SANTA CLARA, Calif. (CNN/Money) - Digital Rights. It's a topic that doesn't jump off the page for the average investor, music and movie lover, or business person.

However, if you're in either the entertainment or technology industry, it has become the No. 1 issue, the polarizing hot-button topic that can make grown-ups shout at each other nearly as much as abortion rights, war with Iraq, and whether "The Bachelorette" has any socially redeeming qualities.

I confess that until now I have viewed this topic, from afar, as being fairly black and white. Stealing of any kind is wrong. Owners of intellectual property (like music, movies and online financial columns) have a right to make money from that property -- and to be protected by the law against piracy.

Folks who think Napster should have survived because ripping songs from the Internet was cool are whiners who were condoning music theft. (Though at the same time, I think Hollywood clearly didn't "get" the online revolution and was being stupid by antagonizing its customers.)

After attending a so-called "Digital Rights Summit" hosted Wednesday by a group of anti-Hollywood technology types -- including a little innovator called Intel -- I've come to realize that like any controversial issue, it's much more complex than I'd thought.

The summit was sponsored by folks with an agenda: They want to water down legislation the entertainment industry has passed that the techies think will bring the ruination of Silicon Valley. In short, the summit's sponsors want to strike a balance where Hollywood gets paid, but consumers still get to enjoy, share and modify that content.

The recent high point of this fight was the Digital Millennium Copyright Act, passed with Hollywood's assistance in 1998. Without going into too much detail, it basically makes it illegal to copy proprietary content for just about any reason. There are exceptions to the rule, but not many. And it's giving some tech policy types nightmares about the future.

"I'm scared," said Joe Kraus, a founder of the deceased Web company Excite and also of DigitalConsumer.org, the group that organized Wednesday's "summit." What frightens Kraus is that the cornerstones of Silicon Valley -- interoperability (devices working with each other), innovation and empowering consumers -- are being threatened by the perfidious legislation.

And the act is rearing its head in some strange places. For example:

• Static Control Components, a maker of remanufactured printer cartridges, says it's being sued under the DMCA by Lexmark. Where's the digital connection? Static Control has re-engineered a chip Lexmark put in its cartridges to make sure third parties couldn't repair them, forcing customers to buy replacements from Lexmark. Changing the chip supposedly copies Lexmark's technology.
• Skylink Technologies is in a similar battler with the Chamberlain Group, a maker of garage-door openers. Skylink makes universal remote openers, and Chamberlain says such a product unfairly copies technology in a chip it has put into its openers.
• ClearPlay is under the gun because Hollywood directors don't like its device, which allows parents to edit the bad stuff out of movies. They're after ClearPlay even though its device doesn't physically alter a DVD. It just affects the viewing.

In each case, intellectual property -- a song, a movie, a software program -- isn't being stolen, the defendants argue. Yet the DMCA is being used against them anyway.

The meeting wasn't much of a summit in that only one tangential representative of the "enemy" -- Southern California Congressman Howard Berman -- was in attendance. (He joked that he felt like a Frenchman at a meeting of the U.S. National Security Council.) But it opened my eyes that the DMCA, at best, is flawed.

Stanford law professor Lawrence Lessig has a near-term solution, which is to get legislators to understand that technology is changing so quickly that the best legislative fixes should be short-term. Because disk space is so cheap today yet Internet connections remain slow, Lessig argues, many consumers effectively hoard content on their hard drives. When broadband becomes more ubiquitous, content will become even easier to get than it is today. And Hollywood presumably will better be able to deliver it in ways consumers want it.

What role should government play? Force Hollywood to charge for content but to deliver it the way consumers want it. It's exactly what Congress did in forcing the broadcasters to sell their content to cable TV operators.

The digital rights debate already is half a decade old, but it's just getting warmed up. And there aren't any easy answers.

Now, can you believe that guy Trista picked?

Greg Ballard is CEO of SONICblue (SBLU: Research, Estimates), the much litigated-against maker of Replay TV boxes, Rio MP3 players and Go-Video dual-deck VCRs. Ballard said Wednesday at the summit that his company spends $3 million a quarter, or 20 percent of its operating expenses, on one lawsuit with Hollywood.

Clearly, he'd rather laugh than cry about being around so many lawyers all the time.

"What's the difference between Brobeck and Fenwick?" he asked, referring to Brobeck Phleger & Harrison, the Silicon Valley law firm that flamed out last month, and Fenwick & West, another tech-oriented firm.

Answer: "Fenwick had us as a client."

Adam Lashinsky is a senior writer for Fortune magazine. Send e-mail to Adam at lashinskysbottomline@yahoo.com.

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