LONDON, UK – London-based consumer rights watchdog group the National Consumer Council (NCC) has issued a report outlining its concern that “the use of DRM can and is already constraining the legitimate consumer use of digital content,” according to a statement on the NCC website.The group issued its report to the All Party Internet Group in response to a parliamentary inquiry into the use of DRM technologies designed to protect the intellectual property rights of copyright owners, but which critics say often excessively limit legitimate use of digital products on the part of consumers

“Because of the current situation, consumers face security risks to their equipment, limitations on their use of products, poor information when purchasing products and unfair contract terms,” said Jill Johnstone, Director of Policy at NCC.

“Whilst we recognize the value of intellectual property rights, we have little confidence in self-regulation by the industry,” Johnstone added. “We welcome this opportunity to present our concerns to MPs and hope that this will ultimately lead to an improvement in the rights of consumers.”

While acknowledging the rights of copyright holders and content creators to protect and profit from their work, the NCC asserts that the desired balance between intellectual property protection and protection of consumer rights has not been reached.

“Consumers have an interest in ensuring that innovation is encouraged and creators and innovators receive a fair return for their work,” the NCC stated in their report. “However, consumers also have an interest in competitive markets; protection of intellectual property confers monopoly privileges which restrict competition and impose costs on consumers. Intellectual property law needs to find a fair balance between protection and competition – too much or too little IP protection will lead to a loss of economic welfare. In recent years it has become clear to us that this balance is not being achieved.”

The NCC cited the recent controversy over a form of DRM employed by Sony on some of its music CDs.

“It was recently discovered that the ‘anti-piracy’ software included by Sony/BMG on a CD by country rock group Van Zant included “cloaked” files that installed a proprietary player to play the CD (and then did not allow the user to uninstall the player),” the report states. “Mark Russinovich, who discovered the hidden software, noted that this allowed Sony to take over an element of his computer, and therefore compromise the security of his machine.”

After meeting with broad and intense criticism over the cloaked DRM files, Sony issued a patch, but that patch turned out to be incomplete, and left in place many of the problems caused by the original files, according to Russinovich.

Microsoft later declared Sony’s DRM a security risk, and a variety of security companies began alerting users of its presence. Following the security warnings, Sony announced plans to recall over 4.5 million music CDs, of which over 2 million had already been sold to consumers.