Stefan Bechtold

The Present and Future of Digital Rights Management - Musings on Emerging Legal Problems

This article presents a roadmap of emerging legal problems in the area of Digital Rights Management (DRM). It argues against adopting fundamentalist viewpoints in the DRM policy debate. In particular, DRM technology is much more flexible than many DRM critics acknowledge. The article covers various problems that are less frequently discussed in legal and policy circles. It analyzes the relationship between DRM, fair use, and innovation, using rights locker architectures, dynamic DRM systems, the Creative Commons project, DRM technology license agreements, and security research as examples. It addresses the alleged dichotomy between DRM and copyright levy systems as well as the implications of DRM for privacy protection. By analyzing various technology platforms, it describes the implications DRM has for competition in platform markets as well as in complementary aftermarkets. Finally, the article assesses recent efforts to standardize DRM technology, both by the private sector (in particular TCPA and Palladium), and by the legislature.

Google AdWords and European trademark law

Is Google violating trademark law by operating its AdWords system?

Accountability in future internet architectures

Can technical and legal aspects be happily intertwined?

Disentangling Psychological Sources of Overpricing in Anticommons Dilemmas: Strategic Incentives, Endowment Effects, and Interdependence of Outcomes

The realization of market transactions often depends on decisions in groups in which members are anonymous and cannot communicate, but have interrelated outcomes. In a comprehensive study, we investigated the interaction of group effects, strategic effects and endowment effects in different group situations. We show that groups display an endowment effects for uncertain goods which is reduced by about 50% compared to the endowment effect in individuals in corresponding situations. In group situations with additional strategic incentives to overprice the endowment effect completely diminished. The strategic effects and group effects on pricing in group situations cannot be found for participants’ personal valuations of the good, whereas the endowment effect for personal valuations prevailed in both group conditions. This indicates that the endowment effect might be more fundamental than group effects and strategic effects. A paramorphic model for pricing in strategic group situations is suggested and practical implications are discussed.

Transparency Instead of Neutrality

The technical community has so far defined network neutrality in terms of specific mechanisms, e.g., policing or shaping. We argue that these definitions are problematic: according to them, a non-neutral network may be preferable (for all users) to a neutral one; moreover, these mechanisms can have the same effect on the target traffic as legitimate ISP practices like traffic engineering or peering agreements. We argue that we should not try to define or enforce network neutrality through technical means at all. Instead, the network layer should provide transparency, i.e., low-level loss and delay information that is admissible in court and can be used as a building block by regulators to reason about ISP neutrality at a higher level. We close by outlining challenges and possible solutions.

Trademarks, Triggers, and Online Search

Internet search engines display advertisements along with search results, providing them with a major source of revenue. The display of ads is triggered by the use of keywords, which are found in the searches performed by search engine users. The fact that advertisers can buy a keyword that contains a trademark they do not own has caused controversy worldwide. To explore the actual effects of trademark and keyword advertising policies, we exploit a natural experiment in Europe. Following a decision by the Court of Justice of the European Union, Google relaxed its AdWords policy in continental Europe in September 2010. After the policy change, Google allowed advertisers to select a third party’s trademark as a keyword to trigger the display of ads, with only a limited complaint procedure for trademark owners. We use click-stream data from European Internet users to explore the effect this policy change had on browsing behavior. Based on a dataset of 5.38 million website visits before and after the policy change, we find little average change. However, we present evidence that this lack of average effect stems from an aggregation of two opposing effects. While navigational searches are less likely to lead to the trademark owner’s website, non-navigational searches are more likely to lead to the trademark owner’s website after the policy change. The effect of changing keyword advertising policies varies with the purpose of the consumers using the trademark, and it is more pronounced for lesser-known trademarks. The article points to tradeoffs trademark policy is facing beyond consumer confusion. More generally, the article proposes a novel way how to analyze the effect of different allocations of property rights in intellectual property law.

Trademarks, Triggers, and Online Search: Trademarks, Triggers, and Online Search

Internet search engines display advertisements along with search results, providing them with a major source of revenue. The display of ads is triggered by the use of keywords, which are found in the searches performed by search engine users. The fact that advertisers can buy a keyword that contains a trademark they do not own has caused controversy worldwide. To explore the actual effects of trademark and keyword advertising policies, we exploit a natural experiment in Europe. Following a decision by the Court of Justice of the European Union, Google relaxed its AdWords policy in continental Europe in September 2010. After the policy change, Google allowed advertisers to select a third party’s trademark as a keyword to trigger the display of ads, with only a limited complaint procedure for trademark owners. We use click-stream data from European Internet users to explore the effect this policy change had on browsing behavior. Based on a dataset of 5.38 million website visits before and after the policy change, we find little average change. However, we present evidence that this lack of average effect stems from an aggregation of two opposing effects. While navigational searches are less likely to lead to the trademark owner’s website, non-navigational searches are more likely to lead to the trademark owner’s website after the policy change. The effect of changing keyword advertising policies varies with the purpose of the consumers using the trademark, and it is more pronounced for lesser-known trademarks. The article points to tradeoffs trademark policy is facing beyond consumer confusion. More generally, the article proposes a novel way how to analyze the effect of different allocations of property rights in intellectual property law.

Digital Rights Management zwischen Urheber-und Innovationsschutz

Napster, Gnutella, KaZaA, Morpheus, Grokster, Freenet, Madster, eDonkey, Overnet — die Liste der Peer-to-Peer-Systeme, die von der Tontragerund Filmindustrie fur grose Umsatzeinbusen verantwortlich gemacht werden, ist endlos. Wahrend im Internet die Gefahr von Urheberrechts Verletzungen rasant ansteigt, sind die Reaktionsmoglichkeiten des Urheberrechts ernuchternd. Die Medienindustrie setzt zunehmend auf Schutzmoglichkeiten auserhalb des herkommlichen Urheberrechts. “Digital Rights Management”-Systeme — kurz: DRM-Systeme — versprechen neuartige und umfassende Schutzmoglichkeiten.

The Nature of Sequential Innovation

When creators and innovators take up a new task, they face a world of existing creative works, inventions, and ideas, some of which are governed by intellectual property rights. This presents a choice: Should the creator pay to license those rights? Or, alternatively, should the creator undertake to innovate around them? Our Article formulates this “innovate/borrow decision” as the fundamental feature of sequential creativity, and it maps a number of factors — some legal, some contextual — that affect how creators are likely to decide between borrowing from existing IP or innovating around it. Importantly, creators are influenced by more than just formal IP rights. We identify three other sets of factors — Technological & Artistic, Market, and Behavioral — that can also affect the path of sequential innovation by encouraging either borrowing or innovating. Our focus on creators’ innovate/borrow decisions offers a richer, but more complex, account of the nature of sequential innovation and, in so doing, yields insights into its efficient legal regulation.

The Valuation of Moral Rights: A Field Experiment

U.S. intellectual property law is firmly rooted in utilitarian principles. Copyright law is viewed as a means to give proper monetary incentives to authors for their creative effort. Many European copyright systems pursue additional goals: Authors have the right to be named as author, to control alterations and to retract their work in case their artistic beliefs have changed. Protecting these “moral rights” might be justified by the preferences of typical authors. We present the first field experiment on moral rights revealing the true valuation of these rights by over 200 authors from 24 countries. A majority of authors are not willing to trade moral rights in the first place. They demand substantial prices in case they decide to trade. The differences between authors from the U.S. and Europe are small. These results call into question whether moral rights protection should differ across the Atlantic and whether a purely profit-based theory of copyright law is sufficient to capture the complex relationship between human behavior and creativity.