As Larry Lessig has long and presciently emphasized, law and technology are substitute methods of protecting an interest. You can sue a trespasser; but it may be cheaper just to put up a strong fence. We used to think that if the technological substitute was adequate, it would be superior to the legal; and in fact the law often imposes self-help requirements to discourage lawsuits. And we never (or rarely) used to think that technology could upset a balance struck by the law; we thought law could cope with any technological changes. The dizzying advances of modern technology have destroyed these assumptions.

File sharing is the obvious example. On the one hand, encryption technology and Internet distribution (that is, selling directly to the consumer rather than through a dealer, enabling the seller to impose by contract additional restrictions on the use of his product beyond those imposed by copyright law) may progress to a point at which the fair use privilege of copyright law is extinguished (and so Lydia Loren has made the interesting suggestion that it should be presumptively deemed copyright misuse for a copyright holder to impose by contract (or, presumably, by encryption) restrictions over and above those authorized by copyright law). It would be like having a fence and gate so secure that the fire department couldn’t enter one’s premises to fight a fire; in such a case the fence would be giving the homeowner greater rights than trespass law, which would permit such entry.

On the other hand, Grokster-like services greatly reduce the cost of infringing copyright. The copyright owners retain (even if the Ninth Circuit’s Grokster decision stands) their right to sue the direct infringers, i.e., the people downloading recordings of copyrighted songs, without a license, into their computers, but this imposes litigation costs that the copyright owners did not have to bear when unauthorized copying of recordings was sufficiently costly to discourage most infringers without having to threaten them with a lawsuit.

We are in the presence of an arms race between encryption and copying technologies; if the latter prevails in this competition, copyright law will be ousted from one of its domains.

With all due respect for the interests of the recording industry and the file sharers, I regard this particular interaction of law and technology as relatively trivial in its overall social consequences. I am much more concerned about the ability, or rather inability, of the law and other policy instruments to cope with the issues thrown up by the relentless progress of science and technology. I’ll give examples in subsequent postings.

[Lessig Blog]