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DMCA & US Laws Impact on Global Commerce
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DMCA & US Laws Impact on Global Commerce

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  • 1. DMCA & US Laws Impacton Global Commerce
  • 2. HKUST Business School2Digital Millennium Copyright Act Two purposes of ACT First, to bring USA into compliance withinternational IP Law related treaties (e.g., WTO) Second , extend / augment US copyright law Three areas of new laws under DMCA “safe harbor” for ISPs” Protection of Digital Rights Management(limitations on number of copies allowed) Circumvention of Copy Protection Prohibited
  • 3. HKUST Business School3DMCA is US only Law, but … The restrictions on cracking copy protectionaffect more than USA citizens and companies Can apply to ANY firm worldwide that doesbusiness within the USA (can be fined in USA) Apply to ANY individual within USA (even just ontemporary travel) for acts even outside USA Loss of US Market Sales for Software reduceincentives to produce new innovations Costs / risk of creation of Software increase
  • 4. HKUST Business School4Example of DMCA Global Impact Software developer creates code that cancrack encryption, and distributes it free on theinternet for anyone to download This is illegal distribution of code which enables orencourages others to break encryption, so criminaloffense in USA under the “new” DMCA laws Foreign citizen not subject to USA laws whileoutside USA for actions committed outside USA But, while traveling to USA for a conference, he isarrested for violation of DCMA while on US soil.
  • 5. HKUST Business School5Academic Researchers GivingUp Some academic researchers in the USA aswell as outside the USA are giving up onresearching encryption breaking algorithms Risk of criminal sanctions for academic research Difficulty of publication, as journals might also besubject to government penalties and even criminaloffenses for the officers and directors of journals Difficulty of any potential future commercialization Encryption breaking research still ongoing forsecret military applications, but limited
  • 6. HKUST Business School6Objections to DMCA in USA Restricts Free Speech – First Ammendment Restricts Innovation and Research Inconsistent with public policy goals of copyright Criminalizes relatively “innocent” behavior Eliminates some aspects of Fair Use Defense Parody and Satire Academic research or educational usage Software compatibility and modifications
  • 7. HKUST Business School7Privatization of Information Information which was previously not able tobe copy protected might be able to beprotected via encryption under DMCA rights Provide limited access to data via screen only Encrypt database to prevent easy access to data Increase cost of replication of data which wouldotherwise not be copy protected Underlying data not visible or displayed maybe protected via encryption using DMCA
  • 8. HKUST Business School8Restrictions on Global Commerce Provides protections under US law neveranticipated in original copyright or patent law Global businesses have offices in USA, so subjectto application of US laws for their firms actions Restricts competition more than copyright orpatent, and US laws being effectively exported Proprietary game maker for game consolessues emulation software maker for iMAC. Seeking $25k USD per unit for DMCA violation
  • 9. HKUST Business School9DMCA and Entertainment Criminal offense to break any form of copyprotection, so can not copy movie on DVD This would include making copy for iPod Making backup of DVD impossible Even makes illegal backing up software whichpreviously was expressly permitted by law Future digital rights management and digitalwatermark identification issues
  • 10. HKUST Business School10DCMA and Product Innovations Computer printer used chip in tonercartridges which enabled printer to use toner Both toner chip and printer chip have encryptedcode within them to restrict ability to copy code Violation of DMCA claimed for producer ofcompatible toner cartridge due to otherwise legalreverse engineering of products Internet access and validation plus chipencryption as new form of product protection
  • 11. HKUST Business School11Beyond DMCA: USA Regulations USA is the dominant hosting country forinternet based businesses and sites All dot.com names are USA names US names include .com, .us, .bis, .org, .gov, .edu,and almost any other name not assigned toanother country to manage domain names USA laws apply to any disputes involvinglegality of domain names and rights Domain management outsourced to private firm
  • 12. HKUST Business School12Much of “Cyberlaw” is US Based Domain names under US laws jurisdiction Many websites for ecommerce hosted in US Even for businesses not owned by US companies Most of litigation in cyberspace overintellectual property rights has taken placewithin the USA over the past 20 years Easier defenses for firms infringing others rights Less formal government controls on internet underUS law than under laws of many other countries
  • 13. HKUST Business School13Cyberspace Trademark Problems Same name registered in different states; markets don’t overlap Then, one firm goes online, and takes other firm’s customers E-Commerce is global in reach – so who has jurisdiction? National registration of Trademarks in USA Interstate commerce regulation clause of the consitution Might not overrule states rights for “local” brand issues Domain names and Trademark issues Cyber Squatting and Cyberspace Blackmail Increasing importance of National Trademark registration,and potentially international issues, although limited to USAin disputes over Domain name registrations for .com names