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Two stories from today’s news underscore the high tensions and short tempers surrounding the commerce in bits.

As we noted a few days ago, the McCain campaign received a cease and desist letter about its use of the song “Barracuda” at the RNC. According to Reuters, singers Nancy and Ann Wilson issued a statement that¬†”The Republican campaign did not ask for permission to use the song, nor would they have been granted that permission.”

But the situation may not be so simple. According to the RNC,¬†”The McCain campaign respects intellectual property rights. Accordingly, prior to using ‘Barracuda’ at any events, we paid for and obtained all necessary licenses.”

And in any case, the article goes on to explain, “the song is licensed for public performance under a blanket fee paid by the venue to ASCAP, the firm that collects royalties on behalf of composers and copyright owners.” Makes sense that the center would have paid a one-time fee so whoever rented it could play anything they wanted.

The moral here may just be that copyright law gives copyright owners such absolute control over their bits, and there have been so many frivolous takedown notices, that copyright holders assume they can do anything they want, such as to object to a performance for political reasons even when they have legally assigned their rights to others.

In other copyright news, a company has announced that it will sell for $30 what it claims is a legal DVD copying program for Windows computers. (Illegal programs for doing this are widely available on the Net; the New York Times article names a couple.) RealNetworks believes that a recent court ruling opens the door to lawful DVD copying just a crack. The copy could be played only on the computer that was used to make it, or up to four others for which separate license fees would have to be paid. The content industry is not amused, and it looks like another battle over copying technologies, like those we lay out in Chapter 6, will soon be joined.

Would it be in line with the tough language of McCain’s Issues page:

John McCain Will Protect The Creative Industries From Piracy. The entertainment industry is both a vital sector of the domestic economy and among the largest U.S. exporters. While the Internet has provided tremendous opportunity for the creators of copyrighted works, including music and movies, to distribute their works around the world at low cost, it has also given rise to a global epidemic of piracy. John McCain supports efforts to crack down on piracy, both on the Internet and off.

… or the more relaxed posture of their nominating convention, which played music without the permission of the recording artists, who are angry about it? Protesting are:

Van Halen (Right Now): Used for McCain’s big entrance last night. Permission was not sought, and would have been denied.

Heart (Barracuda): Used last night when Palin joined McCain on stage after his speech. The copyright holder has sent a cease-and-desist letter to the campaign.

This is not the first time McCain has taken a generous view about sharing others’ copyrighted material. For example, there was an issue earlier this summer with¬†Franki Valli’s “Can’t Take My Eyes Off You.” Warner Music sent a takedown notice to YouTube, where a video montage mocking Obama had been posted on McCain’s official channel.

Digital copyright law is crazy to be sure (that’s our Chapter 6). You have to wonder whether McCain has any idea how crazy, or whether he thinks it applies only to teenagers so he doesn’t need to worry about it.

A major point of Chapter 6 of Blown to Bits is that copyright protections were so strengthened by rewrites of copyright law over the past decade that it became difficult even to facilitate the re-use of your creations (literary, software, or artistic), unless gave up all claims on your work and released them into the public domain. As we discuss, Creative Commons was an effort (Hal was among the founders) to allow creators easily to specify conditions under which their creations could be re-used by others (for example, that the new creation include proper attribution to the original, and that such “borrowers” must make similar requirements on those who borrow in turn).

But there has always been a bit of discomfort about the legal infrastructure underlying Creative Commons licenses. Suppose I put a CC license on my work and you just use it, ignoring the conditions I stipulated. Have you actually done anything unlawful? The theory has been that in attaching a CC license, I never gave up my copyright, and I could always go after you for infringing that copyright. But it’s a delicate matter of law and, until recently, it had never been tested in court.

Indeed, a Federal District Court in California came to the opposite conclusion about an “Open Source” license — that the creator couldn’t impose a legal requirement on the re-user by attaching the open source license. On August 13, that decision was reversed on appeal to the US Court of Appeals for the Federal Circuit, which is the venue where appeals on intellectual property issues like this get adjudicated. Though it applies exclusively to software, an “open source” license is enough like a Creative Commons license in its intent and in what it requires that there is now much more confidence that CC licenses are legally binding.

The case is that of Robert Jacobsen v. Matthew Katzer and Kamind Associates, and the decision of the Appeals Court is here. The decision is 15 pages, and while you would need legal training to understand the subtleties, the gist of what the parties did and the court’s reasoning about its conclusion are comprehensible to an interested layperson.

A couple of recent court decisions create some hope that the ordinary understanding of terms like “copy” and “own” may have some life in them, in spite of the best efforts of the intellectual property industry to twist these words’ meanings out of shape to the disadvantage of consumers. These examples pick up the story line of Chapter 6 of Blown to Bits.

You can TiVo a television program and watch it later. You can record it on a VCR and watch it yourself as many times as you want. You can’t legally sell it or make multiple copies, but as long as the copy is for your own use, you have no legal issue.

Cablevision offered a videorecording service where the bits would be held on your behalf at Cablevision, not on your home machine. The bits would be physically in “the cloud,” as the saying goes, but functionally Cablevision’s service would walk and quack like a home VCR. Legal or not?

The entertainment industry thought not, and sued Cablevision for copyright infringement. A lower court held Cablevision liable, but an appeals court agreed with Cablevision that it didn’t matter where the bits happened to be held, only who could do what with them. Entirely sensible, it seems to me. See the Reuters story that came out today.

The other story was in May. A Mr. Vernon bought stuff at garage sales and resold it on eBay. Among the stuff he sold were copies of AutoCAD, a computer-aided design software package used by architectural design firms. These copies of AutoCAD were used, but were in their original packaging, and included the original disks. Autodesk, the company that produces AutoCAD, cried foul — that was copyright infringement. The folks who originally acquired those copies of AutoCAD didn’t actually buy them. If they had bought them, then Vernon’s resale would be just like reselling a used book. Bun in fact all they had done was to acquire a right to use AutoCAD. The license agreement clearly stated that it was nontransferable. No one else could “buy” the used software package because it had never been “sold” in the first place.

A U.S. District Court in Washington State, in its opinion, notes that Autodesk actually referred to users “purchasing” the software, and charged a one-time fee with no continuing charges. The transaction looks and quacks like a purchase; Autodesk can’t turn it into a licensing agreement simply by stating that that’s what it is. Mr. Vernon can go back to selling the used software on eBay without Autodesk hassling him with DMCA takedown notices.

Will this decision have any impact on things like the Yahoo Music “Store,” which actually only issues revocable music licenses, as Hal has been blogging? Probably not — in that case there is nothing that looks like a used book that the consumer could wave at the judge. But these are both welcome decisions. Maybe some judges are starting to understand how this stuff works.

The Higher Education Act is now at the President’s desk and is certain to be signed. The full text can be viewed here. Like most such laws that update ones previously passed, it is almost unreadable, because it is really an edit log: “change this word to that, add this sentence at the end of that paragraph,” etc.

It includes many disclosure and reporting requirements (colleges will have to include textbook costs in their online catalogs, for example). While I am all in favor of more transparency, my guess is that this will mostly result in colleges adding more clerks to satisfy the requirements, or, for colleges unable to afford more hires, conversion of educational and student-service positions into bean-counting and bean-reporting positions.

A lot of recent interest in the bill has come because of the entertainment industry’s efforts to pressure Congress into making colleges copyright enforcers on its behalf. Colleges are in a unique position — their residential students have no choice of Internet Service Providers. All the bits that students get go through the college’s connections to the Internet. Monitor and choke off illegal activity there, and students have nowhere else to get their bits.

The problem, as I noted in the Commencement issue of the Harvard Crimson, is that colleges should be the last place where communications are monitored for anything without probable cause. Students who have come to college to have new worlds opened up to them, to explore ideas and works that would have caused them shame and shunning at home, should not have every bit they are reading screened for appropriateness. That’s what we expect of Chinese universities, not American universities. If the entertainment industry (which pays a lot of the bills for many congressional campaigns) can get filtering installed on college’s networks, they will likely use that as a precedent to pressure Congress to act against other ISPs. And if the government can compel colleges to exclude this particular kind of material, it can compel colleges to keep out other kinds of bits it deems bad for the young to be consuming.

The compromise version of the Act that is at the President’s desk doesn’t mandate that colleges filter all incoming bits, only to disclose what weapons they are using to help the entertainment industry’s anti-“theft” crusade. But Congress hands the entertainment industry a different huge gift. It mandates that colleges develop plans to buy music subscription services. Here is the relevant language:

`SEC. 494. CAMPUS-BASED DIGITAL THEFT PREVENTION.

• `(a) In General- Each eligible institution participating in any program under this title shall to the extent practicable–
  `(1) make publicly available to their students and employees, the policies and procedures related to the illegal downloading and distribution of copyrighted materials required to be disclosed under section 485(a)(1)(P); and

  `(2) develop a plan for offering alternatives to illegal downloading or peer-to-peer distribution of intellectual property as well as a plan to explore technology-based deterrents to prevent such illegal activity.

Is there another area of private industry from which Congress mandates that colleges plan to buy subscription services? This section goes on to promise grants to colleges who fight the good fight against piracy. The recording and movie studios are rubbing their hands and setting up their money-changing tables right now, waiting for the colleges to line up to negotiate with them as federal law will soon demand.

Here’s a suggestion. Let’s instead pass a law requiring colleges to inspect laptops at the border of their property, the way DHS inspects laptops at the U.S. border, without probable cause. Students arriving as freshmen will have their laptops searched as they are unloaded from their parents’ cars. Same after they come back from winter break, etc. Ipods too, of course.

The reason this won’t happen is that students and their families wouldn’t stand for it. There would be face to face confrontations of a kind not seen since the draft protests of my youth.

The problem with network monitoring, and what makes it a more plausible and acceptable alternative, is that no one would see it happening. We all tend to accept intrusions that are logically equivalent to physical searches, even if we know they are happening, if we don’t see them happening.

The entertainment industry is winning in its efforts to force public and other private institutions keep its anachronistic business models alive for a few years longer. As much money as they claim to be losing, they have plenty to lobby Congress to do their bidding.

I wrote last week about Yahoo’s shutdown of its Music Store Server, thereby stranding customers who had bought music controlled by the Music Store’s digital rights management. This week, Yahoo announced that it will compensate stranded customers with coupons for replacing music tacks from Real Network’s Rhapsody, whose music is free of DRM copying restrictions.

It’s good to see Yahoo showing concern for its customers, and even better to see them offering higher-value, i.e. non-DRM, replacements. As recently as February 2007, Warner Music’s CEO was deriding the idea of non-DRM music as “completely without logic or merit.” Now DRM-free is becoming the norm for on-line music, with the growing realization that DRM is bad deal for music, not only for customers but for publishers, and also, as explained in Blown to Bits, for innovation. I expect that we’ll see the same shift in attitudes toward DRM-free video within a couple of years.

Yahoo was wise to quickly make amends to its customers, because there’s a lot more at stake for the IT industry than lost music tracks. The basic phenomenon of Yahoo’s (and earlier, Microsoft’s) announcement about shutting down DRM servers was that of leading high-tech companies offering a product that entailed a long-term commitment to maintaining a customer service, and then abandoning that commitment when the economics went sour.

What does that mean for the industry’s growing emphasis on cloud computing? After all, if you can’t count on Yahoo to keep your music available for five years, how can you count on Microsoft, Google, IBM, and others to keep your company email and documents available for … do you need to have confidence for 10 years? 20? 50? I’d be viewing these server shutdowns nervously if I were a corporate CIO faced with the option of moving to cloud computing. And I’d be thinking hard about them if I were high-tech exec eager to get into the cloud business. After all, maintaining “long term” DRM servers seemed like a great business opportunity in 2004.

Last April (see MSN Music RIP) I blogged about Microsoft’s decision to shut down the license servers for MSN Music at the end of August, thereby stranding customers who had purchased music tracks governed by MSN Music’s Digital Rights Management. As it turned out, Microsoft reconsidered, and now says that the license servers will operate until at least 2011.

Now Yahoo has joined the DRM customer stranding game with its July 23rd announcement that it will shut down the Yahoo Music Store servers at the end of September. The result will be that anyone who purchased Music Store tracks will be unable to move them to new machines after the deadline. As with Microsoft’s (since retracted) announcement, this is another demonstration that customers don’t really own the music they “purchase” under DRM systems. Instead, they remain dependent on the distributor’s willingness to keep the DRM license servers running: something for which the distributor has given no long-term guarantee.

As Blown to Bits argues, DRM is a bad deal for customers and a bad deal for innovation. It’s also a bad deal for the music distributors themselves, since it obligates them to maintain an ongoing technical infrastructure of license servers. It’s encouraging to see the continuted growth of non-DRM alternatives for music distribution. Now if only Congress would figure out what a bill of goods they’ve been sold by DRM pushers.

As we were completing Blown to Bits, the big news on the copyright war front was the Jammie Thomas trial. (See “Sending a Message” in Chapter 6.) This was the first of the thousands of peer-to-peer lawsuits filed by the RIAA to go all the way to a jury trial. Thomas lost and lost big: The jury not only found the Minnesota woman guilty of sharing 24 songs using Kazaa, but they imposed a fine of $220,000: $9250 per song. This was a huge victory for the record companies, because the demonstrated reality of such high stakes for losing in court is a huge incentive for other targets of RIAA lawsuits to settle.

Now the verdict is being called into question. In May, trial court judge Michael Davis issued a ruling saying that he may have made a legal error in instructing the jury.

Here’s the issue: Thomas, and the other P2P lawsuit targets are accused of infringing copyright by illegally distributing music tracks. What they actually did (allegedly), was to place the music tracks on their computers in a way that made them available over the network. Does ‚Äúmaking available‚Äù count as ‚Äúdistribution‚Äù under the copyright law, or does ‚Äúdistribution‚Äù require the files actually be disseminated? This issue has come up before, and different courts have ruled differently on the issue. Judge Davis instructed the Thomas jury that ‚Äúmaking available‚Äù does in fact count as distribution. Now it appears that there is an appeals Court ruling in the 8^th Circuit going other way: ‚Äúdistribution‚Äù requires actual dissemination of material, not just ‚Äúmaking available‚Äù. Since Minnesota is in the 8^th Circuit, that should be a governing precedent in the Thomas case. Davis will hear arguments on the issue in hardings scheduled for July 1.

These gyrations underscore how uncomfortable the legal system becomes when old notions of copyright confront new digital realities and just how much the copyright balance has been toppled by the world of bits.

And things can get even murkier. As Villanova Law Professor Michael Carroll points out (http://carrollogos.blogspot.com/), the RIAA, in arguing for the ‚Äúmaking available‚Äù interpretation of distribution, may want to be careful of what it’s wishing for. US copyright law includes a provision called the first-sale doctrine, which says that once you’ve acquired a copy of something, it’s legal to redistribute it. That’s why used book stores are legal, for example. So if making music tracks available counts as distribution, it ought to be OK under the first-sale doctrine. In that case, the record companies would probably argue that placing music on a P2P network counts as contributory infringement, and the legal merry-go-round rides would continue.

A lot of college students are getting “pre-litigation” letters from the Recording Industry Association of America (RIAA) claiming that they have illegally downloaded music. The RIAA threatens them with enormous penalties and offers them the opportunity to settle up for only modestly large fines.

The RIAA identifies these students by their IP addresses — the numerical address of their connection to the Internet. In residential colleges, where students living arrangements are known, the IP address is arguably a reliable identifier of an individual student.

Doubtless many of the RIAA’s claims are accurate. But many are not; we give a particularly dramatic mistake in Blown to Bits.

Now three researchers at the University of Washington have demonstrated ways to spoof IP addresses — that is, to make it look to the RIAA as though a download is going to your IP address when it isn’t, and in fact no download is occurring at all. A new way to be mean to your enemies — induce the RIAA to send threatening letters to them, even though they are completely innocent!

The moral of the paper is that the RIAA’s identification methods are deeply flawed and are unreliable. That could be a very important fact, given the levels to which the RIAA has taken the war over music file sharing.

There is more on the New York Times blog or you can read the original paper here.

I have a piece in the Crimson about copyright, including a strange story about the publication of Blown to Bits.