EMI to Remove DRM from Online Songs

In a move that could shape the future of online music sales, record company EMI announced on April 2 a deal with Apple that affords Apple the right to sell most of EMI's song catalog via Apple's iTunes store. What makes this deal unique is the fact that the songs offered for sale will have all of their Digital Rights Management (DRM) software removed. Other companies in the music industry fear that the deal could lead to major sales and copyright implications.

DRM software is installed on songs to block users from copying songs purchased online. In addition, DRM restricts users from listening to songs on multiple players (i.e. songs purchased on iTunes can only be played on iPods). As a result of the EMI-Apple deal, users will be able to copy the DRM-free songs freely as well as play and listen to the songs on multiple players. The deal calls for iTunes to offer the songs for $1.29, thirty cents more than its existing songs. The DRM-free songs will also have a smaller compression rate and twice the sound quality of existing downloads.

The long-term impact on the music industry as a result of the deal is largely unknown. Other major record labels are sure to be influenced to follow EMI's lead, but many questions remain. Will the other labels follow suit? If so, will the deal hurt or hinder online music sales? Do artists have any copyright claims in the matter? How will Apple's iPod sales be affected? For now, only time will tell.

Patent Reform on the Way?

Small businesses are urging Congress to reform some of the current patent laws after warning that the U.S. patent system is broken. In speaking to the House Small Business Committee, Mitchell Gross, chairman and CEO of Mobius Management Systems, Inc. cautioned that the current system leaves small businesses in a position where they are afraid to innovate.

At the center of this reasoning are the high damage awards from infringement cases that could leave businesses financially crippled. Small businesses claim that large corporations are at an advantage because of their deep pockets to absorb damage awards against them and their large resources to litigate. Gross called on the House Committee to cap infringement damages to only the value of the patented piece of a larger product, and not on the value of the entire product.

To counter, large corporations are urging Congress to establish legislation that controls the actions of so-called patent "trolls," companies that own often broad and obvious patents and attack large corporations claiming infringement or invalidity. Large corporations are often unwilling to litigate and will instead agree to settle, costing them millions. A proposed post-grant opposition program allows companies and people to challenge patents after they have been granted without the high cost of litigation.

Is there a happy medium? Maybe. Both sides seem to agree that patents need to be reviewed more closely so that they are less likely to be later deemed invalid. This solution would, at least, limit costly litigation for both sides.