Digital Journal — It all started with the Mouse.
A few years ago, the Walt Disney Company noticed that its star, Mickey Mouse, was aging. At the turn of the century, he would be almost 75 — venerable for a mouse, and more so for one in the entertainment field. And that meant the little black rodent would end up in corporate hell.
Corporate hell, in Disney’s case, was the public domain. Once in it, Mickey would belong to the world, and no longer be obliged to toil solely in Disney’s vineyards.
Mickey was born in 1928, when he made his debut in a three-minute cartoon called Plane Crazy. It was one of the first works by brothers Walt and Roy Disney, who founded their animation studio in a Hollywood garage in 1923. The manic mouse proved so popular that they brought him back in Steamboat Willie, the first fully synchronized sound cartoon.
Walt Disney died in 1966, survived by the mouse that helped him earn 30 Academy Awards and amass a fortune with a string of subsequent hits such as Bambi, Fantasia, Pinocchio and Dumbo.
But Disney’s death also ushered in a long creative drought for the House of Mouse, which was kept afloat largely by recycling its old hits, released regularly for each new generation. Michael Eisner, when he took over as president in 1984, rebuilt the animation studios and made a series of new acclaimed films according to a tight annual schedule and strict rules that became known as “the Disney formula.”
Eisner’s approach proved to be much more corporate than Walt’s. His strategy was to continue marketing the old movies while making new movies for both children and adults (Touchstone Pictures), along with strategic corporate takeovers such as the purchase of the TV network Capital Cities/ABC in 1995.
It’s worthwhile indulging in Disney’s corporate nostalgia, because it has a direct bearing on technology. What Disney did next to protect Mickey Mouse is now echoing throughout the high-tech industry.
Eisner knew that the old Disney films were still the company’s prime source of revenue, even with the success of such post-Walt films as The Little Mermaid and The Lion King. He also wanted to keep the old movies from slipping out of the company’s possession, especially after he had purchased ABC, which would serve as a broadcast platform for his products.
The Lion King, for instance, followed Eisner’s belief that a single film was not merely a potential box-office money-maker but an industry unto itself, capable of being spun off into a Broadway musical and licensed to play in other cities; it would also merchandise soundtrack albums and T-shirts. It could, in short, be elevated into a recognizable brand, to be applied to a variety of products with a market life much longer than a single hit film. It was just a logical extension of the practice of strategically re-releasing the old hits every so many years.
To protect his marketing model, Eisner looked carefully at the European Union, where the Berne Convention for the Protection of Literary and Artistic Works of 1996 extended copyright protection from the author’s life, plus 50 years to life, plus 70. He and other Hollywood moguls worked on the premise that such copyright protection could also be applicable to popular culture, and lobbied Washington to extend the U.S. life-plus-50 limit by 20 years to cover movies and music.
To accomplish this, Eisner and his Hollywood colleagues took a two-pronged attack. First, they drafted Sonny Bono, a junior Congressman whose career as a pop singer had plummeted after he and his wife Cher divorced. Bono drafted a bill proposing the 20-year extension and the House of Representatives, in a fit of distracted lawmaking (this was during the national hysteria over the Monica Lewinsky scandal), rushed its passage by a voice vote in 1998.
The second prong was to revamp the Copyright Act and toughen a piece of legislation that would halt the trade in digitized copyright material.
The same distracted Congress, under siege by an opposition mired in moral outrage, passed the Digital Millennium Copyright Act which essentially gave copyright holders a mighty hammer to smite those who ignored copyright laws. The DMCA, as it came to be known, was officially created to ratify the World Intellectual Property Organization’s Copyright Treaty of 1996. But it was a much more draconian piece of legislation than the WIPO called for, essentially allowing copyright holders to bypass the courts in getting warrants to charge violators.
Obsessed by Lewinsky’s dalliance with President Bill Clinton, few people looked at either bill very carefully. Critics who did called it “the Mickey Mouse Copyright Act” or the “Copyright Theft Act,” noting that its primary purpose was to protect Hollywood’s profits and not necessarily its creative products.
And those profits aren’t puny. As a single example, Disney found itself the target of a surprise takeover bid by cable giant Comcast Corp., which in February, 2004, offered $49 billion (US) for Disney, later increasing it to $67 billion (US). The bid was abandoned in April, but it did serve to show just how much property Eisner was protecting.
The impact of the two acts of Congress was that corporate interests could hang on to all sorts of creations that could be protected by copyright for nearly a century. For instance, no works copyrighted in the U.S. would enter the public domain until Jan. 1, 2019, when all works created in 1923 would become eligible. By then, of course, the studios — and the recording industry, which followed on Hollywood’s heels — would have figured out how to combat the new threats to their classic marketing models: digital technology and the Internet.
Though Congress was convinced that by passing the two copyright bills it was protecting works of artistic merit and lasting cultural richness, other industries were beginning to realize that these lavishly pro-business laws could also be used to protect stuff that was on neither film nor paper, such as computer code, component design and architecture and a host of other intellectual properties.
Serendipitously, in 1998 (the same year the copyright laws were passed) a U.S. court ruled, in a precedent-setting case, that business processes could also be considered intellectual property — and therefore could be patented. Patent registrations ballooned over the next few years, especially during the dot-com boom, when companies were creating entirely new models of doing business every day, and sought to protect their e-commerce inventions.
The Business Software Alliance (BSA), a group representing some of the largest makers of enterprise-grade software, used the precedent to step up a global campaign to stop the trade in software piracy. Its Canadian branch, the Canadian Alliance Against Software Theft (CAAST), reports how many millions of dollars the Canadian economy loses to piracy each year. It also noisily trumpets the results of its major lawsuits, all of which have so far ended with out-of-court settlements.
With the tightened laws regarding copyright on one hand, and the expansion of the definitions of patents and trademarks on the other, the road had been paved for a whole new approach to business. Tech manufacturers, especially, began to wrap ideas into a patent or a copyright so they could improve their profit margins without having to actually produce any new product. Instead, they could license it to other manufacturers or hand it over to their legal departments, which would then drag offenders into court. It helps that people charged with copyright infringement are usually competitors.
This has created an atmosphere where corporations ask patent attorneys to approve all sorts of questionable things — a recent patent-infringement suit was launched against online retail giant Amazon.com for using one-click purchasing and virtual shopping carts. Those techniques were created by a software maker called Open Market, and the patent on them was loudly criticized when it was granted. Open Market was bought in 2001 by Divine Inc., a seller of enterprise services, which subsequently went bankrupt. Divine’s assets were sold in 2003 by an investment firm called Saratoga Partners, which then sold the Open Market intellectual property to Soverain Software, an e-commerce company. It is Soverain Software that is now taking Amazon.com to court over the “shopping cart” patent.
More similar suits are inevitable, says one patent lawyer, because between 40 and 50 per cent of new patents are frivolous or unnecessary. The owners probably sought the patent just to profit through licensing or litigation.
So it was without extreme dismay that we heard U.S. businessman Donald Trump musing that he would like to claim the intellectual-property (IP) rights to the cliché “You’re fired!” — a line he delivers to the losing candidates in The Apprentice.
This situation has not arisen spontaneously. Efforts to awaken companies to their IP rights have been made by a number of groups, among them the Licence Executives Association, a worldwide organization with 5,500 members in North America whose purpose is to promote understanding and use of intellectual property as a revenue stream and as protection against copycat competition.
This non-profit organization, which gathered recently for its annual meeting at the Royal York Hotel in Toronto, is a low-key group, most of them lawyers and accountants. Their day jobs are to get products and processes patented, license them and prosecute people who violate their rights. They’ve been around since 1966, but only since 1998 have they really begun to find themselves closer to the core of the businesses for which they work.
These are the people who, when they find publications printing words such as Kleenex or Plexiglas without capital letters, thus making them generic, send sharp letters to the publication demanding apologies. Protecting patents, trademarks and copyrights must be done vigilantly, they say, because the first thing courts look for in a case of infringement is whether IP owners have ever protected their product, signifying that they care about their property. “You have to be aggressive,” one LES executive said. “Use it or lose it.”
Among the crusaders is Peter Ott, a Toronto accountant whose company, Peter Ott and Associates, specializes in price tags to put a value on any given work or process or item, so that companies can set a price when licensing their wares (or when estimating the damages if someone else has used them illegally).
As far as Ott is concerned, his business is a quiet one in which his greatest challenge is to persuade his corporate clients to exploit their products in new ways. And given Canadian law, which is not as aggressive as the U.S.’s, he’s right. But his counterparts south of the border live in a more litigious society, and their boisterous corporate strategies are now as much influenced by their legal departments as by executives in marketing and sales. The classic example of this is the music recording industry, whose immediate response to the arrival of peer-to-peer file-sharing of music was not to change its marketing or sales strategy, but rather to drag offenders to court, even college kids or pre-teens downloading “If You’re Happy and You Know It.”
This is especially true of the high-tech industries. Most of them are terrified of rapacious behaviour like Microsoft’s strategy of “embrace and extend,” which to them means to absorb the creative work of competitors. But it has also become true of other fields in which patents and copyrights are central.
“Congress intended the DMCA to target criminals who pick digital locks to engage in mass piracy,” said Gwen Hinze, a lawyer representing the Electronic Frontier Foundation, a watchdog organization in the U.S. that has been highlighting problems posed by the DMCA. “Yet, in practice, the DMCA’s anti-circumvention provisions have stifled the legitimate activities of scientists, scholars, business competitors, journalists, publishers, consumers and the general public.”
The EFF has been sounding the alarm about misuse of the DMCA ever since it was passed. An organization dedicated to guarding the free-speech provisions of the U.S. Constitution, it maintains a document called “Unintended Consequences” that lists lawsuits specifically involving new technologies that are peculiar examples of cases derived from the law. The EFF acknowledges that the “anti-circumvention” aspects of the DMCA were designed to stop copyright pirates from defeating protections built into copyrighted works. But in practice, the EFF says, the consequences are radically different from their intended spirit.
In 2000, a multi-industry group called the Secure Digital Music Initiative (SDMI) told a team of computer researchers from Princeton and Rice universities and Xerox Corp. that they would be sued under the DMCA if they delivered a certain paper at a conference. The paper outlined how the team had taken up a challenge by SDMI and cracked its digital watermarking technology in audio files. The SDMI, stung by the team’s success, threatened the suit if the winning team published the report on how they had done it.
Similarly, Microsoft invoked the DMCA against the Web-geek forum Slashdot, which had published charges from people who believed Microsoft had made changes to a user-authorization security standard known as Kerberos. Kerberos is an open-source system, meaning it is not protected by copyright. But Microsoft argued that its implementation of Kerberos wasn’t covered by the General Public Licence.
In 2002, a college student wrote a small software program that allowed him to embed TrueType fonts in documents. He released the program as open source and used it himself on a series of open-source fonts. But Agfa Monotype Corp., a type foundry, threatened to sue him under the DMCA saying that his program, which converts numerous fonts at once so they can be embedded in documents, could be used to convert proprietary fonts made by Agfa as well.
The EFF’s Unintended Consequences document keeps getting updated; it’s currently in its third edition. Next, it may include a recent threat of a suit launched by the Directors Guild of America (DGA) against ClearPlay, creator of a technology that allows DVD players to skip over violence, swearing, nudity and other objectionable content in movies.
The DGA is arguing that ClearPlay is altering copyrighted works without permission. “ClearPlay software edits movies to conform to ClearPlay’s vision of a movie, instead of letting audiences see and judge for themselves what writers wrote, what actors said and what directors envisioned,” the DGA said in a statement. “Ultimately, it is a violation of law and just wrong to profit from selling software that changes the intent of movies you didn’t create and don’t own.”
Last October, SunnComm, maker of a CD copy-protection technology called MediaMax CD3, threatened to sue Alex Halderman, a Princeton student who wrote a review of the system in which he revealed how the copy-protection technology could be circumvented. Halderman revealed that you simply had to hold down the Shift key while loading a CD. That act would temporarily disable the Autorun feature used by the copy-protection technology.
SunnComm claimed Halderman had violated the DMCA because he had reported the name of the driver installed by MediaMax CD3 and, once identified, it could easily be removed from the computer. SunnComm concluded in a statement that Halderman and Princeton University had “significantly damaged SunnComm’s reputation and caused the market value of SunnComm to drop by more than $10 million.”
SunnComm suddenly found itself in the centre of a firestorm of protest on the Internet, most of it accusing the company of releasing a shoddy product, and defending Halderman for pointing out its weaknesses. SunnComm CEO Peter Jacobs dropped the suit abruptly, but was unrepentant in his citation of the DMCA. “This cat-and-mouse game that hackers and others like to play with owners of digital property is over,” he huffed.
Another case involves recording giant EMI Group Plc, one of the world’s largest music companies, which sued California-based Electronic Arts Inc. for using copyrighted music in some of the video game maker’s sports titles, including Madden NFL 2004, Tiger Woods PGA Tour 2004 and MVP Baseball 2004. The case is interesting because, in 2003, EA had entered negotiations with EMI for the rights to certain songs, but then released the games before the rights had been granted. Though EA tried to continue negotiating for the rights, EMI chose to go the legal route instead and launched a lawsuit for tens of millions of dollars in damages — a sum far greater than whatever EMI would have received from the song right sales.
Utah-based SCO Group, owner of copyrights on the Unix operating system, has launched a series of lawsuits against operating system rival Linux, claiming some of the Unix code had found its way into Linux. The suit against IBM Corp. alone is for $5 billion (US).
The SCO case is nightmarish in its complexity and perhaps the most dramatic example of using the DMCA to profit from a troubled product. With the future of the $19-billion Unix market cloudy, SCO’s suits appear to be designed to allow the company to relax and simply collect licence fees from Linux users.
Much of the problem in all these cases is the rhetoric surrounding them. While copyright and patents are designed to protect artists and creators, the clout built into acts such as the DMCA is increasingly being used by corporations as a bludgeon against competitors. The companies that are most directly affected still cling to the language of artists in defending themselves.
So now movie studios roll a short film before the previews in theatres in which a stuntman explains how his work is threatened by online pirates who trade movies without paying. Meanwhile, record companies trot out pop stars like Madonna to support their position on file-swapping.
The key word used by all who invoke copyright infringement is “theft,” which places the DMCA at the heart of a moral argument involving the right of individuals to benefit from their labours. But “theft” is invoked even when a suit has little to do with an individual creator. Technology is often created by a corporate entity, which owns all its employees’ labour, and when it sells the technology, it sells all the rights to it — including rights to license it. So when industries get involved in copyright disputes, it almost never has anything to do with individual creators, who are cited as the people who are supposed to benefit from the updated laws in the first place.
Copyright is such a useful tool for large companies, says one noted copyright lawyer, because copyrights have always been about monopoly. Creators of works that can be covered by copyrights or patents would love to enjoy the fruits of their labours for as long as they can, and not have to worry about letting their works slip through their fingers like fine sand. But, individuals are less interested in dealing with subsidiary rights, derivative rights, licensing rights and all the marketing done by corporate entities like Disney, which has developed a terrific vault of proprietary material of enduring popularity no matter how old it gets.
Stiffening the copyright laws to favour corporate ownership has created serious contradictions such as this. Western society has a long history of borrowing ideas, and if the borrowing is done on a small scale, we just accept it as part of the way things are done.
But when laws become so tight that suits are easy to file, the language in defence of the suits becomes increasingly moralistic in an effort to deflect attention away from the possibility that they may be little more than a venal desire to cripple the competition.
Worse, the rhetoric has become even more hysterical, linking copyright infringement to terrorism.
In the spring of 2004, Jack Valenti, president of the Motion Picture Association of America since 1966, was sitting in a U.S. Senate Appropriations Subcommittee hearing, describing the horrors of a world in which the Internet allows flagrant disregard for private property. He was quoting from an article written by Sgt. 1st Class Eric Hortin for the Army News Service in which the sergeant explained that peer-to-peer file-swapping technology was a threat to national security.
“Internet piracy is going to grow malignantly over the years,” he said. “The U.S. Army believes [file traders] constitute a threat to national security.”
How not paying for a movie constitutes a security threat remains a mystery, but the damage was done. In legislators’ minds, peer-to-peer file-sharing, when violating copyright, is almost synonymous with terrorism and could perhaps even be regarded as traitorous.
In the meantime, down the hall, another U.S. Senate committee had just passed a broad anti-piracy package, which would (among other things) make the use of camcorders in movie theatres a federal crime.
As a result of such extreme language, the Electronic Frontier Foundation started a campaign in April to persuade Washington to revoke patents the EFF considers harmful to innovation and free expression. The EFF took the action after the release in October of a report by the U.S. Federal Trade Commission (FTC), which recognized that courts are being tied up in legal action over questionable lawsuits. The FTC recommended finding a better way to challenge a patent’s validity without going to court.
The EFF is not the only voice trying to recapture the genie of corporate greed that has escaped from the bottle. Lawrence Lessig, a Stanford University law professor, has recently published a book called Free Culture: How Big Media Uses Technology and the Law to Lock Down Culture and Control Creativity. To demonstrate his commitment, Lessig released the book for free on the Internet, as Ann Godoff, publisher of Penguin Books (which released the paper-based version) smiled nervously in approval.
In the book, Lessig argues for a more liberal public domain, with voluntary licences that would allow creators to choose whether to release work freely or to allow their works to be altered. He believes that excessively long copyright protection, and the aggressive tactics of media conglomerates, have upset a traditional balance between intellectual creativity and property.
Penguin said in April that the results of Lessig’s experiment were successful. After one month on the book shelves, sales had reached 2,600, a respectable showing. But Lessig said the virtual book was a much greater success. After one month, downloads from two of his websites amounted to more than 66,000 copies, and 100,000 had been downloaded from Amazon.com.
He doesn’t want to eliminate copyright, Lessig told a Reuters reporter, just “eliminate the middleman.”
Lessig believes that, ultimately, the current tight copyright laws will actually kill commercial ventures, not make them more profitable. “What so many examples around the world demonstrate,” he says, “is that free content actually helps push commercial content.”
Maybe it’s time to tell that to Mickey Mouse.