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Report: Feds Should Stay Out of DRM Issues

The solution to digital piracy is new business models, not legal action and regulatory mandates, a new report by the Committee for Economic Development (CED) concludes.

The prestigious organization of business leaders and university presidents said "hastily enacted" laws and regulations could have unintended consequences and slow the pace of innovation and economic growth.

Congress is currently monitoring industry efforts to curb online copyright infringement, particularly over peer-to-peer networks. Lawmakers prefer private sector solutions to federal mandates for protecting digital intellectual property, tracking its usage and collecting payments and fees.

But a frustrated Congress hasn't seen much progress and bills have been introduced ranging from banning P2P software to allowing electronic interdiction for copyright owners. The music industry has primarily focused on filing lawsuits against the P2P networks and the individual users of the software.

"There can be no question that prosecuting those who break the law is both valid and important, but many anti-piracy proposals go much further that," the CED report states. "Many of the proposals would require consumers to add hardware or software to their computing devices that would add to cost and reduce interoperability regardless of the machine's use."

The CED report, Digital Economy: Promoting Competition, Innovation and Opportunity, recommends experimentation with digital rights management (DRM) systems while refraining from government mandates to include specific technologies.

"Logical and fair solutions to the intellectual property rights challenges presented by the digital world are needed to ensure that this issue does not severely hamper economic growth," CED President Charles Kolb said in a statement.

The CED, a Washington nonprofit, notes previous technological breakthroughs also caused consternation and upheaval between producers of content, distributors of that content and the content users.

"Introduction of the phonograph, radio, television and videocassettes recorders all led to fundamental changes in content markets," the report says.

In each transition, the report states, copyright law maintained "its basic bargain: Society should provide incentives to creators and prevent wholesale appropriation of their work, while at the same time ensuring both that subsequent creators can build upon a creator's work and that the public as a whole can have access to the creation."

Without that structure, the CED says "under-protection of works may inhibit initial creation, while over-protection may inhibit follow-on innovation by the millions who come after the initial creator."

The CED recommends dedicating the next two years to building consensus about the appropriate role in the digital age for traditional "legal safety valves" to balance the exclusive rights of creators with users' rights.

"We recognize the need for digital rights management systems that will allow creators to be rewarded for their efforts," the report states.

The CED adds, however, it is skeptical of government-mandated copy protection technologies.

"DRM systems provide a useful 'speed bump' for consumers by inhibiting unauthorized uses of materials," the report says. "Consumers should play a substantial role in evaluating and approving mandated technological protection systems."