Protection of Intellectual Property: Background

Remember the elementary school teacher who canceled recess for the entire class because one student ran in the hallway? She apparently went into the digital media protection business. Legitimate users have increasingly found their lives complicated and rights curtailed by a seemingly endless barrage of cumbersome and frustrating attempts to prevent the illegal copying and use of digital media.

Existing protection schemes are designed to eliminate any practice that could conceivably allow someone to use the media in an unauthorized manner. Unfortunately, these schemes make no attempt to differentiate between actual piracy attempts and legitimate usage. Therefore, the multitude of law-abiding users find themselves being punished for the crimes of a few miscreants.

Current protection schemes -- from serial numbers to hardware dongles to network activation -- are ultimately crackable because all code runs on the user's computer, where it is readily accessible by crackers wielding debuggers and disassemblers. These flawed approaches are doomed to failure from the start. They serve only to frustrate legitimate users and do little to prevent piracy.

Copyright, Patents: A Brief History

Our world is an increasingly interconnected one, bringing with it all the benefits as well as the problems of the free and plentiful exchange of all kinds of information. However, the line has blurred between what can be freely copied and enjoyed and what cannot.

The group of work collectively known as intellectual property includes everything that is protected by intellectual property laws, for example, copyrights, patents, trademarks, and trade secrets. The original purpose of these laws was to protect inventors and creators and to spur innovation, as they granted the owner exclusive rights to copy or distribute a protected form of property.

The term is controversial, particularly to those people in the free culture movement who consider intellectual property more as an intellectual monopoly, arguing that the laws are so restrictive that they hurt the public interest. They argue that the laws hurt the dissemination of new ideas, stifle competition, and thus harm the public good.

In recent years the scope of intellectual property has been expanded to include new types of material, like databases and algorithms, and regulating new activities and the removal of limitations on exclusive rights. Along with this expansion has come more attention on protection of digital and intellectual property by software vendors and the music and film industries, and they are aggressively going after whoever they perceive is illegally copying their products. The reason is simple: because of widespread copying made easier by the Internet, these industries are losing hundreds of billions of dollars in revenues.

Hence the rise of software-based digital rights management (DRM) tools to try to stop copying of digital works. The effect, though, as been to limit fair use of works that were allowed in the pre-digital world. In the pre- or non-digital world, for example, a consumer may buy a book and then loan or sell the book. In the digital world, by contrast, the consumer is prevented from similar benefits, and may be arrested if he/she shares or sells a digital book with a friend. The Digital Millennium Copyright Act (DMCA), passed in 1998, actually criminalizes any activity that tries to circumvent any software used to enforce DRM systems; critics say this law is too restrictive and unnecessarily limits legitimate uses while doing little to stop piracy.

The DMCA: Prohibition in the 21st Century

In the early 20th century, Prohibition was viewed as a way to reduce crime and corruption, improve health, and solve a number of social and financial problems attributed to the use of alcohol. However, within a few years after the ratification of the 18th amendment in 1920, Americans increasingly realized that the cure was much worse than the disease.

By the time the 18th amendment was repealed in 1933, it was clear that the only beneficiaries of Prohibition were organized crime syndicates, which had taken advantage of the ill-conceived law and used their own enforcement techniques to establish monopolies in the supply of alcoholic beverages, at the expense of the very citizens Prohibition was supposed to protect.

In the late 20th century, similarly, there was no evil or malicious cartel trying to abolish the fair use rights of U.S. copyright laws. There was only a concern that existing copyright laws did not address issues introduced by the growing use of computers and digital data. Copyright revision was viewed as a way to reduce criminal activities and solve a number of social and financial problems attributed to the use of digital technologies to abuse copyright laws.

However, shortly after Congress passed the Digital Millennium Copyright Act (DMCA) in 1998, again, many people realize that the cure is much worse than the disease. Now it is clear that the only beneficiaries of the DMCA are large corporations and organizations in the music and movie industries that have taken advantage of the ill-conceived law and used their own enforcement techniques to establish monopolies in the supply of digital content, at the expense of the very citizens the DMCA was supposed to protect.

Even though big companies are the only ones that benefit from the current procedures, under a CloakX approach, even they would benefit more.

Technological Developments

The development of two simultaneous trends in technology has made the protection of intellectual property increasingly difficult. They are:

  1. The emergence of the personal computing environment, in a change from the previous main frame or time sharing environment: With virtually all computing now being done by users who have at least one personal computer on their desks, all users have access to the tools necessary to copy software and anything else in digital form. Thus, the task of protecting creative materials and insuring that the owners and creators receive proper compensation for their distribution has become increasingly difficult.
  2. Digital representations of almost all forms of intellectual properties, including books, formulas, music, art, photographs, and computer software. There is no discernible difference between the original digital form of these works and the copied versions. This combined with a hacker mentality by many users has led to widespread copying of music, to take one well-known example, with the composers, performers and music companies receiving no revenue.

In the early days of computing, software piracy was a minor issue because computers ran in a mainframe environment. Consequently users did not have access to the software code; they could run the programs but they couldn't get to the program code and thus had no opportunity to steal the software program itself. That has all changed with every user having a personal copy of software programs on their own machines.

Software publishers have searched for ways to insure that one copy of a program that is sold legitimately would not turn into millions of free copies distributed by the buyer; these methods range from copy protection schemes to hardware protection devices called dongles or hasps; this scheme involves connecting a special piece of hardware to one of the standardized ports in order for the software to run. Other schemes involve product activation codes distributed over the Internet; a buyer of a piece of software must enter a code in order for the program to run.

No system has been without its flaws. Many companies have concluded that hardware protection devices are a nuisance and enrage legitimate users, the cost of which is greater than the lost revenue from copying. Hasps and dongles are impractical in the long run, for users would soon run out of ports if they were commonly used by software manufacturers. What software companies have tried to do to increase their revenues is have compliance departments (also known as the software police) to ensure that large corporate users of their software products are paying for all the copies of the software that they are running.

Digital Intellectual Property

A whole new category of intellectual property has been created with the manufacture of audio and video works in digital form. With widespread availability of such digital media is a pervasive attitude that any and all of this material should be free to copy and distribute. This kind of "hacker" mentality means that among certain users (particularly teenaged consumers of music) there is the belief they have the right to copy any piece of music even if it involves using cracker programs or other means of defeating built-in anti-copy methods. Member companies of the music industry have formed the Secure Digital Music Initiative in an attempt to create a private encrypted standard for music to in effect digitally watermark legitimate copies, but the history of their successfully doing this is not promising.

Compounding the problem is the existence of the Internet and peer-to-peer sharing programs that allow users to share pirated music, games, and just about any other digital intellectual property with no threat of being caught. Today it doesn't take much effort at all to obtain virtually any software selling at any price over the Internet at zero cost. However, the cost to software companies is huge, with estimates ranging from $15 billion to $20 billion in lost revenues each year through such piracy.

Software theft is only a small part of the revenue pie, as more and more intellectual property will come to exist in digital form, not only music, but also video, photos, and books. The open personal computing environment has simultaneously expanded the market for the products making up intellectual property as well as created a market for pirated copies. It is the openness and standard of the PC environment that has produce the problem and it has also made a solution so difficult.

The CloakX Solution

The CloakX system offers a method of protecting digital media from theft or unauthorized usage. What is different about CloakX? The primary difference is that the permission to use the content is associated with a user's identity, rather than the devices he owns.

Unlike traditional protection schemes, CloakX gives the user more flexible usage rights. As a result, there are tremendous benefits:

  • The content is not locked to individual playback devices or computers, and so users can easily migrate content across different platforms and devices.
  • The system can be applied to any type of digital content ranging from software to video, music, and print.
  • Users are permitted, even encouraged, to share media with each other because permission to use the content is separated from its acquisition. Thus, licensed content can be publicly distributed without compromising copyrights.
  • No connection to a local or wide area network is required, and so the CloakX system can be used in environments ranging from a single computer to the most complex enterprise networks.

In sum, the CloakX system will be embraced by both buyers and sellers alike because it offers benefits to all. While securing the legitimate copyrights of media owners, it does not impose unacceptable restrictions on users of the media. It assures a free market system, in which the creator of an innovative product is rewarded for his efforts, and the user pays a fair price for a product he wants.