The Napster controversy may have died down, but file sharing and pure peer-to-peer networks still proliferate on the Web. Several companies now offer downloadable software based on the Gnutella file-sharing platform. And many other firms all over the world offer similar ways to trade everything from video files to music to text documents with the click of a mouse.
Up until now, most of this fight has transpired on a wireline battlefield because of bandwidth constraints on wireless networks. Multimedia messaging has only just started to proliferate in Europe and Asia, and it remains almost nonexistent in the U.S.
As a result, few copyrighted materials are thought to bounce around between wireless devices these days, with most sharing of copyrighted files and other intellectual property (IP) taking place over wires. Of course, that's not expected to last.
Verizon Wireless, the largest wireless carrier in the U.S., has started rolling out an advanced wireless data service with typical speeds of 60 to 80 kilobits per second (and up to 144 kbps under optimum conditions) for $30 per month. Meanwhile, Sprint PCS plans to offer a similar service nationwide in mid-2002 in which it will offer enhanced messaging, email with attachments, enhanced games, video and audio clips, high-speed Internet browsing and digital imaging.
Sprint users can already download nearly 250 ringtones, with Sprint PCS paying royalties to content owners through royalty collection agencies BMI and ASCAP. "We've put a lot of thought into it," says Paul Reddick, vice president of product management at Sprint PCS. "The idea is to try to create a content-rich environment, and you can't do that by offending the content providers."
When worlds collide
Indeed, the wireless industry may soon be forced to deal with copyright and IP issues that have already vexed the wired world. In Europe alone, music file sharing has increased 53 percent from November 2001 and February 2002, according to Jupiter Media Metrix. "As wireless bandwidth increases, we can expect increasing use of wireless networks for all purposes, including file sharing," says Bruce Sunstein, head of the patent practice at Bromberg & Sunstein, a Boston-based law firm.
He even predicts "a more dramatic kind of file sharing" in which individuals trade files in their wireless devices to anyone within range of the always-on signal-whether or not they are members of the same file sharing community. "This amounts to a broadcast of the material," he says. "This kind of activity goes beyond Napster because Napster at least had the argument that it merely facilitated the exchange of files between consenting users of the system."
Adds Robert Andris, a partner in the Redwood City, Calif., law office of Ropers, Majeski, Kohn & Bentley: "Wireless Web devices simply add availability and numbers to the same issues confronted on the hard-wired Web... they potentially increase the number of persons with access to the Web. From a legal perspective, the devices potentially add to the damages available because they have the potential for more frequent use - more infringements - on the Web."
The liability conundrum
That may sound like great news to copyright and IP owners, but establishing an alleged copyright violation is one thing; it's quite another to determine liability and then go after the appropriate party. In wireless file sharing, the most likely target would be the carrier, but according to the Digital Millenium Copyright Act of 1998 (DMCA), that's not as easy as it seems.
The DMCA specifically sets limitations for providers that merely act as a data conduit. A wireless carrier would meet the limitations as long as the transmission was initiated by someone other than the service provider, and copied and distributed without the service provider's involvement in selecting content. In addition, the service provider can't archive or modify materials and must try to terminate the accounts of subscribers deemed repeat infringers. "You could try to go after the operator of the wireless service, but that would be like trying to go after AOL," says David Hayes, chairman of the IP practice group in the Washington, D.C., office of Fenwick & West, a Palo Alto, California-based law firm.
Others could try to fall back on "fair use," which gives a certain latitude for copyright usage. "The fair use doctrine is not a very precisely defined thing," notes Stuart Hemphill, an attorney with the Minneapolis, Minn.-based law firm, Dorsey & Whitney. But it isn't a catchall loophole either. "Where there's a point of significant commercial impact, the law may say, `No, this isn't fair use anymore'," he says.
That leaves end-users as targets. And no media company relishes prosecuting its own customers. "Is it the consumer who is liable? Yes," notes Bobby Rosenbloum, an attorney with Greenberg Taurig, which has represented media companies in copyright battles. "The consumer is the one actually making and using the content." But although companies could go after those actually trading files, "they almost never do," he says. "Going after fans is not the best way of growing your business."
So what's a copyright owner to do?
The explosion of Web devices, including wireless-enabled phones and PDAs, has media companies scrambling to find a way to collect royalties in an increasingly wild-west environment of file sharing. "Everything is theoretically going to be accessible to everyone everywhere," says David Aloisi, president of REAL Software Systems, which sells software that enables copyright owners to calculate royalties in complex collection environments such as the Internet. "It's just going to become a bigger and bigger problem."
Of course, the trepidation of copyright owners could be a gold mine for companies selling digital rights management (DRM) solutions, in which the copyrighted files themselves are encrypted at the source for limited usage or the Web-enabled device is embedded with software and/or hardware that restricts file sharing. In the first instance, media companies would only be able to protect future content, leaving everything else relatively unprotected.
"The problem is that the copyrighted content is already out there for free," notes Scott Crenshaw, CEO of NTRU Cryptosystems, which encrypts digital files to prevent unauthorized usage. But Crenshaw points out that users aren't likely to pillage the vast library of unencrypted copyrighted material with their wireless devices any time soon. "Downloading is free on the Web, but it's not free in the wireless world," he says. "It costs a lot per megabyte to download over a wireless network. Right now, the trend [among wireless carriers] is to allow unlimited and unrestricted use of content, but that will change once the bandwidth constraints are lifted," he says. He says the new 3G wireless devices "already have cryptography built into them."
That means that both hardware and software could make it less desirable for wireless users to download copyrighted files-especially as carriers continue to restrict unlimited Web downloads to both save bandwidth and direct consumers into their own "walled gardens" of content. "There may be a difference in that wireless network operators will have greater control over the content," says Robert Rosenberg, president of Insight Research Corp., a New Jersey-based research company. "It has to do with making money. They'll try to keep you in the garden."
The roach motel strategy
Sprint PCS' Reddick says it's not about revenue sharing as much as keeping content owners happy so they will continue to make their content available to users. In fact, Sprint PCS has taken quite a restrictive approach to ensure that content owners are comfortable. "We call it the roach-motel strategy," says Reddick. "You can get it into the phone, but you can't get it out to another device."
Reddick envisions a "vending machine" from which users can download authorized content but not be able to share it because of security hardware embedded in the handset. "Individuals will be able to go outside the vending machine, but we won't participate in that," he says. Even then, Reddick says, the device won't allow the user to share that file with anyone else. "It's physically impossible," he says. "It's a balancing act. Consumers want full freedom...but we know that in order to keep this machine fed, we have to take care of the upstream part of this."
Rosenberg predicts that carriers could also allow browsing within its own download service cheaper than using wireless minutes to download from the broader Internet-even if there is a wider selection of content outside. "The reason to stay within the walled garden may be less," he says, "but you may pay less for the walled garden."
Indeed, wireless providers may push legitimate downloads out of both convenience and self-interest. Digital Media On Demand (DMOD), a digital rights company, is working on ways to embed DRM protections at both the chip and software level in wireless devices, even though the process involves unique challenges. "It's the same principle, but the difference is at the device level," says DMOD's CEO Mark Overington.
"It's more difficult to support a handheld device than a laptop. You have to embed it into a smaller space." Not only that, but small wireless devices have power-consumption and heat issues that aren't as much of a factor with larger desktop devices. Just the same, Overington says wireless devices could potentially become extremely safe for copyrighted material. "The combination of hardware and software crypto is virtually impossible to break," he says.
Nonetheless, there's little agreement among technologists, lawyers and business executives about how much DRM solutions can protect digital content-whether users are flinging it around cyberspace via wires or through the air. "Wireless devices are no different than other types of peer devices," says Steve Lesavich, an attorney with McDonnell, Boehnen, Hulbert & Berghoff, an IP law firm in Chicago. "Current digital rights management schemes don't work on peer devices and won't work on wireless peer devices."
In the end, it may come down to convenience. "As in most cases, the truth probably lies somewhere in the middle," says Peter Toren, a partner at Sidley, Austin, Brown & Wood. "The copyright protections will certainly protect against piracy in the vast majority of cases. A small minority will look for ways around paying... But most people are fairly law abiding."
Copyright owners better hope so.