Battle Stirs Over Copyright Laws

Although they are heavily dependent on each other, the people who make DVD and CD players and the people who produce DVDs and CDs are preparing for a showdown.

As consumers switch to digital forms of entertainment, Hollywood is pushing Congress to pass laws that make it more difficult to copy movies and music. But consumer-electronics manufacturers warn that there is no such thing as a perfectly secure system.

The arcane world of copyright law rarely triggers such uproar. But intense lobbying by Walt Disney Co. and other entertainment firms--which collectively gave nearly $38 million to politicians in the last election cycle--has sparked a movement on Capitol Hill to boost copyright protection.

The studios and record labels fear a day when consumers swap perfect copies of blockbuster movies online as easily as some now trade bootlegged music.

Last month, Sen. Ernest F. Hollings (D-S.C.) introduced a bill that would, for the first time, make it a crime for anyone to sell, create or distribute “digital media devices,” such as computers, TV set-top boxes or DVD players, unless they contain government-approved technology to thwart unauthorized copying. In effect, the Consumer Broadband and Digital Television Act would make equipment manufacturers responsible for safeguarding the content their gear plays.

The bill faces an uphill battle. But equipment makers, consumer groups and lawmakers are bracing for a bruising political fight.

“This is a shot across the bow,” said Gigi Sohn, co-founder of Public Knowledge, a Washington watchdog group that follows intellectual-property issues. “I do not support piracy. But you don’t punish technology to get at bad [consumer] behavior.”

At stake are billions of dollars in digital entertainment sales and the future development of the Internet, cable TV and other communications networks capable of delivering digital content to consumers.

Supporters and opponents of Hollings’ bill agree that getting Hollywood to put its valuable wares on the Internet could trigger a wave of spending by encouraging consumers to buy more movies and music, more robust computers and faster Internet connections.

Already, computer CD recorders have become standard equipment on new PCs. And DVD players are the fastest-growing consumer electronics product in history, with worldwide shipments expected to exceed 35 million this year, according to research firm Cahners In-Stat/MDR in Newton, Mass.

But consumer groups, equipment makers and other opponents said that if the Hollings bill passes, consumers who want new digital entertainment services will need government-approved devices-- ranging from copy-proof MP3 players to car stereos and PCs that will automatically manage how many times, if any, copy-protected digital content can be copied.

“Rather than finding a workable market solution, an imprudent [federal] mandate could require millions of dollars in engineering changes that, in the end, will be passed on to consumers,” Rep. Anna G. Eshoo (D-Atherton) told her colleagues in a letter last week.

Jack Valenti, president of the Motion Picture Assn. of America in Washington, said the industry needs greater protection. He said piracy saps $3.5 billion from the motion picture industry annually and discourages studios from releasing more digital content.

“The copyright industry [for entertainment and publishing] is America’s greatest trade asset, providing more than 5% of the nation’s gross domestic product,” Valenti said. “The movie industry alone has a surplus balance of trade with every single country in the world. No other industry can claim that. It is very important to find some way to protect these valuable works in this digital age.”

Besides imposing a new security standard on electronic equipment, the Hollings bill would make it unlawful to import software or hardware without government-approved security features. The government’s anti-piracy standard would be imposed within 18 months of the bill’s passage unless the industry agreed on alternative anti-piracy technology.

Record companies already are trying out several anti-piracy technologies to protect music CDs.

Last spring, country singer Charley Pride became the first artist to acknowledge selling a CD with copy-protection technology aimed at thwarting digital duplication. Music on the disc can be played on CD players but not on personal computers. Several big record labels, including Vivendi Universal unit Universal Music Group, also have embraced copy-protection technology.

Major film studios, meanwhile, have been in talks with computer and consumer-electronics companies for more than a year to come up with an industrywide copy-protection standard. Their task is more difficult because they are seeking an anti-piracy solution that would secure unprotected television content sent over the air, such as the hospital drama “ER.”

Studio officials met in Menlo Park, Calif., in September with a number of entertainment and technology officials, including John Chambers, president of computer networking giant Cisco Systems Inc. and Valenti. But Hollywood executives said Hollings’ bill is needed to reach an accord.

“There is a reason cases get settled on the courthouse steps: Without the stimulus of an impending decision by an [independent arbiter], the parties would go on arguing forever,” said Preston Padden, Disney’s executive vice president of government relations. “We are the people who wanted to get this done yesterday. After all, it is our movies that are getting pirated.”

Silicon Valley companies also are victimized by piracy and lose about $2.6 billion annually in the U.S. from unauthorized copying of software, according to the Washington trade group Business Software Alliance. But the firms said Hollywood’s efforts to win greater copyright protection through legislation are misguided.

“Industry will come up with a much better solution than one mandated by Congress,” said Robert Holleyman, president of the Business Software Alliance. “If there was a silver bullet that would defeat piracy, we would be for it. But the Hollings bill is not the answer.”

Because the ubiquitous personal computer has a flexible design that makes is possible to make exact copies of almost any digital data without degradation, many technology experts, such as Princeton University computer science professor Edward W. Felten, believe it is impossible to develop a mass-market anti-piracy technology that can’t be defeated.

Hollywood has been spared the Napster-like, mass-market sharing of videos that has hit the music industry. That’s because only 10 million American households have the high-speed Internet connection needed to quickly download a feature-length film. Using a standard dial-up modem, downloading a movie could take as long as a day.

Nevertheless, the movie industry faces a growing threat from Web-based services that let consumers download unauthorized copies of movies for free. And Valenti, aware of the threat, said he is hopeful of reaching agreement on a new copy-protection technology in the next few weeks.

“I’m not looking for perfection,” he said. “But what we are looking for is [sufficient] copyright protection ... so that we can offer our products to law-abiding consumers at a fair and reasonable price.”