Failure of DMCA and TPP is going to be worse

It should come as no surprise to many of my readers that I’m not really a big fan of DMCA. I believe that this law hinders innovation in the arts and sciences. I you are interested in a very nuanced and well articulated argument against Copyright, I suggest you download Lawrence Lessig‘s book Code 2.0 – it’s a law book, but it’s free and interesting. However, I have written about this topic before if you’re like a bit of a synopsis.

The DMCA is a law that requires companies to help copyright holders manage and protect their copyrighted material. This results in something called a Take Down Notice, where the company that receives the take down notice must remove the offending material. In many cases the copyright holders are requiring companies like Google to create tools to allow them to automatically search for offending material.

Growing number of Take Down requests

Growing number of Take Down requests accessed 1/5/2014

For a growing company like Twitch.TV which streams live video game broadcasts and services several hundred thousand viewers at once, may cripple them in the future. According to a recent George Mason University study, the DMCA take down notice process has been a complete failure. The law was never intended to function in the manner that it has been.

The take down notice was designed as a stop gap measure and compromise between copyright holders and the new technologists on the web. The DMCA was passed in 1998, most of the internet that we know and love didn’t exist then. It was likely that only a few people had even started using Google when the law was passed, YouTube was nothing more than a pipe dream, Napster and sites like it were the major driving force for this law.

Over the past few years we’ve had several attempts to expand on the DMCA and make matters significantly more restrictive on the Internet. For example we had the SOPA/PIPA, CISPA laws that the internet killed with a blackout. The blackout is an example of what Rebecca MacKinnon argued in her book “Consent of the Networked” where law makers need to look at the interconnectedness of the world and how these laws reach beyond our boarders and impact the broader world.

Unfortunately, these types of laws aren’t dead and DMCA isn’t going away despite what GMU recommends. Currently TPP is working it’s way through the “Fast Track Process” (fast track essentially allows the President to enter into trade agreements powers not authorized by the Constitution) and if it is successful there are copyright provisions that are very damaging for both Copyright Law and Patents. The copyright provisions are stronger than DMCA, similar to SOPA, and would force all signers to follow the rule of the trade agreement over their own established laws, including the US. If you are interested in reading TPP here’s the full agreement for download at Wikileaks.

What can we do to prevent TPP from making our copyright lives worse? Well, it appears there’s limited things we can do. Of course you can contact your representatives, however, Darrel Issa was already refused to see the agreement. However, more interest from the general population can only be a good thing. We’re going to have elections this year in the US, so it’s a good idea to get people thinking about this trade agreement now and stop it before it’s ratified.

Apple v Samsung: iJury

As most of you are aware Apple crushed Samsung in it’s suit. Every patent of Apple’s was upheld and Samsung owes Apple just a touch over $1Billion. This is going to do a great deal to chill innovation. Many other people are commenting that these patents and the idea of copying isn’t new and that Apple has stolen a great deal themselves. In one discussion with an author at the Urban Times, he seemed to argue that the theft of these ideas is more honest than copying and that Apple was a better company for doing so. Well, there’s a major flaw in that idea, the theft of an idea is essentially copying the idea, the only difference is you act as if it was always yours and that you didn’t copy someone else.

One author thinks that one billion is a small price to pay to be the second largest mobile manufacturer in the world. While I understand the thinking behind this, sure they copied a great deal from Apple and it only cost them a portion of what it could have cost. However, this is a short sighted view. The manner in which Apple has attacked Samsung isn’t going to stop and will likely intensify. The ruling in San Jose wasn’t the only ruling that came in yesterday. In Korea a judge ruled that both companies were infringing each other and banned both products from being imported to the country. The judge also found that Samsung didn’t copy and in the UK a judge also said that Samsung didn’t copy and wasn’t cool enough to be confused with an i Anything – ordering them to post it on their website.

The idea that Apple’s design for the phone’s desktop being unique is a bit absurd. They simply changed the way the buttons looked, but there had been interfaces that were extremely similar for years. I had a Sony Cliq PDA in 2001 and 2002 and some of the way that product looked was similar to the iPhone. Apple repackaged things extremely well. Judge Koh did not allow Samsung to present all the information to the jury related to prior art, which certainly didn’t help Samsung’s case (Samsung released it to the public though).

The other major issue with this case is the idea that laypeople can really understand the issues with patents. They are difficult to understand, written in legalese and intended to be so broad that they can be interpreted in many different ways. I’ve read through several patents and they quite frankly are confusing and in many cases don’t convey the information they are required to convey (how to manufacture or build whatever is patented).

For a patent to be valid it only has three conditions to meet: Novel, which means that nothing like it has been done before; Non-Obvious, which means that (originally) that an expert in the field wouldn’t see this as a natural extension of previous work; now it must be non-obvious to a layperson; the final one is the possibility of industrial application, this means that the technology must be useful in some way. Many of Apple’s patents do not meet the threshold for the first two, novel or non-obvious. Now of course people that disagree will argue that in hindsight these patents are obvious because Apple did such a god job at inventing them. I disagree primarily because many of the patents are reapplication of ideas from the computer to the smart phone.

I’m extremely worried about the future of innovation in light of this ruling. I think that there will be serious repercussions and whatever comes out of this will be terrible for consumers.

Finally check out this video discussing what Apple has invented:

Cash reserves, risks and innovation

In my last post I discussed the large cash reserves that companies have been holding since the 2007 recession. As I mentioned there are several reasons for this, some of it has to do with lack of R&D investment. R&D is an expensive investment. This requires both train scientists and equipment to conduct the research. In addition there are extra requirements for technicians and other employees to support the R&D effort. This isn’t cheap. As we can see in the bottom half of the chart all types of research funding has decreased recently.

R&D is not a certain thing by any stretch of the imagination. This is why companies are paring with universities to share the burden of R&D. Universities are doing much of the basic and applied research, while industry is developing it into product. This is where the money is and the greatest amount of certainty. You can’t really blame companies for this, but they need to work to develop their own technologies regardless of the work being performed at universities. To compensate many companies do engage in corporate venturing. This is where they fund a start up to conduct research and get a product to a certain position and possibly buy that company after a certain maturity point, set up an exclusive license or license the technology once it’s mature. This reduces the large company’s risk exposure.

The final piece that has increased since the late 80’s has been the amount of litigation due to patent infringement. In 2011 the amount of money spent on patent litigation was $29 Billion. That is a lot of money. That’s a quarter of the money that Apple has in it’s reserves. We also know that Apple is one of the largest spenders on litigation. I know there are a lot of Apple lovers out there, but they could have invested that money into more products and reduced their risk of a flop with the next iPhone. We all know that iOS6 was a major disappointment for many people, spreading their revenue stream into more sources with some cool research could mitigate any fall out from that or if iOS7 is more of the same. 

Litigation is such an outsized risk because it can lead to your entire firm being shut down by a non-producing entity. This reduces the incentives for innovation and increases the incentives for hoarding cash.

Social network patent war?

Today the first salvo has been launched in what will likely be a brutal and bloody patent war in the social networking world. Yahoo! has decided to go after Facebook with several patents which were bought from Friendster a now long defunct social networking site. As I’ve mentioned in previous posts companies that start suing over patents likely have lost their competitive edge. However, I think this is going to have long reaching impacts.

Facebook will likely try to find something they can use to counter-sue Yahoo! Which I believe will open a huge can of worms. A large number of companies have put forth effort into creating social networks and there are companies that are built on top of those networks. Essentially, this is an entire ecosystems of companies and products that interconnect and work together. Until now, it has been rather peaceful except for a few angry words tossed back and forth.

I’m not really aware of what patents are out there for these types of sites, however, it is likely that all the major companies are going to be scrambling for patents. Some of the companies involved have already been in patents wars, Google for example. I don’t think Google is going to sit by and allow other companies to attack them the way that Apple has gone after Android. This would be an extremely foolish business move so, I think it makes sense for Google to actively defend (attack) competing firms by acquiring patents and aggressively targeting firms that may be infringing.

Apple has also tried to get into the social networking side of things with their Ping network. Based on their previous patenting strategies, it seems likely that they have built their own war chest of patents and we know how Apple likes to use them.

Yes, much of this is simply speculation. However, as the entire ecosystem of social media and networks have developed into a huge new area of business and marketing, we need to be aware of how these could impact us. Systems that allow access to multiple different social media accounts could be shut down using patents to enforce the use of each platform. I use tweetdeck and I know other people that use Hootsuite they essentially work in the same way (results may vary), but could a patent derail their use? I don’t know at this point, but i’m not happy about the prospect. I’ve mentioned before my distrust of Facebook, which is why I use tweet deck and sign in using Incognito. An all-out patent war could seriously disrupt this growing environment and reshape the way we use these networks.

Entitlement for copyright owners

Business Insider had an article today about Reddit’s FIA. In my article in the Urban Times last week I addressed some of these issues before he wrote this article. However, he raises points that I don’t mention there and I feel that it’s extremely important to discuss them.

First he says that the law would make the internet “Hugely Difficult to monitor.” This raises a few questions. What does he mean by the internet? I helped define that in FIA, which I defined it as any data network including the web, social networks, FTP, peer to peer, email and a slew of other things. If he means this; then do we want the web to be easy to monitor? He trots out the case against it as child pornography of course, which I addressed in my Urban Times article. It’s a powerful argument because it hits upon two competing sets of social norms, rights of privacy and abhorrence to child abuse.

The use of child porn is a technique that is designed to end the conversation and shut down dissent. It places supporters of privacy in a position that is not congruent with their belief system. Additionally, the connection between copyright and child porn mixes different issues and seriously different belief systems. This difference is extremely important as there have become two different competing sets of norms. The incumbent belief that copyright is stealing, and the one new that has been developed by Web Kids.I strongly suggest reading the previous link as it provides powerful arguments for the changing sets of norms that my generation and younger entail. (I’d be on the rather old side of that generation).

Using a somewhat bad analogy, we’re using the “internet superhighway” and like the real highway people don’t want everyone driving by to know what you have in your car. Even if you aren’t doing anything illegal, do you want the cops to know that you have 5 cases of beer in the back and are going to be floating down a river all day? Probably not, cause they have no reason to know what you’re doing. Now, our data is similar to those cases of beer. Using encryption puts that into the back of the trunk where a cop is required to have justifiable cause (in the US) to inspect it’s contents. The person looking at the data would know the general direction your going and some of the ways you’re getting there, but nothing more. Yes, it makes it more difficult to identify bad stuff, but it’s difficult to do that on a real highway too. Just ask boarder patrol, and they have the right to inspect whatever they want.

Second, he essentially argues that copyright owners should have their content monitored by others. This is a huge subsidy for the copyright industry that will be paid for by other services. I’m going to use a physical world comparison, it doesn’t work perfectly but it works reasonably well. Let’s say that YouTube is similar to a Wal-Mart, or even The author is arguing that YouTube needs to monitor as soon as the video is put on the web to ensure it is not infringing on copyrighted material. This would be similar to requiring Wal-Mart or to search for patent infringing technologies.

Why does this analogy work? In both cases these rights are state sanctioned monopolies. In both cases they are protecting a manifestation of an idea. Something that needs protection because it is extremely easy to protect. However, in Patent suits things are extremely different. The owners of the patent are required to sue companies that infringe on the patent. Wal-Mart and are both protected from the suit.

If Apple was allowed to sue Wal-Mart for the fact that an infringing technology is being sold there, Wal-Mart would have to bear the cost of policing their inventories for infringing material. In addition it would be in their benefit to be overly caution and remove potentially infringing products before anyone can see them. Part of the cost of owning a patent is the cost of policing products that may be infringing. By removing that burden from the copyright industry we are reducing the cost of the ownership of copyright and placing it on services like YouTube. This stifles innovation in services like YouTube because they have to include the extra cost of policy copyrighted material. A competitor to YouTube has a huge hurdle to overcome before they can even open.

Finally, he argues that the bill supports file sharing. I don’t think that it does other than being based off of a different set of norms. I’d argue that the bill supports innovation over old business models. You can disagree with me on this, however it’s been shown in several studies and some anecdotal evidence that increasing legal access to copyrighted content reduces pirating. If it is easier for a company to create interesting ways to provide access to content while paying the copyright industry then everyone wins. However, as Falkvinge puts it, “I don’t care about industry profits.” Realistically, I don’t care about most companies profits, because I’m only dealing with the company to buy a product or service I want at a price that I believe is reasonable. If all the legal sources that are available to me to watch a show or listen to a song when a person wants to, it is not unreasonable for them to look for it elsewhere and then try to find it legally later if they liked it.

If the company is making bad choices for their business, why should the law change to improve their business model’s chances of surviving? Anyone that supports free market capitalism should be horrified by this sort of industrial policy making. Essentially, these companies are being faced with disruptive technologies and working to push the government to protect them. It’s similar to what has happened with the auto industry in the US.

In closing, FIA represents a dramatic change from the current norms and aligns more directly with a younger generation. This generation does not understand why companies prevent them from viewing content that they want to see. While being an open generation on Facebook, they also understand the importance of protecting the data that has been given to companies. They choose what information they share and with whom. They want an open internet so they have the ability to innovate like their parents generation. They believe that it should be a fundamental human right to have access to data and communicate with whoever they want. An industry that is not innovating should not have the ability to destroy the internet.

Are patents going to impact how doctors treat a patient?

Today Ars Technica reported on a case before the US Supreme Court and how the court is assuming that the usage of scientific data, which has been publish, is a valid patent. This is a pretty scary scenario. What do you mean? Well, the patent is related to how the levels of some chemical impact the dosage of a drug. That’s it. If you have level X in your blood you should have dosage Y. The patent holder created a device to test the level of the chemical in your blood which then suggests a dosage level. The Mayo clinic developed their own test and  have been administering the test on their own without paying anything to the company. The arguments in the court essentially assume that this is a valid patent.

Should this patent be valid though? Seems like something that could be patented. Based on what is considered patentable, this should fall under mathematical formulas. Essentially, this is a matter of correlation and basic regression analysis. During a drug trial you can determine a correlation between the impact of a dosage of a drug on the current level resulting in a lower level of the chemical. This is really how all medicine works. If you can reduce costs by creating your own tests and administering it yourself then that’s great. Hospitals should be encouraged to do this if they are large enough.

This is what Doctors do. They read literature about the medicine the condition it’s supposed to impact and what sort of connection there is with the dosage levels and the response rate within the patients. Every doctor has to use a test to determine the level of a chemical or some condition. This can be the pulse (irregular heartbeats), blood pressure (pressure cuffs), blood sugar (A1 test) and the list goes on. In each case the doctor is able to assign a proper dosage prescription based on the study of patients. If a doctor was required to pay a licensing fee for each and every case of this our currently exorbitant costs of health care will seem cheap. Like when we used to complain about $1.50/gallon for gas.

The other problem with patenting something like this is that it’s likely to be highly unenforceable except for when a large institution like the Mayo Clinic. Individual practitioners will be safer than large clinics, but they could be impacted as well. If they are required to use an extremely expensive proprietary testing methodology rather than have the ability to use any testing method it will drive up prices and may put doctors out of business.

If the court rules on this as if these types of patents are valid, we will need to push to have patent law changed again. The last change moved things in general, in the right direction but a lot more work needs to be done.