The Rights Paradox: Uncovering DRM’s Influence on Copyright Licensors and Licensees

Digital Rights Management (DRM) is a type of technology that allows copyright holders to control access and the use of their artistic work by copyright licensees. Netflix’s system that prohibits more than two devices to use one account at a time or Amazon Prime Video’s feature that prohibits accessing the account from a very distant location from the user’s usual location are all examples of DRM technology. This article will analyse the seemingly benign uses of technology that have rather sinister implications for Copyright Law and the free movement of ideas in this society. The article starts by describing the legal framework that allows for the existence and continuous use DRM. It then proceeds to establish that the facilitation provided by the legal framework infringes upon two exceptions to the absolute protection granted to copyright holders. Namely, the first sale principle and the fair use principle. The article will also highlight other practical challenges posed by DRM technology to copyright licensees.  

The Legal Framework

The intent behind copyright law was to reward individuals for their artistic work and incentivise them to create more. However, with technology developing at a rapid pace, piracy became a serious issue. The record music industry in the United States (US) lost close to $7 billion in 2000-08 due to piracy. Piracy also affected other industries such as Movies and Books. The loss was so profound that many artists argued it even affected their ability to produce artistic work. DRM was conceived as a solution to stem this loss in revenue. Article 11 of the WIPO Copyright Treaty obliges states to ensure adequate legal protection for DRM and remedies against actors that try to circumvent them. Given Article 11, the United States enacted §1201 in their Copyright Act to enforce DRM. India too has Section 65A & 65B in her Copyright Act which protects DRM. While article 11 merely requires effective legal provisions to protect DRM, India has criminalised circumvention of DRM. This has attracted considerable criticism from the industry owing to the regulations’ chilling effect on the exceptions to copyright law such as the fair use and the first sale principle. Not just the Indian DRM jurisprudence, but worldwide, DRM has been subject to vilification as most argue that DRM inequitably prioritises the rights of copyright owners far above the rights of copyright users. For instance, when you pay for Amazon Prime Video, you have compensated Amazon for the expenses it had to incur in licensing its digital catalogue. In return for the compensation, you demand uninterrupted access to the digital catalogue. Therefore, is it fair for you the consumer to be denied access to the digital catalogue merely because you are on a vacation in a geographic location different from your habitual place of residence?

Infringement of First Sale principle

The first sale principle or the principle of exhaustion allows a copyright user to sell the copyrighted work in its physical manifestation. That is, if you buy a hard copy of a novel, you have the right to resell the book. However, you cannot type out the book on your laptop and then sell that text because that would amount to reproducing a copyrighted work. It is easy for an individual to exercise the first sale principle in case of physical goods. However, in case of digital goods, copyright owners enforce DRM measures that prohibit an individual from sharing the digital good with someone else. Therefore, DRM measures allow copyright owners to tacitly infringe upon the exhaustion right of copyright licensees.  In the US, the principle of exhaustion is not recognised for digital goods; however, the European Union recognises it if the first owner gives up access to the work. Initially, consumers who bought songs on iTunes could hear it only on one device. Therefore, consumers would buy a product, keep it in their possession, yet never be able to “own” it as they would not have the right to alienate an essential facet of ownership rights.

Infringement of the Right to Fair Use

The rationale underlying the fair use principle is that a user uses an author’s work in a fair way and does not intend to monetise the access to the author’s work. However, if the author believes the use of her work is not fair, she can move the courts to seek a remedy. This method ensures a free flow of information to catalyse innovation and balances the rights of the copyright owner. However, DRM blocks the initial access to information and leaves no scope for the interpretation of fair use. This leaves the society with only those fair uses of copyright work that courts have deemed fair use till now and no new fair use can will be created. This has a chilling effect on the growth of the definition of fair use to match the changes in technology. Prima facie, this issue sounds very trivial; however, this technicality has manifold negative externalities and shackles the free flow information and innovation. For instance, when Sony had initially created the VCR, Walt Disney and Motion Pictures sued Sony because the VCR allowed consumers to record movies; therefore, reproduce them. Motion Pictures argued that Sony should create a sensor in the VCR that prohibits recording if the movie has a tag that says, “not to copy”. However, the courts ruled that VCR for personal purposes is fair use. Had Sony implemented Motion Pictures suggestion even before the lawsuit, today we would not have the innovations surrounding VCR such as recording our favourite movies or matches for viewing it later. In the initial years of Silicon Valley, most of the innovation happened due to public lectures and technology sharing. If DRM were applied to them, we might not have as much innovation as we have today.

Other Problems

DRM causes other inconveniences too. At times, DRM measures are installed onto devices without the user’s knowledge. There have been instances where the DRM measures, such as Sony CD’s with XCP, had security flaws that compromised the personal information of consumers who legally bought the product. The DRM mechanism was found to install unsafe software without the consent of the device owners. Through these software’s, the DRM mechanism would transmit information on the use of the device to the copyright owner which would enable them to restrict access and use of the CDs. Apart from privacy threats, the software also posed vulnerabilities that were exploited by viruses. In other cases, DRM servers were shut down by the copyright holder after it became commercially unviable to operate the DRM laden systems or they decided to transition from DRM-laden system to DRM-free systems. In either case, the consumers who had purchased the DRM-laden systems could no longer use the devices they legally purchased.


Intellectual Property law is built on the foundation of Utilitarian theory that aims to maximise utility through incentivising innovation whiling balancing the interests of society to benefit from the innovation. Both the outcomes are equally important, and a balance must be maintained. Copyright owners have a very legitimate interest in protecting their works from piracy. However, the existing DRM framework is far too intrusive and prioritises the interests of copyright owners far more than the rights of consumers. This falls afoul of the utility theory as aggregate utility is diminished. A new, less intrusive mechanism that respects the rights of consumers as copyright licensees is the need of the hour. DRM technology worsens the schism between the interests of copyright licensors and licensees. Instead of adopting technology that priorities one side’s interest over the other, an attempt must be made to further collaborative efforts between copyright holders, licensors, and policymakers to explore innovative solutions that respect user rights, foster creativity, and ensure fair access to copyrighted works. Finding a middle ground that adequately protects intellectual property while preserving consumer rights is crucial in the digital age. By reevaluating the existing DRM framework and exploring alternative methods, we can strive towards a system that better aligns with the principles of utilitarian theory.

Ryan Joseph


I am a 4th year B.B.A., LL.B. (Hons.) student studying at Jindal Global Law School.

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