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.
Scalzi points out that the Humble Bundle had two salient effects that are hard to replicate. One is that it represented a very large number of units sold in a short period of time. This may happen when an author releases a new e-book but Scalzi's book in the bundle was not his newest volume; it was an older title that had already sold well. So getting a big burst of sales on an old title was a new phenomenon. Two, the bundle allowed him to sell the first volume of a series to a large number of readers. People who buy the first volume of a series are likely to pick up subsequent volumes and Scalzi reasons that he may get substantial uptick in sales of the rest of the series, for which he'll be paid the normal amount.
Most notably to my eyes is his calculation that people buying this e-book were not the people who would normally buy his books, as his weekly e-book sales didn't take a dip while the Bundle was on offer. This is very strong evidence that the readership for e-books is nowhere near tapped out, and that pricing is a significant factor in bringing more of that readership on-board. This is something that successful indie authors (see for example Joe Konrath) have been claiming for a while. But big publishers have been uniformly resistant to lower- and flexible-pricing models on the theory it would cost them sales. Time to look again, oh agency-price-raising-lovers.
About the time of Scalzi's post, Cory Doctorow tagged an open letter to e-book publishers on the current marketplace mess. The post, from Joanna Cabot of TeleRead, pleads with e-book retailers to treat their customers "...like a real person, and given the trust to use my purchased content sensibly, and with some allowance for real life."
The issue at its heart, is the DRM-encumbered misbehavior of e-book retailers such as Amazon and behind that the paranoia of e-book publishers. As Ms Cabot says, publishers "need to get over this idea of the ‘lost sale.’" If you listen to e-book publishers you'd think that all their customers were thieves just waiting for the opportunity to steal e-books. (I'm reminded here of Amanda Palmer's comment on how music execs view fans.) What Scalzi's numbers show is that Cabot is on the right track - given a chance to set a slider to zero and get e-books for free, people instead chose to pay something for the prospect of value. DRM-free value, I should repeat.
Where I disagree with Cabot is in the conclusion that if e-book publishers don't get a clue then readers will take their dollars elsewhere. When agency pricing was introduced and prices jumped 30% overnight there was not a commensurate fall in e-book buying. Sure, people bitched, but they still paid up. That's why I think that experiments like Scalzi's are so relevant - we need data to show that there's a bigger marketplace waiting to be captured and that it's in the publishers' interests to go after it. A good first step would be following Macmillan into the DRM-free lands, but that's only a first step.
It's generally hard these days to be a Safe Harbor defender. The key provision of the DMCA that permits high-volume sites to operate more or less freely - without pre-approval - requires that they also be willing to respond to take-down notices. And this is where the trouble begins: takedown notices get seriously abused; people file takedown notices for material they don't even own the rights to. The DMCA provides no sanction or penalties that might curtail this abuse; someone can spam DMCA notices like they would spam Viagra ads and nobody is likely to stop them.
The facts appear simple: some years ago, a blogger at Edublogs published copyrighted content. According to WPMU.org, another site hosted by ServerBeach, the offending material consisted of 279 words and was published in a 2007 blog entry.
Pearson, the educational technology company, owns rights to that material and sent a DMCA notice earlier this month to have it taken down. The notice passed through to Edublogs administrators who, as the BBC noted, used a simple Wordpress feature to make sure the entry containing the disputed material was only visible internally. This, however, did not satisfy ServerBeach, which took upon itself the role of "three strikes arbiter" and less than a day later shut down 1.45 million edublogs. That's all million-and-a-half blogs, all entries, blacked out.
Think you might be overreacting just a WEE bit there, ServerBeach? The hosting company claims it had no choice but to black out the entire site since it couldn't selectively block a single blog or page. Now, aside from being complete technical nonsense, it's also legal nonsense. Technically speaking, any ISP can selectively block traffic to or from any URL it is the host for. It may not be a trivial switch to throw, but the capability exists; claiming it doesn't exist is just stupid. And really, it's not ServerBeach's job to be a copyright cop. That's the whole point of the DMCA - ISPs get Safe Harbor by acting as neutral third parties. The copyright dispute exists between Pearson and whoever is determined to be responsible for the publication of the material, which might be the article's author, the blog owner, or Edublogs, in some combination. If the owner (Pearson) wasn't satisfied with the action taken to remove the material from public view, it should say so.
The story got a round of attention in both the tech and mainstream press, but to my understanding ServerBeach continues to defend its position and actions. Which, if I was Edublogs, would be prima facie evidence that a new ISP is needed, and pronto.
(Thanks to Copyfight reader Ross Hudgens of WPMU.org for bringing this story promptly to my attention; it's been languishing in my queue for almost two weeks now.)
Earlier this week I was invited to listen in on the inaugural press conference for a new lobbying organization calling itself the Owners' Rights Initiative.
The group, composed primarily of resellers (e.g. overstock.com), retailers (e.g. Powell's Books), and lenders (e.g. American Library Association), has formed in response to the threat to their (and our) livelihoods posed by the growing restrictions on First Sale doctrine. Notably, the group is trying to draw attention to the Kirtsaeng case that is about to be argued before the Supreme Court. Members of the coalition (such as the ALA) have filed amici briefs in the case
However, the group believes that no matter which way SCOTUS rules in this case, the action is next going to move to Congress, as the losing side will want to get legislation turning things back in their favor. Thus the group is going to focus on "advocacy" which I hear as "lobbying Congress".
The press conference featured half a dozen spokespeople for major members of the initiative, each giving a short statement of support and then taking questions from the call-in audience, most of whom appeared to be members of the press (and people like me, who fake it well). Generally the poitns made were things that Copyfight readers will be familiar with: Kirtsaeng is a case that could significantly curtail First Sale rights for people in the US by taking those rights away from products manufactured overseas. Aside from being an invitation to every manufacturer to shift their production outside the US, this would be a tremendous burden on reselling and lending institutions such as eBay, Overstock, and libraries of all sizes. In my talk to the New England Library Association I spent a bit of time trying to educate those mostly smaller-scale librarians about the dangers of this case. I found it interesting to note that the Seattle library system estimates that over 50% of its collection of printed materials (including English- and foreign-language volumes) was printed abroad. That's probably not an unrealistic yardstick, so just try to imagine that half your local library's lendable materials vanish off the shelves overnight. Yeah, that's a big problem.
ORI also seems to be focused a bit much (too much, in my view) on physical materials. The gentleman from Overstock noted with alarm that Kirtsaeng would lead to manufacturers segmenting their products by region or country and that this would mean you couldn't buy certain non-US goods in the US. Hunh, I thought to myself, isn't that what region encoding already does for DVDs? What, I wanted to know, was the big deal about that? Unfortunately, I think I mis-phrased the question to him as he kind of flubbed the answer.
I was also slightly disappointed by repeated references in the panel to "clever lawyering" as being responsible for the current situation. I've read the Second Circuit's decision and it seems a reasonable application of the law as written. If you don't like the law as written, blame Congress not the lawyers. Congress, whom the ORI hopes will fix this mess, is also full of clever lawyers. So less blame and more comprehension next time, please.
I should also note that ORI isn't alone in taking this approach. I've been getting pings from YouveBeenOwned (whose site appears to be slashdotted as I write this). This offshoot of the liberal Internet activism group Demand Progress went live in June of this year with a campaign against Kirstaeng and other things like TPP - the Trans-Pacific Partnership - that also threaten consumer rights in the US. If they can ever keep their Web site going they appear to be planning a public demonstration in DC on Monday, the day before SCOTUS hears arguments in Kirtsaeng.
In CLS Bank v. Alice Corp the Court will have to decide the relationship between the implementation of a process in a computer (program) and the abstractness of that process. In Ultramercial v. Hulu the issue again is whether taking a process that is abstract and putting it into a computer program somehow makes it non-abstract.
In both cases the EFF is arguing that encoding an abstract process into a computer program doesn't automatically make it non-abstract. This sounds good on the face of it, but it has two major problems - neither of which is really the EFF's fault. Problem one is the question of what is "abstract." The common-sense notion of abstract is a fine one, but in order to rule on a matter of law what's needed is either a definition in the law (missing) or a definition in a precedential court case (missing and/or confused). In order for the Federal Circuit to be able to make reasonable sense of these cases, we're going to need a workable, legally binding agreement as to what "abstract" means in the sense of patents on processes.
The second problem is one I referred to when I criticized the EFF's patent-reform efforts this past summer: focusing on software is misguided. I continue to believe that a fundamental principle underlying all of computer science is that anything that can be done in a program (software) can be done in a machine (hardware). Therefore, the critique of these cases cannot be simply that "turning them into a program does not make them non-abstract." You must logically also say that "turning them into a machine does not make them non-abstract."
And if you say that creating a machine that follows a process is not patentable then you have a serious problem that loops back around to our first point: how is this not making something non-abstract? Isn't a machine the Platonic ideal of a non-abstract thing? And how are we to differentiate one set of steps (process) taken by a machine from another set of steps taken by a different machine in such a way that we could say one machine was performing an abstract idea and one was not?
It's this sort of reasoning that leads people like Greg Aharonian (of PATNEWS) to argue that the entire notion of abstract is undefinable - he would say "nonsense" - and thus should be removed from the laws entirely. Unfortunately, the CAFC can't rewrite the law and Congress is extremely unlikely to do so, which means we may be stuck trying to untangle this knot for some time to come. Paging Alexander the Great!
I've been going on about e-book evils a good bit lately, but they do have undeniable appeal. As someone remarked to me privately, you can torrent down today more e-books than you could read in the remainder of your lifetime, no matter how old you are, and carry them around on a piece of hardware smaller than your thumb. Try doing that with physical books. Touche'.
Joel Johnson, it seems, would like at least for vendors of goods like e-books (that you don't actually own) to be required to tell you that you're not actually "buying" the thing when you click that button that says "buy." That seems a thin solace for the mess we're currently in, but at least one can hope that giving it some more attention will lead to more ideas. Maybe, as Gizmodo suggests in the image it put with Johnson's story, every iPad and Kindle should come with a big "OPP" label.
I wanted to take a separate blog entry to talk about HathiTrust. This is related to the previous entry about Google Books, in that the actual case in question was not a suit against Google itself, but was instead the case known as Authors Guild v. HathiTrust.
HathiTrust is the online resource formed by several libraries to hold the digital editions of books created from Google's scanning. HathiTrust uses these scanned book copies in several ways, including allowing searches against them and providing the electronic sources to vision-impaired users who can't access the printed copies. HathiTrust does not pay anyone for rights to do this and the question that Judge Baer ruled on was really the question of whether or not what HathiTrust is doing is fair use. Of course, this has significant implications for Google, which also makes scanned digital text copies searchable and readable, but Google was not formally a defendant in this case.
The case (PDF link) is a little complicated because the Court had to deal with other matters such as whether a state university enjoyed 11th Amendment immunity and what scope of possible copyright violations could be the subject of the suit. GSU has tried to self-police via a "Fair Use" policy that requires professors who want to make electronic elements available to justify their use of the copyrighted material on fair use grounds. The court generally upheld that approach, though it did put limits on what percentage of a book could be offered fairly by the library. In addition, the judge appears to have given the publishers an "out" in that if they were themselves to offer a reasonably priced excerpting service online that might preempt what libraries are now doing. However, in the absence of such things (or a reversal on appeal) this one is marked as a win for libraries that want to do a limited form of e-lending in support of research and class materials.
The third case that Kolowich notes as related came last year. In Association for Information Media and Equipment v University of California (PDF link) a U.S. District Court Judge appeared to buy UC's argument that a library streaming video off a secure server to authorized users, not the general public, was fair-use equivalent to showing that same video in a classroom. Since UC had an agreement that permitted showing the DVDs in an educational context, the judge reasoned that it didn't matter whether the students were sitting in the same physical classroom or in distributed virtual classrooms - the use of the stream was still part of the educational agreement and thus permitted.
As Kolowich notes, the suit was actually dismissed on technical grounds and so there isn't a standing ruling on the fair use issues, and there are certainly many more fair use practices that HathiTrust are going to have to navigate. But still, it's looking like a winning year for the Trust and other library/educational users.
Of course, that may change with Kirtsaeng about which more tomorrow.
This suit has been going on forEVER (at least seven years) and I'm at least technically party to a possible settlement as an author so I haven't had much to say about it, but this month there have been two major developments that are worth tracking. Plus I'm hopeful my new librarian readers are paying attention because this one matters to you guys, too.
To review: Google announced in 2004 a major initiative to scan a lot of books. There was a considerable debate about which ones it could scan - things out of copyright are obviously fair game but that's a vanishingly small sample of the literature. Most controversial were plans to scan so-called "orphan" works: out-of-print items still under copyright but whose copyright owners could not be located. Also controversial were Google's plans to be the exclusive repository of the scanned material, in effect building a digital wall around what might be thought of as public-domain material.
Major organizations objected, publishers objected, attorneys general had significant questions, and as usual it all dragged out in court. There have been some attempts to engineer a comprehensive settlement, none of which have held on. The most recent one was last year, and that got thrown out as vastly unfair and likely to give Google a ridiculous monopoly and would have instituted whole new powers for Google, such as the ability to sell copies of these scanned books.
Fast forward to this month, when Google managed to split its enemies, or close one front in the war, depending on how you look at it. They settled with the big five publishing houses. Since this part of the suit isn't public - it's corporations agreeing on things - the precise terms aren't required to be shown publicly. Most notably as a private agreement it lets Google and the publishers get around the requirement for a judge's approval and avoid getting torpedoed again for selling things they don't have rights to sell... oh, wait, was that my out-loud voice?
Some details have appeared in news stories, and the Association of American Publishers put out a press release: Google agrees that publishers may require that their books and journals be removed from the archive. Publishers who do leave their materials in the archive get a digital copy for their own use (avoiding the costs of digitization themselves) and can use that copy for whatever they want, including presumably selling it. Likewise, Google gets rights to sell the material in its "Play" store, giving publishers some of that revenue, and is allowed to make 20% of the digital edition readable on-line.
Not mentioned is what efforts (if any) will be made to determine that either Google or the publisher has digital sale rights to these publications. Recent decades' contracts have usually assigned digital edition rights to publishers, but that leaves a great deal of material from the last century that is both under copyright and for which no digital reproduction rights were ever negotiated. Just because something is out of print doesn't mean it's out of copyright, a fact that both Google and the publishers seem all too happy to gloss over.
The second win for Google this month came against its remaining opponent, the Author's Guild, which has been pushing a class-action case on behalf of author-members as well as other authors such as those who wrote those out-of-print-but-not-out-of-copyright books. In a ruling earlier this month, Google's practice of scanning these out-of-print books for inclusion in its search archive was found to be a form of fair use. In specific, libraries that had given Google copies of books to be scanned were held not to be in violation of the copyrights on those books.
Interestingly, the decision by Judge Harold Baer is based on a full fair-use analysis. Baer reasoned that inclusion of the works in a searchable archive was sufficiently "transformative" and that inclusion of the resulting digital copies in the Hathitrust Digital Library did not impair the market for digital editions of the books produced by the publishers. (I'll have more to say about Hathitrust in the next blog entry.)
This is Happening Right Now: Amazon DRM-nukes a Customer
This link is going viral in the spaces I inhabit right now. Short form: an innocent woman has her account closed and her (paid-for) collection of Kindle e-books nuked with no warning and no explanation by Amazon UK. This is, as the blurb says, DRM gone insane. I did tell you that e-books suck, right? As I write, the link has appeared on popular blogs including our friends at Boingboing and people are starting to post copies of the WTF letters they've written to Amazon. I anticipate we'll see an apology and retraction by tomorrow AM, which will be great for the individual woman but still leave all the rest of you e-book readers hanging by the same thread.
Whether you read the book or the V.C. posts, I also recommend you read McArdle's response in The Daily Beast. In her column she takes issue with the core argument that experiences with low-IP industries are comparable to, or can serve as any guide for, high-IP industries. Her key point is that in the low-IP industries, copies are generally inferior in quality whereas in digital industries copies are perfect. Also, digital copies are far easier to mass-produce than copies of physical objects like clothes.
Sadly, while I agree with her major theses, I think she then goes off the deep end. For example, she believes that a low-IP model would "impl[y] the end of drug discovery." That's just grossly overstated, and ignores several things. One is the option of using much-cheaper small-scale discovery steps, which I discussed back in 2011. It's possible that a low-IP model won't ensure drug-company profits on a multi-billion-dollar pipeline that produces one blockbuster drug every few years, but why should that business model be sacred?
Second, it ignores the "Advil effect." Briefly put, the effect is this: Advil was only patent-protected against generics for two years, and that was over 20 years ago. Despite that, brand-name Advil still controls over 50% of the market for ibuprofen. That is at least prima facie evidence that lifelong patent exclusivity isn't required for a drug to be successful across decades.
Her discussion of the music business is even worse, being at best anecdotal and in places outright insulting. For example, she bemoans the (implied if IP protection is weakened) death of blockbuster-producing major label acts. Excuse me if I don't cry a river over the removal of corporate manufactured acts from the airwaves, hopefully clearing the way for some of the hundreds of thousands of hard-working non-major-label musicians to get airplay. McArdle's phrase "low-productivity artisinal profit model" almost made me snarf. Imagine the reaction of, say, Amanda Palmer to being told she is "low-productivity".
Again, McArdle enshrines the current business models as sacrosanct. Palmer may sell 1/10th the number of units of someone who gets pushed to the front racks at Wal-Mart, but so what? If those front racks disappeared entirely would we be any worse off? There's no quality difference I can discern in the disc I got from Ms. Palmer through Kickstarter compared to the disc produced by a major-label factory. And if I'm getting a quality product and am a satisfied customer/fan, isn't that the point? I don't require a Big Corporate Seal of Imprimatur in order to hear good music and I see no reason why intellectual property regimes should privilege BCSI over AFP who, it should be noted, offered the entire album as a digital download with no DRM for $1.
By the end McArdle softens her critique somewhat. She admits that her points are "not necessarily arguments against looser IP". Well, yeah. That's sort of a shame, as I think there are some core things to be said about reproduction fidelity and relative cost in response to Raustiala and Sprigman. Maybe once I've dug myself out of this backlog I will return to the topic, if I have anything new to say.
First, the good folk at TechCrunch pointed me to their (glowing) review of the new Boxee TV. This product, as the story illustrates, is aimed squarely at the new generation of cord-cuttters. People who want their television a la carte, in the cloud, and available on any device. Record multiple channels at one time? Sure. Unlimited storage? Sure. Have the latest from streaming providers like Netflix? Sure.
If the damned thing didn't cost so much I'd order one for myself today. The per-month price tag is hefty and would significantly cut into the savings I'm enjoying from cancelling my cable TV. But prices always come down and I can wait.
What's most interesting to me, looking at this from a business perspective. is that I don't see Boxee offering anything that the major cable providers could not have offered. The only reason they can't (didn't) is that they are still locked into that tie-down, cord-from-the-wall, one-device (ours) etc model. It's all about control for them.
Which brings me to the second item: a notice that the FCC is finally going to allow cable companies to scramble basic channels, although they're going to have to bend over backward to accommodate for a couple years. These basic channels are the ones that are usually broadcast over the air - free, you may recall - that cable companies first howled about being forced to carry, and then tried desperately to control. Scrambling the signals is just one more sign that the cable companies remain mired in the 1990s, clawing for every single bit of control they can get. Heaven forbid someone should see television channels for free! I have no words.
Chris Welch's story is deliciously ironic, opening with the sentence
The days of plugging a TV into the wall and getting cable are coming to an end.
You got that right, Chris, and sooner than people think.
Let's start with the facts: the patent (#8,286,236 in case you want to look it up) is for a copy-blocking system (DRM) for (some) files used by (some) 3D printers. It will no more "prevent 3-D printer piracy" (by which they mean the use of a 3D printer to create an object that might have IP protections) than any other DRM system has prevented copying. Which is to say, not at all.
The article is full of misstatements such as "you can’t generally copyright objects (exceptions include sculptures and architecture). That’s because copyright applies to creative works but not to 'useful articles.'" Like, say, books? Useful objects, those books. Also, copyrighted. So the article misunderstands what DRM does, misunderstands basic intellectual property concepts, and generally is sub-par.
That aside, what of the patent? The patent works like every other DRM system - you load a file into a DRM-encumbered machine, which checks that "an authorization code" (in the words of the patent) is available allowing you to load this file on this machine to produce some object. That's not a horribly stupid way of stopping people stealing your shape files and making unauthorized use of them - again, just like every other DRM system in existence. But it has jack-all nothing to do with the reproduction of IP-protected objects.
I could just run that file on a machine that doesn't bother to check for the code, or that has a simple resistor soldered in place to ensure that it thinks it has the code for every file. Or I could just take a copy of the file with the DRM stripped out and use that. Or I could make my own file that produces the object in question. Or, or or. I'm sure anyone with more than five minutes to think about it could vastly expand that list of ways this patent is irrelevant to any real problem.
The patent itself has significant problems. Greg Aharonian (of PATNEWS) sent out a mailing earlier this week in which he cited a major government publication that anticipates this patent by five years, as well as several easily-found patents that involve uncited prior art. Just search the US Patent database for patents containing the words "print" (or "printing") and "rights management." I'm sure you'll find the same patents Greg found. Technically, those patents talk about 2D printers, but the problems and solutions they discuss are nearly concept-for-concept identical with this one.
There remain significant problems with how to handle intellectual property protections in a world where anyone can duplicate objects more or less the way we can photocopy book pages. But this patent and article aren't contributing to the discussion.
A Copyfight reader responded to yesterday's story about Bowman v Monsanto to say that he believes SCOTUS will reverse in this case. The reason is that unlike Circuit courts, which can disagree with each other on a matter that SCOTUS must then settle, the Court of Appeals for the Federal Circuit (CAFC) is the binding decision body for patent matters. Its decisions have precedential weight; therefore, if SCOTUS simply wanted to affirm that CAFC was right in this case there was no reason to grant cert. Since they took the case, ipso facto, one is led to believe they intend to reverse. That may still not happen since only 4 Justices' votes are needed to grant cert and 5 votes are needed for a majority, but it's the way this reader is betting.
In another case that is potentially hugely important but flying mostly under everyone's radar, SCOTUS has agreed to hear one 74-year-old farmer's challenge to the biggest of the big in agribiz. Like the other stealth IP case this term (Kirtsaeng) part of the question at issue here is what constitutes "exhaustion", though in this case it's a patent that is being fought over. As usual let's start at the beginning.
Monsanto makes (among many other things) a patent-protected line of soybean seeds generally known by the phrase "Roundup Ready". These seeds are genetically modified to be resistant to Monsanto's popular Roundup herbicide, allowing farmers to plant and spray without fear that they'll kill off their own crops as they exterminate weeds. This combination has been very popular - so much so that over 90% of the commercially planted soybean crop (in the US) is Roundup Ready. But plants are not like other products in that they're self-replicating. A patented seed produces a plant that in turn produces... well, seeds, and the modification Monsanto made is passed down through generations so the seeds are also resistant. Allowing the re-use of those seeds would give farmers the ability to benefit repeatedly from Monsanto's patented innovation without paying (again) for it.
Monsanto therefore requires farmers who want to plant its seeds to sign an agreement saying they won't re-plant the seeds but instead will buy new seeds from Monsanto each planting. Bowman, the farmer in this case, realized that because Roundup Ready-derived seeds were so common he could just buy some local generic soybean seeds and be pretty sure the majority of them would contain the herbicide-resistant mutation. Of course, this is also much cheaper. So he did that, and Monsanto accused him of violating its patent; Bowman counter-argued that his use of the generic seeds was fair because of patenting's exhaustion doctrine.
The exhaustion doctrine says (more or less) that you can only sell a patented product once. As Timothy Lee notes in the linked story above, SCOTUS has already said that exhaustion applies in the case where you use a patented product inside something you sell - in the case of a patented chip sold on its own and then re-sold as part of an OEM computer. Bowman reasoned that since he had not violated his license - he replanted generic seeds, not the ones grown by the plants he signed for - then exhaustion would apply and the generic soybean seeds would be OK.
As Bloomberg notes, this is a potential bombshell for the genetic-seed industry. If they are forced to play by the rules that chipmakers and others have to play by then they'll have to change their entire business models. Given the degree to which Monsanto dominates the business you can see why they'd be reluctant to do that. Conversely, it seems contrary to ordinary sense to say that the simple act of planting a seed may be a patent violation. Dan Charles noted for NPR earlier this week that the trial judge was troubled by the basic issue: is the reach of gene patenting so long that a single company should be allowed to encumber an entire generic market?
I'm frankly baffled by why SCOTUS agreed to hear this case rather than letting the CAFC decision stand. And given the way that the Court's recent Mayo decision sowed (sorry, I couldn't resist that one either) confusion rather than giving clarity I'm afraid that a decision here will similarly muddy the waters further.
Part of Posner's theoretical framework is a critique, often based on economics, of patent and copyright protection. This is the substance of his September 30th column - a cost-benefit test for patent protection. Sadly he picks pharmaceuticals as his poster child, which shows off the bat just how bare a simple means test is for judging patent suitability, As I've argued in the past, the drugs marketplace involves special considerations that weigh against a needs-blind market analysis.
Posner's main point is that the software industry is presently overprotected by patents because software is cheap to make. This seems a little odd on the face of it - presumably if I run a large software development project that goes for many years and has huge cost overruns (i.e. any government software procurement) then that is more worthy of patent protection than a mobile app that's written over the course of a few months by a talented three-person team. This is the sort of argument economists make which tend to leave the rest of us scratching our heads in puzzlement. I understand that it accords with a theory that says "things that are more expensive to make need more protection" but when the theory leads to (dare I use this word) patently absurd results isn't it time to re-examine the theory?
Posner also that software patenting suffers from "a shortage of patent examiners with the requisite technical skills" - true, but also probably true for many other fields of cutting-edge technical innovation. Are there really more and better-skilled microbiology examiners? Or carbon-fiber materials processing examiners? I have no data, but tend to doubt it. There are indeed problems with software patenting, as I've written about before but these ain't it.
His discussion of copyright protection seems better. He notes that fair use is getting short shrift (but see my upcoming piece) and that copyright terms are too long. Most of all, he notes that copyright violation action requires showing of some willful infringement whereas you can infringe a patent you've never heard of, simply by going about your normal business. That alone is a significant impediment to software business and could stand some public discussion. Creation of only token penalties for accidental infringement is right up there with mandatory licensing on my "how to improve patenting" wish-list.
Sadly, Posner doesn't take any specific stand on the reforms he thinks are needed, just calling for Congress and the courts to devote "serious attention" to the problem. Right after they get done devoting "serious attention" to the budget deficit, one presumes. And prays.
Sometimes the lede is just so perfect I can't improve on it. Therefore: The Pirate Bay has made an important change to its infrastructure. The world’s most famous BitTorrent site has switched its entire operation to the cloud. From now on The Pirate Bay will serve its users from several cloud hosting providers scattered around the world. The move will cut costs, ensure better uptime, and make the site virtually invulnerable to police raids — all while keeping user data secure. (h/t +Rob Malda for the original pointer)
In the past we've talked about the reach of copyright; for example, to facial tattoos. We haven't (largely due to my own ignorance) talked much about how far trademarks can go.
In the general public there's only a vague awareness of trademarks, usually because of famous cases. Xerox-the-company saw their tradmarked name become used as a generic term for photocopying, for example. And lately it's become fashionable to call all portable digital music players "iPods", which I'm sure Apple's trademark people don't care for.
The column's author, Michael Dorf, seems to be taking both sides in the case. On the one hand, he agrees that the 2nd correctly applied the Lanham act in granting the trademark; on the other, he expresses concern that this is part of a larger trend toward overbroad IP protectionism. Generally I agree with that sentiment but in this case I think Dorf is overreaching.
His point is that he agrees with the District court, which originally ruled that trademark was not appropriate because trademarks don't protect functional element. The reasoning that in fashion, "...color is usually a vital element of the aesthetic appeal of a product, which is at the core of its function" seems excessively tortured to me. The logical consequent of that would seem to be that if your function is aesthetics (which is to say, fashion, show, entertainment, etc) then you lose all ability to trademark your distinctive visual elements. And that's going too far for me.
Yeah, that had my eyebrows going up, too. However, Reid isn't writing this stuff from an outsider perspective. In past lives he's been an entrepreneur and had a hand in the founding of listen.com which eventually led to Rhapsody - an online music service that is still operating (albeit in different form) today. Reid has also gotten some notice for his TED talk titled "The $8 Billion iPod" In this talk Reid lambastes the Cartel for its massively out of proportion sense of its own self-worth.
If anyone has read the book (or listened to the audio, read by John Hodgman, which is getting good reviews) please drop a comment and tell us what you thought of it.
Raustiala and Sprigman are co-authors of a new book, The Knockoff Economy: How Imitation Sparks Innovation. Here's the teaser blurb:
Conventional wisdom holds that copying kills creativity, and that laws that protect against copies are essential to innovation–and economic success. But are copyrights and patents always necessary? In The Knockoff Economy, Kal Raustiala and Christopher Sprigman provocatively argue that creativity can not only survive in the face of copying, but can thrive.
Needless to say that's right up our alley. I'm not sure how much of this I'll be able to report on, so get it from the source if you can.
I've been trying to write this story for a while and stuff keeps popping up. I'm going to focus on three related posts, all of which illuminate different corners of the current (problematic) business model for online streaming music. The core questions are: who gets paid for this and how sustainable is it.
Here "broken" means "can't ever possibly make money." The model advertises free-to-listen streams for US consumers (good for us) while the company has to pay server and bandwidth costs as well as those high US royalty rates (bad for them, and ultimately bad for people who like Spotify). Sandoval's story notes that Spotify is still a private company and thus not required to publish numbers, but it has agreed that the numbers posted by PrivCo are generally correct.
Spotify's strategy appears to be to absorb the losses (covered by venture financing) while it builds market share and audience size, then find a way to make money off that large audience. One way to do that is through subscription fees and you can see that the #2 comment on Sandoval's story (at least when I wrote this) is someone asking Spotify to raise subscription fees. In other words, there are real people out there who are really willing to open up their wallets and pay for a service they love. Shocking, innit?
Currently it appears that services are converging around a number like $10/month in fees, with a wide array of discounts and premium/freemium models being tested. I think, given the cacophony (you see what I did there?) of subscription models still being tested it's premature to write off Spotify or any other service just yet.
In order to survive, streaming services need not just to satisfy the Cartel with its royalty structures, but they also need to keep artists happy. For some time there has been muttering that streaming services aren't returning (enough) money to the artists and some artists have chosen to keep their latest hits off the streaming services. Two articles address this point head on: First, AP reports that the RDIO service will be paying artists $10 per new subscriber. Rdio is definitely playing catch-up in this business against the bigger names like Spotify and is hoping that artists will sign on to the program, create pages on the Rdio service that fans will find, and then lead the fans through the sign-up, for which artists will get direct revenue. Adding subscribers is a significant cost for these services and some kinds of affiliate-style programs make sense.
However, this doesn't address the deeper question of how stream revenue flows to artists. Pandora's take on this question hit their blog earlier this week. Stacking up real (if lesser-known) names, and actual revenue numbers, Pandora founder Tim Westergren shows how much money is flowing from the streaming service to artists.
In addition, he's not shy about pointing the finger directly at the RIAA and blaming them for artists not getting more money. As we've seen, the RIAA isn't shy about setting high fees for streaming music, and isn't shy about keeping those fees for itself. Westergren's points include the claim (sadly using awful marketing studies to back himself up) that streaming services have contributed to the decline of music piracy while the supposed anti-piracy RIAA continues to hoard the revenue that's being generated.
There's a lot more to say about this business and its models for survival, but this is a good set of places to start.
Our friends at the Future of Music Coalition (FOMC) sent out a reminder that their annual Summit is happening next month (November 13th). This will be their 11th annual conference and this year it's free to attend. In addition it'll be streamed live online for free.
In this case the villain is Microsoft, but you can find hundreds of similar instancse going back to the earliest days of the DMCA, and the story is always the same: $player sends thousands of takedown notices for material in which it claims copyright. The recipient takes down the material and may or may not notify $targets that their stuff is no longer visible. If $target is a big entity with lawyers and money it can usually get its stuff back online, quickly. If $target is you or me, we are (as my kids like to say) ood-scray.
In this case Microsoft clearly went bananas, targeting its own search engine Bing along with other things. But the specifics aren't the point here - the point is that the automated spewing of these notices is now routine and widespread practices and there are no requirements that $player emit only reasonable notices, or are there any penalties for failing to do so. I still think that the DMCA Safe Harbor idea is a sound one, but it clearly needs additional regulatory strength to curb abuses and stop companies controlling online speech.
Free speech (in the US, First Amendment) claims are somewhat tangential to Copyfight interests, but it's still important to understand how courts interpret things. First of all, you don't have First Amendment rights with regard to private interests, such as the corporations that make up the Copyright Cartel. Against a government you may, and lots of people assert that the government can't restrict speech. Entities that are publicly funded, such as libraries or public parks, usually have to follow the same restrictions as governments themselves.
In fact, courts have held that governments may restrict speech, but only under certain conditions. Among the most important of those are that the restriction must be viewpoint-neutral; that is, they can't restrict some speech and allow other speech based on the point of view expressed, though there are exceptions even here, for things like sedition and credible threats. And a government entity that wishes to restrict speech must tailor its restrictions as narrowly as possible, in order to serve (what the court recognizes as) legitimate interests such as maintaining public safety.
Cory Doctorow's announcement that he is direct-selling the (professionally done) audiobook version of his recent Pirate Cinema reminds us that one of the big problems with mainstream online retail outlets (*cough*Amazon*cough*iTunes*cough*Audible*cough*) is that they all refuse to carry DRM-free titles. Even though the publisher (in this case Random House Audio) is perfectly willing to make the high-quality title and wants it sold, the retailers are blocking it. Get a freaking clue, already, guys.
Unless you're superhuman or very young and medical science advances faster than I think it will, at some point in your life you're going to lose some or all of your sight. I'm 50 and for the last decade I've been noticing significant degradation in my vision. I do that "old guy" thing of pushing my glasses up and holding small print really close to my nose so I can make it out. The fine control muscles in and around my eyes have lost a lot of their strength and flexibility with age.
The good news is that there are an ever-increasing number of devices and software to help with this; the bad news is that DRM screws up almost all of them. This is detailed in heartbreaking depth by Rupert Goodwins on ZDNet in the third part of his essay series. (The essay links you back to parts 1 and 2.) Goodwins particularly calls down a plague upon the house of Adobe but notes many others share blame. And he describes how he, like so many people who are generally law-abiding but want access to their paid-for content, is reduced to petty crime simply because he loves to read.
I will be speaking at two events in the near future.
October 15th I'll be part of the New England Library Association's annual conference, a three-day affair that will be in Sturbridge MA this year. I've been invited to talk on the topic of e-books and libraries and I've tentatively titled my spiel "Why E-Books Suck (unless your name is Amazon)".
Arisia will once again be MLK weekend in January (18-21) and there will be a couple of panels on intellectual property. Topics and panelists aren't final yet - I'll update once I know for sure. I know that a couple of my co-panelists from previous years are planning to return this year and we're hoping to have some discussions focused on IP and creative folk (e.g. authors and artists).