Here we'll explore the nexus of legal rulings, Capitol Hill
policy-making, technical standards development, and technological
innovation that creates -- and will recreate -- the networked world as we
know it. Among the topics we'll touch on: intellectual property
conflicts, technical architecture and innovation, the evolution of
copyright, private vs. public interests in Net policy-making, lobbying
and the law, and more.
Disclaimer: the opinions expressed in this weblog are those of the authors and not of their respective institutions.
Nick Bilton blogs for the NY Times about Craigslist. It's generally a familiar story: the old established business protects itself by legal threats, unexpected API changes, and generally working to lock out competitors and innovators who want to build on and improve the basic service.
The difference here is that we're not talking about the typical Big Cartel Corporation; instead, this is Craigslist. Many of us have mental images of Craigslist as being small, local, homey. In fact that's how it started, but in the intervening years it has grown into a multi-million dollar business. Once in a while it hits the news, as happened when it was forced to shutter its adult services sections after charges arose that the ads there were thinly veiled covers for prostitution and human trafficking.
But despite these blips, the service has generally retained a genial and positive public image. Bilton argues that part of why Craigslist - which has generally grown old, creaky, and ripe for disruption - hasn't been surpassed is the large surplus of goodwill and beneficent image it maintains. People, even those whose attempts at building new services on Craigslist have been shuttered, don't seem willing to make a big deal of it nor attack the service publicly.
This can only go on so long before people notice and start losing their goodwill - remember when everyone thought Google really wasn't evil? As Fred said, Craigslist (which didn't comment for this story) is in the wrong here and needs to live up to its reputation, not down to its legal bottom line.
Suddenly, it seems, stories about the end of cable television are everywhere. Today's entry from ReadWriteWeb asks how we will watch television in the future. That's actually an interesting question, since I don't expect cable TV to die and vanish overnight. There will be a transition period, which I expect to last most of this decade. Cord-cutting for an individual or household is sudden (we just dropped our cable subscription today, for example) but national trends are slower. There's still time for cable and network execs to realize that people will watch television, but it needs to be served Internet-style, which means much more on demand, much more a la carte, and much better integrated into other digital offerings such as Web sites, social media, and new offerings that are only now in the incubator stages. I will probably not blog a lot more of these general high-level stories but readers with items of specific interest should feel free to keep sending them to me.
Yes, Virginia, TV execs do know where their audiences are - in the US, online, and they don't want you. Unless, of course, you want to fork over $100/month for their massive packages of crap. But seeing the Olympics on your computer? Not this time.
Heidi Moore (for the Guardian) has a nice summary of the #NBCfail that has rolled through the social media sphere since the games opened. You see, there's a theory that you can watch (some of) the Olympics online. But not in the US. NBC has exclusive rights and they don't want to show it to you. Unless, see above, big package, big bucks, big bullshit. The Olympic site itself is no better, using its IP-detection banhammer to tell you to go suck up to NBC if you live in the US. I did try this weekend - I wanted to see some of the live action and compare how the streams performed. Yeah, right.
I mean, really. It's not enough that they fail on time-delay issues, and missing out on broadcasting events. It's a gross ignorance of the size and potential of the 21st-century audience. According to Moore's article, some two million people spent their time reading the #NBCfail hashtag stream. And that number doesn't count people like me who tried and just gave it up in disgust. If NBC are too stupid to capture and profit off two million potential viewers then I have no sympathy for them. As Moore says:
Most Americans would recognize that NBC needs to make money on the Olympics. It is not at all clear, on the other hand, that NBC needs to make money by forbidding millions of people from watching the Olympics.
The creation of artificial scarcity is one of the oldest tactics of monopolists. And, as we saw in the music business and the newspaper business it's all about service to old entrenched models of bureaucracy. NBC thinks it can stop people cutting the cord by creating artificial situations; instead what it creates is animosity and an environment where people openly share advice on how to circumvent blockages. If that doesn't sound like history repeating itself then you haven't paid attention to the last two decades.
Of course, when the US says this sort of thing, they're inevitably thinking of things like the actions by dictators-we-no-longer-support in other parts of the world to sever their countries from the Net in order to further hide repression. I'm sure that the infringements of ACTA and its devil-spawned ilk don't register as human rights abuses. The Netizen project minces no words in this regard, calling out ACTA and the TPP among others and pointing out that Netizens in the US are as divided as the international community when it comes to the hard details of what exactly is meant by freedom and human rights online.
The page describes several ongoing efforts, including competing visions of what a Declaration of Internet Freedoms or Bill of Internet Rights might look like. Messy stuff, but that is, as they say, "...why we are so heavy on the public participation aspect." Maybe the US government could take some notice of that, too.
If you were still in doubt about how we got into the current Copyright Wars mess after reading Drew Wilson's research on file sharing then perhaps the work done by Professor Michael Carrier (Rutgers Law) will help.
Carrier's conclusion isn't likely to surprise anyone who has been reading this blog for a while, but it's worth quoting here:
The Napster decision reduced innovation and [...] led to a venture capital “wasteland.” The article also explains why the record labels reacted so sluggishly to the distribution of digital music. It points to retailers, lawyers, bonuses, and (consistent with the “Innovator’s Dilemma”) an emphasis on the short term and preservation of existing business models.
In painful detail the article describes how the Cartel's scorched-earth litigation strategy managed to bleed or destroy every company that tried to create a legal venture in digital music. As a result, illegal ventures flourished to fill the void. By refusing everything that came along, up to and including full control and a blank check, the Cartel built a legal Maginot Line around which content freely flowed. And in typical Cartel-style behavior, the established music industry threatened, blackmailed, and extorted everything it set its sights on.
I wonder if David Lowery and the others who bemoan the current environment are paying attention. The Cartel may not be directly to blame for any individual's decision to get 11,000 illegal copies of songs, but they certainly are to blame for creating an environment in which nobody (before Apple) could make it routine and easy to acquire those tracks legally. Sadly I don't see any respite coming in the Cartel's self-destructive policies.
(h/t Boingboing and Torrentfreak for the original pointers.)
Nature, the highly respected journal, that is. If you are interested in a quick peek behind the scenes at how editors for big publications balance and swing with the authors trying to get published, I recommend Friday's blog post from Action Potential, one of the blogs at nature.com. It talks about how two similar papers came to be published separately despite similarities while a third paper, also similar, did not get published (there).
I last wrote about this brewing storm in April, when it looked like outrage at astronomical bills university libraries have to pay might finally cause some changes. Instead, it appears that the British have made a bold first move. The notion is simple:
[R]esearch papers that describe work paid for by the British taxpayer will be free online for universities, companies and individuals to use for any purpose, wherever they are in the world.
That may not seem like a lot, but it's a huge deal and if other countries follow suit it could be an even bigger effect. It's not cheap - the government is estimating that UKP 50 million/year will need to be paid out of existing budgets to fund this publication. Of course, that compares favorably to the current UKP 200 million+ that research libraries are paying, but it's not that easy to shuffle money from one pot - the library funding generally coming from things like University budgets and endowments - to the other. Money that scientists have to pay to publish their own work (including servers, bandwidth, staff, support, etc) is money that then isn't available to spend on lab costs, grad students, conference travel, and the other essential components of actually doing the research in the first place.
The final details of the model are not yet nailed down and will probably be fought over at length. Journals and their publishers will of course want to retain control and the free labor system that they now have. Academics will (dear gods, FINALLY) have to re-think how publication and tenure are so tightly bound. The Guardian article describes two competing models, dubbed "gold" and "green", for how research can be opened up. The gold model favors publishers, generally; the green model favors the free and open advocates. It also seems like the new online/open journals such as PLoS aren't being heard here, which is something of a shame.
But still, there's a lot of time to work out how it's going to work, and as Professor Adam Tickell, of Birmingham University is quoted, the UK only produces about 6% of the world's research publications. That means at very best we've still got 94% to go.
These shenanigans remind me of the crap that went on last year with ebooks - publishers and retailers taking out their contract spats on the reading public. Nobody wins in these kinds of disputes, and aggravated customers have all the more reason to get rid of their high-and-mostly-useless cable bills.
The case is called CLS Bank v. Alice Corporation and the PDF of the decision is here: http://www.cafc.uscourts.gov/images/stories/opinions-orders/11-1301.pdf. The case specifically focuses on the question of what in the realm of computer hardware, software, process, etc is patent-eligible. The Court ruled that the system - a computerized trading platform - was patent-eligible, specifically under 35 U.S.C. 101 (this is sometimes called "101 eligible"). In this decision, the CAFC reversed the lower court, which had found that the system was ineligible.
In the majority opinion the Court took some pains to point out areas where decisions such as Mayo seem to have muddled different eligibility criteria, and tried to set the record straight. It also took some not-so-subtle swipes at the SCOTUS opinion and previous dicta from the high court. For example:
The abstractness of the "abstract ideas" test to patent eligibility has become a serious problem, leading to great uncertainty and to the devaluing of inventions of practical utility and economic potential.
For those who are coming late to this game, what this is saying is "Hey, SCOTUS, you gave us this test called 'abstract idea' but no guidance on what it means or how to apply it and which patent eligibility criteria it's supposed to affect". The CAFC complains at length that attempts to clarify this matter have not actually added any clarity:
It can, thus, be appreciated that a claim that is drawn to a specific way of doing something with a computer is likely to be patent eligible whereas a claim to nothing more than the idea of doing that thing on a computer may not. But even with that appreciation, great uncertainty remains, and the core of that uncertainty is the meaning of the 'abstract ideas' exception.
CAFC isn't always the final word on patent decisions, though it often is. If this case is taken up a level then the high court might finally use it as an opportunity to clarify what their 'abstract idea' test means. Or, by refusing cert and letting the decision stand, the Court could be implicitly saying that CAFC are right and that computer system implementations like Alice Corp's are indeed 101 eligible. That's not as definitive as a real ruling but at least it's something.
(Thanks to Greg Aharonian of Internet Patent News Service and PATNEWS for pointing me to this decision and the key parargraphs.)
Back in the old days, when P-A was just two people, they ran for a year on donations but as the enterprise grew so did its need for (paid) services such as bandwidth/hosting, and professional staff that have families to support. This is an intersection of two threads that I've talked about in this blog: the need for artists to get paid, and the ongoing change in relationship between digital media audiences and advertisements. I wish them well and look forward to seeing how this comes out.
As I've mentioned in my posts on "Safe Harbor" it's crucial for the DMCA's application that a safe harbor claim be made on the basis of provider neutrality. If Verizon wants to give up its claim that it is a neutral provider, then it suddenly becomes liable for every bit of infringing content that flows over its pipes. Dear Verizon, have you gone batshit insane?
Not only would that lead to a renewed flood of lawsuits and complications, but it would raise a whole host of issues of whether or not Verizon is claiming some kind of ownership over the content that it provides. People who feel that Verizon is trying to claim some kind of ownership of their content may themselves be moved to sue. This is very dangerous ground to tread and I suggest that Verizon might want to read the position paper that Google recently had prepared on the editorial role of search result-provision.
The parallels are surface-obvious, but functionally subtle and vitally important. Google is in fact editing the Web to produce an organized set of results. Google chooses what sites to crawl, which to index, and how to organize the results for display. However, much as they might mislead you otherwise, Google isn't the Web. There's lots of stuff on the Web that isn't in Google (or any other search engine). Conversely an ISP like Verizon shouldn't care what is or isn't in the Internet. If I type a URL then either that resolves or it doesn't. There doesn't need to be any editorial judgment involved, and trying to pretend to edit the Internet is just daft.
Boingboing pointed me to this story on Billboard about how the band Def Leppard are still sticking it to 'the Man'. In this case the "Man" is their (uncooperative, theiving, Cartel-member) conglomerate Universal Music Group.
The members of Def Leppard assert that UMG is screwing them over compensation for digital downloads - details aren't given. Since UMG won't cooperate, but controls the band's back catalog, the band has first of all given the label a flat "no" to anything the label wants to do with Leppard's music. UMG may own the rights, but the band's contract apparently requires their approval and they're just flat-out refusing to give it.
What makes it more amusing is that Leppard then took it one step further, by going back into the studio and singing themselves "into a certain throat shape" in order to produce "forgeries" of their own back catalog. These forgeries then serve as a digital substitute for the back catalog that UMG holds, but which is now rendered worthless.
According to the Billboard story the two re-recorded albums tracks have sold about 26,000 copies so far which isn't a lot but my guess is that all the profits from those sales are going to the band, making it far more profitable for them than whatever pittance UMG wanted to dole out.
(ETA: commenter Phil S noted that the forgeries so far are just two tracks, not entire albums. That's less cool in that most of Leppard's back catalog remains unavailable by legal digitized means, but cooler for them in that they have 26,000 sales of just two tracks. Even if the others sell at the lower 5,000 downloads/track rate they could see significant income from the work.)
A: I've refused to buy retail CDs since the Cartel went after Napster, long ago. I buy used CDs, sometimes. Often I buy new CDs from artists via their Web sites or at their shows. I buy through iTunes a fair bit, and rarely from other stores like Amazon or Beatport. Almost all the music I buy is stuff I found via some kind of free sample. I found Beats Antique because someone remixed them, which led me to finding a (probably illegal) video someone had posted on YouTube. That's two transgressions already, but the end result was that I went to their show and bought all the CDs they could sell me at the venue. This is how I thought it might work, which is why Emily White's story surprised me.
A: Sadly, no. I'm a terrible book reader these days. Decherney's publisher was kind enough to send me a review copy and that still took me a while to get through. I'm always willing to look at a book or a related product but I can't promise I'll blog about it. I don't hesitate to say something if I think what I've seen isn't that good but I try not to go out of my way to stomp on peoples' toes.
Q: Speaking of Legitmix, do you think they're going to fail?
A: Not exactly. I just don't expect them to be revolutionary. I expect that some people will use it, and lord knows most DJs and producers can use more income. If Legitmix makes them a few bucks then that's all to the good. I'm just doubtful that it's a scalable business model. Stuff will continue to be released as it is now, and also companies like Legitmix will have things to offer.
A: The problem is crap patents. Attacking the problem once the patent has issued is always going to be a second-best solution. So let's focus on removing the crap first.
First and foremost, stop stealing their money. Congress uses PTO fees for all kinds of things that have nothing to do with patenting or the office.
Second, do things that will lead to reduced pendency but without directly rewarding examiners for doing more exams. People do what they're rewarded for - if you just incent examiners to clear the backlog then they'll do that and cut quality corners along the way. Instead, use that PTO money for more staff and training. Give examiners access to all the public searching tools ever: Medline, Science Citation Index, Physical Review Letters, and of course the major search engines. If those tools cost money, pay for them.
Third, allow examiners to make summary rejections and make it mandatory that any patent application which cites no non-patent prior art be rejected before any examination. There is nothing so new under the sun that it hasn't at least been hinted at in the literature somewhere. When I noted that some of the patents Apple was asserting were "strong" that was in part due to looking at how much of the published literature they covered. Nothing slows down patent review more than the applicant making the examiner do all the prior art searching. In my more bitter days I also want to see applicants who clog the system with junk applications subject to fees for filing frivolous patents the way people who abuse the court system can be fined for bringing frivolous lawsuits.
Fourth, do something to bring clarity to the law and cases around patentability. Maybe it requires appointing a special court - we have those for national security matters and for tax litigation, why not for patents? Or maybe a court is the wrong model and we'd do better with an independent board of arbitration. Whatever the system is, it would need to be as independent as possible from the PTO and from whatever political party is in power.
(So, there you are. I probably won't do this often, but the last month or so of stories has brought more questions than usual. Thank you.)
However, I don't care much about enterprise software. What I do care about is gaming. And this is a freaking nuclear bombshell for the gaming industry if it holds up. Right now we're in the death throes of the boxed-sale model for gaming. Services like Steam, Origin, and Amazon have shifted people's purchasing habits away from physical media and toward downloaded games. Never you mind things like the App Store (iPhone) and Play Store (Android) which are selling millions of download-only programs. Even stodgy old desktop and console gamers like me
are doing the vast majority of their purchasing online these days. Always-on, high-speed bandwidth has made it the norm for people to download even very large big-name titles.
This reminds me of Redigi here in the US, which is trying to legitimize resales of iTunes purchases. In both cases the claim is that the company can deploy technology to ensure that only one digital copy ever exists. You buy a tune or game as normal, but when you want to resell it, the item is removed from your computer disk/account. You can't access it again, and when it's repurchased that purchaser gets, in effect, your copy. Just as with physical media, the original seller may not see more revenue but the practice is legal under first sale.
As a practical matter I expect that if this ruling stands the online game sellers will adapt to it. You'll probably have to pay a service fee to transfer your purchases back, and you can imagine situations in which people get a discount in exchange for giving up resale rights. Smart retailers will likely copy the practices of places like GameStop (US, physical) and Greenman where you get more in store credits for returned games than you can get in cash. There are a lot of business opportunities that can be opened up here - it's exciting.
As a related aside I wanted to note that the American Library Association has just filed its amicus brief (PDF link) in Kirtsaeng. As I mentioned before, the ALA position is that this case threatens to tear apart the entire practice of library donations and lending if it is upheld. Clearly the US should not go on to destroy crucial first sale rights and the Europeans should be celebrating their new freedoms. Happy 4th of July, guys.
Another story I've been sitting on for a bit, though much less detailed than yesterday's, may affect many more people. The television business is dying. Or so said Henry Blodget, CEO of Business Insider. If you know that name you might be remembering that Blodget got himself perma-banned from the securities industry for civil fraud in 2003. He also writes for other publications like Slate and Newsweek, mostly doing what he did in the securities business: predicting.
In June he predicted that the television business was on the verge of collapse. In particular, Blodget argues that the television industry is following the same fatal mistakes that the newspaper business made in the past decade, confusing increases in things like viewer numbers for a sustainable revenue model. In particular, Blodget zeroes in on the way that digitization (both Web and digital cable/DVR) have changed our relationship with advertisements, which are the major source of television revenue. No shock to anyone who's paying attention: we don't watch ads.
The problem isn't limited to broadcast channels, which are generally free to receive and almost wholly supported by ad revenue - cable channels that depend on subscription revenue are also likely in trouble as people start ditching their cable lines the way they have been ditching their landline phones. This isn't an immediate problem, but if you project out ten years into the future I agree with Blodget - there's not much reason for people to keep their cable subscriptions. Shows come over the Web, particularly because that enables people to watch on whatever screen happens to be in front of them, be it television set, desktop PC, or tablet. New competitors (iTunes, Amazon, Netflix, Hulu) are taking aim at the money that Blodget notes is currently being "wasted" on cable subscriptions. These new competitors will also give us more on-demand options, and cater more to our schedules.
I "watched" the ACA decision via Twitter and the SCOTUSblog live stream. Those sources had it right. I didn't need a talking head on a screen to tell me what was going on, and I sure don't need to pay thousands of dollars a year for 500 channels I never watch.
Coda: One reason I hadn't posted this story yet was that I was waiting for someone to refute Blodget's numbers, to show where his reasoning was wrong. Instead, I got a notification that HBO has decided it doesn't want Web subscribers' money. Really, HBO? Your response to a campaign of people who are trying to give you money is "no, go away, we don't want your cash." If Blodget is right, and I believe he is, then the television business will have nobody to blame but themselves when their fire sales and funerals roll around.
I've been sitting on this post trying to formulate it at reasonable rather than essay length - I hope readers will forgive me if I go on some. I'm also uncomfortable calling out the EFF for wrongheadedness. I know they're smart people who are trying their best. Usually I support them, but this time I think they're substantially wrong. If you're not familiar with their latest "Want to Abolish Software Patents" effort you can read the discussions and proposals at the project's new site.
I think the campaign to abolish software patents fails on three grounds:
Theoretical: I don't see how you can abolish software patents without also abolishing hardware patents.
Business: I don't see how you can abolish software patents without finding an alternative for people who need legal protection for key information/IP assets.
Message/messenger: abolishing software patents is like trying to abolish cars because some companies make unsafe cars and lots of people use cars to kill/maim other people.
I will agree that the current state of the patent system, and particularly the way large tech companies are abusing it, is a national disgrace. If getting publicly slapped down by Judge Posner doesn't serve as a wake-up call then maybe a few more resounding smacks are needed. But bad behavior isn't the same thing as a bad technology. Let me take first my list above and then talk about Defend Innovation's proposals.
First, if you're not familiar with the Church-Turing thesis then let me summarize: anything you can compute (algorithm, software) can be embedded in a machine (hardware). If you are opposed to software patents then you must explain why I can patent a machine that executes precisely the same algorithm as the software I can't patent. I work in high-frequency trading, a business in which there is an ongoing debate about whether things like programmable arrays are better than general-purpose machines due to speed and other factors. But nobody debates that the FPGA (hardware) and the C code (software) are following the same procedure. You could theoretically oppose patenting hardware AND software, but not split the two. At least, not if you understand a core concept of computer science.
Second, stripping patent protection away without giving inventors some other means of protecting their inventions leaves software innovators at a severe disadvantage compared to hardware innovators, and compared to large companies. Once you know something is possible it's often easy to deduce how to do it, so why should you pay the clever fellow in the first place? There are alternatives to abolishing patent protections; for example, we've talked about trying to restrict patents to defensive-only uses. And we've talked about patent pools. I still believe that the monopoly grant given by a patent should be subject to more restrictions. But you can't just hand-wave them away and not talk about the consequences.
Third, it seems to me that an effort to abolish software patents is a classic baby-with-the-bathwater fallacy. Patenting in the US is in an abominable state. Prior art is a joke, patent searching is ridiculously hamstrung, the USPTO regularly has its resources stolen by Congress, and on and on. Never mind the layers of confusion added to ambiguous law by equally unclear court decisions. But nothing in the current brokenness convinces me that the system is so irretrievably flawed as to require abolishing. We didn't abolish cars after the Ford Pinto, nor should we have.
That said, let's turn to the specific proposals EFF is putting forward...
1. Patent terms of five years. Why? Computer innovations take just as long to bring to market and make mass consumable as anything else. You can look at everything from icons on a computer screen to the latest swipe gestures on mobile devices and trace their roots back 20 or even 30 years. It may seem like the pace of innovation in software is particularly rapid, but it's not.
2. Allow defendants to recoup fees & costs. That's not unreasonable. There are safeguards elsewhere in the legal system to help people recover from frivolous lawsuits. This would need to be coupled with procedures for summary dismissal with prejudice, too.
3. Require running code. This has intuitive appeal in that there used to be a requirement for embodiment of an invention. Embodiment in software isn't per se a stupid idea but it's missing the point. The language of the proposal complains about patents being "confusing." Maybe so, but how are software patent claims any more confusing/less clear than any other claims? And again, why impose an additional embodiment requirement solely on software patents? If you think embodiment is a good requirement for patent grant then it should be a requirement for all patents. And, really, trying to match up lines of code (in what language?) to patent claims is just dumb. Is my javadoc sufficient? It's woven from procedure headers, not lines of code. If I submit the output of the compiler instead is that somehow less valid because it doesn't have lines of code that match patent claims? Come on, EFF, you are better software engineers than this.
4. Allow innocent infringement. Again, not an entirely stupid idea if applied to all patents. I just see no reason to single out software. However, it compounds the willful ignorance of prior art problem. Currently on my patent application I'm required to disclose any prior art of which I'm aware, which creates an incentive for me NOT to know about other inventions. This leads to absurd versions of "I'm sorry, Congressman, I cannot recall what I was doing in that laboratory with that young lady on that date." Innocent infringement doesn't solve anything - it just moves the scope of culpability from the disclosure section of the patent to the courtroom.
5. Improve notices and timeliness. Also generally good ideas that miss the point. As the current most-upvoted comment on the page today says, it doesn't matter how up to date records are so long as there are anticircumvention laws on the books that prevent you from decompiling or doing other things that would permit you to know if a chunk of code is in fact infringing.
6. Limit damages. A favorite whipping-boy of everyone from anti-malpractice Republicans onward: juries give out too much money for trivial offenses. True. And? What this really requires is more Posners and their ilk who will knock down the foolishness of plaintiffs and their lawyers. I'm not generally in favor of arbitrarily legislated malpractice caps and I can't see any reason why patent liability judgments should be treated differently (see a theme here?).
7. Congress should study the issue. Uh, yeah. I'm not even going to touch that one. Except, seriously, if you're going to talk about abolishing patents then I think it's incumbent on you to describe what you want to replace them with. My personal opinion remains that we should encode into patent law something like the Breyer test, which would permit violations of the patent's monopoly grant if it could be shown that the patent was not serving its Constitutionally created purpose.
I have a bunch of other ideas on how one might go about fixing the current patent mess but since this post is epic long already and is supposed to be about how badly the EFF's latest scheme fails, I'll leave it here.