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Not all hackers are disaffected adolescents writing malicious software viruses in their bedrooms. Instead, many collect paychecks from large corporations. But companies prefer to use a different term for what these employees do: They don’t hack, they “reverse engineer,” or break apart competitors’ products to learn their secrets. Companies try to prevent this. Apple Computer, Inc.’s popular iPod portable music player only plays music from its computer jukebox program. The company also uses a proprietary system to copy-protect the songs it sells in the iTunes Music Store — which play only on iPods. But in July, RealNetworks, Inc., shook the industry when it announced that it had found a way for music files from Rhapsody, its online music service, to play on the iPod. Apple, which did not respond to calls asking for comment, said in a press release that it was “stunned” and “investigating the implications of [Real's] actions under the DMCA [Digital Millennium Copyright Act] and other laws.” Real, which also declined to comment, said in a press release that it created software “in a well-established tradition of fully legal, independently developed paths to achieve compatibility.” Real also said “the DMCA … explicitly allows the creation of interoperable software.” Could Apple block Real’s apparent reverse engineering by doing some reverse engineering of its own? Apple, in its statement, said only that it might alter its software for the iPod so that songs downloaded from Rhapsody won’t be playable on its device. Intrigued by the issues raised in the dispute, and about what constitutes “fair use” when companies reverse engineer products, Corporate Counsel staff reporter Eriq Gardner talked to Bruce Lehman, chairman of the Washington, D.C.�based International Intellectual Property Institute (IIPI), a nonprofit group that advocates forceful IP protection for copyright and patent holders. Lehman is often described as the “father of the digital copyright.” As assistant secretary of the U.S. Department of Commerce and commissioner of the Patent and Trademark Office from 1992 to 1998, Lehman helped author the DMCA, a piece of legislation that drew fierce criticism from digital rights activists. In an interview at the Washington, D.C., office of Akin Gump Hauer & Feld, where he is senior counsel, Lehman spoke about the Apple-Real controversy and when the DMCA permits reverse engineering. Corporate Counsel: Apple says that “Real Networks has adopted the tactics and ethics of a hacker.” What’s the difference between software reverse engineering and hacking? Bruce Lehman: I can’t see how what Real Networks has done is hacking at all. I think that hacking is when you have unauthorized access [to software code or computer networks]. I think there’s a huge difference [between hacking and reverse engineering]. Hackers are the people that put viruses and worms [in software]. CC: It also seems that Apple believes that Real disabled some features of its copy-protecting software. Doesn’t the DMCA say that circumventing these controls is a violation? BL: That’s correct. Apple has raised the possibility of some kind of DMCA claim against Real Networks. And my assumption is that if Apple has such a claim against RealNetworks, it will sue [it] under the anticircumvention provisions of the DMCA. CC: The DMCA contains exceptions for reverse engineering, for instance when a company is trying to develop a compatible product. How do lawyers know where compatibility ends and where circumvention starts? BL: We’ve had an example of this issue in the [2003] Lexmark case. A company [Static Control Components, Inc.] took Lexmark printer toner cartridges, refurbished them, and then resold them. In order to try to stop that, Lexmark put a microchip into its product [so the refurbished cartridges would not work the second time they were used]. Static Control went to the copyright office. (We have a provision in the DMCA where someone can go to the copyright office and ask for an opinion.) The copyright office actually held that this was a case of reverse engineering that was permitted under the DMCA. Separately, Lexmark took the case to court, where it’s on appeal at the Sixth Circuit. CC: Why does Lexmark think Static Control’s actions violate the DMCA? BL: Lexmark thinks they’re a DMCA violation because the purpose of the Lexmark microchip was to prevent someone from reusing the cartridges. The DMCA anticircumvention provisions were intended to be used by copyright owners to protect their copyrighted works. But [Lexmark] is not preventing access to a copyrighted work, it’s preventing the use of a machine [a toner cartridge]. That doesn’t really have anything to do with the DMCA and the anticircumvention provisions of the DMCA. Certainly, courts can always stretch things and make new interpretations. But since I was involved in the creation and evolution of the DMCA, I can say flatly there was no intention to cover that kind of a situation. The DMCA was crafted to protect copyright owners’ rights, not people that make machines or � unless the machine has significant copyrighted elements � the machine itself. I don’t believe that was the case here. CC: So, like Lexmark, Apple shouldn’t be able to claim that the iPod’s software copyright has been violated under the DMCA? BL: The iPod itself has built into it digital rights management (DRM) technology that prevents certain kinds of unauthorized copying — file sharing — of the copyrighted music. But the iPod itself is not a copyrighted work and, in that sense, it’s just like the toner cartridge. Real Networks is creating compatible software that enables people who make other [non-Apple software] to interface with the iPod. And that is exactly what the reverse engineering provisions of the DMCA were intended to permit. But there are all these things we don’t know about the facts of this case. CC: It sounds to me that you think reverse engineering is a fair use, or should be a fair use, right? BL: Yes, absolutely. CC: Do you think that some of your critics would be surprised at the fact that you’re now arguing that the DMCA has its limits when it comes to copyright protection? BL: Well, they might be surprised, but I think those are the very critics who never understood my position from the beginning. The DMCA is at its heart an extremely simple statute and a simple concept. It really doesn’t give new rights to copyright owners much at all. What it simply does is reestablish traditional copyright protection — adapted this time for creators of digital content. Copyright holders have had this protection for two centuries. Now there are a huge amount of Chicken Littles [saying] the sky is falling — people thinking up all these hypothetical situations in which somehow or other, some fair use right that we might have will somehow be restricted by the DMCA. But the sky has not even remotely fallen at all. CC: Let’s talk about other arguments Apple could use. When you buy an iPod, you get one of those shrink-wrap licenses where you agree not to reverse engineer the product. Can Apple sue Real on the basis that Real violated its contractual obligations? BL: It’s an ambiguous issue. And that is because software companies haven’t wanted to take the risk of testing [the licenses]. So they kind of leave it out there. The problem with shrink-wrap licenses is that as long as [the licensee] does not copy the work, there is no right [by the licensor] to control its use. In other words, if you have a patent on an invention, you have the right to exclude others from using the work. Not with copyright. You have the right to prevent unauthorized reproduction, public performances, or display — but if I buy an authorized copy, I can resell it, give it away, or give it to a library, and there’s nothing that can be done about it. CC: What do you predict Apple is going to do now? BL: If it goes to court and loses, Apple establishes a precedent. That seems to me legally risky. More likely, Apple will modify its product so that if you go out and try to use something that Real Networks or somebody like that sells [such as a song downloaded from a rival service like Real's], it won’t work anymore with that [Apple] product. Apple has publicly stated that it intends to do that. CC: What do you think is really going on here? BL: Apple doesn’t make any money from selling the tunes [on its online digital music service, the iTunes Store; each song sells for 99 cents]. The record companies make money. Apple makes money from selling the iPod and, obviously, that’s why they’re in this. And Apple is making a lot of money, and so the strategy seems to be designed to keep that goose laying golden eggs. CC: Some observers say the future of technological innovation could be imperiled by the proposed Induce Act (currently in committee). This bill would make it a crime to aid or induce copyright violations. Do you agree with this criticism? BL: I know the Induce Act is very controversial. I personally am rather sympathetic to what it is trying to do. The notion that the makers of the digital file-sharing software Kazaa and Morpheus [Sharman Networks Inc., and Streamcast Networks, Inc.] are out there selling file-sharing products or promoting file-sharing products because they think people are going to be using them only for sharing stuff [legally, such as data files] is absolutely ridiculous. Overwhelmingly, these products are being used to permit unauthorized copying of copyrighted works [such as music] without the permission of the copyright owner. I think Kazaa and Morpheus are built on an infringement problem, and that just troubles me that, somehow or other, the courts haven’t been able to recognize that and develop an appropriate response, and that’s why you see the Induce Act. CC: Is it really possible to end file sharing by new laws and seemingly endless litigation? BL: I don’t think we’re seeing endless litigation. And I would like to think that eventually the courts will resolve the problem by interpreting existing law in the way that it upholds the copyright owner’s rights. CC: Someone said recently that the IP system is not designed for these new technologies. Do we have to patent a new system or can we reverse engineer our current IP system to fix the problems? BL: Well, I think what we’ve been talking about is reverse engineering. Because of the bad decisions in copyright cases, [courts] have made it necessary to kick the issue back to Congress, and what do we end up with? We ended up with a section 111 of the Copyright Act [which defines circumvention and fair use]. Unlike patents, the courts never seem to want to go the extra mile on copyright. CC: It seems like you desperately want courts to go your way, but they’re not playing the game. BL: I don’t say, “Rule my way.” [But] I guess I wouldn’t have had much of a career had it not been for all these things.

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