For other versions of this document, see http://wikileaks.org/wiki/CRS-RL32692 ------------------------------------------------------------------------------ Order Code RL32692 CRS Report for Congress Received through the CRS Web Anticircumvention under the Digital Millennium Copyright Act and Reverse Engineering: Recent Legal Developments December 10, 2004 Robin Jeweler Legislative Attorney American Law Division Congressional Research Service ~ The Library of Congress Anticircumvention under the Digital Millennium Copyright Act and Reverse Engineering: Recent Legal Developments Summary The Digital Millennium Copyright Act (DMCA) prohibits individuals from manufacturing, selling, or trafficking in technology, products, services, or devices that circumvent technology designed to control access to a copyrighted work. This is known as the DMCA's "anticircumvention" provision. Although most commonly invoked in the context of digital piracy of music, motion pictures, and other entertainment-related media, another genre of anticircumvention-based cases is making its way through the courts. These cases involve the initiation of anticircumvention litigation for what some argue are anti-competitive purposes in the marketing and sale of durable goods. The practice of reverse engineering allows others to identify and analyze the creative versus the functional aspects of copyrighted software and to utilize them to some degree. In some contexts, reverse engineering has been held by the courts to be a fair use of copyright-protected property. There is also an express, limited statutory exemption for reverse engineering under the DMCA. How the practice and use of reverse engineering for commercial goals relates to the relatively new protections against circumvention is of interest to many. They are concerned with the extent to which access-control technology is likely be employed to extend (or attempt to extend) a copyright holder's control over durable goods with copyrighted components and the secondary markets for such goods. This report examines two recent decisions from U.S. Courts of Appeals, Lexmark International, Inc. v. Static Control Components, Inc., 387 F.3d 522 (6th Cir. 2004), and Chamberlain Group, Inc. v. Skylink Technologies, Inc., 381 F.3d 1178 (Fed. Cir. 2004). Both cases allege violation of the anticircumvention statute with respect to development and sale of consumer goods. In Lexmark, the defendant marketed a microchip that allowed third-party manufacturers to sell toner cartridges that worked with the plaintiff's printer. In Chamberlain, the defendant sold a universal garage door opener transmitter that worked with the plaintiff's garage door opener. In both cases, the courts found that the actions of the defendants did not violate the anticircumvention provisions of the DMCA. In doing so, the courts had to reconcile closely related aspects of copyright law with the strictures of the DMCA. This report will not be updated. Contents Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Exceptions to the copyright monopoly: reverse engineering . . . . . . . . . 2 Lexmark International v. Static Control Components, Inc . . . . . . . . . . 4 Chamberlain Group, Inc. v. Skylink Technologies, Inc . . . . . . . . . . . . . 9 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Anticircumvention under the Digital Millennium Copyright Act and Reverse Engineering: Recent Legal Developments Background. The Digital Millennium Copyright Act (DMCA) prohibits individuals from manufacturing, selling, or trafficking in technology, products, services, or devices that circumvent technology designed to control access to a copyrighted work.1 This is known as the DMCA's "anticircumvention" provision. Enacted in 1998, the law became effective in 2000. The DMCA's anticircumvention provisions have proven to be controversial. Proponents argue that they are essential to protect the creation and distribution of, and the market for digital intellectual property (IP), while critics argue that they extend the copyright monopoly beyond its intended scope and thwart the public's ability to access materials for permissible purposes.2 The statute is best known in the context of encryption programs and access control "gates" interposed between the public and copyrighted digital entertainment media, e.g., music and motion pictures.3 Here, critics of the DMCA argue that the anticircumvention provisions allow copyright holders to impose new and overly restrictive conditions on content users. This new layer of IP protection has been referred to as "paracopyright."4 It refers to the ability of content owners to use conditions for access in order to extend control over usage of copyrighted work. The focus of this report, however, is another genre of anticircumvention-based cases making their way through the courts. These cases involve the initiation of anticircumvention litigation for what some argue are anti-competitive purposes in the marketing and sale of durable goods. The question is, when a manufacturer utilizes 1 17 U.S.C. § 1201 entitled "Circumvention of copyright protection systems." 2 While a copyright owner's exclusive rights in a copyrighted work is set forth at 17 U.S.C. 106, exceptions to exclusive rights are set forth at, e.g., 17 U.S.C. §§ 107, 108, 110, 111, 117. 3 The statute was widely publicized in a successful suit by movie studios to prevent the posting over the Internet of a code to circumvent the Content Scrambling System, an encryption program for digital motion pictures. Universal City Studios v. Corley, 273 F.3d 429 (2d Cir. 2001). 4 H.R. Rept. 105-551, Part 2, 105th Cong., 2d Sess. 24-25 (1998) quoting a letter from copyright law professors arguing that enactment of anticircumvention legislation "would represent an unprecedented departure into the zone of what might be called paracopyright ­ an uncharted new domain of legislative provisions designed to strengthen copyright protection by regulating conduct which traditionally has fallen outside the regulatory sphere of intellectual property law." CRS-2 software as a "gate" to enable, control, or restrict access to consumer goods containing copyrighted material, to what extent does it preclude competitors from circumventing the controls in the engineering of compatible ­ or competitive ­ consumer goods? This report examines two cases involving 17 U.S.C. § 1201 that involve commercial interests unrelated to the entertainment industry, specifically, manufacturers of garage door openers and manufacturers of toner cartridges for photocopying machines. These cases involve issues that have been the basis for criticism of the DMCA in a slightly different commercial context, namely, whether the provisions permit IP owners to extend their copyright monopoly beyond its intended scope to control consumer goods. Exceptions to the copyright monopoly: reverse engineering. There are several statutory and judicially created exceptions to a copyright holder's right to control IP. Among the best known is the public's right to make "fair use" of a protected work.5 Among the judicially-sanctioned interpretations of the fair use defense to copyright infringement is the right to "reverse engineer" a copyrighted computer program to gain an understanding of its unprotected functional elements.6 Like all fair use analyses, the context for a court's decision is intensely fact-specific. But a court considering the legitimacy of reverse engineering as a fair use will factor in the public interest in a competitive marketplace for consumer goods. When, for example, copyrighted computer code functions primarily as a "lock out" code designed to prevent access to functional as opposed to copyrighted elements of a durable good, then reverse engineering or other methods of overcoming it may be permissible.7 In Sega Enterprises Ltd. v. Accolade, Inc., 8 a U.S. Court of Appeals held that Accolade, Inc.'s disassembly and reverse engineering of Sega's copyrighted computer program was a fair use. Accolade reverse engineered the program in order to manufacture video games on cartridges that were compatible with Sega's video console, Genesis. Because there was no other known method of access, the court found that Accolade's use of Sega's initialization code did not violate the U.S. Copyright Act. Accolade's copies of Sega's software enabled it to discover the functional requirements for compatibility with the Genesis console. Even though Accolade's ultimate purpose was the development of Genesis-compatible games for sale, its direct use of the copyrighted material and its purpose in reverse engineering Sega's code was to study the functional requirements for Genesis compatibility. 5 17 U.S.C. § 107. 6 Sega Enterprises Ltd. v. Accolade, Inc., 977 F.2d 1510 (9th Cir. 1993); See also Sony Computer Entertainment v. Connectix Corp., 203 F.3d 596 (9th Cir. 2000); Bateman v. Mnemonics, Inc., 79 F.3d 1532, 1539 (11th Cir. 1996); Atari Games Corp. v. Nintendo, 975 F.2d 832, 843 (Fed. Cir. 1992). 7 See Julie E. Cohen, Reverse Engineering and the Rise of Electronic Vigilantism: Intellectual Property Implications of "Lock-Out" Programs, 68 S. CAL. L. REV. 1091 (1994- 1995). 8 977 F.2d 1510 (9th Cir. 1993). CRS-3 Accolade wanted to modify its existing games so that they could be played on the Genesis console. In reaching its decision, the court noted that [W]e are free to consider the public benefit resulting from a particular use notwithstanding the fact that the alleged infringer may gain commercially. Public benefit need not be direct or tangible, but may arise because the challenged use serves a public interest. In the case before us, Accolade's identification of the functional requirements for Genesis compatibility has led to an increase in the number of independently designed video game programs offered for use with the Genesis console. It is precisely this growth in creative expression, based on the dissemination of other creative works and the unprotected ideas contained in those works, that the Copyright Act was intended to promote.9 Judicial determination of what activity constitutes a fair use of copyrighted property is a fluid and evolving doctrine. The anticircumvention provisions of the DMCA, however, establish offenses wholly distinct from copyright infringement. In other words, reverse engineering that may be (or have been) permissible under the Copyright Act may no longer be permissible under the DMCA. To the extent that the DMCA's anticircumvention provisions address the narrow issue of manipulating ­ or circumventing ­ technology (whether or not it is copyrightable in its own right) to access copyrighted technology, its impact on fair use, particularly the employment of reverse engineering, may have a significant impact in the marketplace. And, there are still many other legal doctrines that impact the legality of reverse engineering in any given context. For example, the DMCA itself, at 17 U.S.C. § 1201(f), contains an express exemption for reverse engineering "for the sole purpose of identifying and analyzing those elements of the program that are necessary to achieve interoperability of an independently created computer program with other programs[.]"10 Conversely, the courts have honored contractual terms under state law, such as licensing agreements and terms of use agreements, that curtail a user's right to reverse engineer copyrighted material.11 How do the rights, remedies, and exceptions in the DMCA relate to comparable ones in the Copyright Act? In the realm of online entertainment, such as music, film, and electronic books, critics of the DMCA argue that it has the potential to curtail the public's right to make fair use of copyrighted material. In other commercial contexts, litigants argue that the act's anticircumvention provisions may thwart access to the permissible fair use of reverse engineering and thereby permit a copyright holder to leverage a limited monopoly to control areas outside of that monopoly in the broader world of fungible consumer goods, a practice traditionally held in check by the judicial doctrine of 9 Id. at 1523. (Citations omitted.) 10 17 U.S.C. § 1201(f)(1). 11 See Bowers v. Baystate Technologies, Inc., 320 F.3d 1317 (Fed. Cir.), cert. denied, 539 U.S. 928 (2003)(Copyright Act did not preempt or narrow scope of a shrink wrap license agreement that prohibited reverse engineering.) See also, Davidson & Assoc., Inc. v. Internet Gateway, 334 F.Supp.2d 1164 (E.D.Mo. 2004). CRS-4 "copyright misuse."12 But with the "rebalancing" of interests that was effected by enactment of the DMCA, how far can a manufacturer go in using restrictions on access control technology to prevent competitors from legitimately using reverse engineering to develop competitive, interoperable noninfringing consumer goods?13 This question, and the relationship between prohibitions on circumvention and the underlying law of copyright, makes the anticircumvention cases presently wending their way through the federal courts of interest to many. Lexmark International v. Static Control Components, Inc. A U.S. district court granted Lexmark, a manufacturer of laser printers and printer toner cartridges, a preliminary injunction against a remanufacturer of replacement cartridges, Static Control Components (SCC), for copyright infringement and violation of § 1201 of the DMCA. A toner cartridge is a device that is inserted within a laser printer and contains the toner necessary for the printer to print. Plaintiff Lexmark manufacturers two types of toner cartridges: a regular one that can be refilled by the printer owner or by a third party remanufacturer and a discounted one for its T-series printers which, pursuant to a licensing agreement, consumers agree to use only once and return to Lexmark for recycling. SCC and other remanufacturers refill and sell Lexmark's regular toner cartridges. Lexmark employs copyrighted computer programs embedded within microchips to control and monitor various operations on the T-series toner cartridges. It utilizes an authentication sequence to prevent unauthorized access to its Printer Engine and Toner Loading Program (TLP). In the absence of the authentication sequence, a printer will not recognize a toner cartridge as being authorized and disables access to the Printer Engine Program. Defendant SCC manufactures and sells components for use in the remanufacturing of toner cartridges. By reverse engineering the Lexmark microchip, SCC developed a microchip that copies, and thereby circumvents, the authentication sequence that Lexmark uses in the T-Series printers. This enables SCC to sell its "SMARTEK" microchip for use by third-parties to market replacement toner cartridges that are compatible with the T-series despite Lexmark's intention to limit replacement cartridges to those it manufactures. U.S. District Court. Lexmark sued SCC in U.S. district court and received a preliminary injunction against the continuing sale by SCC of the "SMARTEK" 12 Assessment Technologies of WI v. Wiredata, Inc., 350 F.3d 640, 647 (7th Cir. 2003). 13 See Dan L. Burk, Anticircumvention Misuse, 50 U.C.L.A. L. REV. 1095, 1135 (2003). The author advocates development of a judicial doctrine of "anticircumvention misuse," akin to copyright misuse, to curb anticompetitive applications of access-control technology. "[A] finding of misuse would be proper where the ends to which the anticircumvention right is put exceed the reasonable grant of the right. For this standard to have any definite structure it will be necessary to determine what the bounds of the anticircumvention grant might be." CRS-5 microchip for T-series replacement cartridges. The court found that Lexmark was likely to prevail on claims of copyright infringement and violation of the DMCA.14 There were two distinct components of SCC's microchip. One circumvented an authentication sequence embedded in the T-series printer. The sequence determines whether the printer will accept the cartridge as authorized and subsequently grant it access to the Printer Engine Program which is resident in the printer's controller board. The other both circumvented access to and copied Lexmark's TLP in its entirety. The Toner Loading Program enables the printers to approximate the amount of toner remaining in the cartridge. This information is used to display a "toner low" message on the printer screen. The question before the court was twofold: First, did the SMARTEK microchip violate the DMCA by illegally circumventing the access control systems to both the Printer Engine Program and the Toner Loading Program? Second, by replicating the TLP in its entirety, did the microchip infringe Lexmark's copyright in it? The court considered in depth whether the Lexmark's Toner Program was copyrightable and concluded that it was, relying in part upon the fact that the U.S. Copyright Office granted Lexmark of a Certificate of Registration for it. It considered and rejected a fair use defense. It also rejected a copyright misuse defense, finding that attempting to enforce rights under the DMCA to protect access to a copyrighted computer program cannot have the legal effect of "using copyright to secure an exclusive right or limited monopoly not expressly granted by copyright law."15 Nor could Lexmark's efforts to enforce its rights under the DMCA be considered an unlawful act undertaken to stifle competition. The court emphasized that under the DMCA, "the right to protect against unauthorized access is a right separate and distinct from the right to protect against violations of exclusive copyright rights such as reproduction and distribution."16 Indeed, the authentication sequence which triggered the interface between Lexmark's toner cartridge microchip and printer was exactly the type of "technological measure that effectively controls access to a work" designed to be protected under the DMCA.17 Finally, the court rejected the argument that the DMCA's exemption for reverse engineering was applicable to SCC's SMARTEK microchip.18 In addition to 14 253 F.Supp.2d 943 (E.D.Ky. 2003), rev'd, 387 F.3d 522 (6th Cir. 2004). 15 See also Sony Computer Entertainment America. Inc. v. Gamemasters, 87 F.Supp.2d 976 (N.D.Ca. 1999)(no copyright misuse where plaintiff sued to prevent defendant from selling counterfeit accessories which circumvented access controls on plaintiff's game console and CD-ROMs.) 16 253 F.Supp.2d at 969. 17 Id. at 967. 18 Sections 1201(f)(2) and (3) provide that a person may develop a circumvention device and make that circumvention device available to others "solely for the purpose of enabling interoperability of an independently created computer program with other programs, and to the extent that doing so does not constitute infringement under this title or violate (continued...) CRS-6 violating the DMCA by circumventing the authentication sequence to the Printer Engine Program, SCC's microchip infringed the Copyright Act because it contained an exact copy of Lexmark's copyrighted Toner Loading Program. Therefore, SCC was unable to meet the reverse engineering exemption requirement that the circumvention enables interoperability of an independently created computer program. The Court of Appeals. The Sixth Circuit Court of Appeals overturned the lower court's issuance of a preliminary injunction, taking issue with virtually all of the district court's findings.19 Specifically, the Court of Appeals found that, for purposes of upholding a preliminary injunction, Lexmark was not likely to successfully establish that SCC infringed its copyright for the TLP or that the SMARTEK microchip violated the DMCA by illegally circumventing access controls. The court first considered the TLP's eligibility for copyright protection. It weighed the basic element for copyrightability, original and/or creative expression, against that which cannot be copyrighted ­ an idea, procedure, process, system, method of operation, concept, principle or discovery, regardless of form.20 Applying this process to computer programs with its concomitant task of separating idea from expression is "vexing."21 In order to ascertain the "elusive boundary line" between idea/expression and between process/non-functional expression, the court utilized the doctrines of "merger" and "scènes à faire." The merger doctrine precludes copyright protection where there is only one way or very few ways of expressing an idea. Idea and expression are deemed to be merged because granting copyright to the expressive component of the work would extend protection to the work's uncopyrightable ideas as well. The scènes à faire doctrine is related. In the computer-software context it means that the elements of a program dictated by practical realities--e.g., by hardware standards and mechanical specifications, software standards and compatibility requirements, computer manufacturer design standards, target industry practices, and standard computer programming practices--may not obtain [copyright] protection.22 The court noted that lock-out codes generally fall on the functional-idea rather than the original-expression side of the copyright line. Manufacturers of interoperable devices such as toner cartridges or garage door opener transmitters often employ a security system to bar the use of unauthorized components. To unlock the system to permit operation of the primary device, the printer or the garage door opener, the component must contain certain code or be engineered to respond 18 (...continued) applicable law other than this section." 17 U.S.C. § 1201(f)(3) (emphasis added). 19 387 F.3d 522 (6th Cir. 2004). 20 17 U.S.C. § 102(b). 21 387 F.3d at 535. 22 Id. CRS-7 correctly to an authentication sequence. When a code sequence must be included in a component device to permit its use, the merger and scènes à faire doctrines often preclude the sequence from obtaining copyright protection. Applying the foregoing, the court concluded that the district court erred in finding that the TLP code had sufficient originality to be copyrightable. It found the TLP to be a very brief, uncomplicated code sequence that functioned as a lock out code. Brevity in a computer program does not make it ineligible for copyright protection, but creativity and effort are reciprocally related: the smaller the effort, the greater the creativity required to invoke copyright protection.23 In view of its finding that the TLP was not copyrightable, the court declined to rule on SCC's fair use defense. It did, however, indicate that although the purpose of SCC's use of the SMARTEK chip was for commercial gain, a factor in a fair use analysis, its use of the copyrighted TLP on the chip was not. Rather, the use of the TLP was to satisfy authentication requirements and to permit printer functionality. Likewise, with respect to the allegedly infringing use on the value of the copyrighted work, the lower court had concluded that the SMARTEK chip would diminish the market for sales of Lexmark's toner cartridges. The proper and more narrow question, however, was whether replication of the TLP on the microchip would diminish demand for the TLP. More significantly, the Court of Appeals observed that copyright law is not properly invoked to protect a secondary market in consumer goods: [T]he district court focused on the wrong market: it focused not on the value or marketability of the Toner Loading Program, but on Lexmark's market for its toner cartridges. Lexmark's market for its toner cartridges and the profitability of its Prebate program may well be diminished by the SMARTEK chip, but that is not the sort of market or value that copyright law protects. ... Lexmark has not introduced any evidence showing that an independent market exists for a program as elementary as its Toner Loading Program, and we doubt at any rate that the SMARTEK chip could have displaced any value in this market.24 The Court of Appeals then addressed the district court's findings with respect to Lexmark's likelihood of success in establishing that SCC violated the DMCA's ban on distributing devices that circumvent access-control measures placed on copyrighted works. According to Lexmark, SCC's SMARTEK chip is a "device" that "circumvents" Lexmark's "technological measure," i.e., the authentication sequence, which "effectively controls access" to its copyrighted works (the Toner Loading Program and Printer Engine Program). Lexmark claimed that the SMARTEK chip met all three tests for liability under § 1201(a)(2): (1) the chip was "primarily designed or produced for the purpose of circumventing" Lexmark's authentication sequence, (2) it had "only limited commercially significant purpose or use other than to circumvent" the authentication sequence; and (3) SCC marketed the chip "for use in circumventing" the authentication sequence. The district court 23 Id. at 543. 24 Id. at 545. (Citation omitted; emphasis in original.) CRS-8 agreed and concluded that Lexmark had shown a likelihood of success under all three provisions. For the Court of Appeals, the anticircumvention allegation with respect to the TLP was problematic. The microchip did not provide "access" to the TLP but actually replaced it. More important, since the DMCA prohibits circumvention of access controls for copyrighted work, the determination that the TLP was not eligible for copyright protection mooted the DMCA charge. The charge of illegal circumvention of the authentication sequence for the copyrighted Printer Engine Program was more complicated. The district court determined that the authentication sequence "controlled access" to the Printer Engine Program because it controlled the consumer's "ability to make use of" the program. The Court of Appeals disagreed, asserting that the authentication sequence did not control access, rather "[i]t is the purchase of a Lexmark printer that allows