waive various rights in the interest of a mutual bargain.)
Ownership Rights to Software Remain a Mystery
A third interesting aspect to the Copyright Office’s rulemaking has to do with the highly-confused question of software ownership. For largely technical reasons, software has moved from intangible programs that must of necessity be copied to physical media (tapes, disks, cartridges) in order to be distributed to intangible programs distributed electronically (software as a service, cloud computing, etc.). That technical evolution has made the tricky problem of ownership has gotten even trickier.
Under copyright law, the owner of a “copy” of a work has certain rights, including the right to resell their copy. The so-called “first sale doctrine” makes legal the secondary market for copies, including used book and record stores, and much of what gets interesting on Antiques Roadshow.
But the right to resell a copy of the work does not affect the rights holders’ ability to limit the creation of new copies, or of derivative or adapted works based on the original. For example, I own several pages of original artwork used in 1960’s comic books drawn by Jack Kirby, Steve Ditko, and Gene Colan.
While Marvel still owns the copyright to the pages, I own the artifacts—the pages themselves. I can resell the pages or otherwise display the artifact, but I have no right until copyright expires to use the art to produce and sell copies or adaptations, any more than the owner of a licensed Mickey Mouse t-shirt can make Mickey Mouse cartoons.
(Mike Masnick the other day had an interesting post about a man who claims to have found unpublished lost negatives made by famed photographer Ansel Adams. Assuming the negatives are authentic and there’s no evidence they were stolen at some point, the owner has the right to sell the negatives. But copyright may still prohibit him from using the negatives to make or sell prints of any kind.)
Software manufacturers and distributors are increasingly trying to make the case that their customers no longer receive copies of software but rather licenses to use software owned by the companies. A license is a limited right to make use of someone else’s property, such as a seat in a movie theater or permission to drive a car.
As software is increasingly disconnected from embodiment in physical media, the legal argument for license versus sale gets stronger, and it may be over time that this debate will be settled in favor of the license model, which comes with different and more limited rights for the licensee than the sale of a copy. (There is no “first sale” doctrine for licenses. They can be canceled under terms agreed to in advance by the parties.)
For now, however, debate rages as to whether and under what conditions the use of software constitutes the sale of a copy versus a license to use. That issue was raised in this week’s rulemaking several times, notably in a second exemption dealing with unlocking phones from a particular network.
Under Section 117 of the Copyright Act, the “owner of a copy” of a computer program has certain special rights, including the right to make a copy of the software (e.g. for backup purposes, or to move it from inert media to RAM) or modify it when doing so is “essential” to make use of the copy.
Unlocking a phone to move it to another network, particularly a used phone being recycled, necessarily requires at least minor modification, and the question becomes whether the recycler or anyone lawfully in possession of a cell phone “owns a copy” of the firmware.
Though this issue gave the Copyright Office great pause and lots of pages of analysis, ultimately they sensibly hedged on the question of copy versus license. The Register did note, however, that Apple’s license agreement was “not a model of clarity.”
In the interests of time, let me just say here that this is an issue that will continue to plague the software industry for some time to come. It is a great example of how innovation continues to outpace law, with unhappy and unintended consequences. For more on that subject, see Law Seven (copyright) and Law Nine (software) of “The Laws of Disruption.”