Apple must disclose iTunes DRM to competitors, but can charge for it

Posted by Scott M. Fulton, III

Paris (France) - In a decision reached late last week that has since been widely misinterpreted in the English-speaking press, the nine-member French Constitutional Council struck down portions of a law that required Apple, and other players in the digital download market in France, to disclose its digital rights management mechanism to enable interoperability. Those reading the entire decision learned that the Council left in place the compulsory licensing mechanism the law had instituted.

Even with key provisions of the law (referred to by the French abbreviation DADVSI) having been struck down, it will still mandate a DRM Regulation Authority which will oversee the mandatory licensing of all DRM for all file-sharing networks available to French consumers. What's different now, however, is that the licensing can come with a fee, to be determined not by the network proprietor but by the Authority itself, on a case-by-case basis.

"The DADVSI is by far the hardest internet Law ever passed in the world," writes French intellectual property attorney Jean-Baptiste Soufron. "It seriously impedes the development of French startups in this sector." Soufron is legal director for the Association of Audionautes, which advocates the open disclosure of all DRM systems to enable interoperability.

Soufron interprets the Council's decision as having struck down a major portion of French fair use law. Up to this point, DADVSI had upheld that software authors collaborating in the course of their work could share methodologies that helped them to produce software. Under a very loose interpretation which the Council nullified, transactions taking place over P2P networks were examples of such collaboration, and thus qualified as fair use. Citing the Declaration of Human Rights of 1789 - as honored within France as is the Bill of Rights in America - the Council proclaimed that such mandatory sharing was a violation of intellectual property, and that such property was to be respected just as much as personal property.

According to a press release dated last Thursday, the Council faulted DADVSI's unclear definition of the term "internetworking," citing such passages which translated into English as "the ends of internetworking" which were apparently supposed to refer to the parties to a P2P transaction whose rights were to be protected. Apparently criticizing the law for mixing its metaphors, the statement implied it would be legally impossible to attribute human rights, as defined by the Declaration, to an "end."

The Council's harsh language in striking several provisions of DADVSI led many in the American press to conclude the entire law was struck down. But as Soufron interpreted the Council's decision in English, it actually had no problem with the creation of the Authority in principle. It took issue with Parliament taking away a company's right to be justly compensated for handing over its trade secrets. Though many are interpreting the law's upset as a limited legal victory for Apple, the Council did, in effect, uphold DADVSI's restrictions eliminating a proprietor's right to negotiate the terms of intellectual property licensing.

Writes Soufron, "I am not certain that Apple will be satisfied to obtain financial compensation for the loss of their control on iTunes and the iPod."

Also eliminated completely from DADVSI was the exclusive provision protecting free software developers, whose right to access a download service's DRM scheme specifications would have been protected. Parties seeking to obtain a DRM license are still required to petition the DRM Regulation Authority, but now those petitioners are referred to as competitors, implying that a valid petitioner must have the implicit capability to compete with the company whose scheme it wishes to license.

As Soufron sees it, under the current wording, Apple may be compelled to license its FairPlay DRM scheme for iTunes to, for instance, Microsoft, but not to an open source developer who either might not be able to afford the fee, or might not qualify as a legitimate "competitor."

Another provision of the law struck down last week enabled judges to sentence illegal file traders with misdemeanor penalties, within the €38 - 75 range, which is on a par with parking tickets. As the law now stands, the fine for violators may now range up to €500,000 plus five years' imprisonment, regardless of whether it's a company or an individual.

The French Constitutional Council was established in 1958 for the express purpose of reviewing legislation, with the power to overturn laws passed by Parliament, as well as to review the legitimacy of presidential elections and public referendums. The Council is comprised of nine judges appointed by the French President, and may include former presidents. Their term of office is limited to nine years, with three judges replaced every three years.