Peer-To-Peer Computing Is The Newest Threat To Intellectual Property In The New Economy.

Originally published on www.ecfonet.com, Jan. 2001

Many high-flying dotcoms based on business-to-consumer (B2C) ebusiness models have vanished. In addition, many business-to-business (B2B) Internet initiatives by established brick-and-mortar companies are teetering on the brink of failure. The monikers "B2C" and "B2B," goes the joke, more accurately stand for "back to consulting" and "back to bricks."

Even those businesses that have vanished, however, have left a legacy of high-stakes legal battles over patents, trademarks, copyrights, and trade secrets. Many of these intellectual property disputes have yet to be fully resolved and are sure to generate new legal precedent that will affect how intellectual property is protected in cyberspace. Nevertheless, as B2C and B2B ebusiness models fade, peer-to-peer (P2P) computing and ebusiness models threaten to make the next round of intellectual property disputes even more complicated and challenging.

How Is P2P Different?

Most B2C and B2B ebusiness models rely on an always-on, many-to-one, client-server, centralized Web-site arrangement. That is, at any time, many "clients"--typically Web browsers running on desktop computers--can access a single centralized computer that "serves" them with digital content such as Web pages.

P2P, by contrast, is based on a many-to-many, peer-to-peer, distributed computing model. Peer devices (for example, those same desktop computers) use specialized software to communicate directly with many other peers (rather than one central server) via the Internet, modem, wireless transmission, or another direct connection. Peer devices are not "always on"; they participate in a P2P network only if they have activated the specialized software.

These devices are "peers" because each functions as both a client and a server, depending on the situation, sharing responsibilities equally with other peer devices. Each allocates a portion of its computing resources--such as directory space on a hard drive, message receiving and message forwarding capabilities, and communication bandwidth--for use by other peer devices. Gnutella (http://gnutella.wego.com is one of many sites for the Gnutella protocol) and Napster (www.napster.com), for example, provide P2P software that enables peer devices to locate and share music files encoded in MP3 and other digital formats.

Who's The Boss?

Under a centralized Web-site model, if intellectual property is misappropriated or infringed, it's fairly easy to determine who should be the object of the appropriate legal action. One can easily ascertain who registered the Web site's domain name, and various logging mechanisms can determine who visited the site and who extracted what digital content.

In a P2P environment, by contrast, there are no centralized servers or routine logging mechanisms. The peer devices may include not only desktop computers but also mobile phones, personal digital assistants (PDAs), handheld computers, and other mobile devices. And most peer devices are portable (more portable, at least, than a Web server) and owned by individuals instead of businesses. If intellectual property is misappropriated or infringed in a P2P environment, it is virtually impossible to determine who is responsible.

How Can iDRM Help?

Existing patent, trademark, and copyright laws can and still should be used to protect intellectual property in a P2P environment. The nature of the P2P computing model, however, makes it very difficult, if not impossible, without some type of integrated Digital Rights Management (iDRM).

As the name suggests, an iDRM solution is not a single management practice; it takes into account a number of unique new-economy factors. An iDRM solution includes integrated social, economic, and enforcement components that protect intellectual property in a P2P environment or other new computing environments that are yet to be developed or deployed. An iDRM solution can also be used to adjust or enhance an existing intellectual property protection strategy to make it more effective.

The social component of an iDRM solution is used to understand and evaluate the attitudes that prevail among Internet users. Ignoring those attitudes may itself spur some Internet users to misappropriate or infringe an organization's intellectual property. But an iDRM solution that takes those prevailing social attitudes into account also provides an incentive for a majority of Internet users to cooperate, be good e-citizens, and not engage in illegal activities.

The economic component of an iDRM solution examines those prevailing social attitudes to create, refine, or adjust a business model to help an ebusiness venture become profitable more quickly. For example, a recent National Law Journal survey of potential jurors concluded that almost half thought it was perfectly legitimate to download or share digital music or digital movies without compensating their creators. An iDRM solution based on such an attitude could include an economic component that provides certain high-quality digital content, free. Additional content--protected by login, password, encryption, or the like--could be provided for a fee.

In this example, the free content may be new or previously released; the premium offerings may include new content not yet publicly released; additional archival content as such as video clips, digital pictures, and interviews; live chats; and any number of other extras and cool features that devoted customers can't live without. This iDRM solution provides an incentive for users to be good e-citizens; after all, they're receiving high-quality content for free.

At the same time this iDRM solution helps remove the incentive for any large number of users to try to defeat the technology protecting the premium content and exchange it with other users for free. A majority of content users will be happy with the free content and pay for the extras, understanding that very few companies will continue to provide new free content without being compensated for their premium content.

The enforcement component of an iDRM solution takes into account the prevailing social attitudes as well as the desire for profitability based the economic component. An iDRM enforcement component includes at least three subcomponents: (1) using some type of technology to mark digital content; (2) continuing to protect all digital content with the appropriate intellectual property; and (3) vigorously enforcing intellectual property rights against all parties who misappropriate or infringe intellectual property, including individuals.

One technology, "digital watermarking," adds bits of data to digital content that are undetectable by the human eye or ear but can be recovered to identify who marked the content. Whatever technology is used, all digital content should be marked so it can be positively identified if it is misappropriated or infringed.

All digital content also should be protected with the appropriate intellectual property. This includes obtaining patents, trademark registrations, and copyright registrations based on an organized and timely procurement plan.

Intellectual property rights must then be vigorously enforced against all misappropriating or infringing parties, including individuals. (During the appeal of the Napster case, Ninth Circuit Judge Robert Beezer specifically asked during oral arguments why the recording industry had sued only Napster and not any individual users who pirated intellectual property and exchanged it within the Napster P2P network.) Even though it is typically not cost effective, suing one or more individuals may help to influence prevailing social attitudes so ebusinesses need not continually fight intellectual property disputes.

In our knowledge-based economy, intellectual property is one of your organization's most valuable assets. P2P computing--and other new types of computing models that are sure to be developed for use on the Internet--are making it extremely difficult to protect intellectual property rights associated with digital content. iDRM plans offer a sensible solution.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.