Legal and Technical Standards in Digital Rights Management Technology

Abstract:     
This paper examines certain social costs of deploying digital rights management or DRM systems to protect copyrighted content. The calculus of costs and benefits for such technical self-help is highly complex, and the prospect for successful self-help via such measures is uncertain due to the deterministic nature of the technical design. DRM systems essentially provide an automated alternative to legal protections such as copyright. But because it is impossible to program complex situational responses into DRM systems, DRM constitutes the equivalent of a legal rule, rather than a legal standard. Thus the literature on rules and standards is useful in evaluating the effects of DRM deployment. As this literature would predict, DRM shifts discretion away from the user, toward the producer, and DRM design therefore resembles legal rule making rather than legal standard setting. Previous analyses of rules and standards suggests that rules are preferable when the costs of ex ante decision-making will be lower than the costs of ex post discretion and adjudication.

Ex ante DRM design decisions by content producers are also likely to be driven by the character of the technology. At the same time that DRM stands in for a legal rule, it also comprises a technical standard. For reasons of interoperability and trust management, DRM will tend to converge on a single standard. This means that DRM will tend toward a type of technological monoculture, presenting opportunities for the standards owner to engage in anti-competitive market distortions. This result will tend to be reinforced by legal anti-circumvention measures, a trend already apparent in the employment of the DMCA in some court decisions. However, more recent appellate decisions seem determined to resist this result, employing statutory re-interpretation and the threat of anti-competition sanctions to reverse the worst effects of DRM market distortion.

JEL Classifications: L86, O31, O33, O34, O38, L12, K10, K21, L41, L43

Working Paper Series