This bill resembles a forced marriage between the unlamented Hollings Bill (Consumer Broadband and Digital Television Promotion Act of 2002) and the recently-defeated Broadcast Flag.  It requires that all analog-to-digital video converters sold for consumer use in the US detect and act on a specific type of watermark that contains descriptions of rights being granted. 

Yet the Analog Hole Bill adopts a different strategy from the Hollings Bill: whereas the latter attempted to be general enough to remain relevant over time, the Analog Hole Bill is very specific to technology and content business models of the present day.  It specifies what the watermarking and "rights signaling" technologies should be; for example, the watermarking technology it mandates is called Video Encoded Invisible Light (VEIL), from VEIL Interactive Technologies of St. Louis, MO. VEIL was originally introduced two years ago by Warner Bros. and the Mattel toy company for encoding signals in Batman television shows to which Batman toys would respond. 

The rights signaling scheme is CGMS-A, which uses the vertical blanking interval in analog video signals to convey copying information and has been in use for a decade.  The handful of rights and business models that the entire scheme is supposed to protect and facilitate are specified in detail; they are narrow and limited.

Whereas the Hollings Bill left it up to the Federal Trade Commission to dictate and maintain standards for DRM, and the Broadcast Flag was put under the jurisdiction of the FCC (which is how it failed in a federal appeals court; Congress cannot control the FCC in that manner), the Analog Hole standards are to be administered by the Patent and Trademark Office (PTO).  The PTO was chosen, apparently, because it is under the jurisdiction of the Judiciary Committee, whereas the FCC is an independent regulatory body. The bill contains an anticircumvention provision similar to that of DMCA 1201.

Through this bill, the movie industry is demanding that the consumer electronics industry adopt a specific technology, and that it do so without subsidy.  The bill then leaves it up to the PTO -- through rulemakings that resembles those of the Copyright Office for the DMCA -- to modify the spec over time so that the technology continues to be as effective in curtailing video piracy and is as "commercially reasonable" as the previous version.  In other words, the PTO is charged with ensuring that however the technology evolves in the future, the consumer electronics industry will have to pay just as much for it. 

The bill also requires that companies with patents that read on the required technology disclose their patents; it says nothing about requiring them to license patents to consumer electronics makers on any terms, let alone reasonable and nondiscriminatory ones.  This omission is presumably a sop to VEIL Interactive, whose patent on the core technology of VEIL (U.S. No. 6,661,905) was issued by the PTO just two months before VEIL's commercial launch by Warner Bros. and Mattel. 

We are usually against any piece of legislation that would require DRM-like technology by law.  Others have commented on the bill's potential effect on consumers' rights to legitimately obtained video content.  But we find the Analog Hole Bill to be even more objectionable because of its extreme provinciality, as well as its thinly veiled (pun intended) adoption of a single small vendor's technology solution -- a ploy that ought to raise some eyebrows, to say the least.  The bill is as unfair as it is misguided: the former, because it benefits a segment of one industry at the expense of another; the latter, because if it passes, it is likely to become a quaint obsolescence within ten years.  It is a textbook example of the problems in trying to legislate DRM.

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