French Lawmakers Okay Online Copyright Bill

By LAURENCE FROST, AP Business Writer

French lawmakers approved an online copyright bill Tuesday that would require Apple to break open the exclusive format behind its market-leading iTunes music store and iPod players.

The draft law -- which also sets new penalties for music pirates - would force Apple Computer Inc., Sony Corp. and others to share proprietary copy-protection technologies so that rivals can offer compatible services and players.

Lawmakers in the National Assembly, France's lower house, voted

296-193 to approve the bill. The legislation now has to be debated and voted by the Senate -- a process expected to begin in May.

Breaking days of silence late Tuesday, Apple said such a law would "result in state-sponsored piracy."

"If this happens, legal music sales will plummet just when legitimate alternatives to piracy are winning over customers," the company said in a statement e-mailed to reporters. "IPod sales will likely increase as users freely load their iPods with 'interoperable' music which cannot be adequately protected. Free movies for iPods should not be far behind in what will rapidly become a state-sponsored culture of piracy."

The Cupertino, Calif. company did not address the issue of whether it might withdraw from the French online music market, and refused further comment.

Under the bill, companies would be required to reveal the secrets of hitherto-exclusive copy-protection technologies such as Apple's FairPlay format and the ATRAC3 code used by Sony's Connect store and Walkman players.

That could permit consumers for the first time to download music directly to their iPods from stores other than iTunes, or to rival music players from iTunes France.

Apple has most to lose because of its phenomenal penetration of the digital music market, according to analysts. Critics of the French move say legislators have no business forcing Apple to share its proprietary format -- arguing that customers know its limitations when they choose to buy an iPod.

A spokesman for Culture Minister Renaud Donnedieu de Vabres, who backed the crucial amendments, dismissed suggestions that the bill would unfairly damage Apple.

"We're targeting absolutely no one with this bill," Paul Rechter said.

Rather, he said, the legislation is designed to discourage online piracy by offering additional legal ways for music players and online stores to work together.

"When this happens, iTunes will have the French government to thank for making it possible to draw so many Internet users toward legal platforms," Rechter added.

The new interoperability rules were welcomed in principle by recording companies, which have often complained that iTunes has deprived them of any control over music pricing.

"It is important to consumers to have the ability to move songs between their various listening devices," said John Kennedy, chairman and CEO of the International Federation of the Recording Industry.

IFPI also said it is seeking clarification on the penalties set out in the new law for music pirates.

The bill reduces penalties for file-sharing -- currently classed as criminal counterfeiting, with a theoretical but rarely applied euro300,000 ($365,000) maximum fine and jail term.

Instead it promises tighter enforcement, and fines of euro38 to euro150 ($50 to $180) for those caught pirating music or movies for personal use.

Hackers who disable copy-protection systems can be ordered to pay euro3,750 ($4,600), while the full counterfeiting charge and sanctions are reserved for people who distribute software used for piracy.

Under France's fast-track parliamentary procedure, the Senate debate is likely to be the last full reading of the new legislation. If the Senate passes any amendments, a committee of lawmakers from both houses will be convened to thrash out a compromise text, which must then be formally approved in two final votes by senators and deputies from the lower house.

Associated Press Writers Nathalie Schuck in Paris and May Wong in San Jose, Calif. contributed to this report.

Copyright 2006 The Associated Press.

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