Did the Fifth Circuit just make breaking DRM legal? Not quite.

By Nilay Patel

posted July 26th 2010 2:11PM

The world of digital copyright law is a busy place this morning -- not only did the Library of Congress hand down new exemptions to the DMCA that allow smartphones to be jailbroken and short portions of movies to be ripped, but a new decision out of the Fifth Circuit has caused some major waves because it seems to say breaking DRM is legal. Except, well, maybe not.

Here's the deal: an uninterruptible power supply company called MGE sued GE in 2004 for using hacked-up copies of its software to maintain its clients' power systems -- the software was only supposed to work when a hardware dongle is plugged into the system, but GE engineers were using cracked software. After a lengthy trial, the jury awarded MGE $4.6m in damages for copyright infringement, misappropriation of trade secrets, and -- you guessed it -- violating the DMCA by circumventing the protection on the software. On appeal, the Fifth Circuit -- which was reviewing this kind of DMCA claim for the first time -- noted that MGE's hardware dongle only protected access to the software, not copying it, and that the DMCA is only effective when the protections in place guard something more than simple access. Here's the money quote from the decision:

Merely bypassing a technological protection that restricts a user from viewing or using a work is insufficient to trigger the DMCA's anti-circumvention provision. The DMCA prohibits only forms of access that would violate or impinge on the protections that the Copyright Act otherwise affords copyright owners... The owner's technological measure must protect the copyrighted material against an infringement of a right that the Copyright Act protects, not from mere use or viewing.

Broadly read, this means that breaking DRM just to look at or use a copyrighted work is fine -- it's when you break DRM that expressly protects activities reserved for copyright owners (like, say, making copies) that you get into trouble. That's a tiny little step back from other DRM-related decisions in other circuits, which have generally held that any DRM-breaking is illegal, but it's not completely without precedent -- since this was the first time the Fifth Circuit looked at this type of lawsuit, it looked to decisions from other appellate courts and found similar rulings on which to rely.

Let's get back to what this means in practical terms, though -- although many are breathlessly reporting this to mean that breaking DRM is now legal, that's actually not the case at all. First of all, Fifth Circuit rulings are only directly effective in Louisiana, Mississippi, and Texas, so this isn't the law across the US yet -- that's going to take a Supreme Court decision. (We'll get to that in a second.) Second of all, the crux of the decision is that DMCA lawsuits are only valid if the DRM systems actually protect against copyright infringement, as opposed to merely controlling access, and that's only a slight narrowing of the law. Think about it: the number one thing forbidden by copyright law is making unauthorized copies. There's nothing in this ruling that suggests anyone can make copies of works without the explicit permission of the copyright owner -- it's still very much illegal to strip copy protection DRM off a video in order to transfer it to a portable media player, for example, since you're making an unauthorized copy. It's a subtle, but extremely important distinction.

All that said, most of the other appellate courts in the US that have looked at DMCA issues have generally found that breaking DRM for any reason not covered in the exemptions is illegal, so the Fifth Circuit's decision here has set up what's called a "split in the circuits" -- different interpretations of the law in different parts of the country. That's the sort of situation the Supreme Court is there to resolve, so it's possible we'll see MGE appeal this one all the way to the top and DRM law will drastically change in one way or another. In any event, it's clear that the legal tide is slowly starting to turn against DRM, and that's definitely a good thing -- regardless of how small each individual step might be.