The DMCA: Successful in What?

On April 26th, the Cato Institute in Washington, D.C. hosted a "policy forum" at which the DMCA was the subject of some discussion by House IP chair Lamar Smith and Democratic member Zoe Lofgren. A brief report of the forum may be found here. According to the report, Representative Smith believes the DMCA has been a "successful law," which has been blamed for "everything under the sun." Consumers, he asserts, are becoming comfortable with digital rights management (DRM) technology; if some go too far in the application of DRMs, "the marketplace will act as a discipline on that behavior with consumers voting with their wallets."

Respectfully, I think a fundamental point is being overlooked: the DMCA is legislation, with both civil and criminal penalties; failure to comply with its provisions is not played out in the marketplace, but in the courts, while the threat of things being playing out in the courts has a very significant impact on how things work out in the marketplace, not naturally, but artifically because of the force of the statute. The PERFORM Act, introduced this week adds to the marketplace distortion (in the economics sense of that term) by proposing to amend Section 114(d)(2)(C)(vi) to require that webcasters use DRMs, irrespective of whether the format already includes the DRM .

I am all for marketplace solutions, and believe that copyright owners have every right to engage in self-help. Consumers can, in a pure marketplace environment shorn of the DMCA, decide with their wallet over such self-help steps, as they did with Sony's effort to prevent copying of its CDs. Nor do I think content owners must sit back while products or services are marketed with the intent and functionality of encouraging copying (one of the legitimate targets of the PERFORM Act). The DMCA, however, is a very big impediment to the marketplace approach Congressman Smith rightly favors.

One could even accept such interference with the marketplace sorting things out if there was an offsetting benefit. Indeed, the DMCA was premised on such an offsetting benefit. Here is what the House Judiciary Committee said about that in 1998: "When copyrighted material is adequately protected in the digital environment, a plethora of works will be distributed and performed over the Internet." H.R. Rep. No. 101-551, pt. 1, 105th Cong., 2d Sess. 19 (1998). Senator Leahy, in his additional views to the Senate Judiciary Committee report, similarly noted: "We must make sure that our copyright laws protect the intellectual property rights of creative works available online in ways that promote the use of the Internet, both by content providers and users." S. Rep. No. 190, 105th Cong., 2d Sess, 65 (1998). A fair and balanced statement, but can we say, 8 years later that there is a plethora of works available rather than a plethora of efforts to increase the level of protection?