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DMCA and unauthorized access to software, data

The Digital Millennium Copyright Act makes it unlawful to circumvent a technological measure that effectively controls access to a work protected by copyright, or to traffic in devices designed to accomplish that end. See 17 USC §§1201, 1202.

Soon after it was enacted, this statute was used to suppress the publication of code on DVDs to prevent copying and to combat the trade in devices that would give consumers free access to pay-per-view broadcasts.

But these early cases did not define clearly the breadth of the statute. For example, for the purpose of the DMCA, is there a difference between a physical book and a digital one? If not, is shrinkwrap then a technological measure? If it is, does the DMCA enable publishers to sell books under a shrinkwrap license prohibiting their transfer or resale?

Three courts of appeals have directly addressed a fundamental question about the DMCA. Does it create a new substantive right to control access to copyrighted material or does it simply add to the remedies available for copyright infringement?

The Court of Appeals for the Federal Circuit was the first to consider this question and concluded that the DMCA created no new rights, only new remedies. Chamberlain Group, Inc. v. Skylink Techs., Inc., 381 F.3d 1178, 1202 (Fed. Cir. 2004).

In July 2010, the 5th U.S. Circuit Court of Appeals issued an opinion that followed the Chamberlain precedent. But before the ink was dry, the opinion was withdrawn and replaced with a new opinion that skirted the question and removed all references to Chamberlain.

Then, in December, the 9th U.S. Circuit Court of Appeals concluded in a closely watched case that the DMCA does create the right to control access to copyrighted works.

An important tool

The facts of these two cases provide good illustrations of how and why the DMCA can be an important tool for owners of digital content and software.

Chamberlain involved competing makers of garage door openers and their remote control devices. Chamberlain developed an opener that uses an algorithm to frequently change the codes required to open the garage door. The Chamberlain remote controller uses the same algorithm to generate the code that it sends to the opener.

Skylink, a competitor also makes a “universal” controller that can replicate Chamberlain’s algorithm, permitting its openers to operate Chamberlain’s openers.

Chamberlain alleged the sale of Skylink’s controller was a DMCA violation because its own openers and controllers had embedded software protected by copyright and the algorithm for changing codes was a technological measure that controlled access to that embedded software.

The Federal Circuit found no DMCA violation because operating the Skylink universal remote did not result in any copying of the Chamberlain software. It only caused the software to function. The court said there was no connection between the defendant’s thwarting of the plaintiff’s scrambling algorithm and any copyright infringement. And without infringement, the court held, there could be no DMCA violation.

The 5th U.S. Circuit Court of Appeals initially followed this logic in MGE UPS Systems Inc. v. GE Consumer and Industrial Inc. (civ. no. 08-10521).

The case involved diagnostic software used to maintain and repair uninterruptible power supply machines. MGE, which made the equipment, developed the software for use by its technicians.

To control the use of the software, MGE had the software check for the presence of an authenticating external hardware device (a “dongle”) before the software would go to work. Thus, if a competitor were to come into possession of a copy of the software, it would be of no use unless the competitor’s technicians also had a valid dongle.

A competitor did acquire a copy of the software, and by the time it landed in the hands of their technicians, it had been modified to not check for the external dongle. The record does not indicate who modified the software.

The trial judge granted GE’s motion to dismiss MGE’s cause of action under the DMCA, but the copyright and other theories went to trial. The jury found GE liable for copyright infringement and misappropriation of trade secrets, resulting in a damages award of $4.5 million. MGE appealed the dismissal of the DMCA claim.

The 5th Circuit issued an opinion in July 2010 that relied on Chamberlain, reasoning that because the dongle was intended to limit software access, not its copying, there was no DMCA violation. This logic appears inconsistent with the statute, which speaks expressly of technological measures designed to control access to copyright protected works.

But in September, the 5th Circuit replaced the MGE opinion with another that bears no reference to Chamberlain. It found no DMCA violation because there is no evidence as to who modified the software. While this logic is no less questionable, the implications of this opinion are perhaps narrower than before.

Federal court in error

On Dec. 14, 2010, the 9th Circuit issued an opinion in MDY Industries v. Blizzard Entertainment (civ no. 09-15932), a case involving World of Warcraft, a multi-player video game that operates over the Internet.

Users purchase software that allows them to engage in fantasy adventures. As they become more skilled, they advance through as many as 80 skill levels. The game involves user software and remote servers operated by Blizzard Entertainment.

Those wishing to advance through the game’s levels without actually playing the game are able to purchase Glider, a software robot made by MDY Industries. Glider plays the game while players are off doing something else.

Some players were upset to learn that they were competing against robots, so Blizzard banned the use of robots in its license agreement and installed software that inspects player habits to detect and banish those using robots.

MDY Industries responded by offering a premium version of Glider that its software, Warden, could not detect.

When Blizzard threatened MDY with a lawsuit, MDY sought a declaratory judgment that Glider did not violate MDY’s legal rights. MDY replied alleging copyright infringement and violations of the DMCA.

The trial court granted Blizzard’s partial motion for summary judgment, ruling that MDY was liable for contributor copyright infringement. After a bench trial, MDY was also found to have violated the DMCA.

On appeal, the 9th Circuit found that Blizzard had not proven the existence of any copyright infringement.

While there were violations of the Blizzard terms of use, those violations were not directed to copyright protection, but to preserving the integrity of the game for all players. Thus, while the violation of the terms of use might render MDY liable for interfering with Blizzard’s customer contracts, it could not be liable for contributory copyright infringement.

Having reached that crossroads, the 9th Circuit considered whether there could be DMCA violations in the absence of any copyright violation.

After an exhaustive review, the 9th Circuit concluded the Federal Circuit was in error because the DMCA created not only remedies, but a new right to control access to works protected by copyright. The court also interpreted “access” in a broad sense, not limiting it to access for the purpose of infringing.

Since Warden was a technological measure designed to control access to the game experience, and since Glider was designed to thwart Warden, MDY Industries was found to be trafficking in a circumvention device prohibited by the DMCA.

DMCA’s implications

Critics wonder whether DMCA might enable publishers to sell books in shrinkwrap with a license that forbids resale of the books.

The Federal Circuit in Chamberlain seemed to be concerned about the expectations of consumers who purchase a garage door opener. If they lose their remote, they want to be able to purchase a replacement from anyone without being locked into the original provider.

The response of content providers to the first argument is simple. The DMCA preserves the fair use defense. As to the second argument, the amicus brief of the MPAA points out that the DMCA contains language designed to promote interoperability and suggests that Chamberlain could have been decided on that basis.

The third issue may require antitrust remedies to resolve. It is largely a theoretical problem at the moment, however, and the solution can await the development of a real-world problem. In the meantime, there seems to be little reason to deny that the DMCA does in fact protect access to material that is protected by copyright.

Companies that license software and content should understand that, in order to preserve the availability of the DMCA, they must incorporate controls that “effectively” protect access to that software or content.

It is also important to realize there are jurisdictions where the DMCA is viewed as providing a new substantive right to control access to content, but that the Federal Circuit holds a contrary view.

Until the Supreme Court resolves this conflict, care should be taken in selecting the venue of any dispute involving access controls and allegations of DMCA violations.

Thomas Carey is a partner and chairman of the business practice at Sunstein, Kann, Murphy & Timbers in Boston.

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