Keywords: Digital rights management, law, economics, moral philosophy.

This is a refereed article published on: 15 December 2004.

A techno-legal practice has emerged in response to difficulties encountered by copyright holders in effecting the distribution and sale of their works in the digital and distributed communicative environment. The practice is a commingling of existing conceptual legal force with actual technological protection. It thus allows the distribution and sale of digital copyright works to be undertaken in accordance with both the legal rights of the right holder and, more importantly, in accordance with (or, in spite of) the technological reality of the digital and distributed communicative environment.

The purpose of this paper is to undertake a summary exploration and assessment of the justificationary aspects of this practice. The ultimate objective of such is to illustrate that the practice is potentially unjustified as a result of its application of legal doctrine as conceptual bedrock. To achieve this, i suggest that the practice utilises and relies upon certain systems of management (or, legal doctrine) which are typically used in order to address the economic problems of disparity between the wants and needs of any given society, and the amount (or availability) of goods able to satisfy such wants and needs. I further suggest that the justificationary difficulty with such use of legal doctrine in this case is that it is in violation of an important concept: that any such use can only be properly justified when it accommodates the circumstances in which it is used. In the case of the aforementioned use of doctrine by this practice, certain circumstances are not properly accommodated. I hope to conclude that the circumstances are in fact explicitly ignored and that the practice is rather utilising law as a self –justificationary concept in order to protect the vested interests of copyright holders.

The first step in assessing the justification of the practice is a considered understanding of what the practice is. In order to understand a practice one must determine the objectives of that practice. Such a determination is very much an exercise in abstractions, because the objectives are the very essence of a practice, the absolute core of the practice and, usually, universal to any specific substantiation of the practice in actuality. The determination of the objectives in this paper will follow this methodology of abstraction to core elements, establishing what it considers to be the universal, or generic, objectives of the practice of rights management. There are a number of resultant benefits in undertaking such a process. First, creating such an objective understanding of the practice removes the need for subsequent ponderous lists of technologies involved in the practice. Instead of pointing to specific technical examples, one can refer to the most important element in an understanding of any practice: what it wants to achieve. From a jurisprudential perspective this is far more beneficial than any administrative list of technologies. Specific technologies change quickly, but the fundamental purpose of any technology is mundanely static and therefore a much more useful benchmark for subsequent understanding and criticism of any practice.

In addition to these general analytical benefits, there is a benefit specific to the topic of the paper. In outlining the universal objectives of the practice, as discussed above, the paper will be provided with an initial illumination of some of the economic principles that are instrumental in later suggesting that the practice is unjust. This results because the illumination of these economic principles is a central part of beginning to appreciate the core objectives of the practice. Why? The practice is evidently a reaction to certain problems posed by certain circumstances. These problems are economic problems. Economic theory therefore allows one to understand the problem and understand the reaction to the problem (rights management), which is the beginning of understanding the objectives of the practice. The economic theory utilised for this purpose will also allow us to understand why the practice might be unjustified.

The subject of this paper, the practice of rights management, is a response to certain problematic circumstances for right holders. These circumstances are technological circumstances. Specifically, the practice is required as a response to the economic effect of changes in the technological circumstances of society. What is this economic effect? The central economic effect is an erasure of an historic quantitative relationship between the amount of informational goods available and the amount of need or want for informational goods. This relationship was an implicit aspect of expressing information by historic technologies of information use; new technologies have subverted it. An understanding of this concept of the quantitative relationship between wants and needs is central in initially determining the objectives of the practice, since the practice is a reaction to its erasure. Such an understanding is also beneficial in appreciating the larger argument of this paper, because, as shall be illustrated, the existence of a quantitative relationship is instrumental in any properly justified use of legal doctrine as a system of economic management. Any removal of it therefore creates difficulties for those who rely on such legal doctrine.

The economic theory utilised in this paper is certain specific aspects of the work of Austrian economist Carl Menger that he outlined in his Grundsatze (Menger; 1994). I want to concentrate on, ultimately, two aspects of this work. The first, and more important, is the concept of the quantitative relationship as already mentioned, and the second is some smaller aspects of his general theory of value.

First, the quantitative relationship. Menger isolated this concept while outlining his general theory of the good, so it is useful to explain that in some detail first. Menger began, simply, by suggesting that things , general actual or ideational objects, can be placed in a causal connection with the satisfaction of needs, and that such things can be considered useful things . Here, Menger is reflecting the ‘great principle’ that states that ‘all things are subject to the law of cause and effect’ , for if one passes from a state of need to a state of satisfaction, certain causes must exist to explain this change. As such, any thing that can explain any change in the satisfaction of needs is the cause of this change, and a useful thing for society. Useful things, however, can also be transformed. They can become goods . However, a useful thing can only become a good if it satisfies certain criteria. First, a human need must exist for the useful thing. Second, such properties must exist that allow the useful thing to be brought into causal connection with the satisfaction of the need. Third, there must be knowledge of this connection. Finally, there must be command of the thing sufficient to direct it to satisfying the need. Useful things that satisfy these criteria become goods, those things that have most potential for useful interaction with the needs of society, because society is aware of their effect in satisfying needs (aware of the causal connection) and also has the power to direct the useful things to this end. Goods, however, nonetheless exist in a precarious situation. Admittedly, they can satisfy needs and admittedly, societies eternal concern is the continuing satisfaction of its needs. However, the problem is that there is no surety surrounding this historic situation.

When discussing physical goods, which easily combine their implicit tangibility with the problems of time management, the line of reasoning that concluded the following section does not run into any complications. This is because physical goods exist in a constant quantitative relationship with everything, whatever the amount of desire or good. Because they exist in discernable quantities per se , they will always exist in quantitative relationships. As such, justifying the application of exclusive ownership and property rules to such goods is not problematic. Physical goods continually and inherently require such an application.

In this respect the existence of a quantitative relationship is of vital importance in determining the validity of any application of law in order to effect distributive justice, either for informational goods or more physical goods. However, as regards information goods, the technology of information use is also of vital importance because it can act to create the quantitative relationship. This adverse effect on information goods by technology is not a static unchanging effect, however. Importantly, technologies of information use can also reverse this effect. If the effect of the technology changes, the argument for applying systems of management to information is therefore threatened. What is currently occurring is that new technological circumstances of society have reversed the historical imposition of a quantitative relationship on informational goods by technologies of information use. These two new technologies increase the usefulness of information by re-asserting its intangible character, having the economic effect of returning information to its natural economic state i.e. non-scarce and non-rival.

These new technologies of information use are digitisation , which marks a move from the representation of information via analogue methodology (with its reliance on physical models, which are limited by the constraints of quantitative relationships) to digital methodology, (with its reliance on abstract symbols; informational goods, and as such not constrained, quantitatively) and distributed communications , which allows the instantaneous global communication of such digitally represented information at low cost and high speed.  Such technologies have distinct economic effects on information. The most important is that they subvert the historical effect of the old technologies of information use, the imposition, in a necessary fashion, of a quantitative relationship between an informational good and the want or need for that good. Importantly, these new technologies of information use are still making information useful, but they are also returning it to its natural economic state and removing the existence of the quantitative relationship. What is the result of this removal?

Well, if we recall Menger, he stated that the existence of a quantitative relationship between a good and the want or need for that good acts as an important economic justification for the application of concepts of exclusive ownership and the property rules that regulate such ownership. Historically, technologies of information use have provided the quantitative relationship that acted to justify the exclusive ownership of informational goods. The new technologies of information use do not naturally provide the same. The economic effect of these new technologies of information use is therefore fundamentally worrying for copyright holders wishing to distribute and sell their goods in this new technological environment. It is worrying because although the owners of existing exclusive rights in certain informational goods will want to exploit those goods in the new media, the circumstances that previously justified the application of those systems of management, those rights, no longer exist. One can, perhaps, begin to see how the illumination of these economic principles might assist in suggesting that the use of law within rights management systems is unjustified. However, the first use of the concepts unearthed by the exploration of these principles is the creation of the objectives of the practice, to which we return.

The points raised in the previous discussion allow us to now determine and appreciate the objectives of the practice. At its most basic the practice is an attempt to negate the economic effect of the new technologies of information use because they are problematic in ensuring the continued justification of applying legal systems of management to informational goods. How is the practice doing this? Quite simply, it does this by creating a quantitative relationship between the desire for informational goods and the amount of informational goods. This fact explains the first objective of the practice; the exclusion of free access to information goods that are digitised and placed on-line. In order to understand the second objective of the practice, one must understand a little of another aspect of the economic theory of Menger, as previously mentioned; his general theory of value.

Quite simply, Menger has stated in outlining his general theory of value that if one understands the effect of something existing in quantitative relationship and one can command that understanding, one can create value. The perception of the quantitative relationship and, more importantly, the necessary economising that results from it can ensure the creation of value in goods. It does so because it ensures that those who so perceive become aware that the satisfaction of needs dependant on a good subsequent to a quantitative relationship, is itself dependant on the level of availability of that good. This is not simply awareness of the requirement to economise, but an awareness of the importance certain goods attain because they require economising. It results in the creation of value, which, as Menger  suggests, ‘is thus the importance that individual goods or quantities of goods attain for us because we are conscious of being dependent on command of them for the satisfaction of our needs’. Therefore if one creates a quantitative relationship between a good and the desire for it, but is aware of the importance such a state has, and utilises, or commands, that awareness, one can create value. This explains the second objective of the practice, the control of the use of informational works subsequent to paid access. Of course, access and use must be allowed if the owner wants to profit at all from the distribution of goods on-line, but controlling that use ensures the continuation of the quantitative relationship and, through such commandeering, the creation of value. These two objectives are the regulatory objectives of the practice, and are, I suggest, generic to all rights management systems, irrespective of the technology involved. However, the practice has another objective, or rather set of objectives. The exclusion of access and the control of use must take place in a distinctive electronic and digital environment. The practice must therefore achieve, technologically , the exclusion of free access to information works and must achieve, technologically , the control of use subsequent to access. These are the architectural objectives of the practice, and the distinction, while it might initially appear trite, is an important one. It is the distinction between what is to be achieved (the regulatory objectives) and how it is achieved (the architectural objectives). The architectural objectives are not of concern in this paper, although there are major problems with that aspect of the practice also.

What is useful about isolating these two sets of objectives, the regulatory and the architectural, is that they allow one to form a considered and proper notion of the practice, far removed from the ineffectual pithiness of such terms as Digital Rights Management or Technological Control Measures. It allows one to suggest that the practice is one concerned with the creation of techno-legal systems that manage informational goods in the digital and/or distributed communications environment, although even this lengthy definition does not do the previous discussion any service. In addition, the process of unearthing the objectives has required the additional exploration of economic theory that is not only extremely useful in establishing just what the practice is about, but in also encouraging criticism of the practice as a result of this better understanding, with which the paper concludes.

Hume, in talking of the origins of justice and property in his Treatise of Human Nature (Hume, 2000), begins by following a similar thread to that of Menger. He points out that society exists with needs and wants and that things are supplied in nature to satisfy those wants. Or, rather, as Hume puts it, nature presented society with ‘numberless wants and necessities’ and ‘slender means, which she affords to the relieving these necessities’. Hume suggests the formation of society allows for the compensation of such infirmities, since the combination of talent and skill by society augments the abilities of man in combating the slender means provided by nature. Hume goes on to suggest that while society provides a better arrangement for humankind, certain particulars of mankind’s natural temper and outward circumstances continue to affect such a union of society. For example, mankind is selfish and would love no other better than himself. More importantly, regarding the outward circumstances, Hume suggests that there are three different types of goods; the ‘internal satisfaction of the mind, the external advantages of our body, and the enjoyment of such possessions as we have acquir’d by our industry and good fortune’. While Hume considers the first is ‘perfectly secure’ and the second ‘of no advantage to him who deprives us of it’ the last, rather perversely, is more complicated. The improvement of such goods is to the chief advantage of society and yet ‘the instability of the their possession, along with their scarcity is the chief impediment’ to achieving an ultimate improvement of such goods. This argument is much the same as Mengers concerning the quantitative relationship between goods and needs as it highlights the defining aspect of that relationship; scarcity.

Uncultivated nature, Hume suggests, has no possibility of providing society with an answer to this problem. Artifice, however, or human nature, can provide a remedy. The problem, as Hume outlines it, is that ‘Men come to seek a remedy in order to place goods, so far as is possible, on the same footing with the fix’d and constant advantages of the body and the mind’. Simply, society realises that the principal problems in society arise from the scarce nature of goods. Hume is suggesting, as Menger as done, that goods exist in a quantitative relationship concerning their availability (or scarcity) and the desire for such goods. Like Menger, Hume realises that a system of managing such goods, so that they appear to be on the same footing with the ‘fix’d and constant advantages of the body and the mind’ is required. The remedy, Hume suggests, ‘can be done after no other manner, than by a convention enter’d into by all the members of the society to bestow stability on the possession of those external goods, and leave everyone in the peaceable enjoyment of what he may acquire by his fortune and industry’. This is essentially the idea of exclusive ownership of goods, for as Hume suggests, the general observation becomes ‘it will be for my interest to leave another in the possession of his goods, provided he will act in the same manner with regard to me’. In addition to exclusive ownership, Hume identifies the ideas of rules relating to such exclusive ownership; ideas of justice and injustice in the use and transfer of such exclusively owned objects, notions of property, rights and obligations.

Importantly, Hume always asserts that the use of these instruments as instruments of justice emerges from the convention established by society to allow exclusive ownership, a convention that itself results from inconvenient circumstances. Those inconvient circumstances are ‘the selfishness and limited generosity of the human mind’ and the ‘easy change of external objects allied to their scarcity in comparison to the wants and desires of man’. Hume is highlighting the importance of the ability of goods to exist in a quantitative relationships in justifying the concepts of exclusive ownership of goods and subsequent property rules.

Rather more importantly, for the purposes of this paper, Hume also asserts that if these inconvient circumstances changed, the justified use of the systems of management changes. As Hume states, ‘tis only from the selfishness and confin’d generosity of man, along with the scanty provision nature has made for his wants, that justice derives its origin’, referring to the justice embodied in exclusive ownership and property rules.  In this respect, similarly to Menger, but from a moral perspective, Hume is asserting the quantitative relationship as central in justifying the application of such remedial instruments. More generally, (and perhaps more importantly), Hume is asserting the importance of external circumstances, of politics, in justifying the use of law. He is saying that law is not a self-justificationary construct.

Both Menger and Hume assert the importance of external circumstances in any properly justified use of law. Menger does it from an economic perspective, Hume from a moral perspective. The practice of rights management relies on legal doctrine, but in a fashion that ignores the important circumstances that surround it, circumstances which must be accommodated if any use of law is to be justified. In this respect the practice might be unjustified. The use of doctrine might rather be a self-justificationary act, suggesting that law has some ‘immanent moral rationality’ (Weinrib, 1997) that can be applied to all circumstances without any change to reflect those circumstances. Why? The idea that the law is like this allows its application where the original purpose of the law no longer exists. If law can justify its own existence simply by being ‘law’, it can be continually applied, even when the important reasons for its initial creation and use are absent. In this way, it can act to protect the activities and interests of those who have historically relied on the protection offered by the law, but, if circumstances were properly accommodated, could not do so any longer. In this respect, the practice of rights management appears to be simple act of vested interest protection.