Google's new Toolbar includes a feature called AutoLink that adds hyperlinks to certain content in Web pages. For example, if it spots a street address in the page, it hyperlinks the address to Google Maps; if it spots the ISBN number for a book, it hyperlinks it to that book's page on Amazon.

Some people are unhappy about this, seeing it as a violation of Google's famous "don't be evil" rule. I don't see the problem – at least not yet. (Others think it is a strategic mistake by Google, which it may be. I'm not considering that question here.)

Thus far, AutoLink is applied to a page only when the user installs certain versions of the Google Toolbar. The user also has an explicit switch to turn AutoLink on and off. Nothing is going to happen unless the user asks for it, so it's hard to see how the interests of sophisticated users are harmed. (The story might be different for novice users, if the feature is presented in a way that tends to confuse them about which hyperlinks came from the original site author. I haven't looked at that issue.)

What about the interests of website authors? If Google is rewriting my site without my permission, that may affect my copyright interests in my page. In the same way that ad-blocking software may harm a site author's business, an overly aggressive page-rewriting tool could potentially erode the site author's ability to generate revenue via hyperlinks on the page. For example, if I mention a product and hyperlink to it via an online store's affiliates program, I can get revenue if one of my readers clicks through the link and buys the product. If Google adds hyperlinks to other stores (or, worse yet, replaces my hyperlink with one of theirs), this will cost me money.

A site author could argue that the rewritten page is a derivative work, created without permission, and thus infringes copyright. Can the user be held responsible for this? Can Google?

I don't know the legally correct answer to that question, but it's interesting to think about whether it's fair to allow the kind of rewriting that Google is doing. (I'm using "fair" in the ordinary sense here, not in the legalistic sense of "fair use".) I think that what Google is doing now is fair. Links are added only at the user's request and only in limited circumstances (street addresses, package tracking numbers, ISBNs, and vehicle ID numbers), and the original site author's links are apparently left intact. If the system expands too far, it could cross the line, but it hasn't done that yet.

(Andrew Grossman at Tech Liberation Front has an interesting post about this, if you can ignore the gratuitous ad hominem attacks. He's right that this shouldn't been seen as an antitrust issue.)

Tomorrow the DC Circuit will hear arguments in the case challenging the FCC's authority to impose the Broadcast Flag regulation. The case will determine whether the FCC can control the design of computers, in the name of copyright. It will also determine whether the ill-conceived Broadcast Flag rule will be imposed.

Today's New York Times has a disappointing story, by Tom Zeller Jr., rehashing the arguments about the Broadcast Flag. I say it's disappointing because it reiterates without comment the MPAA's logically disconnected hash of arguments about the Broadcast Flag. I think the press has a responsibility, at the very least, not to let logically fallacious arguments pass without comment.

The article starts by describing Mike Godwin downloading an episode of the Showtime series "Huff." After some scene-setting, we read this:

The M.P.A.A. has argued that without the broadcast flag rule, content creators would have no incentive to provide digital content over the airwaves, because people could simply pluck video streams out of the air and redistribute them to millions of viewers over the Internet.

"It's very simple," said Fritz Attaway, a vice president and Washington general counsel for the M.P.A.A. "Without the broadcast flag, high-value content would migrate to where it could be protected."

In practical terms, such "protected" places would be cable and satellite systems where digital content can be more easily scrambled, encrypted or otherwise controlled, leaving broadcast networks at a distinct disadvantage in the new digital marketplace.

The fallacy here should be pretty obvious. "Huff" is already distributed only in a "protected" place – a premium cable channel – and it's available for infringing downloaders. (Other cable and satellite offerings are similarly available on P2P.) This is not evidence that cable-like protection is needed for broadcast. To the contrary, it's evidence that the "protection" of cable-like DRM is illusory.

Similarly, the article repeats without comment the MPAA argument that they will be forced to withhold high-resolution broadcast service unless the Broadcast Flag is imposed. This argument couldn't be more wrong in its view of broadcasters' incentives.

In fact, P2P infringement gives broadcasters a powerful incentive to offer higher-quality, higher-resolution content.
High-res content makes legitimate broadcast service more attractive to viewers. P2P versions can't match these increases in resolution because doing so would make P2P files much bigger, clogging P2P systems with enormous files and making downloads much slower. If broadcasters have to "compete against free" their best hope is to actually compete, by improving their product – especially when the competitor can't match the improvement.

If the Broadcast Flag actually did reduce infringement, then imposing it would only reduce broadcasters' incentive to switch to high-res broadcast. Looking at the evidence, though, it could hardly be more clear that the Broadcast Flag won't reduce the availability of P2P content at all. Even ignoring the Flag's many technical loopholes, the best it could possibly offer is the same level of protection that cable content gets today. The evidence is overwhelming that that level is insufficient to keep programs off the P2P networks. Remember Huff?

The real story here, for an enterprising reporter, lies in how the MPAA convinced the FCC to mandate the Broadcast Flag despite offering only these weak arguments in the public proceeding.

I wrote yesterday about the new Cato Institute paper on the economics of peer-to-peer and anti-copying technology, which argues that everything will be okay in the online-music market because competition will force vendors to offer consumer-friendly products. I agree that a competitive market would have this effect. But how competitive is the market?

One of the more interesting sections of the Cato paper is about interoperability (pp. 8-9), or the ability of different DRM systems to work together. If a buy a file in one system, can I move it to another system? If two devices implement different DRM systems, can I transfer a file from one device to the other? If my DRM vendor goes out of business, do I lose access to my files?

The Cato paper says that DRM interoperability is good, and that progress is being made. I agree with the first part but I'm not so sure about the second. It's not clear that we can rely on the DRM vendors to make their products interoperable – they have little incentive to help their customers switch to competitors' products. Are there alternatives? Here's the Cato paper:

Unilateral solutions may exist. In its present Harmony service, RealNetworks enables the compatibility of its RealPalyer Music Store tracks with both Apple's iPod players and players compatible with Windows Media Audio (WMA). RealNetworks acomplished that by producing WMA files and integrating Windows Media Player on the user's PC (both of which are permitted by Microsoft) and by reverse engineering Apple's FairPlay DRM file format (which Apple may yet legally contest). In another potential solution, RapidSolution Software of Germany now offers software (called Tunebite) that allows users to re-record any file played on a PC by simple loopback through the PC's audio card; songs are stored in an open format for later use. Parties differ as to whether the technology legally breaches access protection.

In other words, these products provide public benefits, but they might be illegal. One would expect, at this point, a policy discussion about why it might be wise to ensure that such products are legal. But that is not forthcoming. The authors just change the subject and talk about something else.

This flaw – extolling the virtues of competition, but failing to follow up by recommending pro-competition policies – seems to run throughout the otherwise excellent Cato paper. It makes sense to rely on market competition to blunt the potential downside of DRM. That strategy will only work if we adopt pro-competition policies, or at least reverse the anti-competition aspects of our current policy. Talking about competition is good; but having competition is much better.

Derek Slater, responding to the recent Cato paper on DRM technologies, raises an important question: How competitive is the record industry?

The Cato paper argues that market competition will blunt the possible negative effects of DRM on consumers. The theory is that a variety of competing DRM systems will emerge for online music. These systems will offer differing levels of flexibility to consumers. They will face market pressure to meet consumers' needs, because consumers can choose which one to buy. Record companies will face competitive pressure to license their music via the DRM systems that consumers want to buy. If the DRM market is competitive, and the music market is competitive, then market forces will foster a reasonable DRM technology.

This theory has much to recommend it. But the theory works, of course, only if the music business really is competitive. If the record companies act as a cartel, they can use the resulting monopoly power to dictate the design of DRM systems, regardless of consumer preferences. Tellingly, the Cato paper does not bother to argue that the major record companies behave competitively in this respect. Instead, the section on record company competition (p. 6) talks almost exclusively about indie labels, which account for only a small piece of the overall market.

How can we tell whether the record industry is responding competitively to DRM? An interesting natural experiment is about to start. MP3Tunes, a new startup headed by serial entrepreneur Michael Robertson, is launching a new music service that sells songs in MP3 format. Will the major record companies license their catalogs for sale on MP3Tunes?

In a competitive market, they would license to MP3Tunes. There are surely some customers who are willing to pay for music but don't want to accept the hassles of other online music services. MP3Tunes will extract revenue from these customers.

You may object that the record companies won't sell their content in an unprotected format. But of course they already do so, and in fact most of their revenue comes from sales in the unprotected CD format. And they can't rationally be worried that their existing catalogs will leak to the P2P networks – that already happened, long ago. It's hard to see how licensing their existing catalogs to MP3Tunes would make the P2P infringement problem any worse.

The record companies may feel that other music services meet their needs better, for example by increasing the likelihood that consumers will have to repurchase the same song later. These factors might affect the price they offer MP3Tunes, but they shouldn't preclude negotiations altogether. In a competitive market, producers have to offer the products that consumers want, not the products the producers like.

It's hard to see any economically rational reason for a major record company to refuse, categorically, to deal with MP3Tunes – unless we assume that the major record companies act as a cartel. That's why the record industry's response to MP3Tunes will tell us how competitive that industry really is.

(Let me preempt some rebuttals by pointing out that if you want to argue about what would happen in a competitive market, your argument cannot be based on assertions about what the record industry, as a whole, wants or needs. Assuming that "the record industry" is an actor whose needs, desires, or plans matter is tantamount to assuming that the industry is in fact a cartel. Nor can you assume that any individual company in a competitive market cares about the fortunes of the industry as a whole, as opposed to its own selfish interests. Much of the discourse about the record industry assumes, implicitly, that it is a cartel. If you want to rebut my argument about how a competitive industry would behave, be very careful to avoid adopting that assumption.)

Macrovision is introducing a new DRM technology for DVDs, apparently based on passive changes to the data encoded on the disc, according to a news.com article by John Borland. (The article is entitled "New Copy-Proof DVDs on the way?" The answer to that question is "no.")

The new technology, called RipGuard, tries to code the DVD data on the disc in a way that triggers bugs in popular DVD ripping programs, while remaining readable on ordinary DVD players:

Macrovision's new product takes a different approach to antipiracy than it has taken for analog or audio CDs. Gervin said Macrovision engineers have spent several years looking at how various DVD-copying software packages work and have devised ways to tweak the encoding of a DVD to block most of them.

That means the audio and video content itself requires no new hardware and isn't scrambled anew, as is the case with most rights-management techniques. Someone using one of the ripping tools on a protected DVD might simply find their software crashing, or be presented with error messages instead of a copy.

As when used on CDs, this passive approach will only work against some ripping programs, and in any case will become useless as the bugs in ripping programs are fixed. If the goal is to keep protected DVD content off the P2P nets, then this product will fail.

The article argues that RipGuard can be updated over time, which is true, but not very helpful for copyright owners, for two reasons. First, there is a limited supply of disc-reading bugs in ripping programs, and each version of RipGuard will cause some of them to be fixed, making it harder to find bugs to exploit in the next RipGuard version. Second, although users can update their ripping software, there is no way to update RipGuard on DVDs that have already been sold. Once a version of RipGuard becomes useless, all of the discs produced with that version will be copyable forever after.

This is yet another anti-copying technology that will have no effect on P2P availability of content. It will make ripping somewhat more difficult for people who don't use P2P; but how does that help the studios?

This semester, I'm teaching "Information Technology and the Law". We're reading a series of articles and court decisions on important techno-legal issues.

I've created a student writing blog, on which students will post weekly essays on topics related to the course. Essays are 400-500 words in length, with due dates staggered through the week so that we get some new essays every day. (Some students writing under pseudonyms for privacy.)

The site is open to the public, for reading and comment. Please do drop in and join us.

We're watching this week's episode of West Wing. On the TV screen, Professor Lawrence Lessig starts talking. "I know that voice," exclaims my wife. "It's The Hacker!"

On West Wing, Lessig was played not by Himself but by the actor Christopher Lloyd. One of Lloyd's other roles is on Cyberchase, an animated PBS Kids show, as the voice of an arch-villain known only as The Hacker. Here's a picture and description of The Hacker, from the Cyberchase website:

The cosmology of Cyberchase cries out for cultural analysis. The Hacker is locked in an endless struggle for supremacy against Motherboard, the benign Mother-Goddess of cyberspace, who appears to ordinary humans only by teleconference. In each episode, The Hacker, with help from his henchrobots, unleashes a dastardly plot (e.g., releasing a virus, letting bugs invade the database library, or draining Motherboard's life-giving liquid coolant) to overthrow Motherboard and unleash chaos on all of cyberspace. A group of multicultural kids must solve some kind of mathematical puzzle to foil the Hacker's otherwise-foolproof plan.

Come to think of it, there are those who see Lessig in much the same way, as the evil genius who will destroy cyberspace with his Free Culture plot, replacing the benign content-rich cyberworld of Mother MPAA with a content-free dystopia of uncontrolled filesharing. It's up to those feisty kids at the DRM companies to figure out some fancy cryptographic math that will foil his evil plan.

Look carefully at the picture above – the Hacker appears to be wearing Lessig's trademark black jeans. Coincidence? I think not.

I guess that makes most of us henchrobots.

Bruce Schneier points to a new product Smart Water. Each bottle has its own unique tag, and the water in it contains tagging elements (e.g., microdots), that will stick to an object if you spray the Smart Water on it. Then, if the item is stolen, the company says that the police can use the tags to identify the real owner.

Bruce, being a smart security analyst, immediately sees attacks on the system:

The idea is for me to paint this stuff on my valuables as proof of ownership. I think a better idea would be for me to paint it on your valuables, and then call the police.

He has a point, but this doesn't mean that Smart Water is useless. As often happens with security products, one has to think carefully about what can be deduced from a particular fact. The fact that an item has Bruce's tag on it doesn't prove that the item belongs to Bruce, but it does prove that Smart Water from Bruce's bottle has been near the object. (Actually, it doesn't even prove that, unless the tags have certain anti-forgery properties. What exactly these properties are, and how to achieve them, is left as an exercise for the reader.)

If Bruce is your neighbor, and he has been in your house recently, then the presence of his tags on your valuables means little. On the other hand, if there is no apparent connection between you and Bruce, and an item locked in the safe in your house has his tags on it, and he was known to own an item like that which he has reported stolen, then you have some explaining to do.

This seems like a technology that will have unforeseen uses, some of which are sure to be annoying. I could put my tags on the shirt I give you for Christmas, and then check to see whether that same shirt shows up back in the store later. I could spray my tags onto my back porch, and then see whether they turn up on my neighbor's cat. These are mildly annoying, but given enough people with enough annoying goals, I'm sure some interesting ideas will turn up.

Just wait until tags like these are RFID-enabled. Then the fun will really start.

This afternoon I'm going to lead a discussion among twenty-five bright Princeton students, about the basics of copyright. Why do we have copyright? Why does it cover expression and not ideas? Why fair use? The answers are subtle, but I hope to guide the discussion toward finding them.

I can say for sure that a flat "downloading = shoplifting" argument would be torn to shreds in minutes. This equation seems wrong to most people, and it is wrong. Copyrights differ from traditional property in important ways. That doesn't mean that copyright isn't justified, but it does mean that the justification for copyright doesn't follow from the justification for ordinary property. It will take a room full of college students a while to sort through all of this.

Let's face it, this is challenging material, even for smart, motivated twenty-year-olds.

Meanwhile, JD Lasica notes that in fourth-grade classrooms, the BSA's anticopying ferret (who seems, amusingly, to have been copied himself) will try to explain the same concepts to nine-year-olds. Cory Doctorow observes that this is crazy. Telling nine-year-olds that they have to understand copyright before they can use the Internet is like telling them that they have to understand employment taxes before they can run a lemonade stand.

I pity the fourth-grade teacher who, having read the BSA's Teacher's Guide, has to explain exactly what it is that is being stolen when a kid copies an image from the Barbie website to use as a placemat at dinner. If I were that teacher, I would prefer simpler questions like "Why are people mean to each other?" and "How did the universe start?"

David Post at the Volokh Conspiracy predicts, astutely, the outcome of the Grokster case. He predicts that the Supreme Court will try to split the baby by overturning the lower court decision (which Hollywood is asking for) while upholding the Sony Betamax doctrine immunizing designers of dual-use technologies from secondary liability (which technologists are asking for). How will the Court do this? Here's Post:

The Court has an easy "out" here, and my experience has been that when they're presented with an easy out they usually grab it. The Ninth Circuit in this case affirmed the grant of summary judgment to Grokster, holding that on any reasonable version of the facts, Grokster could not be held liable for "contributory copyright infringement" because the software involved is "capable of substantial non-infringing uses" under the Sony v. [Universal] case. The record company plaintiffs want the Court to "tighten up" the Sony standard, and to say, in effect, that the non-infringing uses that these P2P networks have are not "substantial" enough under Sony.

That would be a disaster for technology providers — but I don't think that's what the Court will say. Instead, I think the Court will send the case back to the Ninth Circuit and say: you were right that, under Sony, the non-infringing uses here are substantial enough so that, standing alone, providers of these p2p technologies can't be held liable for the copyright infringements of network users. But — and here's the critical part — on these facts, it doesn't stand alone; there's evidence in this record that Grokster and the other defendants actively encouraged and induced its customers to infringe copyrights, and that inducement of this kind is not protected by the Sony safe harbor. The Court will then instruct the Ninth Circuit to re-open the case and evaluate whether or not this evidence is enough to hold the defendants liable on an inducement, or "aiding and abetting," theory of liability.

In doing this, the Court would be drawing a line between acts of technology design, which would not trigger secondary liability, as long as the technology is capable of substantial noninfringing use, and other acts, which could trigger secondary liability. If the Court isn't careful to draw this line carefully, we could be left with a terrible muddle.

Consider, for instance, a vendor's decision not to try to incorporate filtering technologies into its product. This is a decision about the design of the product, but the Hollywood briefs argue that it is also (or instead) a decision about which market to enter, i.e. a non-design decision. Ideally, the Court would make clear that this is a design decision and therefore protected under Sony. But if the Court leaves this issue unaddressed or, worse yet, simply hints at moral disapproval of Grokster's lack of filtering, technologists may be left in the dark as to which kinds of design decisions are really covered by Sony.

In my predictions for 2005, I predicted that the Court's ruling would not provide clarity for future technologists. A vague split-the-baby decision is one way that could happen.

[To be safe, I'll follow Post and belabor the obvious: a prediction is an assertion that something will happen; it doesn't imply that the predicted event is or isn't desirable.

I'm being a bit cagey about my own views here, partly because I'm going to be leading class discussions about Grokster soon, and some of my students are probably reading this. Sometimes students take positions that they think will please the professor, on the expectation that they'll get higher grades just because they agree with the professor. I do my best to reward students for making creative and well-reasoned arguments, regardless of whether I agree with them. If anything, I try to lean the other way, and reward students for disagreeing with me, if they do it well.]