Exporting Restrictions, Importing Poverty

Some new developments that reinforce an observation I’d made that the emerging world-wide IP landscape will become one that is divided into two differing regimes. One, centered on the USA, is built on strong restrictions on the free transfer of certain types of information. The two cornerstones of this restricted space are the Digital Millennium Copyright Act (DMCA) and overbroad patent protections. While software patents, a particularly pernicious form of overbroad patent protections, have gotten much attention, the real backbone of this restricted space is the Digital Millennium Copyright Act, which codifies criminal prosecution for the transfer of certain types of information, even to the extent that many types of speech, formerly thought by many to be protected by the First Amendment, have been criminalized.

The other economic space will be marked by freedom of information transfer, and it will develop into the place that innovative software development, digital content creation and design will occur. Historically, the first two of these fields had been dominated by America, and America still has many advantages over other regions in these fields, but is risking those advantages by adhering to such restrictive measures as the DMCA. This is a minority opinion, at present.

I noticed a while back that those pushing for these restrictions were not content to let other types of IP regimes co-exist in other parts of the world, but seemed compelled to constantly push for an expansion of their restrictive laws into all regions that actively participate in the global economy. The reason is quite simple: all other things being equal, an economic space freed from the restrictions of the DMCA and overbroad patent protections, will out-compete the non-free zone. Of course, all things are never in fact equal, but the essential truth that the restricted economic space would be at a critical economic disadvantage to the free space is why those advocating DMCA-like restrictions have constantly sought to export these restrictions to other countries. Once the economic dis-advantages of these restrictions was clear, the advocates of freedom would be able to make a compelling case to abolish restrictive laws like the DMCA.

It is therefore no accident that in every so-called ‘free trade’ agreement negotiated by USA, the signatory country is obligated to implement DMCA-like laws, and remove certain freedoms from their own populations. However, the exporting of these restrictions has started to cause a ‘blowback’ reaction against these restrictions. People don’t like their freedom being taken away.

The recent decision in the Finnish Supreme Court is an example of this ‘blowback’ that is so central to the continued separation of the world into ‘free’ and ‘non-free’ zones, and shows that the E.U. will be in the free zone. Note that the decision was unanimous:

Hat Tip: Groklaw

Finnish court rules CSS protection used in DVDs “ineffective”

In an unanimous decision released today, Helsinki District Court ruled that Content Scrambling System (CSS) used in DVD movies is “ineffective”. The decision is the first in Europe to interpret new copyright law amendments that ban the circumvention of “effective technological measures”. The legislation is based on EU Copyright Directive from 2001. According to both Finnish copyright law and the underlying directive, only such protection measure is effective, “which achieves the protection objective.”

So that’s it–this is potentially the end of restrictions on the distribution of DeCSS libraries in the EU, and what’s even more interesting, it seems that a precedent has been established–if a DRM scheme can be broken, it will be deemed ‘ineffective’ and therefore not subject to DMCA-like restrictions on the disclosure of its workings. The whole decision seems to be a slippery slope to repealing certain DMCA-like provisions that exist in the E.U. Those who would want to continue or to extend such restrictive schemes in Europe would do well to remember the popular outcry and eventual defeat of the Directive on the patentability of computer-implemented inventions (2002/0047/COD), the final vote being 648-14.

The popularity of the Pirate Party in Sweden is another example of this ‘blowback.’ Those who favor DMCA-like restrictions ascribe the popularity of the Pirate Party to clever marketing etc. In reality, however, their praise of the effective PR of the Pirate Party is entirely misplaced. It is those who oppose the Pirate Party who have done all of the good PR for the Pirate Party, by trying to shutdown the web site Pirate Bay, for example.

Europe is hardly the only place where DMCA-like restrictions have been falling afoul of basic laws (read ‘constitutionally guaranteed rights of citizens’) of a country.

The USA-Australia Free Trade agreement also required Australia to implement laws similar to the DMCA. It’s notable that many innovation leaders in Australia were strongly opposed to this treaty. In particular, Andrew Tridgell, the developer of Samba, notes on his website that the so-called ‘Free Trade’ Agreement, in an Orwellian twist, is really all about restrictions, not freedoms:

Harming Trade
The free trade agreement has been presented as promoting trade and breaking down trade barriers, but Chapter 17 is more about restrictions and constraints on Australians. For Australian computer users what Chapter 17 really does is erect a one-way gate, preventing Australian consumers from having access to the same software and media that are enjoyed in other countries.

But one of the most interesting facts he cites shows that the restricted IP zone that America has built has begun to place it at a disadvantage:

For instance, in 2001 a Russian programmer named Dimitry Skylarov spent several months in a United States jail after Adobe asked the FBI to arrest him for writing software that allowed books in the Adobe e-books format to be used by blind people[6]. Dimitry, who wrote the software in his home country, was visiting the United States to give a paper at an international conference.

Since then a number of key technical conferences have had to be moved away from the United States as organisers fear that some of their speakers could suffer a similar fate. It is notable that the three major technical Linux conferences are now in Canada, Germany and Australia, which all lack DMCA-like laws.

Since Andrew had written this, the USA-Australia Free Trade Agreement was passed. However, an Australian legislative committee looked into exactly how the DRM provisions of this agreement could be implemented into Australian law. As covered on Wikipedia:

The agreement requires legal enforcement of digital rights management systems, however an Australian legislative committee has issued a report[4] stating that this portion of the treaty has a “significant flaw”. The report goes on to term it a “lamentable and inexcusable flaw”, an “egregious flaw”, and even a “flaw that verges on absurdity”. The committee expressed the strong view that the Government must find a solution to the flaw before implementing this portion of the treaty.

It’s unlikely that robust DMCA-like provisions will be effectively integrated into Australian law.

So, the US is exporting restrictions via the so-called ‘Free Trade Agreements’ and importing poverty, by building markets that are non-competitive, closed and dominated by monopolies at home. This gives other regions the chance to take the lead in the knowledge economy. But don’t take my word for it–a study commissioned by the EU to look at FLOSS (Free Libre Open Source Software) found:

• Increased FLOSS use may provide a way for Europe to compensate for a low GDP share
of ICT investment relative to the US. A growth and innovation simulation model shows
that increasing the FLOSS share of software investment from 20% to 40% would lead to
a 0.1% increase in annual EU GDP growth excluding benefits within the ICT industry
itself – i.e. over Euro 10 billion annually.

• FLOSS potentially saves industry over 36% in software R&D investment that can result
in increased profits or be more usefully spent in further innovation.

• By providing a skills development environment valued by employers and retaining a
greater share of value addition locally, FLOSS can encourage the creation of SMEs and
jobs. Given Europe’s historically lower ability to create new software businesses
compared to the US, due to restricted venture capital and risk tolerance, the high share of
European FLOSS developers provides a unique opportunity to create new software
businesses and reach towards the Lisbon goals of making Europe the most competitive
knowledge economy by 2010.

• The existing base of quality FLOSS applications with reasonable quality control and
distribution would cost firms almost Euro 12 billion to reproduce internally. This code
base has been doubling every 18-24 months over the past eight years, and this growth is
projected to continue for several more years.

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Exporting Restrictions, Importing Poverty

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