Over the last two years, cases in which companies used DRM technology and the anti-circumvention provisions of the DMCA in order to control downstream markets and channel innovation on these markets have received considerable amount of attention. Particularly worrisome was the Lexmark case in which Lexmark used the anti-circumvention provisions of the DMCA in order to receive a preliminary injunction against a manufacturer of toner cartridges that competed with Lexmark's own cartridges (for more information about the case, see here at pages 623-626). In an important decision called Chamberlain v. Skylink, the U.S. Court of Appeals for the Federal Circuit has now rejected a similar argument that involved garage door opener systems. On August 31, 2004, the Court upheld a summary judgment according to which a manufacturer of garage door opener systems cannot use the DMCA to prevent competitors in the downstream market of hand-held portable transmitters from offering transmitters that interoperate with the manufacturer's garage door opener system. The decision is important for three reasons.
- First, from an economic and policy perspective, the decision emphasizes that Chamberlain's rejected construction of the DMCA "would allow any manufacturer of any product to add a single copyrighted sentence or software fragment to its product, wrap the copyrighted material in a trivial 'encryption' scheme, and thereby gain the right to restrict consumers' rights to use its products in conjunction with competing products. In other words, Chamberlain's construction of the DMCA would allow virtually any company to attempt to leverage its sales into aftermarket monopolies - a practive that both the antitrust laws ... and the doctrine of copyright misuse ... normally prohibit." (slip opinion pages 37-38)
- Second, from a strictly legal perspective, the decision is important because it sheds some light on the unclear relationship between the anti-circumvention provisions protecting access control technologies and the traditional rights granted under the Copyright Act. In this regard, the decision includes sentences like
"the broad policy implications of considering 'access' in a vacuum devoid of 'protection' are both absurd and disastrous" (slip opinion page 37), and
"We conclude that 17 U.S.C. 1201 prohibits only forms of access that bear a reasonable relationship to the protections that the Copyright Act otherwise affords copyright owners. While such a rule of reason may create some uncertainty and consume some judicial resources, it is the only meaningful reading of the statute" (slip opinion pages 40-41).
- Third, from a legal perspective, the decision is interesting because it will stir up the ongoing discussion about whether copyright law grants any "rights" in the legal sense to consumers. Although the decision does not include an explicit statement in this regard, you can find sentences like
"The DMCA cannot allow Chamberlain to retract the most fundamental right that the Copyright Act grants consumers: the right to use the copy of Chamberlain's embedded software that they purchased" (slip opinion page 42) and
"The Copyright Act authorized Chamberlain's customers to use the copy of Chamberlain's copyrighted software embedded in the [garage door opener systems] that they purchased."