My weekly Law Bytes column (Toronto Star version, homepage version) uses the recent French Parliament law involving interoperability and Apple's DRM as the basis for a discussion of governments that tinker with technology through regulation. The law should be understood as a logical reaction to mounting consumer frustration with technological limitations on their purchases and a desire for balance in copyright.
Although the French law may appear to be unique, many governments regularly tinker with technology through regulation. For example, the Liberal government last year introduced "lawful access" legislation that would have required Internet service providers to dramatically overhaul their networks by inserting new surveillance technologies. Similarly, the U.S. established "broadcast flag" requirements that would have mandated the inclusion of copy-controls within a wide range of electronic devices (a court struck the requirements down as unconstitutional).
Moreover, experience demonstrates that the private sector may not respond to consumer demands to offer compatible products. The satellite radio market provides a recent example, with the two major providers – XM and Sirius – steadfastly refusing to offer a device that supports both services despite the fact that they have jointly developed just such a product.
With government intervention looming as a possibility and the private market unlikely to resolve compatibility concerns, what principles should regulators adopt to provide all stakeholders with greater certainty about the appropriate circumstances for lawmakers to tinker with technology? The obvious starting point is that intervention is possible – indeed desirable – where companies with dominant marketplace positions exploit the lack of compatibility for anti-competitive purposes (there have been no allegations that Apple has acted illegally with the iPod and iTunes, though the major music labels are the target of several anti-competitive investigations in the U.S. arising from the digital music market). The legal actions against Microsoft in the U.S., Europe, and South Korea, most of which remain active, highlight this principle. Authorities fear that the world's largest software maker could use its proprietary standards in the operating system market to exclude competitors in other software areas.
Regulators may also be inclined to act in order to protect the public in cases when technology poses a safety concern or is used to eliminate or hamper consumer rights. Technological requirements to meet safety standards or enforce environmental protection are common today, with government setting requirements for many consumer products and mandating testing before certain technologies may be marketed to the public.
Similar issues are entering the digital domain. For example, most DVDs include region codes that link the product to the region in which they were purchased. DVDs purchased in Canada will play on Canadian DVD players, yet discs bought while on vacation in Europe will not function on those same DVD players.
In addressing the issue, Australia has proposed protecting the content on the DVD, but ensuing that the public is not precluded from trying to break the technological protection that surrounds it. The Australian response, which the French parliament would have been well advised to emulate in the iTunes case, highlights the need for government to avoid prohibitions that limit the ability of the public to tinker with technology. Tinkering often encourages innovation through new discoveries, while a patchwork of patents, trademarks, trade secrets, and copyright protect the underlying content.