Introduction
DRM-patents play a role in standards setting and interoperability and by this means are closely linked to consumer experiences. That's one reason why we think patents should be dealt with in the INDICARE Monitor. The second reason is that patents are kind of hinge connectors aimed to balance private interests and public benefits and therefore the question if DRM-patents stimulate innovation is a citizens' (and public policy) concern, interesting for INDICARE too. Thirdly, there is a lot of activity to be observed in the field of DRM-patents showing that the respective industries are forming up – think of the litigation InterTrust vs Microsoft way back in 2003 (settled in 2004; cf. Microsoft 2004), or the concerns of the European Commission in 2004 that Microsoft might achieve a dominant position in the DRM technology market as a shareholder of ContentGuard (cf. Beals 2004; Gray 2005). More recently attention has shifted to the marketing of patents, e.g. MPEG LA announcing a portfolio license agreement for essential patents relevant to OMA DRM 1.0 to be ready in March (cf. the interview with MPEG LA, Horn 2005), and Macrovision recently announced a patent pool for CD copy protection (cf. Rosenblatt 2005a).

Background
Patents are about industrial property rights and refer to inventions which "use principles of nature and technology for new devices or processes that are novel, useful, and nonobvious" (Marlin-Bennett 2004, p. 34). The social bargain underlying the patent system is to grant a monopoly to exploit an invention for a limited period of time (often 20 years) in exchange for the disclosure of the secrets of an invention, i.e. to make them patent. On the one hand the inventor can exploit the invention by selling products or by getting royalties from licensees – the money may be invested in new inventions. On the other hand competitors have access to the essential know-how and can go on – based on public knowledge – inventing and innovating and come up with solutions which are significantly better (or solutions which circumvent existing claims). Following the underlying societal calculus of patents, innovativeness should increase in this way. While there is no doubt about the good intentions at the outset when the patent system came into being, its costs and benefits, and its ambiguous effects on competition and innovation have been debated almost as long (see on the economics of patents the worthwhile primer by Lévêque and Ménière 2004). From a social point of view the following groups are often regarded as disadvantaged by the patent system: SMEs (lack of know-how and resources), third world countries ("digital divide"), indigenous communities (appropriation of their knowledge), and the open source movement (which follows a different approach to innovation).

Apparently patents become ever more important in "knowledge economies" and the importance of an adequate and efficient IPR regime is therefore evident. The evaluation of present trends, however, is highly controversial. Currently a trend can be observed to extend the scope of what's patentable and to introduce new categories of inventions, e.g. "natural compounds", "genetic sequences", "medical treatment techniques" (cf. Wikipedia 2005a with further links). Of course patents on computer programs and business methods have to be mentioned here too. Literature about the usefulness of patents in dynamic industries like computers and software, and about the role of open source software is abundant. Many have also observed a trend that companies use patents for strategic purposes e.g. to block competitors, to strengthen reputation, to increase their bargaining power (cross-licensing), and to give incentives to their researchers (cf. e.g. Blind et al. 2003). This has led to an increase in the number of patents without a parallel increase of R&D outcomes.

The strategic use of patents however is not new: patents are often written in a form that the decisive information is not easy to grasp. The problem to figure out what a patent really means might also be due to old terminology, as Stefan Bechtold mentioned at the 3rd DRM conference in Berlin with respect to DRM relevant patents, which were written in the 1990s. Patents may also play a strategic role in the standardization process when e.g. companies pushing a standard hide the fact that they hold patents relevant for the implementation of the standard – a kind of "submarine patents", so to speak (cf. Wikipedia 2005b; see also Berlecon Research 2005, p.11). Another strategy is to grant licenses for free until a critical mass of deployment and implementation has been reached. Developers of software who are against software patents may decide to make their invention public to prevent others from applying for a patent. In this respect a handbook on IP in the Internet even recommends making the invention public on a website outside your home country in a foreign language which only few people in G8 countries will understand (cf. Bittner 2003, p. 689).

DRM patents
While the debate about patents in general and software patents in particular has led to a record number of papers of all kinds, DRM patents are seldom addressed. You can easily find articles about DRM standards (for instance in the INDICARE Monitor). Some of them even touch upon DRM patents (e.g. Bill Rosenblatt 2005b). One of the few dedicated papers on DRM patents I know stems from INDICARE partner Berlecon (Berlecon Research 2005). As you can see from the title – DRM, DRM Patents and Mobile DRM – it pays special attention to developments in the mobile field. Reading the paper it becomes evident that this topic has not popped up incidentally but due to the transition to rich content in the mobile segment and consequently an increased demand for "multi-device and multi-channel capability" (p. 13) of DRM-systems.

The paper explains well the relationship between interoperability, standards and DRM patents including the intricate question what patents mean for "open standards". The authors can also show with respect to mobile DRM (especially OMA 1.0 and OMA 2.0), which players in the mobile content value chain need to know about patents. They hold that the patent situation for mobile DRM still lacks transparency, because not all essential patents are known and can not yet be licensed via patent license administrations (cf. p. 15). This situation however is about to change due to the efforts of patent license administrators like MPEG LA (see also the interview with Larry Horn in this issue). However, efficient administration of patents is not the only effort where industry co-operation is required to foster the use of DRM systems. Issues of trust and confidence are at least as important. The CMLA (Content Management License Administrator) is an industry initiative aiming exactly to ensure interoperability of DRM implementations at the level of trust and confidence (cf. p. 14). CMLA has been set up by Intel, mmO2, Nokia, Matsushita, RealNetworks, Samsung and Warner Bros. Studios.

Open questions
While the above might be taken as a teaser for an interesting paper, I would like to add some questions – some of them already mentioned in the paper – which in my opinion deserve further analysis and should be taken up in future articles for the INDICARE Monitor. There are three major questions with further questions attendant.

(1) What is a "DRM patent"? In fact this question contains two separate questions one about scope and the other about claims: A) what spectrum of patents is relevant when designing, building and implementing DRM systems? B) what are – in terms of content and ideas – the relevant inventions or claims in the field?

The Berlecon "Whitepaper" tells us that rights expression languages (RELs) "are not the only standardized components of DRM" (p. 6), adding that also a "standardized trust model" addressing encryption, security, authentication etc. is required. In other words, there will be relevant patents related to rights expression languages and others related to trust and security. Are the latter "DRM patents"? The same question, adapted to a precise DRM standardisation effort, namely MPEG-21, is: How many and which patents are involved considering the MPEG REL and how many are involved when it comes to the IPMP (intellectual property management and protection) part of this standardisation effort? Of course the question is not about quantity, but about relevance of patents for DRM systems builders.

(2) How is the development of DRM patents influenced by the regulation of software patents? Many of the relevant DRM patents are probably US software patents. What are the likely effects on DRM-based markets if regulation in the US and the EU – software implementations as patentable or not – differ? Berlecon states that "(n)o matter how the current debate and legislative initiatives turns out, the patents that have been granted so far will have to be taken into account" (p. 9). This suggests thinking that there might be lots of patents granted e.g. by the European Patent Office dealing with DRM relevant software implementations although this matter is not legally regulated. Be that as it may, it should not prevent us from asking if the current situation implies significant market disadvantages for the EU, and what implications a different regulation of software would have in the future. In this context it would also be interesting to know if "DRM patents" include also business method patents. Is something like "superdistribution" patentable?

(3) How to best understand the strategic behaviour of industry players in the field of DRM patents? Everything from proprietary solutions to official standards and "open standards" involves intellectual property and often patents, and by nature they become assets in strategy games. The difficult thing to find out is the underlying logic – just to put forward two particular observations: No doubt the OMA consortium relies on ODRL (Open Digital Rights Language) – and not on XrML or MPEG REL. Nevertheless MPEG LA – offering a portfolio license for essential patents for OMA 1.0 – has included in this portfolio patents of ContentGuard (the licensor of XrML). The likely reason is, as the Berlecon paper already points out, a general claim of ContentGuard "that its portfolio of patents is not restricted to XrML but covers any rights expression language" (p.7; emphasis KB). This might be considered a delicate claim, because it suggests that the implementation of XML constructs like XrML can be patented, and any developer of a REL might be obliged to pay licenses to ContentGuard. Can this really be the case? Another interesting question is about the intricate relationship between MPEG REL and XrML. MPEG REL has been developed on the basis of XrML – no doubt. But what are the strategic reasons why Microsoft, shareholder of ContentGuard, still uses XrML in its DRM systems instead of shifting to MPEG REL developed by ISO within MPEG-21?

About this issue
For the first time we pick up the "DRM patents" topic and hope to shed some light on this matter in coming issues too. Apart form the editorial we offer an interview with Larry Horn, Vice President, Licensing and Business Development of MPEG LA, LLC. His answers to the questions of Thorsten Wichmann (Berlecon) bring the role and position of MPEG LA to the fore. Next Rik Lambers (associate INDICARE member) fervently argues against the implementation of the "broadcast flag" in the US. The broadcast flag seeks to prevent the unauthorized distribution of digital over-the-air television content via p2p-networks. For European readers the question is, of course, if Europe will adopt a broadcast flag regime too or what alternative solutions respectively may protect the legitimate rights of broadcasters and content industry in the EU region?

Natali Helberger (IViR) has encountered a new commandment "Thou shalt not mislead thy customer!" She starts from legal reasons confirmed by a court decisions in France. The measures against "misleading" consumers are labelling and transparency. However, as we learn these measures are tricky, and may even turn against the consumer. The consumer perspective is also paramount in the interview which Nicole Dufft (Berlecon) conducted with Patrick von Braunmühl, Federation of German Consumer Organisations (vzbv). The interview neatly shows where consumer organisations are not satisfied with current legislation demanding that copyright exemptions have to become consumer rights. Péter Benjamin Tóth (ARTISJUS) sees a need for a comprehensive re-thinking of "DRM" .The focus of his article is on the potential of DRM systems – which he understands as a technology monopoly – to override statutory exceptions and to be misused when it comes to legally non-copyrighted content, non-protected works, and non-protected uses. By the way, Tóth has also contributed an interesting comment to an earlier INDICARE article which deals with a related subject – the first one including nice pictures (see the comment to http://www.indicare.org/tiki-read_article.php?articleId=48 and find out)!

Carsten Orwat (ITAS) reports on the 3rd DRM Conference, Berlin, 13th and 14th January 2005 addressing consumer concerns, economic aspects of DRM and alternative compensation schemes. Finally we have included again a comment on INDICARE's first State of the Art report. Chris Barlas (Rightscom) argues that INDICARE has not got the work of MPEG-21 right. Critique is a necessary part of an Informed Dialogue, and definitely helps us to improve.

INDICARE News
The present issue of the INDICARE Monitor is the last one of Volume 1. Volume 2 starts in March in parallel with the start of the second year for the INDICARE project. As there were some ambiguities with respect to the monthly publication of INDICARE we have adjusted our terminology and procedures for Volume 2. On the last Friday of each month INDICARE publishes its monthly online-journal: the INDICARE Monitor. This publication contains reviewed articles which have been pre-published continuously on the INDICARE website during the month, and adds an editorial. The INDICARE Monitor is made available online in html and pdf-format and collected in the INDICARE Monitor Archive.

You can use the RSS-feed to get articles as soon as they are posted, and you can subscribe to the INDICARE Monitor, and receive an e-mail notification containing the contents page (title, author, abstract, and URLs) and a link to the pdf-version (this service replaces the bi-weekly INDICARE newsletter).

Sources

About the author: Knud Böhle is researcher at the Institute for Technology Assessment and Systems Analysis (ITAS) at Research Centre Karlsruhe since 1986. Between October 2000 and April 2002 he was visiting scientist at the European Commission's Joint Research Centre in Seville (IPTS). He is specialised in Technology Assessment and Foresight of ICT and has led various projects. Currently he is the editor of the INDICARE Monitor. Contact: + 49 7247 822989, knud.boehle@itas.fzk.de

Status: first posted 28.02.2005; licensed under Creative Commons
URL: http://www.indicare.org/tiki-read_article.php?articleId=82