New copyright regulations: great for Microsoft, not so good for e-commerce

Software companies look set to be hit by new copyright rules that came into force this month, as ministers ducked resolving what has become known as the ‘Microsoft Word problem’.

The Copyright and Related Rights Regulations 2003 which implement Directive 2001/29 bolster the efforts of copyright holders to protect their intellectual property rights and extend their powers to take action against persons circumventing technological measures, or anti-counterfeiting devices. The regulations also make it an offence to manufacture, sell or possess in the course of business such a device.

“Problems arise, because there’s a distinction in the Copyright Designs and Patents Acts 1988 (CDPA) between the way computer programs are treated and the way other things are treated,” commented Helen Scott-Lawler, a partner at Bristol firm Burges Salmon. “If you circumvent a technological measure on something that isn’t a computer program, there’s a risk of a criminal sanction as well as a civil action. The difficulty is that there are some things that aren’t computer programs but concern the way you operate your computer, such as the way in which a file format is set up, and technological measures can be applied to them.”

Scott-Lawler points to the problematic interaction between these new regulations and the ‘decompilation’ exception in the CDPA. Under Section 50B of that legislation it is not an infringement of copyright to decompile a computer program (ie examine its programming instructions and attempt to derive the original source code used to create the program) for the purpose of creating an independent program that can be operated with the original program.

However, following implementation of the regulations, concerns have been raised that ‘reverse engineering’ – a technological protection measure applied to a saved file format (ie decompiling it) – would infringe copyright, even though it is not a computer program. “The issue has been dubbed ‘the Microsoft Word’ problem: if Microsoft apply technological measures to their file formats, developers will be restricted from reverse engineering the file in order to allow a competing word processor to convert from MS Word format,” she explains. According to Scott-Lawler, this would “inevitably have a detrimental effect on potential sales of competitor products” and “only serve to strengthen companies like Microsoft and diminish consumer choice”.

It was a problem that was drawn to the attention of ministers in the drafting of the new regulations. “It’s unhelpful but possibly not a surprise that they haven’t dealt with it,” Scott-Lawler said. “The incorporation of the directive was a nightmare for them as they have had the existing law and then the European Union has imposed what the law should be across Europe. They’ve tried to get the two to sit together and sometimes they rub each other up the wrong way.”