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Alyssa

Piracy Is A Service Issue

By Alyssa Rosenberg on Dec 1, 2011 at 9:51 am

Very smart talk from Gabe Newell of Valve Corporation:

In general, we think there is a fundamental misconception about piracy. Piracy is almost always a service problem and not a pricing problem. For example, if a pirate offers a product anywhere in the world, 24 x 7, purchasable from the convenience of your personal computer, and the legal provider says the product is region-locked, will come to your country 3 months after the US release, and can only be purchased at a brick and mortar store, then the pirate’s service is more valuable. Most DRM solutions diminish the value of the product by either directly restricting a customers use or by creating uncertainty.

Our goal is to create greater service value than pirates, and this has been successful enough for us that piracy is basically a non-issue for our company. For example, prior to entering the Russian market, we were told that Russia was a waste of time because everyone would pirate our products. Russia is now about to become our largest market in Europe.

I understand the entertainment industry’s antsiness about piracy, even if I don’t particularly agree with their approach. And I think that more companies and groups could take a lesson from this lens on the challenge. Even if you’re cracking down on “rogue sites” rather than on individual consumers, spending all your time talking about the evils of piracy sends the message to consumers that your focus is on limiting the way they get to the product, rather than on the product itself, or on improving methods of delivery. And even if I don’t think it’s the main reason people download content they don’t pay for, I think the idea that production companies have the interests of neither consumers nor artists in mind becomes a powerful part of the moral justification that people use to give themselves permission to do so. Focusing more of their public messaging on improving and diversifying delivery mechanisms — and actually doing so — seems like it would do much more to change the culture of consumption than talking about piracy will. And ultimately, it’s that cultural shift is what undid media companies and what they really need to change.

Yglesias

Apple Has A Patent On ‘Slide To Unlock’

By Matthew Yglesias on Oct 26, 2011 at 4:01 pm

Apparently Apple has a patent on this:

Slide to unlock is an excellent idea. Indeed, it’s difficult to see how you could implement a multi-touch smartphone without doing something along these lines. Which is why Android has the functionally equivalent, though in my view somewhat superior, pattern unlock feature. Jerry Hildenbrand seems to think that what’s ridiculous about this patent is that it arguably existed already when Apple was granted the patent. But the real problem here is that it’s contrary to the public interest to ban copying this kind of thing. We want to live in a world where useful new features are rolled out, and then bosses say “we need to find a way to implement that on our product.”

Justice

Appeals Court Holds Corporations Can Patent Genes

By Ian Millhiser on Aug 1, 2011 at 10:00 am

The United States Court of Appeals for the Federal Circuit, a specialized court that deals mostly with patent law, held on Friday that biotechnology companies can patent DNA sequences:

The Court of Appeals for the Federal Circuit, which specializes in patent cases, said that Myriad Genetics was entitled to patents on two human genes used to predict if women have an increased risk of getting breast and ovarian cancer.

The court ruled that DNA isolated from the body was eligible for patents because it was “markedly different” in its chemical structure from DNA that exists inside the chromosomes in the body. As a result, the isolated DNA is not simply a product of nature, which would not be eligible for a patent.

The 2-to-1 decision on the gene patenting issue was also a rejection of arguments made by the Obama administration, which had filed a friend of the court brief arguing that isolated DNA should not be patented.

Although this case could potentially be reviewed by the Supreme Court, high Court review of the Federal Circuit’s patent decisions are unusual. The Federal Circuit was created in 1982 as a specialized appeals court that handles all patent appeals brought in any federal court in the nation. Accordingly, the justices frequently defer to the Federal Circuit’s patent decisions because of the court’s particular expertise in this area.

Yglesias

Assessing The Market Price Of Patent Rents

By Matthew Yglesias on Jul 28, 2011 at 1:44 pm

I kind of feel like people throw the word “bubble” around too loosely, and Richard Waters ought to at least consider the possibility that the sky-high valuations of patent-owning firms reflect the real economic value of the legal authority to extort money out of firms with products:

In the month since an auction of patents from the bankrupt Nortel Networks ended with a shockingly high bid of $4.5bn, or five times the initial offer, the favourite game in tech circles has been to find the next big chest of buried gold. [...] As always in tech bubbles, it is the “pure plays” that have drawn the most interest – in this case, the companies set up mainly to exploit the value of pure IP, rather than actually to build things. Shares in InterDigital, which specialises in mobile communications IP, have soared 75 per cent since it said last week that it was looking at putting itself up for sale: with a market value of $3.2bn even before any auction begins. [...] But even that pales in comparison with VirnetX. Despite having only one licensee for its internet security technology and royalties of just $17,000 in its latest quarter, VirnetX’s 14 US and 16 non-US patents pack a punch: with lawsuits out against Cisco, Apple and Avaya, among others, its stock market value has jumped more than fivefold in the past year, to $1.6bn.

It’s possible that this is a bubble. But smartphone sales have, in fact, soared over the past several years and there’s plenty of remaining room for growth. And it turns out that amassing patents and threatening to sue smartphone makers is a viable line of business. It also turns out that selling your patents to smartphone makers in order to let them sue or countersue competitors is a viable line of business. We’re not experiencing an unsustainable bubble in smartphone sales, so I see no reason to think that skyrocketing valuations of smartphone-related patents reflect anything other than a basic market dynamic. It looks like a bubble to some observers because it sounds insane that you could get rich off smartphones without actually selling smartphones or smartphone components to anyone. But the current state of law and policy really is that bad. What we’re getting here is a market test of a portion of the value of the rents created by the Patent And Trademark Office.

Alyssa

The 2012 Candidates On The Arts: Barack Obama

By Alyssa Rosenberg on Jul 21, 2011 at 9:51 am

With arts and public broadcast issues percolating on the edge of the race for the 2012 presidential race, I thought it made sense to look at where the declared and prospective candidates for president have stood on arts issues throughout their careers. Their views on everything from arts education to intellectual property rights to support for local artistic traditions say a lot about how they value culture — but also about how they think about the role of government.

Now that we’ve run through the Republicans, it’s time to look at how one last candidate approaches arts policy: the incumbent President Barack Obama. Obama didn’t take on arts issues much during his tenure in the Illinois state Senate, but as a candidate and as president, he’s pursued a fairly wide-ranging arts policy that’s met with mixed success because of the pressures of the recession. I’m not including a discussion of internal changes by the National Endowment for the Arts here, though I’m a fan of the Our Town program, because I want to focus on the things that Obama’s made significant priorities:

2008: In his presidential campaign platform, Obama supported the Artist-Museum Partnership Act, which would have let artists deduct the full market value of works they donated to charity on their taxes, rather than just deducting the cost of the materials that went into the work. He also committed to expanding cultural diplomacy through public-private partnerships and to make it easier for foreign artists to get visas to come to the U.S.; to increase funding for the National Endowment for the Arts; and to add block grant funding that would support arts education through the Education Department (he cited the Mozart effect in stump speeches). At the time, this was considered one of the more comprehensive platforms a candidate had ever offered on the arts. The question is, how well did he live up to it?

2009: The stimulus bill Obama worked out with Congress included $50 million in arts funding, including $20 million in funding that went directly to state governments. The National Endowment for the Arts was supposed to use the funding specifically to bolster arts non-profits that saw their budgets shrink in the recession. In the normal budget process, the NEA got its highest budget in 16 years, $167.5 million, and the Education Department got $38.166 million for its Arts in Education program.

When Obama adjusted restrictions on travel to and from Cuba, he made it easier for cultural programs to take Americans to Cuba and for Cuban artists to make it to the United States.

But the administration’s cultural efforts became a minor political kerfuffle when the NEA’s Yosi Sergant encouraged artists to work with the Corporation for Public Service on projects that would highlight the administration’s public service efforts. Sergant eventually left the NEA.

2010: Obama made good on his cultural diplomacy promises in a number of ways, allocating $1 million to help visual artists create public art works in 15 countries as pat of a new smART Power program; increasing the State Department’s cultural diplomacy budget 40 percent in 2010 to $11.75 million; sending Stanford professor Clayborne Carson to Israel to put on a production based on Martin Luther King, Jr.’s writing.

At the same time, he proposed consolidating grants programs for education, leaving some advocates worried that arts programs would have to compete against science and literacy programs for funds. And the administration proposed cutting NEA funding by $6 million in is fiscal 2011 budget, both moves that drew criticism from arts advocates.

This year, U.S. Intellectual Property Enforcement Coordinator Victoria Espinel presented Obama and Congress with the first national strategy on intellectual property law and copyright violation, which includes improved interagency cooperation, targeting of websites that distribute pirated material, and better economic analysis of the impact of intellectual property law and violations on American firms. That same year, at the Export-Import Bank, Obama gave a speech in which he promised vigorous IP protection: “Our single greatest asset is the innovation and the ingenuity and creativity of the American people…It is essential to our prosperity and it will only become more so in this century. But it’s only a competitive advantage if our companies know that someone else can’t just steal that idea and duplicate it with cheaper inputs and labor.”

2011: An Obama-commissioned study argued that creative classwork has an “unambiguous place in the curriculum,” though it acknowledged that there needs to be more research to quantify the impact of arts education on achievement. Education Secretary Arne Duncan’s made the case for keeping arts education even in a recession throughout his tenure in the administration.

And on the copyright front, the Obama administration helped broker the deal that got Internet Service Providers to start providing warnings to users who are caught downloading content illegally.

It’s clear the president and his wife enjoy the arts, and they’ve hosted lots of cultural events at the White House — though his stance on copyright allies him more with content producers than with consumers. Obama has called for tax reform, and it would be interesting to see, if comprehensive efforts happen, if he includes artists’ tax credits, the one item in his 2008 platform that he hasn’t really addressed while in office. Whoever the Republican candidate is in 2012 is, they may be able to rally support by attacking the existence of the NEA (it’s dubious any of them would break with him on IP issues), but it remains to be seen if any of them will match Obama for a sense that arts policy isn’t just a matter of funding.

Related Posts

Yglesias

Academic Work Should Be Distributed For Free

By Matthew Yglesias on Jul 20, 2011 at 2:29 pm

Tim Lee has an item on the Aaron Swartz arrest that strikes me as a bit wrongheadedly concern trolly, fretting that “the more lasting cost of Aaron’s actions will likely be to the reputation of the open access movement.”

This I doubt. Most likely, the lasting benefit of his actions will be to elevate the salience of the underlying issue on which Lee, Swartz, and I are all in agreement. And here’s the issue. Right now in academic publishing, what you have is basically a lot of donor- and government-financed nonprofit organizations taking outputs with near-zero distribution costs (electronic journal archives) and selling them to each other. For any one institution, this kind of makes sense. A publisher doesn’t want to give up his fees, which are valuable in meeting the costs of producing scholarship. But on net, it’s a mix of pointless and pernicious. Sale of access to journals helps finance scholarship, but it also raises the cost of scholarship. If everything was distributed for free, the whole exact same enterprise could be undertaken with no net financial loss. But there would be huge potential gains. A precocious 17 year-old could have free access to scholarship. So could a researcher living and working in a poor country. Or even an earnest political reporter who’s working on an issue and curious about what political science has to say about it. When I, personally, come across an article I’d like to read but can’t get free access to, my standard practice is to tweet about it and then someone affiliated with a university sends it to me. That’s good for me and, I think, good for the world. But there’s no reason curious people should need to amass thousands of twitter followers before they’re able to gain access to information that’s been produced by non-profit institutions that are supposed to be serving the public interest.

Both governments and private donors expend a good deal of funds on subsidizing the production of scholarly knowledge. That’s an excellent idea. Increasing the overall stock of human knowledge is important. But for most of the same reasons that producing scholarship is important, making it available is also important. Open access is important, and I’m glad to see people fighting for it.

Yglesias

Nokia Finds New Life As Patent Licenser

By Matthew Yglesias on Jun 14, 2011 at 10:14 am

Once leading mobile phone maker Nokia is on the ropes, first overtaken by Apple as a sexy smartphone maker and then crushed under the meteoric rise of Android-powered smartphones. But there is a new hope! Patent litigation. Specifically, Nokia has resolved its lawsuit against Apple with a settlement that involves both a one-time payment and ongoing royalties for iPhones and iPads. Interestingly, this isn’t even a bad deal for Apple:

In the statement, Nokia pointed out that it has invested approximately EUR 43 billion in research and development over the last 20 years, building up a patent portfolio with over 10,000 patent families. The agreement is expected to have a “positive financial impact” on Nokia’s quarterly earnings.

Legal pundit Florian Mueller viewed the settlement as a favorable outcome for Apple shareholders, despite the fact that Apple has to pay. According to Mueller, the agreement comes as a “sweet defeat” for Apple because competitors building Android-based devices will also likely have to pay Nokia, possibly paying more per-unit because rival handset makers may have less intellectual property to use as bargaining chips.

What’s more, Apple has tons of cash on hand and super-high profit margins. The people for whom this promises to be a big headache are, as usual, not the incumbent players but hypothetical future players. Imagine a firm that’s not currently a highly profitable, super-successful manufacturer of mobile devices. Now you’ve got a new barrier to entering the market. In other high tech news, Microsoft and other device manufacturers are filing suit to try to block Google’s purchase of network equipment maker Nortel. Google wants Nortel for its patent portfolio, but Microsoft claims a “worldwide, perpetual, royalty-free license to all of Nortel’s patents” as a result of a 1996 deal that apparently Google doesn’t recognize.

I don’t have a super-clean policy point to make about this, but it’s striking how much time and energy is spent in this most vibrant and innovative sector of the economy on these patent wars. It’s an equilibrium that’s obviously wonderful for patent lawyers, and seems to serve all the major incumbents well enough but I don’t think it really bodes well for the world. When firms engage in an arms race to hire more and better engineers to build better products, we all end up reaping gains. A battle to hire more and better lawyers to craft better litigation strategies is, by contrast, a zero-sum thing or even a negative-sum one if at the margin it persuades some bright hard-working people to become lawyers rather than engineers.

Alyssa

Apple Makes It Easier To Do The Right Thing

By Alyssa Rosenberg on Jun 8, 2011 at 1:18 pm

I’ve said before that I try not to download content by means other than those in which it’s made legally available to me, so I’m glad iTunes is making it easy and cost-effective to retroactively pay at least some of the cost of music people downloaded illegally in the past. The music industry’s never going to recover all the money it lost to downloading in the period before pricing and technology caught up with consumer demand (and I imagine the fights over fair value for downloaded music would be pitched). This seems reasonable: the industry and artists recover some money and gets a revenue stream that presumably will last in perpetuity as long as consumers keep ponying up their $25 a year. The price threshold is low enough that a lot of people will probably do it, even if not everyone does. And we all get another experiment in getting people to pay for content as we continue to figure out what works and what doesn’t.

Yglesias

Intellectual Property vs Free Speech

By Matthew Yglesias on May 26, 2011 at 5:31 pm

New York Stock Exchange (cc photo by Mike Fleming)

Another day, another cease and desist letter:

The New York Stock Exchange now claims that you have to get their permission (express or implicit) before you use images connected to the New York Stock Exchange. So if you find a wire photo of the trading floor and use it to illustrate a story on Wall Street, you’re violating the NYSE’s trademark because they’ve trademarked the trading floor itself.

We found this out yesterday when we got a cease and desist letter from the NYSE based on an article published at TPM back in November. You can see the letter here.

TPM is represented on Media and IP matters by extremely capable specialist outside counsel. And we’ve been advised that the NYSE’s claims are baseless and ridiculous on their face. But this is yet another example of how many large corporations have given way to IP-mania, trying to bully smaller companies into submission with inane and legally specious claims of intellectual property rights.

And of course good for TPM for having extremely capable specialist outside counsel. And good for TPM’s outside counsel for being so capable. But not only is this kind of IP bullying a form of rent-seeking by the bullies, it diverts social resources into things like being extremely capable specialist outside counsel for TPM on frivolous claims. There’s an urgent need to recenter policy, debate, and legal precedent in this sphere on advancing legitimate public interests rather than the interests of lawyers and incumbents.

Yglesias

IP Law Should Encourage Innovation, Not Protect Incumbents

By Matthew Yglesias on May 26, 2011 at 8:30 am

Great piece from John Kay about the state of the intellectual property debate in the UK:

The Hargreaves report on intellectual property (PDF), published last week, is a landmark in the evolution of British policy. Ian Hargreaves concludes the existing intellectual property regime, far from being a spur to innovation and growth, gets in the way. The contrast between this document and the paper on the digital economy Lord Carter prepared for the last Labour government could hardly be more marked. Mr Hargreaves deplores the way government policy has been led by business interests and not evidence of its effects. The Carter report, unintentionally, illustrated his point in every chapter. [...]

As the commercial market is being transformed, anyone who thinks that the policy challenge is to restrict internet piracy has missed the point. Such thinking confuses, as Carter did, the development of successful businesses with the welfare of the industry’s established large companies. The result is that UK companies, and the UK government, are now no more than bit players in a play staged on the other side of the Atlantic. The UK government is at least more enlightened than the European Commission, which seems to be playing in quite another show – one where trade associations and naive artists are the only audience.

That’s all quite right. We’ll know that the time has come to strengthen IP protections for musicians when we start observing some kind of shortage of new bands and new recordings. And it’s the same across the board. Have people stopped writing books?

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