Modeling high-def
-- Video Business, 11/11/2005
NOV. 11 | Almost from the beginning of the high-def development process, there was a conviction among many studio and hardware executives that any new format needed to offer consumers compelling new capabilities to get them to upgrade from standard DVD.
Efforts focused on features like advanced interactivity and, more recently, managed copy.For high-tech companies like Microsoft, the ability to rip data off the disc and send it to other devices is critical to the vision of building the networked home using Microsoft’s (and others’) technology.For studios, allowing consumers to make copies under carefully controlled circumstances is better than tempting them to hack their discs and make copies without any controls at all.However, for all the attention given to capabilities like managed copy, there has so far been little public discussion of how to fit a realistic business model around the new features.For instance, as I discussed in last week’s column, it’s not clear whether the studios and other content distributors are even in a position, under the prevailing rights and collectively bargaining regimes, to authorize consumers to make copies, managed or otherwise. Even if those issues can be resolved, however, managed copy would still face a thicket of legal and policy questions concerning consumer and retailer rights that have also so far been ignored, at least publicly.Let’s say you buy a high-def disc that provides for managed copy. You bring it home and rip your authorized copy.Under U.S. copyright law, you now almost certainly have a second, lawfully made copy, which, like the original, would therefore be subject to the First Sale Doctrine.If you’re allowed to burn the copy onto another form of removable media, you would be legally entitled to dispose of it however you saw fit—including by sale or rental.The studios, of course, would argue that you don’t really own the copy, you’ve merely licensed its use—a point you would have agreed to, along with various restrictions, by clicking “I agree” before being able to make the copy.However, it’s an open question whether such End User License Agreements, which like all contracts are governed by state law, can be used to trump federal copyright law as reflected in the First Sale Doctrine.U.S. case law on the question is mixed, which is another way of saying ripe for further litigation. And in some foreign countries (Italy for instance) such “shrink-wrap” licenses are not legally valid, so no managed copy for them.
The First Sale Doctrine would also permit a retailer to rent a high-def disc, just as they can now with standard DVDs, raising the question of what to do about the managed copy feature.
