I found a couple of pieces online related to past posts, and thought they were worth sharing.

First, I continue to noodle around the idea that the vast majority of creative people aren't making (enough) money and that's been true for a very long time. Then up pops an item from NPR's Planet Money blog that shows how the 1% in performing entertainment are hoovering up an ever-increasing share of the concert dollar.

Pitched as a piece about income inequality, it takes off from a talk by Princeton economist Alan Krueger in which he argues that “The music industry is a microcosm of what is happening in the U.S. economy at large." More depressingly, it appears that the technology that ought to be democratizing and spreading wealth is instead contributing to this distortion. That, and simple luck.

Technology plays its part by spreading the most popular (and most produced and most solidly funded) material the most widely. You're simply more likely to be exposed to the already popular stuff because money buys the tech that gets it out there. As it always has, I think.

Luck comes in because of network effects. People will (despite their protestations to the contrary) tend to gravitate to things that appear popular. If you have the good fortune to get early downloads, early thumbs-up, and appear to break from the pack first you are going to gather more attention, more downloads, more likes and the spiral is going to build. Technology factors into that by making the entire system of downloading and rating more visible, which drives more herd behavior and so on.

Second, you may recall that last month I noted that the fashion industry tends to build on copying, and does so successfully. A friend linked (for other reasons) a long post by comedian Patton Oswalt in which the first topic is "Thievery."

Like in fashion there's no IP protection for comedy. You can't copyright a joke, and it's certainly true that many performers use each others' material. Sometimes that's conscious, sometimes it's accidental. The public may even hear about or know people who make a living writing comedy material for well-known humorists like David Letterman or Jon Stewart. However, this has led to what Oswalt identifies as a massive public misperception - that all comedians "steal" and that "nobody" writes their own material.

In fact, the majority of working comedians write, or try to write, their own humor. A comedian's value is a combination of the material and the delivery. Some people are good writers but lousy performers; some people can really hold an audience, but produce poor original material. But as in any other career the people who are bad at one thing either get better at it or they get out of the business. Maybe they hire writers, or pay for stage coaching, but either way the goal is for them to produce more and better original acts.

Along the way, though, they have to deal with the people Oswalt identifies as the thieves. People who scoop up another comedian's jokes wholesale, sometimes even to the point of copying entire segments of someone else's act and then passing it off as their own. Without the ability (or money) to protect their work, comedians often have no choice but to wait until the thieves flame out. If you're stealing someone else's material to help you move up eventually you're going to reach a level where you're expected to produce. If you don't have original material then you can't produce, and you flame out, much like any other person who has cheated their way through life.

It's an interesting way to think about illegal (or at least unwanted) copying: can we create situations in other areas where unwanted copying isn't policed by restrictive technologies (DRM) or by restrictive laws (CISPA/TPP), but contains within itself the seeds of its own demise?

Probably the most surprising thing to me was that SCOTUS managed to craft a single unified opinion in Association for Molecular Pathology v. Myriad Genetics, Inc. Given the complexities at issue and the previous rulings from the Court, I expected another split decision. It's even odder that they issued a unanimous ruling that both sides see as a victory (though that may be lemonade-from-lemons for Myriad). My sense is that they did so by a combination of punting the hard issues - no method claims were adjudicated - and unfortunately through a lack of understanding of the science.

See for example Mark Stern's posting on Slate, where he looks at Scalia's concurrence as an admission that he doesn't understand the science and therefore the judges with whom he is concurring likewise don't get it, but aren't as forthright in saying so. The decision does go into some biology but the points raise by Myriad and the Association are fairly esoteric for someone not versed in at least college-level molecular biology.

Steven Salzberg, a med/sci writer for Forbes, argues that in fact SCOTUS got the science wrong. He lists three major errors contributing to the wrong science that underlies the key element of this decision: the supposedly bright line between DNA (not patentable) and cDNA (patentable). This leads to a tough question: even if it got the science wrong, did SCOTUS get this decision "right"?

By "right" I refer to the idea that the decision could reflect a legal and social sense of what is the right thing to do with patents in biology. For example, Art Caplan has a short opinion piece up stating bluntly that "natural DNA" never should have been judged patentable. Allowing Myriad to hold patents on these specific genes led to a tight monopoly market where no one could bring out a competitive (and one hopes lower-priced) testing product. This exemplified the monopolistic and constricted outcome feared by people who argued that natural biology should not be patent-protected.

This sounds to me like the Court has finally come around to Breyer's view in which the validity of an intellectual property protection law or interpretation has to be done in light of its outcomes. When you make a regime that allows one company to monopolize all possible methods of testing you've done something wrong. When you create a way for multiple companies each to protect their competitive ways of testing you've done something right.

Now if they could only manage to ground that in good science.

Trying to guess Netflix's content economics seems to be a popular pastime this year; however, as Felix Salmon describes, these analyses are missing the forest for the trees. The latest entry in this game is a nicely written in-depth piece by Matthew Ball for Ivey Business Review.

Ball looks at the cost of Netflix producing original content, and in particular what do those costs pay back in terms of building Netflix's subscriber base. This is a natural follow-up to Netflix's recent restart of Arrested Development. The show built up a following while it was on Fox but those who still want more now go to Netflix to get it. Ball goes deep dive, calculating things like Netflix's cost-per-minute and then comparing the value of paying Netflix solely for a specific piece of content you want (like Arrested Development) versus paying for other kinds of specific desired content such as a first-run movie.

These are great numbers, but I think they fundamentally miss what's going on, as Felix Salmon analyzes in his blog post today. I don't think anyone calculates the cost-per-minute of an entertainment offer, even subconsciously. The question is really can I get what I want there, and how much am I paying for what I want? Sure, some of the ongoing wave of cord-cutting is due to people not wanting to pay for big packages in order to get the specific content they're interested in. But that's big-view stuff, not the numbers that Ball is analyzing.

Salmon makes three points I think are worth keeping in mind. One is that original content is not just there to draw new subscribers - it's also a way to keep current subscribers. Netflix suffers from tremendous subscriber churn and the cost of acquiring subscribers has to be high.

Two is that Netflix is essentially bent over a barrel by the Cartel right now. If they appear to be making more money, then the broadcasters just hike the license fees to siphon off that revenue. Ball notes that Netflix had to pay fees of over USD 1.3 billion (yes, billion-with-a-b) in just the first quarter of this year. And I'm sure those fees are going to go up. No matter how expensive it may be to produce original content Netflix can be sure that it alone has control over that expense and isn't going to turn around and find its costs have doubled next quarter because of someone's external decision.

Third and finally, Salmon argues that Netflix isn't playing a quarter-to-quarter or even year-long game. Here's the money quote:

[Netflix wants] to become HBO faster than HBO can become Netflix

Exactly. HBO, with its disastrous response to demand for Game of Thrones, showed how badly it misunderstands new media models. Netflix isn't exactly an agile start-up, but they have the potential to beat HBO at this game if the cable giant sits back and continues to do nothing. With a library of high-quality original (again, licensing-free) content on hand, Netflix will be in a much stronger position to keep customers engaged and paying those all-important subscription fees.

Back in February, Macmillan threw in the towel and settled with the DOJ over accusations of collusion in e-book pricing. Macmillan was the last publisher trying to defend its practices but it wasn't the last defendant. That honor goes to Apple, which was accused in the suit of being in collusion with the publishers. Apple has not settled and is now defending itself in court.

Of course, Apple claims that it was not in collusion and is calling various publishers' representatives to testify about that. Unfortunately for DOJ it sounds like their own witnesses - also from the publishing houses - are making Apple's case by agreeing that there was contention between Apple and the publishers over how e-books would be priced. It seems clear that everyone was out to destroy Amazon's 9.99 price barrier, but I'm not enough of a lawyer to know if that agreement alone will be sufficient to sustain the government's contention.

Anyone who is surprised that Amazon "acted like a bully" toward publishers please raise your hand. You're new here, aren't you?

As Shara Tibken noted, the publishers are going to argue that they went to Apple more or less out of necessity. Amazon, in its turn, is going to claim that it was forced to do this or that by the big bad publishers and you know what? The whole lot of them remind me entirely too much of misbehaving kindergartners. I have absolutely no sympathy for any of the parties in this mess.

Under the dramatic headline "How To Make War on Patent Trolls" Tim Wu has an article in The New Yorker advocating remedies for patent trolling. Wu outlines the well-known problems of NPEs trolling and advocates some solutions that I haven't seen tried yet. Like all novel legal theories we won't know whether they hold up until they're tested in court, but I have doubts.

Wu suggests the use of consumer-protection laws, specifically targeting unfair or deceptive practices. The definition of "unfair" varies wildly since all states and the Feds have such laws. Wu notes also that some NPEs have misrepresented "...the strength of their patents, the extent of other settlements, and their actual willingness to litigate." I'm not sure what it means to misrepresent the "strength" of a patent - presumably Wu is referring to the scope of valid claims or the applicability of the claims to the supposed infringement. Certainly deliberate misrepresentation should be treated as fraud, but I'm not sure how hard it would be to prove deliberate misrepresentation.

Settlements and willingness to litigate, though, are clearly outside the bounds of these laws. I recommend the Planet Money podcast from last week on the patent being asserted against podcasting in which Zoe Chase gives a good view of the "game" played around all civil legal actions. Knowing whether or not someone else will carry through on a threat to sue is a standard feature of this sort of brinksmanship everywhere, not just patents.

Wu then suggests using unfair-competition laws against NPEs who aggregate patents. The idea that assembling a patent portfolio might be a Sherman Act violation when that portfolio is used to stop people from operating a business is certainly a novel theory. I know even less about antitrust law than I do about IP law, but I'm inherently dubious. On the other hand, the RICO laws have been used in ways far beyond their original targets so perhaps the courts will see fit to extend the scope of the Sherman or Clayton Acts in this way.

Wu also suggests that the FTC get into the act, through its power to manage competition and prevent monopolies. Section 5, which Wu points to, seems to target unfair or deceptive practices. This is interesting in that it might be a way to rule out an entire style of business practices. As we've discussed in the past, the use of patents for offensive versus defensive purposes is a matter of the owner's choice; however, the FTC has the power to rule that certain offensive uses of patents are sufficiently anticompetitive as to be illegal. I would be very interested to see the FTC hold hearings on this and air some expert opinions. Right now they're gathering comments and who knows what will follow. That said, any move by the Feds to change how patents are able to be used would almost certainly be challenged in the courts in cases that would drag on for years.

Unfortunately, although Wu notes that patents have been issued with "extreme leniency" (which is quite some understatement) he doesn't advocate for the kinds of changes necessary to prevent patent offal in the first place. Whether or not you like Wu's suggested remedies they are just that - remedies. Far better to fix the problem than clean up the mess afterward.

The place where I agree with Wu most strongly is where he argues that the reasons arrayed against these arguments are not reasons for inaction. Instead they call for proceeding with caution. Patent practices - both issuance and use - are in severe need of reform to keep up with new business practices and changing technology.

Here's the big thought: being an author (or really almost any creative type) does not pay well. Musicians may complain about the few pennies they get for having their stuff streamed online, but those pennies are more than the vast majority of musicians will make. One guy (or maybe a few guys) can make a hundred grand publishing e-books, but the vast majority get nothing. In traditional print they don't even get publication; online they can get published but nobody reads them. Sometimes getting noticed requires torrenting your own works so they get out there.

The sad truth is that this has been the case for pretty much all of human history. Creative types of all sorts have been shunned, kicked out of town at dusk, hired, fired, or even killed at patrons' whims, thrown in gaol for offending the rulership with their latest portrait or play - the list goes on and on. The view that Kennedy expressed - which later led President Johnson to create the National Endowment for the Arts - is a nice idea but a historical anomaly.

We are also living in another historical anomaly, one in which those who make businesses allowing people to self-promote, whether by e-books or other means, are doing their darndest to ignore and get their customers to ignore, this historical fact. Now comes Tobias Buckell with a piece titled "Survivorship bias".

Buckell is, by most accounts, doing pretty well. He's making money by publishing his stuff, both through traditional and new-media means. He's been nominated for a fistfull of awards, which means his stuff gets reviewed, and appears in places like New York Times bestseller lists, one of the traditional measures of publishing success. He is, by some metrics, an "average" selling author; however, as he shows pretty clearly there's a huge difference here between "average" (the summed midpoint) and "median" (the most likely point). In fact, the median sucks, which means that e-publishing sucks for the vast majority of people.

What survivorship bias says is that our impressions will be skewed by unusual tales, which obscure the general reality. We read about one author who is making that 100k and we don't realize how unusual he is. For every Konrath there are hundreds of thousands of other e-book authors who are working hard and not getting enough money to pay the rent and keep the lights on. Again, that's just normal history but Buckell is concerned that because we're in this other historical anomaly, those people are getting doubly victimized.

If you're not selling well in e-book now, the tale goes, it must be your fault, somehow. You didn't try hard enough. You didn't use the right publisher or the right advertising medium or the right pricing model. You didn't land in the top 100 so your experience doesn't have meaning, when in fact it's the other way around. Those top 100-selling authors are the anomalies. They're doing well and that's great. But that doesn't make them more meaningful or relevant examples than an average 100 e-book author, or a median-100 e-book author.

Buckell does have one important point that I think deserves to be thought about harder: he says he's playing the long game and I think that's required here. There are a few true overnight sensations, but when you dig deeper you find that a lot of people who have suddenly broken out did so after years of hard work and building up to that breakout moment. So if you're a creative type, good on you. Do the hard work, try to be successful now but if you're not don't take it as a personal flaw - take it as confirmation that you need to play a longer game.

It's been a while since I've seen another of the "Internet streaming is killing cable" stories that were popular last year. Today's entry comes from Chris Rancourt on Pando Daily and is based on the premise that streaming video has already killed cable. Yeah, maybe.

In fact, Rancourt's body text is more circumspect than his lede, saying "...we might be heading into a world where streaming killed the cable star". Yeah, maybe. It's true that online subs cost less, and it's true that Netflix's latest numbers look good, though profits remain elusive. The kicker is still original content which right now is looking good for Netflix and causing other streaming sites to jump in with both feet. That doesn't automatically spell demise for cable, though, which still holds important trump cards like exclusive live sporting content and first point of access for traditional broadcast channels.

Rancourt thinks we'll see major shifts in digital entertainment in the next few years. I disagree - I think we're going to see several years of tentative experimentation as companies hunt for profitable models and advertisers try to figure out how to deal with the extreme audience fragmentation that online streaming brings. It's always possible someone will come along with a game-changing plan, but my bet is that the next few years look more like a muddle than a major shift.

I know at least a few librarians read this blog and since our government is currently attempting to poison your pool I'm hoping you can make some noise that elected officials can hear.

Cory Doctorow has a commentary up at Boingboing on a story posted by Jim Fruchterman at HuffPo about the US's abominable behavior in negotiating something colloquially called "The Treaty for the Blind."

The core idea of this treaty is that people who can't read print or access printed books would be allowed to get some kinds of access for things like education, employment, and so on. The US is actually pretty good about this but for some reason (*cough*money*cough*) the Administration is going about poisoning this treaty so it can't benefit people outside the country but will enrich the MPAA.

Here's the money quote:

[The treaty now says, i]f a book is commercially available in an accessible format, it can't be provided by a library to a person with a disability. This is equivalent to walking into a public library and finding padlocks on all the books with a note that says: "If you want to read it, buy it."

That's not right and it's something I don't think librarians should be silent about. Librarians here in the US have generally been pretty awesome about helping people get access to information - despite frequent official machinations to the contrary - and I'm willing to bet you care about the same principles outside our country's borders. In particular I'm hoping you share my belief that it's wrong for our administration to be forcing lockdowns on libraries in the name of corporate profits.

So if you do feel this is worthwhile please publicize this story to your colleagues. Put it on your boards and mailing lists and start discussions. Support the World Blind Union, and let the White House know how you feel.

That's kind of grandiose, but I think it's fitting. Today brings the first trailer for a retrospective documentary on Napster, hard on the heels of reporting from TorretFreak that the RIAA is losing money, laying people off, and slowly going out of business. The Cartel's scorched-earth campaign bought it some time, but in the end the demise of the old model and its complacent assumptions was inevitable. Stories are often told in chapters and I see these two news items as bookends on the first chapter. If I was forced to pick, I would choose Amanda Palmer's Kickstarter as the first part of Chapter 2.

Last Sunday, Cory Doctorow posted a piece on Boingboing noting that (some) patent lawyers were going more or less off the deep end in overreacting to patent challenges around 3d printing. It's nice to know that not all lawyers share the particular brand of paranoid lunacy exhibited by Finnegan there.

In particular, I was pointed to a piece by Lisa Shuchman for the Corporate Counsel blog which takes a much more measured approach. Shuchman provides a brief review of the current state of the technology (prices tumbling) and notes that the area is almost certain to be one of the biggest challenges for IP law in the coming years.

Rather than panic, though, she (following the lead of Michael Weinberg, who works for Public Knowledge) advises lawyers to "look to the past before trying to sue the disrupting technology out of existence." Noting that the scorched-earth plan didn't work so well for the Cartel as it tried to stop digital music, Weinberg suggests "...companies would be better off taking a lesson from history and seeking ways to profit from 3-D printing."

How novel! How refreshing! How totally sane. I don't think anyone doubts that 3D printers represent major disruption in both manufacturing and IP law. But disruption doesn't mean disaster, especially if people take the time to plan and prepare. And that includes IP lawyers.

As new legislation makes its way through the halls of Congress to try and fix the mess highlighted by the Librarian of Congress's refusal to extend a DMCA exemption on cell-phone unlocking an important question has arisen: to whom, exactly, does the Librarian answer?

It matters a great deal whether the Librarian is part of the Executive or the Legislative branch. It appears that the Obama administration wants to have it both ways, as laid out in this ConcurringOpinions post by John Duffy, Peter Strauss and Michael Herz.

People may recall that when the Whitehouse.gov petition on unlocking got enough signatures to require a response, the Administration said "yes, we support that but we can't do anything about it because the Librarian is part of the Legislative branch, so sorry." And in fact, that appears to be the Librarian's position as well, as the posting quotes Congressional testimony from the Librarian saying, for example, that the office is “a unique part of the Legislative Branch of the government.”

But with little fanfare the DOJ is in Federal court right now arguing the opposite in a case that has now reached (and may be heard by) the Supreme Court called Intercollegiate Broadcasting System, Inc. v. Copyright Royalty Board. Here's a money quote:

the Library of Congress is “an executive Department,” and the Librarian himself is “subject to plenary oversight by the President.”

ORLY? Why would they want to argue that? Because, as the cell-phone case shows, the Librarian has been vested with authority to execute - that is, carry out the enforcement of - copyright legislation. This is done via the Librarian appointing the Registrar of Copyrights and the judges of the Copyright Royalty Board. And the Administration wants that to continue because this provides them a convenient arm's-length distance from the mess that enforcing those laws is creating.

It's pretty well understood by Constitutional scholars that such appointment powers should reside only with the Executive. Congress can advise and consent, including blocking appointments over which it has advisory power, but the Legislative branch under our government cannot take the initiative to appoint those people who will execute the laws, nor those who sit in judgment over them. Congress hears nominations for judicial offices on the basis of Executive-branch desires to appoint, and that includes judges of copyright.

As noted above, this case is still only at the petition stage, but there's hope that if SCOTUS takes it, the Court will unravel this knot by making a clear decision. Once they do that it will be clear that the Administration has the power to enforce copyright laws and they will no longer be able to weasel out of public demand for changes in how enforcement is done. New legislation to fix the underlying laws is still welcome, but this case could create a bright line that will force Obama to choose between the public and his Cartel funders. Sadly, I have a suspicion he'll end up on the wrong side of that line again.

Mike Masnick has a long but really excellent column up on a tempest in my local teapot. The short form is that Jonathan Monsarrat and his lawyer/business partner have caused quite a stir in my part of the world by filing a raft of copyright, defamation, and generic John Doe claims over a years'-old incident.

I don't plan to write much about this because I know the named defendants and many of the John Does personally but I wanted to point out how Masnick's column illustrates something important: If you are involved in an IP-related legal action, get a lawyer who knows that part of the business. Monsarrat's lawyer-partner Mark Ishman apparently does not, which results in a serious, and epic-level funny takedown from lawyer Dan Booth. Booth and his firm Booth Sweet LLP (not LLC as printed) have been involved in fighting the Prenda nonsense and thus know a thing or two about copyright laws and their abuses.

A significant chunk of the takedown involves Booth schooling Ishman, who is no doubt a fine lawyer in his own area but appears not to know jack squat about copyright law. If you've got IP litigation on your mind, make sure you've got IP-savvy counsel, too.

The games comment sites are a bit buzzed this week as Nintendo has made a very heavy-handed move to claim so-called "monetization" rights on fan-created content.

The basic idea is that if someone makes a video of themselves playing a Nintendo game and uploads it to YouTube any ads shown with that video will be of Nintendo's choosing and revenue from it will flow to Nintendo. Ads may appear beside the videos or actually be inserted before and after the video when people go to play it.

The problem here is that "Let's Play" style videos are a pervasive form of information and sharing throughout the industry. I did a quick YouTube search for "let's play" for this blog post and got back over 9.1 million hits. People create these videos to show off their skills, to highlight interesting things they've seen such as game "easter eggs", to provide guides or walk-throughs, or just to share a bit of fun with friends. There are a few professional or semi-professional games writers who use this style of video to promote themselves or their channels, but they are a tiny minority of that nine million.

Nintendo has positioned its action as a gentler approach; rather than trying to ban content related to Nintendo games, they just want to make money off it by changing the video that an individual uploaded. Yeah, um, guys that's not a whole lot better. It also comes across as cheap and lazy - rather than creating content for YouTube that fans and players would want to watch, Nintendo is just taking over other peoples' content.

It's probably legal for them to do this - Nintendo clearly owns the game, though they don't own the gameplay. It's true that the valuable content of these videos is the gameplay rather than the game itself, but I doubt that would hold much water if this ever got in front of a judge. But that's a sideline: the real point is that it's a terrible PR move for a company that's already struggling to get its new console accepted by players and developers.

Museums are somewhat infamous for trying to stop people taking pictures of famous paintings on display. Some museums forbid flash photography with the argument that thousands of flashes would inevitably damage works that are often carefully hung with special lighting and protective surfaces. But, really, stopping me taking a snap of a modern steel sculpture? What's going on there?

According to Carolina A. Miranda at ARTnews what's going on may be that the museum doesn't hold the copyrights or permissions that would allow people to make copies. This isn't such a big deal when people are taking holiday snaps for private or family display, but in the age of Instagram and Flickr when every cellphone image is instantly broadcast and then indexed and searchable it's a potentially much bigger deal.

The very bigness of the deal may be compelling a change. Back in the day it was just one guy with a camera in hand; now it's everyone with every cellphone and point-and-shoot. Trying to police all of them is both taxing on limited museum resources and ultimately futile anyway. So, according to Miranda, museums are loosening their policies and trying to become part of the social media conversations themselves, publishing Tumblrs and having their own Instagrams.

Enter copyright. Museums often restrict their open-access photography to their permanent collections, over which they tend to have complete control. But loaned and traveling exhibits, which can be the biggest draws, often come with copyright restrictions and photos published online - even if non-commercially - can be considered infringing derivative works. To combat this, museums need to work directly on these rights issues with the holders; for example, they can negotiate exemptions that permit non-commercial reproduction while agreeing to help rights-holders track down people who are trying to make money off the photos.

Miranda's column doesn't discuss one area that I think is crucial: public education. Given that we are constantly bombarded by messages in movies, on TV, on DVDs, etc that all reproduction is bad, I believe it's an important part of this mission to help people understand what is and is not allowed. Might we even say, "teach about fair use"?

An episode this week of Planet Money's podcast, called "Why Pink?", starts off being about the color of the T shirt they're making and ends up having some interesting things to say about copying in the fashion industry.

The story starts with how the T shirt's hue is copied (or inspired by) predictions of trending influences, and elements like colors that are associated with those influences, and goes into a discussion about how the entire fashion industry lives around a copying and imitation model. This is, from a conventional protectionist-thought school, heresy. IP protection exists, protectionists would say, in order to encourage innovation. IP protection gives innovators time to reap benefits of their work. Without such protection, what is the incentive to create?

Well, in fashion, it appears that not only is there incentive to copy - everyone wants to get on the popular trends - there's incentive to differentiate. You want to be identified with a look, or group, or crowd, but not be an identical Mao-suited clone. So innovation begins as variations on a theme, and grows into whole new trends, all without the benefit of much IP protection.

It's an interesting story and challenges us to remember that most of what we consider today to be great works - from the plays of Shakespeare to the sculptures of Michaelangelo - were created in eras when intellectual property protection was unknown or much weaker. Remembering that, we have to wonder whether IP protection truly serves to promote innovation, or simply to promote profit on innovation. Both are important, but they're not the same thing and that's worth keeping in mind.

Sunday's Wall Street Journal carried a pro/con pair of opinions on software patenting.

The 'yes' side was written by Martin Goetz, himself an inventor and entrepreneur. So far as anyone can tell, Goetz holds the first-ever software patent. The 'no' side was written by Brian J. Love, an IP law professor from Santa Clara University School of Law. So far as I can tell, Professor Love does not actually litigate or make patent applications, so this is sort of a mismatch of real-world practitioner versus theorist. I guess it won't surprise many readers that I consider the real-world practitioner to have the stronger arguments.

In particular, Goetz makes the singular point that "software and hardware are interchangeable" and that it's an implementation decision which bits of an invention go in software versus which bits go in hardware. This remains the key point I have yet to see anti-software patent people argue clearly against.

Goetz is, I think, one-sided in claiming purely that patents are effective protection for innovations. Here Love is on more solid ground as we have ample real-world examples of patents (software and otherwise) being used to stifle innovation and that the rapid pace of technological innovation is not suited for the more leisurely and extended protection that patents offer. Goetz might, I think, agree in principle but as a pragmatist he points out that there are no other means available. Both men agree that the system is flawed and needs fixing.

There are two proposals starting the crawl toward daylight, both of which could reshape our interactions with certain digital media and devices. Unfortunately, while one would move us forward, one would be a giant step back. Let's look at both.

Bad news first: in a move that translates as "It's a good idea because we say it's a good idea", the W3C has decided to go ahead and put official DRM crap into its official standards because see good idea we say so. To begin with, let's be very clear: DRM doesn't help anyone. Someone else putting a lock that I can't remove onto my stuff is not helping me. DRM doesn't stop illegal copying, it just annoys impatient and stupid people (OK maybe that's not wholly a bad thing). In case you all missed, the news, Tor once again proved that taking off DRM did not increase illegal piracy.

We now have a supposedly independent standards body, which ought to be acting in the best interest of the net community and the Web itself, acting to promote useless and harmful solutions to problems nobody but big content companies wants "solved". As the EFF pointed out in its petition to W3C, the purpose of the consortium is to promote openness, not standardize controls on people's content, nor promote a playing field for DRM plug-ins.

Somewhat better news comes from the EFF's Deeplinks report on a new bill in Congress to fix several major copyright law problems. The House bill (H.R. 1892) was introduced by Representatives Lofgren, Massie, Eshoo, and Polis so it gets the magic "bipartisan" label. That's good, I suppose, but what's really important about this bill is that it's a direct move to fix Section 1201, the infamous 'unlocking' provision of the DMCA.

The bill (PDF copy here posted by EFF) would implement a couple of common-sense measures as exemptions built into the law, rather than requiring repeated requests for exemptions. First, the law would be changed to say that if you're doing something legal then it's still legal even if you have to get around DRM to do it. In essence, it narrows the bill's definition of what constitutes "circumvention" so that people who want to do things we agree ought to be legal (such as jailbreaking a cell phone) can do that. In fact, phone unlocking is called out specifically in the bill's new list of exempt activities.

In addition, the bill would specifically allow people to make and sell devices (programs) that circumvent digital locks for legal purposes. The canonical example of this, of course, is the program that lets you unlock your e-book so it can be accessed by an audio reader. Vision-impaired book readers rejoice! Reading a book via a device that converts it to audio has always been legal for printed books, but DRM locks stopped that on e-books. Under this bill, the purpose of the circumvention would be a key factor - you still won't be able to break DRM in order to make illegal copies.

Finally, the bill sets up a time clock and requires reporting on Section 1201's "effectiveness." One of the facts noticed when the whole cell phone kerfuffle blew up is that the DMCA itself predates cell phones. It's possible that the bill requires further revision as technology progresses so gathering further data seems like an excellent plan.

There has been a lot written already about last week's Court of Appeals for the Federal Circuit "decision" in CLS Bank v. Alice Corporation and I'm sure there's more to come as people dig into the details of the full house of opinions.

For now the writing that most closely mirrors my own view is Gene Quinn over at IPWatchdog. Quinn echoes a number of other commentators who have thrown up their hands in a combination of desperation and frustration and said "seriously, guys, WTF?"

First a bit of background for those new to this game: CAFC is supposed to be the highest court in the land when it comes to patent matters. It's true that their decisions can be appealed to SCOTUS - and lots of commenters are hoping SCOTUS takes this one if only to restore some illusion of sanity - but mostly their decisions stand. Frankly, the Supreme Courts' rulings in recent patent cases don't give me any reason to believe they'd be any help here.

As the highest patent court, CAFC ought to be bringing clarity to the situation, setting out good guidelines that people can follow to know if their inventions are patentable and how to draw up valid patent claims. Whether you are pro- or anti-software patents, you want to know what the rules of the game are. This decision is like the CAFC is playing Calvinball with different rules depending on which judge you read.

We got no more than five judges of 10 agreeing on anything. Those who claim this is a victory for one side or the other are smoking something. The CAFC itself seems to have been desperate to come up with something to say en banc so they said it but who the heck knows what it will apply to. I'm sure we'll see endless interpretations and re-interpretations as lower courts struggle through this.

Some commentators have blamed the problem on there being only 10 judges and the fact that judicial nominees are being held up, including for CAFC. It's possible that if more judges had been available we might have emerged with a true majority opinion, but I tend to doubt it. The problem I see is rooted in the laws themselves, with which the judges continue to struggle. As I noted back in the Mayo decision discussion, judges seem to confuse 35 U.S.C. 101 and 35 U.S.C. 103. These two sections of the code try to specify what is patentable, but don't set out criteria anyone seems able to understand or follow. And computers just make it worse.

The 101 criteria is supposed to bar things that are 'abstract'. Back in the day when there was a nice distinction between "ideas" and "machines" this made sense. If someone had an idea they couldn't patent that; when they built a machine that operated based on their idea, the machine was the thing they went to patent. Then along came computers and pretty much everything became both abstract (programs, code, algorithms) and non-abstract (programs, code, machines) at more or less the same time. Trying to determine how 101 applies to computer programs, systems, machines, and operations is what leads to messes like this.

If I had my way I'd wave my magic wand and repeal 101 entirely. It feels like 102 and 103 are sufficient to give us guidance and I can't imagine that simplifying the laws would lead to worse outcomes than we have today. This might not make happy those people who want to ban software patents and think 101 is required for that, but I don't think we're making progress in that direction and certainly we're not making coherent progress in any direction.

I've long held an ambiguous regard toward patent monetization entities (aka non-producing entities, aka patent trolls) here at Copyfight. It's clear that some NPEs are picking on small fry in an effort to generate some quick cash. But there's another side to the story. In today's CorporateCounsel Lisa Shuchman tells the story of a patent monetization entity - CopyTele Inc.- that is trying to help the little guy stand up against a deep-pockets potential infringer, in this case Microsoft.

On the surface CopyTele looks like a typical NPE, asserting a couple of encryption-related patents against Skype, which Microsoft owns. CopyTele, as a small company, doesn't have the resources to sue a larger company which can afford to pay lawyers to keep patent claims tied up for years before any trial. This is a common technique big companies use to fend off smaller claimants - just run the smaller companies out of money and the problem goes away.

CopyTele is no white knight - they're overtly out to make money - but at the moment they're the only way that the little guy has of getting anything for their work. Like a lot of companies, CopyTele was not very good at making and marketing products. Having a good and novel idea - good enough to get a couple patents at least - is not the same as being able to thrive in business. CEOs make bad decisions, recessions happen, investors get cold feet - the list of reasons for a company with a good idea to fail goes on and on.

So what else are they to do? Closing up shop and vanishing is certainly going to happen, but that leaves the question of what to do with the company's good ideas. If they can - through the NPE - make some money off them, should that automatically be disallowed? I tend to think not. If we assume that the patents are good and validly granted then they represent the embodiment of innovation and hard work. For another company to make use of that innovation and hard work CopyTele ought to be able to get some form of compensation, such as by sale or license. Which brings us back around to the patent monetization entity.

A long time ago I made an analogy between patents and cars. Certainly people use cars to commit crimes. Cars are responsible for a lot of deaths. People use cars in all kinds of irresponsible ways (hang up the damned phone and drive!). But none of that causes us to want to abolish cars. Likewise, I do not think that the abuses of some NPEs are a reason we ought to abolish patents, software or otherwise. But surely some sort of (possibly stringent) regulation is required.

I name this test in honor of Greg Aharonian of PATNEWS who has been raging about the crap coming out of the USPTO for longer than I've been blogging. The test is simple: if it fails at its most basic function, it's not suitable material for patent discussion.

In an email sent out today Greg has pointed out that the PTO's database of its own patents fails this test. The patent database is both accessible to the public and used by examiners. As I noted last time, one reason we might point to for bad patents being issued by the PTO is that examiners do not have adequate tools to do their jobs properly.

So, what is the most basic function one uses an existing database for? Searching. In fact, the PTO provides a public Web interface that allows you to search the database. In Greg's email he suggests using this interface for a simple query such as "ICN/PA" (that link should perform the query for you).

This query asks for patents where (at least one of) the inventors are in the country of Panama. Go ahead, give it a try. I'll wait.

Right, so if you're like Greg and me you'll notice that the PTO's database fails to perform even this simple query properly. Some of the answers appear to be because of substring matching (bad implementation of the search algorithm); others appear to be because of incorrect data in the patent records themselves (bad quality control). Regardless of the cause, it's clear that this tool fails here, which leads one to wonder how badly it fails on other queries. If patent examiners aren't finding relevant prior art maybe we ought to give them the right (tested) tools and (quality supervised) data to make that possible, eh?

After sending out last month's press release, Aereo expanded its plans to cover another 21 cities by the end of 2013.

That earned it the further ire of broadcasters led by CBS who vowed - as I predicted - to sue Aereo wherever it went. Not content simply to play defense, Aereo went back to court in New York and filed suit against CBS and various CBS affiliates.

The suit seeks a declaratory judgment that Aereo does not infringe CBS's copyrights, which is what the 2nd Circuit said. The suit is filed in New York in part because that's where the original suit was tried and because part of Aereo's complaint is that by threatening to sue everywhere, CBS is both "venue shopping" and trying to evade the ruling against it in the original court. In general courts look poorly on those kinds of legal shenanigans so they may well get their declaratory judgment, but I don't think that's going to stop CBS.

The list of news topics about laws and problems grows week by week: computer intrusion laws being overbroad, DMCA exemptions not being granted for everyday activity with technologies, patent trolling, maximalist copyrighting - all ultimately come down to the laws' failure to keep pace with the rapid evolution of technology and online social/commerce activities. A pair of recent news stories makes it look like Congress might actually be gearing up to do something.

In the copyright arena, the Chairman of the House Judiciary Committee, Robert Goodlatte, announced late last month that his committee would conduct a "comprehensive review" of US copyright laws. Of course, that review alone will take many months and it's likely to be more months still before anything could possibly emerge in the form of new legislation.

However, a review such as this is almost certain to include public hearings, which provides an opportunity for organizations concerned about how badly the Obama administration has handled these issues to get their grievances heard, and garner some publicity. It's one thing to careen from crisis (CISPA) to crisis (TPP) and another to be able to present a coherent view of what a modernized IP regime should look like. Hearings are the place to do that.

Over on the patent side, Senator Charles Schumer announced his intention to file a bill addressing patent trolling. His idea is to expand the realm in which defendants can ask for PTO review of patents before trial. That's not particularly novel, and again fails to address the problem of bad patent issuance, but it is a step in the right direction. PTO review is often directed by courts or requested after courts have invalidated some or all of a patent's claims. Clogging up the PTO with more reviews isn't going to help, but if this works right the number of reviews will remain about the same and companies (and the public) will be spared the time and expense of some IP-related litigation.

David Post, blogging at Volokh Conspiracy, believes that Republicans may be willing to seize the issue of Internet freedom as a way to reconnect with a voter demographic that they've been losing badly. I'm not sure that bedfellows of convenience are what we need now (or ever) but it'll be interesting to see what the GOP makes of this, since it's damned sure the Dems are not going to piss off their funders in the Cartel.

The site got knocked offline by a barrage of spam comments. Thanks to Hylton and the Corante staff for cleaning up the mess and getting us moving again. There are two entries now published that were from May 3rd and I'll work on clearing the backlog tomorrow and the rest of this week.

Julie Crisp, Tor's UK Editorial Director, took to their blog to post about some results of their one-year anniversary being DRM-free. The key headline is that removing DRM did not appear to increase the illegal copying of Tor e-book titles.

When I posted about this back in December, I noted that we didn't have financial data to support this decision on Macmillan's part. Those data are key, because even though it's clear - and Crisp's column reinforces this - that removing DRM delights both authors and readers - it's still a business. Tor and Macmillan need to continue to make money in a DRM-free model, or they won't be in a position to publish books. The news that removing DRM didn't affect copying should be a wake-up call to the industry.

It's important to remember that despite its meteoric rise in the past few years, self-publishing is not (yet?) a true alternative to major publishing houses. It's a complement. Publishers are often focused on 'name' authors, and blockbuster publications that can get placed on visible list like the NY Times Bestsellers and can bring in large dollars. That shuts out a lot of smaller-audience and specialty publications that can do quite well in the self-published marketplace. So, yay self-publishing, particularly since that avenue tends to be DRM-free from the word go.

But we have not yet seen any other big publisher follow in Macmillan/Tor's footsteps and that's just ridiculous. Look, guys, DRM isn't helping you, it isn't securing you any sales, and it is locking you in and your customers out. Cut that out.