Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley Chapter 4: Intellectual Property Ethics for the Information Age Third Edition by Michael J. Quinn

1-2 Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 4-2 Chapter Overview (1/2) Introduction Intellectual property rights Protecting intellectual property Fair use New restrictions on use

1-3 Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 4-3 Chapter Overview (2/2) Peer-to-peer networks Protections for software Open-source software Legitimacy of intellectual property protection for software Creative Commons

1-4 Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 4-4 Introduction Digital music storage + Internet  crisis Value of intellectual properties much greater than value of media –Creating first copy is costly –Duplicates cost almost nothing Illegal copying pervasive In light of information technology, how should we treat intellectual property?

1-5 Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 4-5 What Is Intellectual Property? Intellectual property: any unique product of the human intellect that has commercial value –Books, songs, movies –Paintings, drawings –Inventions, chemical formulas, computer programs Intellectual property ≠ physical manifestation

1-6 Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 4-6 Property Rights Locke: The Second Treatise of Government People have a right… –to property in their own person –to their own labor –to things which they remove from Nature through their labor As long as… –no person claims more property than he or she can use –after someone removes something from common state, there is plenty left over

1-7 Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 4-7 Expanding the Argument to Intellectual Property Writing a play akin to making a belt buckle Belt buckle –Mine ore –Smelt it down –Cast it Writing a play –“Mine” words from English language –“Smelt” them into prose –“Cast” them into a complete play

1-8 Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 4-8 Analogy Is Imperfect If two people write same play, both cannot own it  every intellectual property is one- of-a-kind If one person “takes” another’s play, both have it  copying an intellectual property is different from stealing a physical object

1-9 Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 4-9 Benefits of Intellectual Property Protection Some people are altruistic; some are not Allure of wealth can be an incentive for speculative work Authors of U.S. Constitution recognized benefits to limited intellectual property protection

1-10 Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 4-10 Limits to Intellectual Property Protection Giving creators rights to their inventions stimulates creativity Society benefits most when inventions in public domain Congress has struck compromise by giving authors and inventors rights for a limited time

1-11 Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 4-11 Protecting Intellectual Property Trade secrets Trademarks and service marks Patents Copyrights

1-12 Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 4-12 Trade Secret Confidential piece of intellectual property that gives company a competitive advantage Never expires Not appropriate for all intellectual properties Reverse engineering allowed May be compromised when employees leave firm

1-13 Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 4-13 Trademark, Service Mark Trademark: Identifies goods Service mark: Identifies services Company can establish a “brand name” Does not expire If brand name becomes common noun, trademark may be lost Companies advertise to protect their trademarks Companies also protect trademarks by contacting those who misuse them

1-14 Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 4-14 Patent A public document that provides detailed description of invention Provides owner with exclusive right to the invention Owner can prevent others from making, using, or selling invention for 20 years

1-15 Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 4-15 Copyright Provides owner of an original work five rights –Reproduction –Distribution –Public display –Public performance –Production of derivative works Copyright-related industries represent 5% of U.S. gross domestic product (> $500 billion/yr) Copyright protection has expanded greatly since 1790

1-16 Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 4-16 Key Court Cases and Legislation Gershwin Publishing Corporation v. Columbia Artists Management, Inc. Basic Books v. Kinko’s Graphics Corporation Davey Jones Locker No Electronic Theft Act

1-17 Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 4-17 Copyright Creep Since 1790, protection for books extended from 28 years to 95 years or more Some suggested latest extension done to prevent Disney characters from becoming public domain Group of petitioners challenged the Copyright Term Extension Act of 1998, arguing Congress exceeded Constitutional power U.S. Supreme Court –CTEA does not create perpetual copyrights –CTEA is constitutional

1-18 Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 4-18 Fair Use Concept Sometimes legal to reproduce a copyrighted work without permission Courts consider four factors –Purpose and character of use –Nature of work –Amount of work being copied –Affect on market for work

1-19 Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 4-19 Sony v. Universal City Studios Sony introduces Betamax VCR (1975) People start time shifting TV shows Movie studios sue Sony for copyright infringements U.S. Supreme Court rules (5-4) that time shifting is fair use

1-20 Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 4-20 Digital Recording Technology Copying from vinyl records to cassette tapes introduced hiss and distortions Introduction of compact disc a boon for music industry –Cheaper to produce than vinyl records –Higher quality –Higher price  higher profits BUT it’s possible to make a perfect copy of a CD

1-21 Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 4-21 Audio Home Recording Act of 1992 Protects rights of consumers to make copies of analog or digital recordings for personal, noncommercial use –Backup copy –Give to family member Digital audio recorders must incorporate Serial Copyright Management System (SCMS), so consumers can’t make a copy of a copy

1-22 Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 4-22 RIAA v. Diamond Multimedia Systems MP3 compression allows songs to be stored in 10% of the space, with little degradation Diamond introduces Rio MP3 player (1998) People start space shifting their music RIAA starts legal action against Diamond for violation of the Audio Home Recording Act U.S. Court of Appeals, 9 th Circuit, affirms that space shifting is consistent with copyright law

1-23 Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 4-23 Digital Millennium Copyright Act First big revision of copyright law since 1976 Brought U.S. into compliance with Europe Extended length of copyright Extended copyright protection to music broadcast over Internet Made it illegal for anyone to –Circumvent encryption schemes placed on digital media –Circumvent copy controls, even for fair use purposes

1-24 Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 4-24 Digital Rights Management Actions owners of intellectual property take to protect their rights Approaches –Encrypt digital content –Digital marking so devices can recognize content as copy-protected

1-25 Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 4-25 Secure Digital Music Initiative Goals –Create copy-protected CDs –Secure digital music downloads Consortium of 200 companies developed “digital watermarking” scheme Failed –Internet copying became huge before SDMI ready –Some SDMI sponsors were electronics companies –Digital watermarking encryption cracked

1-26 Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 4-26 Sony BMG Music Entertainment Rootkit Millions of audio CDs shipped with Extended Copy Protection, a DRM system Prevented users from –Ripping audio tracks into MP3 format –Making more than 3 backup copies Relied upon Windows “rootkit” that hid files and processes; usually only hackers use rootkits Huge public outcry once secret uncovered Sony BMG stopped production and compensated consumers

1-27 Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 4-27 Encrypting DVDs Contents of DVDs encrypted using Content Scramble System (CSS) Need decryption keys to view a DVD Jon Johansen wrote a decryption program for Linux 2600 Magazine published the code Motion picture studios sued 2600 Magazine and won Johansen tried in Norway and found not guilty

1-28 Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 4-28 Foiling HD-DVD Encryption Hardware, software, and entertainment companies created Advanced Access Content System to encrypt HD-DVDs Encryption key posted on Digg.com AACS leaned on Digg.com to censor postings containing key Digg users fought back AACS “expired” the key and issued a new one A month later, a Digg user posted the new key

1-29 Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 4-29 Making CDs Copyproof Two approaches –Exploit difference between CD-ROM drives in computers and CD players –Encode patterns into audio that translate into annoying sounds when decoded Two obstacles –Large community eager to “crack” encryption schemes –People can record what they hear

1-30 Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 4-30 Criticisms of Digital Rights Management Any technological “fix” is bound to fail DRM undermines fair use DRM could reduce competition Some schemes make anonymous access impossible

1-31 Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 4-31 Apple/EMI Agreement Apple’s DRM system is called FairPlay FairPlay allows consumers to play iTunes songs on iPod and iPhone, but not other MP3 players European governments put pressure on Apple to license FairPlay or stop using DRM In 2007 EMI announced it would begin selling all of its music without DRM through iTunes Store for a higher price

1-32 Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 4-32 Peer-to-Peer Networks Peer-to-peer network –Transient network –Connects computers running same networking program –Computers can access files stored on each other’s hard drives How P2P networks facilitate data exchange –Give each user access to data stored in many other computers –Support simultaneous file transfers among arbitrary pairs of computers –Allow users to identify systems with faster file exchange speeds

1-33 Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 4-33 Napster Peer-to-peer music exchange network Began operation in 1999 Sued by RIAA for copyright violations Courts ruled in favor of RIAA Went off-line in July 2001 Re-emerged in 2003 as a subscription music service

1-34 Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 4-34 FastTrack Second-generation peer-to-peer network technology Used by KaZaA and Grokster Distributes index among large number of “supernodes” Cannot be shut down as easily as Napster

1-35 Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 4-35 BitTorrent Broadband connections: download much faster than upload BitTorrent speeds downloading –Files broken into pieces –Different pieces downloaded from different computers Used for downloading large files –Computer programs –Television shows –Movies

1-36 Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 4-36 RIAA Lawsuits April 2003: RIAA warned file swappers they could face legal penalties RIAA subpoenaed Verizon for identities of people suspected of running supernodes Judge ruled in favor of Verizon September 2003: RIAA sued 261 individuals December 2003: U.S. Court of Appeals ruled Verizon did not have to give customer names to RIAA

1-37 Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 4-37 MP3 Spoofing Companies support efforts to post bad MP3 files on peer-to-peer networks Goals: make downloading of MP3 files unreliable Peer-to-peer software makers responded by adding user ratings

1-38 Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 4-38 Universities Caught in Middle Universities hotbed for file sharing –High-speed Internet access –High-capacity file servers In 2003 RIAA sued four students for about $100 billion (settled for $50,000) Different university responses –Taking PCs of students –Banning file-sharing –Signing agreements with legal file-sharing services

1-39 Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 4-39 MGM v. Grokster Entertainment industry interests sued Grokster and StreamCast for the copyright infringements of their users Lower courts –Granted Grokster and StreamCast a summary judgement –Cited Sony v. Universal City Studios as a precedent U.S. Supreme Court –Reversed the lower court ruling in June 2005 –Proper precedent Gershwin Publishing Corporation v. Columbia Artists Management

1-40 Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 4-40 Legal Music Services on the Internet Subscription services for legal downloading Some based on monthly fee; some free Consumers pay for each download Apple’s iTunes Music Store leading service

1-41 Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 4-41 Software Copyrights Copyright protection began 1964 What gets copyrighted? –Expression of idea, not idea itself –Object program, not source program Companies treat source code as a trade secret

1-42 Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 4-42 Violations of Software Copyrights Copying a program to give or sell to someone else Preloading a program onto the hard disk of a computer being sold Distributing a program over the Internet

1-43 Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 4-43 Software Patents Patent protection began in 1981 Inventions can be patented, but not algorithms Patent Office having a hard time determining prior art Result: some bad patents have been issued General skepticism about value of software patents

1-44 Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 4-44 Safe Software Development Reverse engineering okay Companies must protect against unconscious copying Solution: “clean room” software development strategy –Team 1 analyzes competitor’s program and writes specification –Team 2 uses specification to develop software

1-45 Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 4-45 Open-Source Software Consequences of proprietary software Open source definition Beneficial consequences of open-source software Examples of open-source software The GNU Project and Linux Impact of open-source software Critique of the open-source software movement

1-46 Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 4-46 Consequences of Proprietary Software Increasingly harsh measures being taken to enforce copyrights Copyrights are not serving their purpose of promoting progress It is wrong to allow someone to “own” a piece of intellectual property

1-47 Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 4-47 Open Source Definition No restrictions preventing others from selling or giving away software Source code included in distribution No restrictions preventing others from modifying source code No restrictions regarding how people can use software Same rights apply to everyone receiving redistributions of the software (copyleft)

1-48 Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 4-48 Beneficial Consequences of Open- Source Software Gives everyone opportunity to improve program New versions of programs appear more frequently Eliminates tension between obeying law and helping others Programs belong to entire community Shifts focus from manufacturing to service

1-49 Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 4-49 Examples of Open-Source Software BIND Apache Sendmail Perl, Python, Ruby, TCL/TK, PHP, Zope GNU compilers for C, C++, Objective-C, Fortran, Java, and Ada

1-50 Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 4-50 GNU Project and Linux GNU Project –Begun by Richard Stallman in 1984 –Goal: Develop open-source, Unix-like operating system –Most components developed in late 1980s Linux –Linus Torvalds wrote Unix-like kernel in 1991 –Combined with GNU components to make an O.S. –Commonly called Linux

1-51 Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 4-51 Impact of Open-Source Software Linux putting pressure on companies selling proprietary versions of Unix Linux putting pressure on Microsoft and Apple desktops

1-52 Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 4-52 Crititique of the Open-Source Software Movement Without critical mass of developers, quality can be poor Without an “owner,” incompatible versions may arise Relatively weak graphical user interface Poor mechanism for stimulating innovation (no companies will spend billions on new programs)

1-53 Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 4-53 Legitimacy of Intellectual Property Protection for Software Software licenses typically prevent you from making copies of software to sell or give away Software licenses are legal agreements Not discussing morality of breaking the law Discussing whether society should give intellectual property protection to software

1-54 Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 4-54 Rights-based Analysis “Just deserts” argument –Programming is hard work that only a few can do –Programmers should be rewarded for their labor –They ought to be able to own their programs Criticism of “just deserts” argument –Why does labor imply ownership? –Can imagine a just society in which all labor went to common good –Intellectual property not like physical property

1-55 Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 4-55 Utilitarian Analysis Argument against copying –Copying software reduces software purchases… –Leading to less income for software makers… –Leading to lower production of new software… –Leading to fewer benefits to society Each of these claims can be debated –Not all who get free copies can afford to buy software –Open-source movement demonstrates many people are willing to donate their software-writing skills –Hardware industry wants to stimulate software industry –Difficult to quantify how much society would be harmed if certain software packages not released

1-56 Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 4-56 Conclusion Natural rights argument weak Utilitarian argument not strong, either

1-57 Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 4-57 Creative Commons Under current copyright law, eligible works are copyrighted the moment they are created No copyright notice does not mean it’s okay to copy Must contact people before using work That slows down creative re-use of others’ work Free Creative Commons license indicates –Which kinds of copying are okay –Which rights are being retained Flickr and Magnatune two well-known sites using Creative Commons licenses