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Sun Apr 24 04:45:37 EDT 2011
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Glyn Moody's Favorite Techdirt Posts Of The Week - This weeks favorites are from Glyn Moody, perhaps one of the biggest sources for various stories here on Techdirt. If you're not reading his Twitter account, you're missing out. Sometimes I think I could fill Techdirt based entirely on stories he recommends.

One of the problems with a site like Techdirt is that there is so much good stuff appearing every day, it's quite hard to see the bigger picture, as post follows post in rapid succession. In looking back over the past week, I've tried to pull out some of the major themes that I've noticed.

One of the key ideas that Mike explores here is how intellectual monopolies like patents and copyright have drifted far from their original purpose, which was to provide an incentive to create new inventions and new works.

Patents, for example, are less a spur to innovation today, and more a way of blocking competitors from innovating in the same field. You could hardly wish for a better demonstration of that than the big story this week about Apple suing Samsung because it claimed the latter's Galaxy tablet looked too much like the iPad.

As a subsequent post listing the claimed infringements showed, these included things like "method and apparatus for displaying a window for a user interface," while elsewhere, Apple said that Samsung used a “similar rectangular design with rounded corners, similar black border and array of icons.”

When companies are claiming "rectangular design with rounded corners" as innovation that deserves a government-backed monopoly, you know the system is broken.

Needless to say, Samsung has fired back with its own lawsuit claiming that Apple infringed on its patents, thus ensuring that the patent thicket surrounding smartphones (and presumably tablets) becomes a little thicker. Interestingly, another Techdirt story indicated that even the ITC is getting fed up with the patent mess.

Sadly, Apple was not alone in abusing the patent system this week. Another major case saw Google being hit with a $5 million fine for infringing on a patent through its use of the Linux kernel. The big story here, of course, is that if the decision stands, many other users of GNU/Linux might also be liable.

This is all pretty ridiculous since the patent describes a basic and obvious programming technique that was probably in use for many years before the patent was filed -- I expect lawyers are busily assembling mountains of prior art right now. The deeper problem is that the USPTO allows patents on software at all.

Software routines consist of algorithms, which are just a series of mathematical and logical operations; they therefore represent pure knowledge, like any mathematical theorem. As such, they need to be excluded from patentable inventions, as is the case in Europe, for example (although there the waters have been muddied by the introduction of the vague concept of "computer-implemented inventions," which are sometimes patentable).

Just as patent law is increasingly used to extract money from competitors as a way for them to avoid litigation, rather than as a spur to further invention, so the other main intellectual monopoly, copyright, is being seen as a way of generating revenue through threats of legal action, not simply as an incentive to create something new.

Perhaps the best-known exponent of this approach is Righthaven, and the last week has seen a gratifying number of stories in which judges and the courts have slapped it down again and again and again. And as an added bonus, the same happened over in the UK, where ACS:Law was found to have "brought the legal profession into disrepute."

Despite this outbreak of good sense on both sides of the Atlantic, there were still plenty of other depressing stories of intellectual monopoly abuse. For example, this week we read about the Tolkien Estate forcing a summer camp to change its name, Summit Entertainment suing adoring fans who dared to tweet a few images from the forthcoming Twitlight instalment, and the UK Music Publishers' Association issuing a DMCA takedown to a public domain sheet music site (and then trying to get the takedown taken down....)

Against this background of patent thickets, suits, counter-suits and vague legal threats, a question that springs to mind is: how did we end up with in this ridiculous situation? A couple of recent posts went some way to offering an explanation, noting that often it is those who benefit the most from monopolies that get to write the laws granting them, and that even judges are being recruited from the ranks of the RIAA, which makes relying on the legal system to rein in abuses of intellectual monopolies problematic, to say the least.

One theme that constantly crops up on Techdirt is the hypocrisy of those calling for sterner enforcement of intellectual monopolies. Time and again we see that what they really mean is that they should be enforced to the hilt against the little people (you and me), but that important people like them shouldn't have to worry about such tiresome details.

A case in point was the Canadian Prime Minister, who was discovered to have used some video clips without licensing them properly. Hypocrisy on an even grander scale is to be seen in the US attitude to the Anti-Counterfeiting Trade Agreement, (ACTA). Apparently, the Obama administration believes that Congress and the courts will not be constrained in any way by ACTA: now imagine the howls of outrage from the RIAA and MPAA if any of the other countries taking part in the ACTA negotiations decided that they, too, could just ignore the result. The same asymmetry will probably apply to ACTA 2.0, aka the Trans Pacific Partnership Agreement, where the US will doubtless seek to impose binding obligations on everyone else but itself. Strange that.

But it's not just governments that can play the hypocrisy game. Here's Prince claiming that when someone covers your song, the original no longer exists...except, of course, when he does it. And then there's the MPAA VP, who asserts that "we must protect our culture," but isn't interested in protecting the kind fostered by the Creative Commons approach. So actually he wants to "protect" -- as in "enforce through that intellectual monopoly we call copyright" -- limitations on creativity, a rather different matter.

Finally, I should mention one other big story that came up on Techdirt in the last week, the realisation that the iPhone and iPad are recording your every move. It's still a little too early to come to any conclusions about whether Apple is to up to anything deeply nefarious here, and if other platforms like Android are doing something as bad, but I'm sure we'll be reading a lot more about this next week as the story unfolds.

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A new, more positive story is emerging. As artists get their arms around all their rights and build direct relationships with their fans we’re seeing artists’ output RE-BUNDLED into higher value packages and average revenue per transaction greater than those delivered by the Compact Disc. Instead of selling their art across a variety of channels (CD at Best Buy, digital download at iTunes, t-shirt at Hot Topic, ticket at Ticketmaster, and vinyl at Amoeba) artists are able to bundle their collective output into a single direct-to-consumer sale where they are the retailer (and pocket half the retailer margin, too). It’s true the CD was an incredibly efficient product with massive distribution (the move from “record stores” to big box retail in the 90s was a large contributor to the bubble you see in the above slide) with an average revenue per sale of greater than $10. It’s also true both piracy and individual track sales have unbundled the product and driven the average revenue per transaction for most artists to less than $3. But at Topspin we see people selling new bundles, different from the CD and as a result very high revenue per transaction:

To legally sample a recording you have to negotiate a separate sample clearance fee with two different rights-holders: whoever owns the sound recording (the actual sound that's been fixed to magnetic tape, CD, etc.) and the song publisher (who owns rights to the underlying melody and lyrics). This takes a lot of money and time. For well-known songs, licensing fees can be very expensive—and sometimes rights-holders won't agree to a sample clearance for any price.

But it gets way more complicated when you start sampling songs that contain samples, which is increasingly the case today. If you wanted to sample, say, "Fight the Power" by Public Enemy—well, that song contains 20 samples. You'd have to get permission from Def Jam, which owns the sound recording rights, and then Public Enemy's song publisher. Then you'd have to go to the other 20 song publishers and get permission to use the song—it creates kind of a domino effect. This licensing logjam is only going to get worse and worse and worse as people increasingly sample the recent past, since that recent past is already a collage. It just becomes impossible to do all these clearances.

We figured out—song by song, sample by sample—how much it would cost to release each record. Sticking with the example of Paul's Boutique: there are about 2.5 million units sold of that record. Incidentally, a lot of the samples on Paul's Boutique actually were cleared—but they were cleared at a time, 1989, when the industry didn't really see the value of sampling yet, so the rates for copyright clearances were much lower. Today, the rates they'd have to pay would make it impossible. Based on the number and type of samples in that record, Peter figured out that Capitol Records would lose 20 million dollars on a record that sold 2.5 million units.

• Collecting data from a wide variety of sensor feeds could become a useful service -- if only there were a standard format for sensor data and all that data turned out not to be junk. Massive amounts of garbage in, garbage out.... [url]
• Ground-based lasers could be used to map the Earth's magnetic field by exciting sodium atoms in the atmosphere and watching them fluoresce with telescopes. And this technique could be used to find underground oil deposits without using satellites to map fluctuations in the Earth's magnetic field. [url]
• British and Russian scientists should probably take a look at the previous link before they launch two satellites that measure the Earth's magnetic field fluctuations from space in order to anticipate earthquakes. Predicting earthquakes would be an awesome ability, but it's not certain there's even a correlation between earthquakes and changes the Earth's magnetic field. [url]
• You could contribute towards the deployment of 600 Geiger Counter devices in Japan -- if you donate to a Kickstarter project that aims to collect and publish the radiation data. The raw data will be published under Creative Commons 0 license. [url]
• To discover more interesting science-related stuff, check out what's currently floating around the StumbleUpon universe. [url]  

OBAMA: So people can have philosophical views [about Bradley Manning] but I can't conduct diplomacy on an open source [basis]... That's not how the world works.

And if you're in the military... And I have to abide by certain rules of classified information. If I were to release material I weren't allowed to, I'd be breaking the law.

We're a nation of laws! We don't let individuals make their own decisions about how the laws operate. He broke the law.

[Q: Didn't he release evidence of war crimes?]

OBAMA: What he did was he dumped...

[Q: Isn't that just the same thing as what Daniel Ellsberg did?]

OBAMA: No it wasn't the same thing. Ellsberg’s material wasn't classified in the same way.

Merchandise, he said, is helping the cause. When Aglialoro obtained rights to the movie almost 19 years ago, he also got rights to sell such items as T-shirts, mugs, posters and even jewelry, though not dolls, video games and other "interesting exceptions."

On Tuesday, the Website atlasshruggedpart1.com was sold out of its most expensive item: a $159 bracelet made of "Rearden Metal," a replica of the one heroine Dagny Taggart (Taylor Schilling) wears in the film.

"The merchandise has taken off like we couldn't believe," he said. "We're shipping to every continent."

• create for a specific audience and target them where they are, rather than casting a wide (but super expensive) net.
• connect, connect, connect with that audience and let them help you spread the word
• offer alternative business models that let people support you at much higher price points ($159 bracelet for AS, $60+ tickets for a movie and Q+A for Smith)

It is a principle of free market. That's a Biblical principle, that's a historical principle. We have all these quotes from Ben Franklin and Jefferson and Washington and others on free market and how important that is to maintain. That is part of the reason we have prosperity. This is what the Pilgrims brought in, the Puritans brought in, this is free market mentality. Net Neutrality sounds really good, but it is socialism on the Internet.

Arguing that piracy is integral to such networks means ignoring the dramatic changes in the technology and organizational structure of the pirate market over the past decade. By necessity, evidentiary standards become very loose. Decades-old stories are recycled as proof of contemporary terrorist connections, anecdotes stand in as evidence of wider systemic linkages, and the threshold for what counts as organized crime is set very low. The RAND study, which reprises and builds on earlier IFPI and Interpol reporting, is constructed almost entirely around such practices. Prominent stories about IRA involvement in movie piracy and Hezbollah involvement in DVD and software piracy date, respectively, to the 1980s and 1990s. Street vendor networks in Mexico City--a subject we treat at length in the Mexico chapter--are mischaracterized as criminal gangs connected with the drug trade. Piracy in Russia is attributed to criminal mafias rather than to the chronically porous boundary between licit and illicit enterprise. The Pakistani criminal gang D-Company, far from "forging a clear pirate monopoly" in Bollywood, in RAND's words, plays a small and diminishing part in Indian DVD piracy--its smuggling networks dwarfed by local production.

The US record isn't more convincing in this regard. Jeffrey McIllwain examined the Department of Justice’s IP-related prosecutions between 2000 and 2004 and found that only 49 out of the 105 cases alleged that the defendant operated within larger, organized networks. Nearly all of these were "warez" distribution groups for pirated software--hacker communities that are explicitly and often fiercely non-commercial in orientation. McIllwain found "no overt references to professional organized crime groups" in any of the DOJ's criminal charges (McIllwain 2005:27). If organized crime is a serious problem in these contexts, it should not be difficult to produce a stronger evidentiary record.

Lax enforcement and high profit margins have made trafficking in counterfeit DVDs a flourishing side business for drug smugglers and crime rings worldwide. Russian gangsters and Mexican drug cartels such as Los Zetas and La Familia Michoacana, Chinese gangs, and even former members of Northern Ireland’s Irish Republican Army have all piled in to the lucrative business in the past decade, according to Robinson. “The scope of organized crime in home-video piracy is enormous,” he says.

Much closer to the truth would be that they piled out of the business in the past decade as profit margins on pirated CDs and DVDs collapsed. We see no evidence that DVD piracy is still a high margin business, nor does the story provide any. Rather, our work documents that pirate prices have fallen dramatically as burners became cheap in the early 2000s and, more recently, as non-commercial internet-based file sharing began to displace DVD piracy. In this context, Mexico has one of the most competitive pirate DVD markets documented in our study, with widespread, small-scale cottage industry production and retail DVD prices routinely under a dollar. Criminals, as we’ve noted more than once, now have to compete with free.

"The legislation is still on the books, so our role as Elections Canada is to administer the legislation that is before us," says Enright. "If there's a breach of the law, Elections Canada is not going to discriminate between the Mothercorp and Joe Smith down the street."

"These jackasses at Elections Canada are out of control," said the NCC president, one Stephen Harper, at the time. "The government's law is outdated and just plain wrong."

"If there's anything that's killing us [in the traditional games business] it's dollar apps," he continued. "How do you sell someone a $60 game that's really worth it? They're used to 99 cents. As I said, it's an uncertain time in the industry."

Federal criminal law has two overlapping misdemeanor criminal offenses that prohibit hacking into an e-mail account. The first, 18 U.S.C. 2701, specifically prohibits hacking into an e-mail account stored on an ISP’s server. The second, 18 U.S.C. 1030(a)(2), generally prohibits hacking into any computer, which will always be implicated when a person hacks into an e-mail account. The present overlap is largely a historical accident. When the two sections were enacted, both in 1986, Section 1030’s scope was very narrow. There was little overlap. But Section 1030 has been expanded over time so that it now covers every computer. As a result, 2701 in its current form is redundant: It doesn’t do any work that 1030 doesn’t already do. However, that overlap matters because violations of 2701 and 1030(a)(2) are normally misdemeanors, but Section 1030 contains an enhancement: The crime becomes a felony if it is conducted in furtherance of another crime. The present overlap between 1030 and 2701 raises the prospect that prosecutors might try to use the felony enhancement to engage in a kind of double-counting. Here’s the question: Can DOJ charge hacking into an e-mail account as a felony by claiming that it is a 1030 violation in furtherance of a 2701 violation?

Looking simply at the allegations of Count 2, it does appear that the government charged Cioni with unauthorized access or attempted access to information in [Victim 1]'s e-mail account and sought to elevate that charge to a felony by alleging that the access to [Victim 1]'s e-mail also constituted a violation of § 2701. Moreover, the facts that the government offered into evidence in support of Count 2 confirm this reading. . . . We thus conclude that a merger problem did arise, implicating double jeopardy principles, and that therefore the felony conviction on Count 2 must be vacated, and, as requested by Cioni, the count remanded for entry of a simple misdemeanor conviction, under § 1030(a)(2)(C).

. . . . Count 4, which claims two crimes, one in furtherance of the other, is actually based on Cioni’s single unsuccessful attempt to access [Victim 2]'s AOL electronic e-mail account. Moreover, this is all that the government proved at trial. If the government had proven that Cioni accessed [Victim 2]’s e-mail inbox and then used the information from that inbox to access another person’s electronic communications, no merger problem would have arisen. But the government charged and attempted to prove two crimes using the same conduct of attempting, but failing, to access only [Victim 2]’s e-mail account. This creates a merger problem, implicating double jeopardy principles.