Knowledge is Money

by Richard Sietmann

The battle for what is known as intellectual property is heating up. The extension of the patent system to software and the tightening of copyright law appear unstoppable. In the neo-liberal order of knowledge information and knowledge are considered traded commodities.

Soon the United States Supreme Court will decide on the constitutionality of the Copyright Term Extension Act (CTEA). By means of this law passed in October of 1998 Congress had retroactively extended the copyright term of protection by an additional 20 years. Up to that point artistic works commissioned by companies had had copyright protection for a period of 75 years; without this act of political intervention many works from the 1920´s and 30´s would by now have become public property - among them such movie classics as "Gone with the Wind," the compositions of George Gershwin or Disney cartoons featuring Donald Duck and Mickey Mouse. For Hollywood this act brought into being by the sponsorship of the late senator Salvatore "Sonny" Bono, one-time partner of the singer Cher in the Sonny & Cher duo, has cash written all over it - "corporate welfare," as some mocking critics of this kind of company support are wont to call it.

The controversial Mickey Mouse law is but one ricocheting reverberation of the veritable explosion of legislative activity concerning intellectual property rights with the aid of which the United States is seizing the role of pacemaker to a new order of knowledge. The overheating legislative branch is reacting as if by reflex to the media groups´ fears of the digital revolution. Seen from this vantage point all attributes of information technology - such as its capacity to bestows upon its users the ability to copy items without attendant loss of quality and distribute the items via the Internet to a potentially world-wide audience - appear not as technical achievements but as misguided developments. Which explains the astonishing paradox that what took off under the heading of the "frictionless economy" toward unprecedented heights, is now being equipped with artificial ballast. All the disputes of late - from those headed "copy protection for CDs and DVDs " to those featuring digital rights management systems and software licenses to the fight against P2P systems and open source software - have as their least common denominator the striving of the content exploiters to recapture the run-away development of technology that has provided users with too much latitude to follow their own whims.

Transatlantic Lockstep The developments in the United States are a not a spectacle that one has the luxury of watching from this side of the Atlantic Ocean as a mere fence-sitting spectator hoping for a happy ending.

Through the TRIPS Agreement of 1994 on the "Trade-Related Aspects of Intellectual Property Systems" the members of the World Trade Organization (WTO) committed themselves to the "maintenance" of their industrial property rights systems, to the adherence to certain minimum standards and to the securing of the rights of foreigners to intellectual property. The Digital Millennium Copyright Act (DMCA), which strengthened copyright regulations with regard to the Internet in a multitude of ways and fortified their penal provisions, was passed in the United States in1998. In particular by making the circumventing or decoding of DRM systems - even if done for the purpose of research - a punishable offence, it set the course squarely toward the introduction of Digital Rights Management (DRM). Since then the direction in which things are to move has been laid down. The European counterpart of the DMCA, the "Directive on the Harmonization of Certain Aspects of Copyright and Related Rights in the Information Society" of the European Union, the date for whose complete incorporation into the national law of the member states is, as a matter of fact, December 22nd 2002, came into force on June 22nd 2001.

In the Bundestag, Germany's Lower House of Parliament, the debates on the amendment of the Copyright Act are about to begin. The government draft too is aiming at the creation of markets for information and at strengthening the commodity character of intellectual products.

Taking its cue from the US model the new law will create the legal framework for DRM systems and prohibit the circumvention of copy-protection systems. Every author or holder of an exploitation right will be given the right to prevent the improper use of a work "through effective technical means" such as encryption, distortion or the use of anti-copying devices or systems (§ 95a UrhGE; German Copyright Act). Circumvention of these means of protection as well as the publication or dissemination of instructions on how to circumvent these means of protection will constitute a criminal offence (§ 108b). In principal paragraphs 52a and 53 will continue to sanction those types of use classified to date as "fair use" and permit the creation - without the prior permission of the copyright holder - of copies for teaching and research purposes, as well as for private use.

The copyright holder in turn will be obliged "to make available" to the user "the necessary means for doing so." (§ 95b UrhGE). In practical terms, however, the protection of the right to make private copies may not amount to much, for it is those copies in particular that the DRM systems protected by § 95a are designed to prevent. The entertainment industry at any rate is making no apparent effort to resolve this conflict.

Software Patents The establishment of a rigid control and exploitation regime is shifting the balance between the stock of publicly accessible creations, the Public Domain, and the domain, protected by exclusive rights, of private marketing interests. The same tendency toward the extension of state-guaranteed exploitation monopolies can also be observed with regard to patent rights. This heated second battle raging in and around pieces of real estate on the building site of intellectual property concerns the extension of patent protection to computer programs in particular.

Software patents place small and medium-sized companies, as well as free software developers, at a disadvantage, because they force them to engage in lengthy investigations ahead of every project as to whether a part or parts of their code might possibly already be patent-protected.

This drives up transaction costs, for though some patents might even generate income, the purchasing of licenses from other people gives rise to expenses. Large companies, on the other hand, able to establish patent units that assert their claims are given a boost by software patents. "Unlike the unambiguous facts indicating their harmful effects, to this day no shred of evidence of tangible benefits arising from software patents exists," the president of the Free Software Foundation Europe, Georg Greve, maintains. "Not being require to conform to reality, any amount of them can be created, however, whose sole purpose then consists in initiating legal disputes," which "in all probability the economically more powerful party" will win.

An insider privy to the workings of the business gave this precise description of how the mechanism of blackballing smaller competitors works: "A startup without patents of its own will in future be forced to pay whatever the large companies choose to charge," the head of Microsoft Bill Gates said while explaining to his senior staff the barriers to entering the market; "and the price could be high - established firms have an interest in excluding future competition."

Since 1994 computer programs have been patentable in the United States. In Europe a directive of the EU Commission is on the verge of being passed. It is to legalize retroactively the software patents already granted by patent offices in Europe - against the wording of the European Patent Convention - and bring the European practice of granting patents into line with that of the US Patent and Trademark Office. Prior to its drafting of the directive the Commission in Brussels had engaged in a consultation exercise in the course of which more than 1450 statements were received. The results did not quite meet the Commission's expectations, however. The majority of proposals rejected the extension of patent protection to computer programs.

The report on "The Results of the European Commission Consultation Exercise on the Patentability of Computer Implemented Inventions" [1] thus highlights the two camps confronting one another on this question: Whereas academics, software developers and small companies were afraid of predominantly negative effects on interoperability standards, as well as of crippling intellectual property-related lawsuits and perceived threats to the development of open source software, the group of the supports of comprehensive monopoly protection was primarily composed of patent attorneys, major corporate groups and patent offices.

"It was obvious that the group opposing software patents (91 %) would numerically dominate the number of answers received," the report initially declares. Then, however, the consultants commissioned to analyze the results go on to subtly dissect the majority ratios: Thus 54 % of statements sent to the Commission directly and not made by explicit open source supporters were in favor of software-related patents. This conclusion is immediately followed by an unabashed realpolitik weighting of the responses: "When the economic clout and the number of organizations whose statements represent the thinking of the industry and of other associations are taken into account a case can be made for there being an 'economic' majority in favor of patents for computer-implemented inventions." Whose interests were to be served was thus unmistakably made clear.

The Rules of the Game To gain an understanding of the mechanisms by means of which powerful lobbies achieve their objectives political scientists will offer Collective Action Theory. As described for the first time in Mancur Olson´s classic "The Logic of Collective Action" [2] it relies in essence on game theory analyses of the cost-benefit ratios as they apply to the participants in question.

Hence a minority of participants who have a lot to gain from a regulation (such as, for instance, one achieving legal protection for DRM systems) will out of self-interest invest considerably more - in terms of expensive expert opinions or intensive lobbying efforts, say - into seeing a particular regulation come about. Conversely the cost-benefit calculations work to the disadvantage of the majority, who are only marginally touched by the regulation as individuals (by being forced henceforth to use a Trusted Computing Platform when availing themselves of their software or when playing their DVDs or by being made to accept the presence of a rights monitoring system on their PC, for instance).

The effort in terms of time and money the majority would have to make - in the face of an uncertain outcome - to articulate their opposition is out of proportion to the benefits they would derived as individuals. Hence there is little incentive to get organized. The organizational barriers favor those whose economic interests are most at stake. "By the time the rest of us figure out what policy choices we ought to make," the American expert on copyright Jessica Litman concludes "the copyright wars may already be lost." [3]

In a democratic system its elected representatives should theoretically provide a counterweight in the event of a diffuse and barely formed section of society being faced with a stubbornly purposeful tightly-organized group. But against a phalanx of patent offices, ministerial and specialist lawyers and lobbyists acting on behalf of economic interests the people's representatives are having a hard time. The more complex the bureaucratic systems of rules propped up by paragraphs and tab strokes become, the less the members of parliament, let alone the common citizens, are able to divine where the courses set are going to take them.

The hard time experienced by the members of parliament is moreover an effect of the neo-classical market-fundamentalist ideas of the Chicago School, associated in particular with the economist Milton Friedman, and of those economic policies - based upon the three pillars of free trade and international division of labor, deregulation and privatization and tax cuts and a restrictive monetary policy - that these ideas have spawned, The subsidiarity principle is considered the core element: The state with its classical instruments of money, law and power is to restrict itself to its core functions of preserving internal and external security and order. The public sector is to stay away from or back out of everything that the private sector can achieve on its own.

The New Order of Ownership The actual structural change from an industry- to a knowledge-and-services-based economy, in which knowledge is turning more and more into a fourth factor of production, besides land, labor and capital, is occurring independently anyway; governments cannot influence it. The French economist Jean Fourastié as early as the 1950s called this transformation the "Great Hope of the 20th Century;" his principal work bearing that title has remained to this day a major influence upon the ways of thinking of leading neo-liberal economists and politicians in favor of globalization [4].

The basic supply of agricultural and industrial products has been secured - in our latitudes at least. Further expansion is now coming up against the material limits of the environment. Hence the creation of added value is showing an apparently inevitably increasing shift towards intangible goods, towards services - high-quality services in the areas of research, education and counseling, culture and entertainment in particular. Intangible goods are not subject to limits on growth.

Unlike the other classical factors of production - land, labor and capital - knowledge, information and know-how can be increased indefinitely. The "Great Hope" which ever since Fourastié´s theses has been associated with this development is that the productivity dilemma might be overcome by those made redundant by technical progress and rationalization measures in agriculture and industry finding work in the tertiary sector. For this to happen, however, investment capital has to be diverted to this sector first. By turning the trend sketched by Fourastié into a "business case" of sorts the American public finance scientist Alfred Rappaport closed this theoretical gap in the 1970s.

With his shareholder value theory he initiated a change in the thinking on the economic evaluation of companies that strengthened the link between "capital" and "knowledge" and gave a greater value to the so-called "intangible assets." To these company assets, which are extraneous in a classical sense to a company's balance sheet, belong - besides know-how, an effective organization, a knack for innovation and the ability to manage a brand - industrial property right (the property rights relating to intellectual property) in particular. On the latter the future cash-flow and hence today's shareholder value, i.e. the investors expectations of revenue and yield that find expression in the market value, depend.

Companies that can point to a host of rights to industrial property and/or their exploitation are considered among investors, who are frequently scarcely in a position to judge for themselves the intrinsic value of the inventions to which these rights relate, as especially innovative and endowed with a promising future. Information, ideas and know-how are easy to copy, though: Once the genie has escaped its bottle it cannot be recaptured. If knowledge is to become a marketable commodity it must be rendered scarce artificially and its use limited. That can only be achieved by legal restrictions on use: By making a monopoly vested by the state that takes the form of a patent or a copyright into a tradeable exclusionary right a market for immaterial goods is created which assigns them a price and hence makes the attendant risks easier to calculate.

This type of thinking has fallen on fertile ground. "Property rights are the cornerstone of every efficient market economy," the Paris-based Organization for Economic Cooperation and Development (OECD), a kind of think tank of the world's 30 leading industrial nations and an advocate of free trade, declared in 1989. "By permitting the exclusion of others from the use of a good, rights to intellectual property in no way differ from rights to tangible goods." Since then the idea of the trading of rights as a potential growth factor to the economy has been omnipresent in the sphere of politics. "Intellectual property rights such as patents, trademark rights and copyrights have today become key areas within the framework of increasing globalization," Germany's Federal Ministry of Justice stated a short while ago. "These serve to secure the value creativity and knowledge have in advancing economic and cultural developments in industrial and developing countries."

Neo-liberal Contradictions Thus all things seem to be falling into place. Strong legal protection granted to software and digital commodities creates jobs in the service sector and the standardization of legal systems across countries in dismantling trade barriers allows free trade to become a reality. Of which only the most stubborn of critics can still claim that it is tantamount to the freedom of the fox to roam the hen-coop. Global unanimity has now reached such a degree that the inner contradictions of the program are scarcely ever noted. Many bank employees will be eyeing the jobs miracle in the tertiary sector with mixed feelings - however, the extent and the size of the as yet not exhausted potential for streamlining services through information technology Fourastié had been unable to envisage. And the fact that shareholder value provides broad scope to the imagination, because the value of intangible goods can only be estimated and not measured, shareholders have now been able to witness by observing the comet-like rise and fall of the New Economy.

In addition the neo-liberal economists ignore the dubious dual role played by information when compared with that of other goods. According to their theories information is, to wit, the condition for the functioning of the market and at the same time a commodity produced in just that market in question: As a marketable commodity it must not be generally available, otherwise no one would pay for it and from an economic perspective it would be worthless; on the other hand, the neo-liberal creed decrees that supply and demand be determined by the rational decisions of totally informed individuals: All items of information must hence be generally available, otherwise those participating in the market cannot act rationally.

Which is why, for instance, the stock market disclosure requirements of companies are regulated by law and "proprietary information," i.e. the exploiting of insider information, is strictly forbidden: Parity among market participants cannot tolerate asymmetries of information.

In a similar fashion the monopolies granted by patents or copyrights create competition-impeding asymmetries. The law expert Jessica Litman, today professor at Wayne State University, showed as early as 1990 by an analysis of hers that a draining of the public domain through an extensive granting of exclusionary rights to the authors of ideas, inventions or works would be nothing short of counterproductive.

For the public domain, that stock of freely exploitable items of information and knowledge, is not, as one might suspect, that huge worthless remainder left over after the other worthy parts have received the exclusionary protection they deserve, but rather that fertile ground in the absence of which authorship cannot thrive.

"Originality is a legal fiction," Ms. Litman believes. Composers recombine sounds they have heard before; writers mould their characters or their plots in accordance with the lives or works of other writers; software designers work with the logic they find in mathematical algorithms or other software. A film-maker, an actor or actress, a choreographer, a sculptor, architect or engineer - all will adapt, transform and recombine material that already exists in some other shape "out there."

"This is not parasitism, it is the essence of authorship," Ms. Litman emphasizes; "and in the absence of a vigorous public domain, much of it would be illegal." The pool of freely exploitable ideas and works creates the counter-pole that makes authorship legally possible in the first place. The argument of the American legal experts runs thus: "A broad public domain protects potential defendants from incurring liability through otherwise unavoidable copying," and "it protects would-be plaintiffs by relieving them of the impossible and unwelcome obligation to prove the actual originality of all elements of their works." [3]

A Malleable Constitution This territorial conflict between Public Domain and Private Property, both patent and copyright law are at present trying to defuse through the introduction of time limits. After the period of protection - in Germany 20 years for patents or 70 years after the author has died - has expired the idea or the work becomes public property in all legal systems and hence freely exploitable. However, the example of the Sonny Bono Act of 1998 is a reminder of the direction in which the proponents of intellectual property rights mean to steer developments.

The United States Copyright Act of 1790 had specified a period of protection of 14 years. During the first century of its existence the period was extended only once, and in the 50 years that followed only one more time again; but during the last four decades, however, Congress has extended the period of protection a total of eleven times. The marketing-of-rights activists, moreover, have no qualms about proceeding to the very verge of violating the Constitution. The United States incorporated the protection of inventions and copyright protection as early as 1787 into its Constitution. "The Congress shall have power," it says in Article I, Section 8, Paragraph 8 of the Constitution of the United States, "to promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries." Merely a matter of interpretation apparently: The Republican congresswoman Mary Bono, who after her husband Sonny's death, became the driving force behind the CTEA, has publicly defined the "limited times" demanded by the Constitution as "forever minus one day."

Both patent and copyright derive their legitimacy from the social utility of the stimulus they provide. The protection of rights to exploitation is designed to encourage authors, artists and inventors to beget inspired creations; without the prospect of future revenues or royalties these can scarcely be expected to invest a substantial part of their creative energy. Even the Linux-Verband, a German association of Linux developers and users, observed of late in a statement on software patents that the protection of investments was the "only rationale for the patent system."

Such actual legislation as the CTEA, however, makes an utter nonsense even of that aimed at protection of the investment of the author and/or exploiter: Whose written-off investments is it possible to protect ex post facto, which dead author is inspired to further creative efforts by the retroactive extension of a term of protection. Naught but the interests of the exploiters is at stake. The legal system is to secure returns on monopolies for media and software companies and shield their business models from the undesired consequences of new technologies.

This form of state subsidization only fails to attract sufficient attention because it is cloaked in the somewhat inscrutable term of "intellectual property." "Which is a fairly stupid term - patents are no more (or no less) "property" than social security is property," says the cyber rights specialist Lawrence Lessig. "The granting of patents may make sense, as the providing of social security certainly does. But the idea that there is a right to a patent is frankly absurd. In our tradition it was assumed from the very beginning that the granting or not of a patent should depend solely on the question of whether patents are useful to society." [5] Yet beneath the banner of "Intellectual Property" the discussion is frequently pared down in a black-and-white fashion to the question of whether one is for or against private ownership, and all of a sudden patents and copyrights are the same as the ownership of an auto or of real estate.

Occupation and Settlement With the aid the battle term (as the FSF father figure Richard Stallman calls it) of "intellectual property" the occupation and settlement of cyberspace is proceeding apace. Regardless of what the Supreme Court's decision on the CTEA turns out to be - the masters of the media will scarcely still be dependent upon it, for they seem to be about to gain total control of digital goods by other means. The means to that end consist of a double strategy, one that combines such legal instruments as end-user license agreements with technical means such as anti-copying devices and digital rights management systems on the users´ terminal devices.

Such DRM system can assume the shape of purely software-based modules for the decryption of works, modules that, for instance, unless retroactive licensing then takes place, prevent a downloaded piece of music from being played more than three times [6]; accounts are settled with the content provider direct or via such Internet providers as AOL or MSN. However, only the linking ("dongling") of hard- and software protective mechanisms which Microsoft with its "Palladium" project and Intel, AMD together with 170 other firms (including Microsoft) with their Trusted Computing Platform Alliance (TCPA) are aiming at offers true control of what is actually going on within the users´ systems. [7]

Within this framework all movement of data between CPU, RAM, hard drive and monitor proceeds exclusively in an encrypted fashion in which all components mutually authenticate one another, thereby preventing the system from being manipulated by, for instance, data flows being tapped or "insecure" components being inserted. The universal computer is thus turned into a sealed and in the final analysis externally online controlled playback device (see also the article on page 186 in edition 24/02 of c't magazine).

For the media industry, alas, all this is happening nowhere near fast enough; the Motion Picture Association of America and the Recording Industry Association of America (MPAA or RIAA) in particular have already begun to step on the accelerator. In spring of this year the Democratic senator Ernest Hollings from South Carolina introduced in Congress the bill of the Consumer Broadband and Digital Television Promotion Act (CBDTPA) which sets terminal device manufacturers a deadline of one year for coming to an agreement with the content industry on a common DRM standard, then to be made law.

With the CBDTPA in place any digital media player (regardless of whether a hardware or software device) not equipped with a legally required security mechanism would be declared illegal. Richard Stallman hence translates the plan as the "Consume But Don't Try to Program Act." For the free software scene the drive is indeed set to be devastating. Because anyone could in principle rewrite the open source code of the present DRM system, DRM implementations with open source software would be deemed illegal - and at the end of the day any free operating system with open kernel sources also. Users who meant to retain control of what was happening within their PC would be driven to act illegally. "If the playing of a DVD with proprietary software be permissible, then the playing of the same with free software must also be permissible," is what Mr. Stallmann demands.

Though the DRM systems are being introduced under the cover of copyright, beneath that tarpaulin all the poles, pegs and props are being fundamentally rearranged. Whereas exploitation rights in the past were granted with certain restricting conditions attached by society it is now the beneficiaries who are doing the granting and who are defining the conditions under which they would be prepared to make exceptions to their general right to exclusive use. The invisible fences are high and the turnstiles of the portals give access strictly in accordance with the conditions laid down by the owners of content. DRM systems provide them with greater protection than classical copyright does. The power of proprietary rights allows them to control and monitor all manner of use and impose their conditions uncompromisingly. The DMCA, the EU´s Directive and the German government's draft on the amendment of the German Copyright Act are already providing them with opportunities for doing so, even before the question as to what the limits shall be has been resolved.

And the opportunities for occupying, for staking claims before the territory has been charted are manifold. Among them are to be found, for instance, the discriminatory treatment - through the restricting or revoking of rights of use - of specific users, designed to prevent the critical quoting from or parodying of works or in the case of software aimed at precluding from the outset comparative testing of competing products. As hacking into DRM systems will unanimously be excluded by law it will not even be possible to prove that such instances of commercial censorship have occurred.

The implanting of external rights management systems into users´ PCs, by thus penetrating into the users´ private sphere and their sphere of fundamental rights, not only undermines classical copyright but also adversely affects other areas of the law. "Trusted Computing," says Richard Stallman putting things into proper perspective, "does not mean that you can trust your computer, but that Microsoft or the RIAA can trust your computer." The professor of law at Georgetown University Julie Cohen, moreover, is provocatively calling for a right to hack into rights management systems so that the "fair use" restrictions on exploitation privileges be preserved.

The Second Front The landlords of intellectual property, however, do not seem to be totally convinced of the effectiveness of the chutzpah with which they are standing the copyright system on its head. Hence they have taken to seeking additional safeguards. Even if copyright law should impose "fair use" and "first sale" restrictions on the way they are required to design their DRM systems - in other words, the right to private copies and resale of legally purchased copies remain - a detour via the law of contract involving End User License Agreements (EULAs) might do the trick of rendering those restrictions meaningless. The occupation and settlement movement's second front bears the title of UCITA. The "Uniform Computer Information Transactions Act" is an initiative that aims at making the already fairly common practice of having "mouse-click licensing" as part of the general terms and conditions (the permitted legal scope and shape of which are determined in the United States by each federal state individually) legally watertight and uniformly legally valid throughout the United States as a whole. The formal responsibility for the initiative lies with the National Conference of Commissioners on Uniform State Laws (NCCUSL), a body concerned with harmonizing commercial law; the driving force behind it, however, is the large software companies such as Microsoft and Oracle, the Internet providers such as AOL, and the computer and chip manufacturers, Intel among them.

The UCITA dissolves traditional rights a buyer associates with the purchasing of a product. It would make legal, for instance, binding licensing conditions which the customer does not get to see until installation commences, i.e. after having purchased the product, and which he can only accept or reject in toto. Such "click-wrap licenses" can empower manufactures to lawfully prohibit users from criticizing the purchased software publicly, reselling it or giving it away as a gift or even from decompiling it for the sake of removing errors or plugging security loopholes. Even the joint use of a PC with a friend or colleague could thereby be barred. And finally the UCITA would ensure that blanket exemption clauses regarding liability and warranty in cases of software defects became legal. Worse still: Anyone who took the term "agreement" in the phrase End User License Agreement seriously and after being forced to click on the OK button still insisted on entering into a discussion about certain EULA clauses with the manufacturer, must be prepared, as the case may be, for the said manufacturer taking lawful steps to shut him down and preventing remotely his gaining access to certain program components while the dispute lasts.

A modern fairy tale? In two states - Virginia and Maryland - the latter state of affairs has been established law for two years now; and from the spring of next year onwards the act will appear on the agenda of a number of other federal states. Which makes UCITA, besides the copyright laws and the patent system, the third scene of battle in the sole-and-exclusive-rights wars.

There's just one small catch, though. Anyone who buys a product, thereby becomes its owner and obtains the full rights of disposal regarding the object. He or she has unrestricted and unlimited use of the object and is entitled to modify it (at his or her own risk), lend it to or rent it out to another person, resell it or find other modes of use for the object - by converting a car into a camper, say.

The rights of the original owner to the product terminate at the moment of sale, at the distinct boundary between manufacturer and customer, beyond which the original owner has nothing but obligations such as those of warranting and being liable for the specified quality and/or flawless working of his or her product.

What is a Product? Alas, the market fundamentalist do not want to go quite that far where immaterial goods are concerned. Which is why the UCITA finally sanctions the licensing model; though the customer pays, he or she no longer purchases a product but merely its associated rights of use; ownership and the rights of disposal remain with the manufacturer. In the case of mass products such as standard software the manufacturer could restrict the user's private law use by means of mouse-click EULAs that restrict the creation of backup copies, forbid installing the program on a second computer, prohibit the use or modification of the code, exclude the passing on of the program to third parties and make the publication of the results of comparative tests dependent upon his permission. Such a far-reaching incapacitation of the customer is controversial even in the United States.

The IEEE which calls UCITA a "rolling catastrophe" has taken up arms against it in a memorandum [8]. So far, though, the initiative has not shown itself impressed. At least the German amendment of that country's Copyright Act is intended to put a stop to a comparable disabling of legitimate copyright uses via the backdoor of EULAs. "Exclusionary agreements," it says in § 95b of the government's draft "are null and void." Whether American exporters of software will in future consider this a barrier to trade remains to be seen.

Crossing Over In the course of Anglo-Saxon legal history copyright, unlike the droit d'auteur of Continental Europe, did not emerge as the property of an author but as a right to copy granted to a publisher. Whereas the copyright emanating from France developed out of a natural-law understanding of property the Anglo-Saxon concept relies upon public-interest oriented considerations of utility.[9] Hence the United States did not sign the "Berne Convention for the Protection of Literary and Artistic Works" of 1886, which is seeped in the French tradition, until 1988. The discrepancy of ideas remains to this day; thus, whereas in the "droit d'auteur" model of the Berne Convention the author retains certain copyrights even after the rights of use to a work have been sold, in Anglo-Saxon law the author's control over his work ends the moment the copyright is transferred to an exploiting party. But all of a sudden the United States has engaged in a change of political course the title of whose script could well be "The Hijacking of Berne."

The United States, which for the sake of its own publishing industry for a century - until 1891 - refused to grant copyright protection to foreign works, is today activating its trade missions throughout the world in the interest of enforcing the claims in foreign parts of America's software, music and motion picture industry. "To copy is to steal," is the motto of the Office of the US Trade Representative (USTR), which acts as guardian of the United States´ trade relations with foreign countries. Every year in its "Special 301" report the Office gives marks to foreign governments and if need be cautions them should they be found wanting in the implementation or enforcement of IPR standards. The Office received its mandate for doing so in the Trade Act passed by Congress in 1988, the year the United States signed on to the Berne Convention.

The USTR is not just a passive observer, however. "We put considerable resources into helping other countries draft good intellectual property laws," it says in the description the Office gives of itself at www.ustr.gov. The TRIPS Agreement of 1994 has prepared the ground for such behavior. An "historic achievement" the USTR calls it: "It required all WTO members to pass and enforce copyright, patent and trademark laws, and gave us a strong dispute settlement mechanism to protect our rights. Thus we created a set of standards enforceable between governments and subject not only to our own trade laws but to multilateral rules ... We have pressed all countries to meet their obligations, and wherever possible, to accelerate implementation of these obligations. In the interim, we have been aggressive and successful in using WTO dispute settlement procedures to assert our rights."

In the meantime the group of legal experts in the United States opposed to the hijacking of the Public Domain has been growing. Besides Lawrence Lessig it now includes, among others, James Boyle, Yochai Benkler, Julie Cohen, Brian Kahin, Jessica Litman, Jerome Reichman, Carol Rose and Pamela Samuelson. James Boyle of Duke Law School, for instance, is already calling the appearance of the Landlords of Cyberspace "The Second Enclosure Movement" - the first having taken place in the 16th and 17th centuries in England when the feudal lords by enclosing common land (which had previously been freely accessible to all villagers) and then cultivating it in accordance with their own wishes, thus managed to subjugate the farmers by forcing them into becoming agricultural laborers.[10]

"The neo-liberal orthodoxy, the Washington consensus," Mr. Boyle emphatically points out "seems to be based on the assumption that the strength of intellectual property is inversely proportional to the costs of copying - as the costs of copying asymptotically approach zero the right to intellectual property must approach total control." The ideology of "property is good, more property is better," however, fails to take into account the so-called externalities - such as the knock-on effects of higher transaction costs and market entry barriers.

The Industrial Production of Knowledge How to protect the cultural common from an enclosure movement that will not even stop at commercializing the field of education? Not, it seems, by industrially producing wares and items of higher education and cultural heritage as the proposal for the development of German universities through the use of new media - entitled "Vision 2005" and made some time ago by the professors José Encarnacao, Wolfgang Leidhold and Andreas Reuter - , which seeks to "transfer the business enterprise model to the university," would have it. By measuring, standardizing and taylorizing in the manner of engineers these gentlemen intend to come up with "a basis for the assessment of the costs of educational products," which would in future allow the virtual university "to settle its accounts for these with its customers."

The Massachusetts Institute of Technology (MIT) recently set a spectacular counter-example to such approaches. In the course of the next ten years the renowned Boston-based university will make the greater part of the study materials - lecture notes, exam papers and video lectures - relating to its approximately 2000 courses and lectures freely available on the Internet within the framework of the OpenCourseWare Project.

A project which was prompted - thus the official reason given - by "concerns raised by the increasing privatization of knowledge." Since last month the first batch of 30 teaching programs from 17 fields has been available at ocw.mit.edu; students can exploit the material, professors world-wide make use of it for their own lectures.

MIT´s bold step puts those visionaries from the Centrum für Hochschulentwicklung, the Center for Higher Education Development, located in the German town of Gütersloh, in their place. The president of MIT Charles Vest is not afraid that there will be a sellout - on the contrary. "The foundation of the learning processes at MIT is the exchange of information between teachers and students in the lecture room and that between students on campus," he announced at the beginning of the project. The message is unambiguous: Added value is not created with the aid of "intellectual property" in cyberspace but through services rendered directly.

It is not only the name of OpenCourseWare that calls to mind the Open Software Movement. The former project too is destined to encounter the same conflicts and clashes. The view of the elected guardians of the public realm regarding the lending of institutional support to the Public Domain was again made plain a short while ago. With PubScience the United States Department of Energy (DoE) had, as early as the time of the Clinton administration, established a freely accessible Web Index for scientific publications (pubsci.osti.gov).

A thorn in the flesh of commercial operators of scientific information retrieval services such as Infotrieve and Scirus, the Budget Committee of the United States House of Representatives slashed the sum of 730,000 US dollars from the DoE´s budget for 2002 stipulating in addition that the Department of Energy take care to prevent its information retrieval services "engaging in unfair competition with comparable private sector services." On August 7th 2002 the DoE announced that PubScience would be discontinued. This generated no headlines. Yet the neo-liberal supporters of the subsidiarity principle had once again shown whose might makes right. @z:No Change - No Future? To authors who are not public servants and depend for remuneration on professional fees MIT´s example will scarcely appear worthy of imitation. In this regard the charging of lump-sum fees on terminal devices might suggest a viable alternative to DRM systems. The German Rights Exploitation Societies such as the GEMA, the Society for Musical Performing Rights and Mechanical Reproduction Rights, the VG Wort, the German Society for Rights to Written Works, and the VG Bild-Kunst, the German Society for Rights to Visual Images and Works of Art, are hence urging that the right to make private copies of copyright-protected works be preserved.

Since 1965 the purchasing price of each recording medium and device in Germany, in other words that of each tape recorder and tape, contains a lump-sum charge with which authors are compensated. A similar lump-sum fee regulation applies in Germany to copying machines. The money is paid to the rights exploitation societies, which then distribute it to the authors.

After this model Bitkom, the German trade association of IT companies, a short while ago concluded a contract relating to CD burners with the German rights exploitation societies to the effect that in future manufacturers and importers of the same will pay to the societies a lump-sum of six euros for each device sold. This will only be an interim solution, though, until DRM systems are introduced. The lobby of the industry rejects on principle lump-sum charges on PCs, scanners, CD burners and blanks on the grounds that they make the terminal devices more expensive - a peculiar line of reasoning as the dongling of hard and software envisaged by the CBDTA and the TCPA would in no way make them cheaper.

As an alternative the model obviously has no future. A digital divide would ensue if the United States continued to insisted on DRM systems and the Old World stuck to its lump-sum regulations. The conflict might be worth enduring but no one is any longer quite so brave in Europe. With the EU directive and the German Federal Government's draft on the amendment of the German Copyright Act the course toward DRM has already been set.

Not much has survived of the Global Information Infrastructure, that euphoric liberation rhetoric about the Internet being there for everyone. "Instead grumpy ghosts are creeping about that make their money by maintaining scarcity whilst persuading their co-conspirators that our cheap copying technologies must be put on a chain, so that no one can make copies - at least not of those goods they want to sell us," writes John Gilmore, the founder of the Electronic Frontier Foundation (EFF), in his description of what he calls the "worst kind of economic protectionism." The unproven basic assumption of which is that copyright holders on account of their special vulnerability are especially in need of protection. Which in turn has the effect of warding off that litmus test that ought to accompany every legislative project, the thought experiment of: What would change if nothing changed?

Waiving all far-reaching legal protection measures for digital goods in copyright and patent law would amount to a de facto approval of the copying and dissemination for free of those goods. The media companies would then have to contend with the possible de-industrialization of the culture industry. That, in the event, artists, authors or software designers would disappear is highly unlikely. Software development was flourishing even before patents for programs became socially acceptable; culture and entertainment existed before intermediate dealers chose to turn their manifestations into economic assets. What could be expected, though, is for the weightings to shift toward other elements of "compensation," to wit, compensation via the audience's attention and appreciation. The reputation-based system which today already plays the most important role in the domain of free software and in that of scientific publications would be strengthened.

Fear of Disruption Such a system, though, relies on direct interaction and last but not least the free exchange of roles between originator and recipient; it works at the expense of intermediaries and exploiters. For the music and media industry the electronic commons present a disruptive technology - a term coined by the Harvard economist Clayton M. Christensen and used by him to highlight the fear of the "disruption" of existing business areas that management is heir to [11]. "Disruptive technologies are such as create new products in novel ways. To begin with they might cost more and offer less than mature technologies but finally they become so much cheaper and better that they crowd out of the market the old technologies." Thus, to give an example, the Internet protocols were disruptive with regard to the development of line-switching telecommunications systems, whereas today it is the ad-hoc mobile networks operating in license-free frequency domains which are disruptive to the fortunes of UMTS mobile radio operators. Disruptive technologies undermine the fundamentals of costing and upset well-established business models, in many cases putting the structure of entire sectors of industry in jeopardy.

At one time too the mechanization of the spinning-wheel and the loom created disruptive technologies. But whereas at the beginning of the 19th century few textile factories threatened the livelihoods of countless spinners and weavers, the situation today is the exact opposite: The use of P2P networks and CD burners by millions of people is threatening the business models of a few major industrial groups in the music and video branch of industry. If in a situation like this the dinosaurs of the industry of insight, awareness and perception allowed business process reengineering to go ahead they would be hazarding their very existence. Instead they are taking the solution to be the reengineering of society. Except that they obviously cannot accomplish the latter on their own. They need the help of law-makers to alter the basic conditions in their favor. Thus members of parliaments are now faced with the choice which movement to endorse - the one in lockstep with that brass band calling for reforms that sustain structures or the one pushing for the democratization of information technologies. (pmz)

Translated by Robert W. Smith

Bibliography [1] http://europa.eu.int/comm/internal_market/en/indprop/softpatanalyse.htm

[2] Mancur Olson, The Logic of Collective Action, Public Goods and the Theory of Groups, Harvard University Press, 1965

[3] Jessica Litman, The Public Domain, 1990, War Stories, 2002

[4] Jean Fourastié, Le grand espoir du XXe siËcle. Gallimard, Paris 1963

[5] Lawrence Lessig, The Future of Ideas, The Fate of the Commons in a Networked World, Random House, New York 2001

[6] Dirk Günnewig, Tobias Hauser, Musik im Hochsicherheitstrakt, c't 16/02, p. 182

[7] Michael Plura, Der versiegelte PC, c't 22/02, p. 204

[8] www.ieeeusa.org/forum/POSITIONS/ucita.html

[9] Volker Grassmuck, Freie Software zwischen Privat- und Gemeineigentum, bpb Bonn, 2002

[10] James Boyle, A Politics of Intellectual Property: Environmentalism for the Net, 1997. The Second Enclosure Movement and the Construction of the Public Domain, 2001, http://james-boyle.com

[11] Clayton M. Christensen. The Innovator's Dilemma, When New Technologies Cause Great Firms to Fail. Harperbusiness, New York 2000

[12] Rainer Kuhlen, Napsterisierung und Venterisierung. Bausteine zu einer politischen Ökonomie des Wissens, Prokla 126, March 2002

[13] Richard Sietmann, Wettbewerb im Gerichtssaal, c't 17/01, p. 170