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9.30.2004
The Induce Act & the Conservatives
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What do RICO, the asbestos crisis, and gay marriage all have in common with S. 2560, the proposed Induce Act?
This is not really a trick question. RICO, asbestos, and gay marriage all represent instances in which the legal system has, in the eyes of political conservatives, proven itself imperious, as in the dictionary definition: "haughty," "arrogant," "overbearing," "domineering."
The system has taken basic principles or language intended to cover limited situations and expanded them to and beyond the limits of their logic, thus producing results that transcend the bounds of good sense and the intent of the original lawmakers and pre-empt political decisionmaking.
Thus RICO is used against not against mobsters but tobacco companies or abortion protesters, asbestos has turned into a nightmare that bankrupts by-stander companies without helping the real sufferers, and gay marriage may be legalized nationwide by four Massachusetts judges rather than debated in legislatures.
Conservatives can produce a longer list of horror stories without breaking a sweat, and the proposed Induce Act is viewed as another in this line. Its proponents vow that it is intended only as a weapon against those who are cynically trying to make money by appropriating the value of the sweat of the brows of the creators of music and movies, not against honest tech innovators. But how can they guarantee this? If the language is susceptible to over-interpretation, then there will certainly be battalions of lawyers pushing for these, and there is no shortage of judges who will go along.
Add to this brew that the issue is arising in the middle of bitter political year, that a major proponent of the bill is "Hollywood," and that another large villain in the conservative anti-pantheon is "the trial lawyers," who are blamed for the legal mess, and it is not surprising that many conservative organizations have grabbed their rhetorical arms.
They are abetted by the tech companies, which have their own bitter experiences with legal system, and no faith at all in any guarantees that lawyers will be reasonable. [See "The Class Action Industrial Complex," Forbes (subscription required), Sept. 20, 2004.] The corporate instinct is to oppose any bill that is not totally unambiguous, and such a feat of draftsmanship is hard to find this side of Utopia.
The result of these swirling forces is that conservative groups and tech companies, both of which should be on the side of property rights and markets, have been enrolled on the side of the pirates. But this is not where either belongs in the long term, so both sides need to figure out how to craft a law, or develop legal doctrines, that will recognize that they both represent legitimate and vital interests that simply must be protected.
How they are to accomplish this, given the context of a badly sprained legal system and legal profession, is, shall we say, a bit of a challenge. The difficulty of the problem is also illustrative of how the neglected rot in the legal system is spreading.
posted by James DeLong : 9/30/2004 01:15:17 PM
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9.29.2004
Status of the Induce Act
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TechDaily (subscription required) this afternoon has a Delphic report on S. 2560. It notes that Rick Finkelstein, President of Universal Pictures, flew in to lobby the Judiciary Committee for stronger copyright protection, but adds that Universal "refrained from endorsing the bill in its current form because of last minute changes."
The report goes on to note that lobbying this week has been "intense," but that despite this, or perhaps because of it, Thursday's mark-up session may not attract enough attendees to approve the bill. In other words, the Senators, caught in a furious cross-fire among content, tech, telecom, and other industries are heading for the hills.
posted by James DeLong : 9/29/2004 05:20:58 PM
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Of Gooses and Ganders
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Anyone who appreciates irony will revel in the news that the Supreme Court has granted cert in the eminent domain case of Kelo v. New London. The issue is whether a state is constitutionally allowed to exercise its power to take property "for public use" when its purpose is to transfer the property to a private corporation which promises to generate more tax revenue for the government than comes from the existing use.
The irony? The beneficiary corporation involved is Pfizer, the big pharmaceutical house, which is thus putting itself squarely on the side of government's plenary power to do anything it damn well pleases with anyone's property.
Of course, in other contexts that are far more important to them, the pharma companies are desperately defending their property rights (in the form of patents) against whimsical governments that would destroy the research goose that lays the long-term golden egg of innovation by appropriating the fruits of that research for the sake of short-term demagoguery.
So Pfizer ought to be on Kelo's side, not New London's. Perhaps the public policy office should start talking to the real estate department.
posted by James DeLong : 9/29/2004 09:26:41 AM
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9.28.2004
More Induction
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The current version of the Induce Act is scheduled to be marked up by the Senate Judiciary Committee on Thursday. Unfortunately, there is still no meeting of the minds between the tech and content worlds on the language of the bill.
The intent is to attack the cynical purveyors of file-sharing that are up to their tails in copyright infringement, as described by Mary Beth Peters (Register of Copyrights) in congressional testimony earlier this summer.
Furthermore, the tech world agrees that creative property must be protected against appropriation. (It better agree: No one will buy tech toys unless vibrant content is available, and this will not happen unless the people who create this content can make money. Also, the tech world lives by its IP in the form of patents. Were I a content company, if the Induce Act fails I ould put some of my lawyers to work drafting the "Patent Sharing Act of 2005.")
However, once a law is on the books it becomes a weapon for opportunistic lawyers, and of course the common law creativity of judges lauded in recent blogs is not always exercised wisely. (As someone once noted, "The trouble with a call for new ideas is that most new ideas are bad ones.")
So the tech world remains skittish, dreaming up horrible hypotheticals under which the law might be deployed against the iPod, or even against the personal computer itself. It is egged on by the academicians and public-interest types who are really opposed to protecting creative products at all, and who have no interest in solving the problem.
The content people keep reassuring everyone that the intent of the law is limited, but so far no language has been found that satisfies everyone of this, and no one can guarantee against opportunistic law suits by unknown parties in the future, so the tech people are loath to take a chance.
Still, it seems like a solution should be possible. The key distinction is between the person who simply sells a product or service and who does not want to be and should not be responsible for the use made of it, and the person who actively fosters infringing uses. It is the difference between selling a copying machine or setting up a copying center and establishing a business that advertises "books pirated here." In the file-sharing context, it is the difference between selling software which customers can use to share files of any sort (infringing or not) and setting up a business that encourages a continuing stream of piracy.
The distinction is not without complications, but surely the interested industries agree on the desirable outcome and can come up with a combination of statutory language and legislative history that will achieve it.
The tech world needs this as much as do the content people. Perhaps not this week, but sooner or later the need to protect creative content will become imperative, and at that point the tech world better have a bill it likes, or it will most certainly get one that it does not.
posted by James DeLong : 9/28/2004 02:34:10 PM
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Pharma Innovation
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National Review Online has an interesting article on "The Transatlantic Innovation Gap," comparing America and Europe on pharmaceutical research.
A key point: "More important than cultural disparities are the differences in regulatory regimes. In spite of recent legislative efforts, Europe still doesn't have a decent regime of intellectual property protection, which leaves companies uncertain about the profitability of any investments they are looking to make. America's fortunes turned when it got serious about promoting R&D through the 1980 Bayh-Dole act. Europe's fortunes deteriorated because of a constant stream of regulations, all aimed at limiting the freedom of research institutes to do their work quickly and efficiently."
posted by James DeLong : 9/28/2004 10:04:44 AM
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9.27.2004
WSJ Articles on Music Downloading
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Today's Wall Street Journal (subscription required) has two interesting pieces on music. One is on the proposed Induce Act, and it emphasizes the proposed changes championed by the Consumer Electronics Association, which would, says WSJ, "target only those computer programs that exist primarily for 'indiscriminate, mass infringement of copyrighted works,' and whose commercial viability depends on that infringement."
This approach would reduce the fears of the tech world, which is concerned that the proposed legislation would be used against hardware devices, with the iPod as the poster child.
The other article is an interview with Gunter Thielen, CEO of Bertelsmmann. His comments on the piracy issue: "I think the downloading problem won't be solved until we're able to electronically interfere with the process. There are some new technologies being tested and I think they will be ready pretty soon. . . . . In one or two years, we'll have taken care of the problem . . . . The combination of technical advancements, user-friendly services and litigation will lead to a reduction in unauthorized downloading."
I am increasingly convinced that Theilen is right -- that a right of self-help, limited by liability for damages caused by mistakes, is a crucial part of any long-term solution. The brouhaha over the Induce Act reinforces this view, too.
posted by James DeLong : 9/27/2004 02:52:56 PM
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The Future History of P2P
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Techies have often responded to the copyright woes of music and movie people by urging them to get a new business model (more or often less politely). My question for the day: why doe the burden of reinventing itself does lie only on "old" business methods? The P2P business model (legality of downloads aside) is nifty, but surely could use refinement. This need for redesign offers the best hope of success for "paid" content services like the revamped Napster.
Raw P2P services are, well, seedy. The success rate of searches is uneven, the quality of downloads more so, and the failure rate of download attempts is high. There are issues with viruses, security problems (as unwitting users accidentally share excel spreadsheets), one is liable to stumble across nasty porn, and so on. What are the implications of this?
To start, it means a business history of P2P might well end up looking like the history of chat rooms. A bit of raw data: The first chat room, PLANET, was born of ARPNET in 1973. In 1988, Jarkko Oikarinen developed Internet Relay Chat. In the mid 1990's newbies flocked into general-purpose, un-moderated chat rooms springing up everywhere. In the late 1990's, AOL served about 15 million users, and found that the average user spent about 19% of his time in chat rooms. Today, chat's growth has slowed and the average user spends much less time in chat. And more experienced users prefer targeted and focused instant messaging or just plain email. Moderated forums open for limited times and limited purposes offer a nicer environment. The unmoderated forum is mostly for the brave, foolish, or twisted. Concerns about children's safety lead MSN to close its free chat rooms in 2003. Chat rooms have gotten a lot of attention from law enforcement, too, with IRC providers like CIT/Foonet shut down for intentionally hosting hackers.
Getting back to P2P, in earlier blogs (e.g. 9/14) I've posed the challenge of how content providers can remake the market in the (relative) absence of enforceable boundaries. How will paid compete with "free"? The history of chat shows that a too-chaotic, dingy sort of medium may driver users to more controlled environments. Thus legal music downloading services are having success in getting consumers to pay up. So content providers may take heart. But this mini-history of chat shows that techies should take heart as well. Neato tech can survive and reinvent itself despite (needed) attention from law enforcement focussed on real bad guys and a dose of accountability.
posted by Solveig Singleton : 9/27/2004 09:33:38 AM
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9.24.2004
Moore's Law Marches On
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As part of a recent home move, I just signed up for VoIP, at $15/month for 500 anywhere minutes. I can keep my old 202 phone number instead of converting to a new 703 one, and I get all sorts of extras, such as voicemail, that I have not sorted out yet. While I was at it it, I spent all of $115 on three new cordless phones.
Incredible!
posted by James DeLong : 9/24/2004 01:56:44 PM
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More Riffs on Posner
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Richard Posner's creative suggestion about a Fair Use solution to the problem of excessive copyright extension triggers some philosophical thoughts.
Too much current debate over intellectual property focuses on cramming the arguments into existing legal pigeonholes. This approach puts things backwards. Legal rules are a derivative of a society, generated out of the culture as people work out their relationships and promote efficiency and fairness. The most famous statement of this is Oliver Wendell Holmes' "the life of the law has not been logic, it has been experience." (Not by coincidence, Judge Posner is the editor of The Essential Holmes, a compendium of Holmes' writings.)
As technology and economic change occurs, the old rules -- pigeonholes -- become inadequate and we must create some new ones. But these do not come initially out of the legal mandarinate, which tends to be locked into the old ways. Rather, new rules should come from the experience of the people who are working with the system, and who have a sense of what is possible and needed. They should be ratified by the legal system, and this may best be done by common law processes, which are more tentative and prone to revision than legislative solutions.
As a previous post noted, this bottom-up process has occurred with respect to property rights in the past, in contexts such as the American West, and is also occurring right now in the tech world.
Posner's suggestion is within this tradition. Given the computer revolution, it would be easy to make available information about those copyrights which holders care about. So it becomes unfair and inefficient for them to put potential users to the expense and trouble of ferreting out the holders at considerable expense and risk of heavy penalties for error. A common law judge, especially one imbued with the law-and-economics views of seeking the person who can avoid a problem at the least cost, then has little trouble in agreeing to convert this sense of the involved community into a legal rule, using as his clay the broad principle of Fair Use.
But this is a relatively easy case, because no one benefits from the inefficiencies and higher costs. Other issues, such as contributory infringement or the Induce Act, are far more contentious, and discerning any community consensus is far more difficult.
But not necessarily impossible. For example, producers and purchasers of software reached agreement very quickly that purchasers should be allowed to make extra copies for extra machines as long as the purchaser is not usually runnning more than one machine at a time. The bargain was ratified by contracts rather than laws, which may indeed by the best approach -- it is, again, tentative and partial rather than cast in stone, and subject to revision if producers want to begin to offer new value propositions, such as cut rates for those who do not need the extra copies.
posted by James DeLong : 9/24/2004 01:43:22 PM
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9.23.2004
9.22.2004
Posner, Eldred, and Fair Use
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Writing in The Economists' Voice (see yesterday's post), Richard Posner makes a crucial point about the Eldred case in "Eldred and Fair Use."
The big problem of extended copyright is not that the right to use intellectual works must be paid for, but that the chains of title become obscure. Potential uses are aborted by the transaction costs of finding the owner more than by any actual fees involved. The major advantage of putting a work into the public domain is that any potential user avoids these transaction costs, not that the work becomes free.
PFF has made a similar point, but without suggesting a solution. Posner has a solution -- an adaptation of the doctrine of Fair Use. If the owner of a copyright has not provided notice of his continued rights by entering his name and address in a copyright registry, then reproducing it becomes, automatically, a Fair Use. This will weed out the economically valuable rights from the valueless, and, of course, will also reduce to zero the costs of finding the owners of the valuable. Disney will maintain its copyrights on Mickey Mouse, but the price of achieving this will not involve the continuing coverage of thousands of works of little or no value.
Posner points out that Fair Use is a judicially-created doctrine, and that the congressional codification of it in 1976 was not meant to be exclusive, so a court, acting in the great tradition of the common law, could evolve such a solution to the problem. If Congress liketh not the development, then Congress could over-rule it.
It is a sound idea, akin to but more realistic than Lessig's suggestion that a law be enacted to require periodic re-registration of copyrights. Nor is it really much of a legal stretch. Fair Use thinking has always had a huge transaction-cost element, and rightly so.
So let's find a plaintiff, and head for the Seventh Circuit, where Judge Posner may be found.
posted by James DeLong : 9/22/2004 02:01:50 PM
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The Mysterious Origins of the Induce Act
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For those wondering what on earth the drafters of the Induce Act were thinking (me, for example, those at Public Knowledge, and many others), here it is: Professor Lee Hollaar's paper on the history of "inducement" in intellectual property, which draws on the now-released records of the Supreme Court's internal debate to explain that the Justices in Sony had not intended to extinguish a prior line of cases imposing liability for copyright inducement. He also describes the doctrine of inducement in patent law.
This is fascinating. The idea of "inducement" liability may seem less like overkill if grounded in an earlier line of precedents (though the paper doesn't describe the earlier cases in detail). But the statute untied from those reads to me like something that could get way out of hand. Furthermore I'm not sure that its application in patent law will prove helpful. With patents, even infringers are likely to be pretty sophisticated, and "inducement" liability can be kept in check by the very obscurity of the whole process. Copyright violations are far more likely to entangle the common man.
posted by Solveig Singleton : 9/22/2004 09:10:04 AM
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9.21.2004
Morality and Medicine
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My silence here during the past week was due not to any burst of reticence but to a medical emergency. (You know the old spiritual Dry Bones? If one falls the wrong way, the part about the leg bone connected to the knee bone needs revision.)
Such an event evokes strong thoughts of my extraordinary luck in being born a 21st Century American, where access to suburb medical care makes it a temporary inconvenience rather than a personal tragedy.
It also raises thoughts of the moral obligation incumbent on those of us who received this gift of fortune to do everything possible to spread the benefits of such care around the world.
But in the halls of PFF this does not lead to any gooey Kumbaya stuff, nor to some new idea for a UN program. Instead, it leads to renewed dedication to institutions of property rights and markets that can harness the best in human thought and effort, and to renewed opposition to the mad abstractionists and demagogues who would destroy such industries as pharmaceuticals, medical equipment, or health care provision in the name of some academic theory or personal advantage.
posted by James DeLong : 9/21/2004 02:46:55 PM
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Economists Find a New Voice
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The Economists' Voice is a new on-line journal from the Berkeley Electronic Press that "seeks to publish innovative policy ideas or engaging commentary on the issues of the day." Its pieces will be "short, 600-2000 words, and intended to contain deeper analysis than is found on the Op-Ed page of the Wall Street Journal or New York Times, but to be of comparable general interest."
The substance is interesting -- an inaugural article is Judge Richard Posner on Eldred -- but so is the journal's pricing policy, which reflects the confusion now sweeping the world of academic literature.
According to the BEP website, The Economists' Voice is to be a paid-by-subscription publication: $50 for an individual; $300 for an institutional license. As with others in this family, BEP is trying to cut the price of access to scholarly publishing. The average economics journal costs $553.
However, BEP and the academicians who write for it for it are also in the intellectual influence business, and they want to encourage broad access. So, actually, anyone can access and download the articles for free. However, I am informed that Berkeley will note who is doing this and that one result will be an email from BEP to your institutional employer suggesting that it subscribe. The theory is that most accessors will be academicians and that university libraries and presses have a deep culture of reciprocity.
In addition, the BEP policy on IP has numerous exceptions designed to facilitate distribution. For The Economists' Voice, the BEP does not demand a copyright. It does demand a five-year exclusive license to publish the article in digital form. However, this exclusivity is riddled with "personal exceptions" which allow the author to post the piece to personal and institutional websites as long as these are non-commercial, so in fact BEP's ability to generate any future revenue from its digital exclusivity seems slight. The aware will simply go to the author's home page.
I confess to skepticism that BEP can generate the revenues necessary to fund the enterprise under these terms, but, as a federal judge once wrote about administrative law, "a month of experience is worth a year of hearings."
More deeply, I remain mystified as to why academics are so obsessed with having things be free; instead of an elaborate structure of moral suasion and differentiation according to educational worthiness, why not adopt a system of micropayments. Would I pay a buck to read Judge Posner's thoughts on Eldred? Absolutely. So charge me, and support the journal. Or, of course, an author or a sponsor of some sort could choose not to charge, thus encouraging the broadest possible dissemination. But it is risible to think that the structure of American academe, which spends billions on physical facilities, salaries, techie toys, etc., will topple if it must pay for IP.
posted by James DeLong : 9/21/2004 01:53:52 PM
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Secret Ingredients in the Recipe for Linux!
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The Wall Street Journal and others report recently that HP, IBM, Intel and other big players have joined in support of the Free Standards Group and Linux Standard Base 2.0 to strengthen their market position against Microsoft by warding off the fragmentation of Linux. I read this with interest because at one time some commentators believed that the very nature of the GPL coupled with network effects would prevent Linux from fragmenting. That is, they thought that because the GPL allowed companies to adopt a standard format, that therefore they would. But to survive in a competitive market, many companies will seek a unique niche and find themselves wanting to differentiate their own product, to be better than others even if it means less compatibility. To maintain standardization, some kind of special institution (like the IEEE) or cultural factors (like the focus on Linus Torvalds) must come into play. The GPL and network effects unaided won’t do it.
This should sound a cautionary note for those who want the GPL to be adopted for everything under the sun, perhaps with a nudge from a governmental toe. Not every group of developers will be as amenable to working towards common standards as has the Linux crowd thus far. The fate of Unix--doomed to non-user-friendliness when it fragmented after being wrested from the Bell System by antitrust decree--awaits the unwary.
posted by Solveig Singleton : 9/21/2004 10:10:35 AM
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9.20.2004
9.15.2004
Tortured rationalizations
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On Monday, Tech Daily's Issue of the Week column contained a quotation from a software developer and file-sharer, Peter Royal, that illustrates the tortured rationalizations used to defend file-sharing. It consists of three pairs of sentences, in which the second sentence either undermines or refutes the first. Here is the relevant paragraph from Tech Daily (an invaluable publication that I recommend to all):
"Royal, who bought 90 percent of the music on his hard drive, said content creators should be paid for their work. But in the spectrum of criminal activity, he equates music sharing to jaywalking. 'File sharing isn't stealing, it's copyright infringement,' he said. 'Digital files aren't really anything. They're just atoms arranged a certain way. The person who creates the music doesn't lose anything tangible from having the file shared. They just lost an [economic] opportunity.'"
"File sharing isn't stealing, it's copyright infringement." True enough, but this distinction proves very little. Copyright infringement is illegal, subject to civil and criminal sanctions, and rightly so. Royal is apparently rationalizing file-sharing by suggesting that infringement is a less serious wrong than stealing. But both are illegal for similar reasons. Downloading an album and stealing a CD with the same music have the same consequences -- reduced incentives to produce works (see below).
"Digital files aren't really anything. They're just atoms arranged a certain way." Basically everything is comprised of arranged atoms, protons, neutrons, electrons, etc. Royal's second sentence thus refutes his first. Moreover, as anyone who has accidentally deleted his or her only copy of a draft memo knows, digital files are often significant things that can be lost and sometimes (thank God) retrieved. Of course, Royal is correct in suggesting that a physical object like a CD seems more real than a file -- we can see it and feel it. This perception that the file is less "real" probably does make it easier to rationalize file-sharing, and distinguish it from stealing a CD (see above). But this is just a rationalization. A music file stored on a hard drive (or on a pirated CD) is no less real than the file on a store-bought CD.
"The person who creates the music doesn't lose anything tangible from having the file shared. They just lost an [economic] opportunity." Again, Royal moves from one claim, that a content producer "doesn't lose anything tangible," to a contradictory proposition, that he or she "just lost an [economic] opportunity." Apparently Royal thinks this opportunity is insignificant and without substance. Another rationalization: No harm, no foul. But the lost economic opportunity is very real and important. It is the content producer's chance to earn tangible economic rewards -- money -- by selling to others the right to enjoy copies of the content. File-sharing enables consumers to free-ride, obtaining the opportunity to enjoy works without paying producers.
In this regard, it is interesting that Tech Daily makes a point of identifying Royal as an "enthusiast" who "bought 90 percent of the music on his hard drive." Well. If Royal were the typical file-sharer, concerns about undermining incentives to create works would, of course, be largely eliminated -- the ten percent leakage would be unlikely to threaten the basic economics of the creative industries. But Royal is an extremely atypical file-sharer. File-sharing overwhelmingly represents free-riding and piracy on a previously unimagined scale, greatly reducing the ability of content producers to earn tangible rewards for their creations, and thereby dramatically threatening incentives to create new works.
posted by Bill Adkinson : 9/15/2004 02:25:48 PM
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9.14.2004
Why IP is a Hard Problem
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Being new to this project, I've been cruising around looking at a lot of other IP blogs. There seems to be a lot of attitude, complete with name-calling, and not much argument. This implies that many commentators there seem to think that the future of IP (or lack thereof) is in a sense an easy problem, justifying the cavalier dismissal of the opposing view. Today let me defend the view that the question of the future of IP is a hard one, in the hope of earning a general increase in courtesy and focus on substance.
At a level of great abstraction and hypothetical cases, with everything deconstructed twice over, all rules look pretty arbitrary. One can argue that property is a monopoly, that tax loopholes are a subsidy, that copyright is property or monopoly or even a subsidy, and on and on. At this level--where many professors and other commentators are safely ensconced--it is easy to think that if any given set of rules is disrupted, you just scrap the system, and come up with something else. It's as easy as a hypothetical, or if you prefer anecdotes, as easy as hindsight. But real life--life for consumers and for businesses and inventors--is not like that. In real life, people rely on given sets of rules (that's what rules are for, to be relied on) and forces that upset the rules are, well, upsetting.
Consider an analogy to the game of baseball. One can easily imagine that the rules of baseball could have been different. It might have been a fun game if played with a flat bat instead of a round one, or two or five bases instead of four. But within the context of the game of baseball as we know it, someone coming in with a new technology that allows the ball to be hit out of the park every single time, well, that raises questions of fairness and within the context of the game those are serious questions. Rules that are at one level arbitrary take on a whole different character once they have become intertwined with complex human expectations and behaviors.
This isn't a plea for keeping the rules always the same. But it does mean that the problem of change needs to be taken seriously. And not just because people get emotionally upset when the games changes--that's not what I mean. It is because the problem of exactly how to adapt to a new world is in fact a very hard one at an intellectual level. It is one thing entirely to say "and now for something completely different," and another to actually do something completely different.
Because it is possible to go wrong. As easy as it is to think of hypothetical worlds that seem to on the surface be as plausible as our own, there are limits. Baseball might be just as fun played with a flat bat, but could it be played with a square ball? With just one base? Doubtful.
Bringing this back to the copyright debate, the question of how to make new markets in content is a hard one for these reasons. How exactly is this to be done? By contract? How are these contracts to be enforced? Using technology? What are the new packaging and the new locks to look like? Will a commons do instead? Very picturesque, but how are artists to get some kind of income stream? With new legislation? How is this to be enforced and at what cost? No, really, how is any of this to be done? That is what the debate is really about, and why it is a hard one. And, sadly, one that most academicians and legislators are sorely ill-equipped to address. And, "Well, we've done it before," is not an answer.
Now, why isn't it an answer to say, "Well, just leave it to the market?" That is a better start. Because if anything can handle the complexities of the question, it will be the distributed energies of myriad entreprenuers. But in the particular case of the copyright question, it's tougher than that. Because what makes a market is some kind of enforceable boundary--contract, property, technological--something to give somebody something to trade. And that bounces us right back to the challenge that has arisen in the digital world--what exactly will these enforceable boundaries look like?
posted by Solveig Singleton : 9/14/2004 05:49:04 AM
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9.13.2004
Default Rules and IP Protection
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Listening last week to Richard Epstein at the Federalist Society Telecom conference, I was delivered back into a time warp to law school and remembered the importance of defining default rules to facilitate bargains and transactions.
The broad question vis a vis intellectual property rights then would be what default rules would best facilitate the creation and production of optimal amounts of intellectual property? Let's take two extreme versions of possible default rules, assuming again a default background of contract rights.
The first set of default rules would have no IP rights. Nothing would be patentable, nor copyrightable; and, short of physical appropriation, everything would be "free." The alternate universe would have strong IP rights, no "fair use" rights and grant the creator complete control over all the terms, rights and conditions of use.
In the no-IP world, creators of IP will have to rely on contract rights and on maintaining privity of contract with those who purchase creative works in order to extract value. Similarly, the creators would invest heavily to maintain trade secrets, since disclosure would mean loss of the ability to draw value from the innovation or creative work.
By contrast, the strong-IP world would have more limited dissemination of creative works because of the creators' pervasive control. That said, I still imagine that 'fair use' rights would emerge through negotiation away from the stronger default rule. Creators would want some free uses of their product to encourage its use. Indeed, many creators, no doubt, would give away their content -- either because it has no positive market value or because non-pecuniary interests predominate their values. (Hence scholars might abjure IP rights to disseminate their ideas and further the cause of knowledge, or -- in less exalted way -- Sports Illustrated might give me 3 'free' issues to get me to realize the value of their product.)
To be sure, the difficult, real world questions happen short of these extremes and I am missing many subtleties. But I think it's clear that a stronger-IP right default world facilitates more creation and negotiation than its alternate. Moreover, the current default rule "fair use" right held up pretty well in pre-Internet/pre-digital age. Whether its contour needs to change in an digital, Internet age is a paramount question for copyright right now.
posted by Ray : 9/13/2004 03:41:31 PM
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9.10.2004
Lessig v. PFF (cont.)
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Last March, Larry Lessig and I debated at the National Press Club.
Now, Lessig is again seriously irked with PFF -- "lost" is his description of us -- this time because of comments on Grokster by Bill Adkinson (here) and Solveig Singleton (here, here, here, and here) suggesting that the case was wrongly decided and that cert should be granted because a better approach is embodied in Judge Posner's Aimster opinion. Lessig closes on the doleful note that the comments show "the danger of putting principle up for bid."
Next week, we will blog more on the substance of the conflict, but a couple of basic points should be made in response.
First, a major difference between PFF staff and the Lessigians is that we place high value on the protection of intellectual property. Our reasons are both societal, in the sense that protection of property (including intellectual property) and markets is crucial to the production of wealth, and individual, in the sense of the Supreme Court's 1972 language in Lynch v. Household Finance that:
"[T]he dichotomy between personal liberties and property rights is a false one. Property does not have rights. People have rights. The right to enjoy property without unlawful deprivation, no less than the right to speak or the right to travel, is in truth a 'personal' right, whether the 'property' in question be a welfare check, a home, or a savings account. In fact, a fundamental interdependence exists between the personal right to liberty and the personal right in property. Neither could have meaning without the other. That rights in property are basic civil rights has long been recognized."
Intellectual creations are solidly within the scope of this truism, in both law and right reason.
The Lessigians seem to place no value on protecting IP. They seem to regard it as totally a utilitarian creation of the government, subject to alteration at whim. (See my analysis of the Eldred case, here.) And they seem to think that the Internet has rendered our concepts of IP obsolete, so we can get rid of them with insouciance. The Lord will provide a new model for its production, probably in the form of a tax on Internet connectivity with the proceeds distributed among creators by an all-wise and all-beneficent government board.
Therefore, if protecting property in any way inconveniences any other interest, the Lessigians' conclusion is clear: To hell with IP.
PFF, on the other hand, finds the issues very difficult. Yes, the tech companies raise some important concerns, but IP is important, too, and the academicians' idea of socialized IP is one of the world's truly bad ideas, absolutely unworkable.
So how does one reconcile the conflicts? Actually, I am somewhat more sympathetic to the Grokster decision than are Solveig and Bill, but my sympathies come with a price -- okay, if you do not want to give the content owners legal power to shut down the infringing services, then give them self-help power. Let them block the file-sharing as they choose, subject only to a requirement that they pay for any harm caused to innocent parties as a result of errors.
Don't like this idea? Then let us back it up, and look again at the rules under which the content providers can assault the P2P enablers, because they have to be able to protect themselves (and the society) in one way or another.
It is characteristic of the Lessigians to claim that they actually favor IP rights, but then to oppose every specific suggestion about how those rights might be protected. I predict with confidence that they will not endorse the self-help suggestion, either.
The second point concerns financial support. PFF is funded by donations from companies. Supporters, past and present, are listed on our web site. They include telecom, tech, and content companies. They support us because they agree with our basic property-rights-and-free-markets orientation, but they certainly do not agree with every position we take, especially because their interests sometimes conflict. Sometimes they stop supporting us; several names on the web site are no longer active. Also, corporations are bottom-line conscious, and their willingness to dole out money for long-term philosophical education is pretty limited.
Thus, it is amusing to be accused of venality by a prominent academician. The academy may not much like property rights, but in fact the most valuable piece of property one can have in modern America is a tenured chair at a major university. The job can pay a cool quarter of a mil per year, plus cushy fringes, and you have great opportunity to add to that with $700-per-hour consulting. You cannot be fired for sloth, senescence, or spending time on activism rather than teaching or scholarship, so you are not responsible to the trustees or the administration of your institution. As icing, for odd sociological reasons, as long as the academic holds to a rigorously anti-corporate, anti-market, anti-property line, he or she can get unending grants from a long roster of sympathetic foundations. (There are almost none of these on PFF's side of the philosophical divide.)
On the auction market, such a position would be worth multi-millions.
If we at PFF are putting our principles up for bid, boy have we come to the wrong eBay.
posted by James DeLong : 9/10/2004 01:59:41 PM
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9.9.2004
More Conferences & News
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The Chamber of Commerce is sponsoring a Symposium on The Future of Standards Setting, Thursday Sept. 16, 8:30 a.m. to 4:00 p.m. This topic is crucial for every company dependent on IP for its value, since standards are the mechanism by which such entities both compete and cooperate.
Glenn Reynolds has an entertaining piece on TechCentralStation called "Sims Rules for a Complex World," on why video games can be good for children. He notes, among other keen observations: "I don't think that The Sims will replace the schools. But I do think that it's interesting to see a consumer product providing an education that is, in some ways, more rigorous than many schools provide." (For those not familiar with free market literature, the article's title is a riff on Richard Epstein's classic work, Simple Rules for a Complex World.)
It is buried on page B7, but today's Wall Street Journal (subscription required) notes that the movie industry group Digital Cinema Initiatives has, after "years of wrangling," agreed on technical standards for digital distribution and projection to allow movies to be sent as bits over the Internet rather than as films. However, one itsy-bitsy detail remains -- who pays? The studios and the theater owners have rather different ideas (though in the end it will be consumers, of course, whatever the initial incidence). But look for more years of wrangling.
posted by James DeLong : 9/9/2004 11:52:23 AM
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9.8.2004
Reading
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C|Net on Sept. 3 printed an interview with Mitch Glazier of the RIAA.
The Center for Strategic and International Studies (CSIS) has a work-in-progress called Government Open Source Policies. It is a 33-page chart summarizing "Open Source (OS) software policies and legislation considered by national, regional or local governments around the world." The latest version is September 7, 2004.
The Tech Liberation Front, which did not take off in August, has posted a number of entertaining blogs recently.
MIT's most recent Technology Review (registration required) has articles on "An Alternative to Windows," touting Linux for the desktop, and on "Digital Music's Next Big Battle," about programs that allow consumers to seek and record music off the airwaves.
posted by James DeLong : 9/8/2004 03:12:31 PM
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9.7.2004
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With a new baby in the Singleton household it's only natural that there's been talk of knitting booties and such. Which brings us to the all-important topic of needle arts copyrights. A few years ago CNN, ABCNews, Forbes, and the Los Angles Times ran stories about the impact of the Net on needle arts-- knitting, quilting, cross-stitch and such. Copyrighted patterns "shared" on needle arts discussion groups over the Internet were hitting professional designers hard. Some companies were threatening to initiate lawsuits, and designers in some arts were reportedly holding designs off the market. Over the next few weeks I'll be bringing you an update on those stories.
Why? Isn't this niche too trivial to study? Au contraire. Needle arts copyright issues are interesting for a number of reasons. First of all, while needle arts fans are a younger crowd than one might imagine, they by and large constitute a more pro-copyright and voluntarily law-abiding culture than say, P2P-using music-downloading tweens and twenty and thirty-somethings. Many of the posts on needle-arts boards are pro-copyright. Second, most of the needle arts discussion groups involve tech no more complicated than e-mail. None-the-less, professional designers seem to have a serious problem on their hands. Are the beginnings of a solution in sight? That's what I'll try to find out.
In the meantime, consider this quote from a handy web site for knitting copyrights:
"If you're thinking, "But one copy won't make a difference, will it?" Consider this: When you see a pattern selling for $5 for only one design, you may think the price is outrageous. However, that $5 doesn't go very far.
First, the yarn store owner takes half--and uses it to pay rent, heat, electricity, phone, advertising, credit card surcharges, employees and maybe the owner. Now the designer might get $2.50, which he or she uses to pay for getting the pattern out to the shop in the first place. If the designer goes through an agent or a distribution company, that middleman takes a cut. On top of that, there are the actual production costs of publishing a pattern. Many people are unaware of the costs of putting a pattern out into the world; they include the costs of the yarn used to make the models and swatches, the paper for the umpteen printouts until the pattern was right, any test knitters, the electricity for the computer on which was typed the pattern, film and developing of the picture to go on the front of the pattern, copying, and those page protectors that the pattern goes in or the equally expensive heavy high gloss paper. (Until you make thousands of them, one page of color copying generally costs over $1.00 U.S.) If there's anything left, the designer gets paid so he or she can pay rent, heat, light, etc."
That's all for now.
posted by Solveig Singleton : 9/7/2004 10:00:36 AM
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9.1.2004
The Mysterious Grid Explained
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My husband has just informed me that my grid could use some explication. Perhaps this will help:
By "license" I mean that the software is distributed under a license, which may contain restrictions on how it is used.
By "constructive" I mean that the distributor should know that there is illegal uses of the tech going on, even if he is not aware of actual instances of it.
posted by Solveig Singleton : 9/1/2004 02:58:16 PM
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Tidying Up
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Voila, a grid. An attempt to make neat what is inherently messy.
(Click here to see a full-sized image)
posted by Solveig Singleton : 9/1/2004 09:38:33 AM
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