[Infowarrior] - FTC: We'll "come calling" about deceptive DRM

[Richard Forno]

FTC: We'll "come calling" about deceptive DRM

http://arstechnica.com/tech-policy/news/2009/03/ftc-well-come-calling-about-deceptive-drm.ars

The Federal Trade Commission kicked off its big DRM conference in  
Seattle Wednesday morning by saying that the goal was not to "take  
sides" over the question of whether DRM is good or bad—but the  
conference nevertheless opened with a warning.

Mary Engle, an FTC Acting Deputy Director, began her remarks by  
warning that those who use DRM had better get serious about disclosing  
it and the limits that it places on products. She referenced the Sony  
BMG rootkit debacle, saying that "sellers who use DRM technology to  
enforce the terms of bargains with consumers need to be particularly  
careful to disclose in advance" what those bargains are.

     An executive vice president at the MPAA kicked things off by  
talking up the merits of DRM. Far from being a soul-crushing, computer- 
polluting, freedom-slaying hydra, DRM actually makes all sorts of  
great things possible.

And just stuffing the disclosure into the fine print of an End User  
License Agreement (EULA) isn't good enough. "If your advertising  
giveth and your EULA taketh away," she said, "don't be surprised if  
the FTC comes calling."

She stressed that it was not permissible for companies to play Lucy to  
consumers' Charlie Brown, holding the football and promising that this  
time she won't yank it away at the last minute. Promising "if you buy  
our DRM downloads, we won't shut down the authentication serves this  
time," she said, wasn't enough.
No consensus

The FTC wasn't using the conference to announce new policy initiatives  
or regulatory principles, so most of the event consisted of short  
presentations by speakers from across the spectrum. Not surprisingly,  
disagreement wasn't hard to find.

Fritz Attaway, an executive vice president at the MPAA, kicked things  
off by talking up the merits of DRM. Far from being a soul-crushing,  
computer-polluting, freedom-slaying hydra, DRM actually makes all  
sorts of great things possible. "Without DRM technology, how could we  
provide consumers with choices?" he asked, referring to streaming,  
rental, and subscription models.

Besides, "DRM technologies are for the most part transparent," Attaway  
added, pointing to DVDs as his example. DVDs just work; no one has to  
think about DRM, it gets out of the way and allows people to enjoy  
films while preventing them from making a copy for everyone on the  
block.

     Professor Salil Mehra flipped this around, saying that DRM wasn't  
quite fraud but that "something like fraud happens with the way in  
which DRM is implemented." While companies rarely lie about what a  
particular DRM scheme will do, plenty are willing to bury that  
information, knowing that consumers won't be happy about the  
limitations.

This brought an almost incredulous response from Jason Schultz, who  
heads the Samuelson Law, Technology, and Public Policy Clinic at UC- 
Berkeley. Consumers certainly are befuddled and angered by DRM, even  
the relatively tame version found on DVDs, he said. Plenty of people  
don't understand why they can't copy a movie to an iPod or make a  
backup, and they don't understand why a DVD won't play when they take  
it to another country. Schultz even referenced the recent gift of DVD  
gift set from Barack Obama to UK Prime Minister Gordon Brown. When  
Brown returned home from his US visit and popped one of the discs in  
his player... region encoding prevented it from working.

This sort of back-and-forth continued all morning. A lawyer who works  
with the MPAA and RIAA said that DRM wasn't just a "necessary evil"  
but was actually a "key enabling technology" for the reasons that  
Attaway also described. It's a "useful rhetorical device" to talk  
about how DRM blocks people's rights, he added, but it's basically  
deceptive.

Professor Salil Mehra flipped this around, saying that DRM wasn't  
quite fraud but that "something like fraud happens with the way in  
which DRM is implemented." While companies rarely lie about what a  
particular DRM scheme will do, plenty are willing to bury that  
information, knowing that consumers won't be happy about the  
limitations.

One thing that received general agreement from all parties was that  
better disclosure was essential. Even the pro-DRM side stressed that  
nothing is gained for an industry by angering its customers, and that  
customers get furious about things like the SonyBMG rootkit.

But Corynne McSherry of the EFF threw a bit of cold water even on this  
idea, saying that disclosure alone is "not going to solve the problems  
with DRM." Copyright law is too often just about the rights of the  
copyright owners, she said, and the key to good law is finding  
balance; DRM "all too often can upset that balance," and just making  
this clear to consumers isn't good enough.

The event continues Wednesday afternoon, and the FTC has made a live  
webcast available (and after-the-fact transcripts will follow).