UC Berkeley

This article concerns the decision taken in November 2004 by the French Competition Authority on Apple’s refusal to license its digital rights management (DRM) technology to a competitor in the downstream market for music downloads. The analysis herein finds that neither the indispensability test spelled out in the Magill/IMS doctrine nor the new, controversial test advocated by the EU Commission for compulsory licensing of interoperability information in the 2004 Microsoft decision was applicable to the leveraging by Apple of its proprietary DRM technology into the music downloads market. The article draws on this analysis of the case to show that property rights and trade secrets in respect of DRM technologies have the potential to establish a “bottleneck” between content providers and media player manufacturers in the near future. To avoid such a bottleneck, the conclusions of the article suggest that interoperability and competition may be structurally supported and pursued either by more permissive “reverse-engineering” exceptions in the field of DRM software protection or, more effectively, by the collective establishment of an open DRM standard. In the absence of these structural remedies, compulsory licensing of proprietary DRM technology should remain subject to the “exceptional circumstances” doctrine made famous in the Magill judgment.

Forthcoming in: World Competition, Kluwer Law International, June 2005.