[T]he two companies are far from strangers. Skype’s current CEO Niklas Zennstrom co-created Kazaa before licensing the technology to Sharman Networks in Australia after a flood of lawsuits by the recording and movie industries.

The march of Providence is so slow and our desires so impatient; the work of progress is so immense and our means of aiding it so feeble; the life of humanity is so long, that of an individual so brief, that we often see only the ebb of the advancing ways, and are thus discouraged. It is history that teaches us to hope.

The obvious question, then, was why Sun doesn't "Free up" their version of Java, and the answer is that Java is already "open," but not under a more liberal license because Sun doesn't want to open up the potential for a fork. The same fear is not present in the OpenSolaris situation because Solaris is more closely defined and controlled by Sun, while Java can be shaped by external forces easier, and so Sun doesn't want to take that risk. With over 2 billion devices worldwide running Java Sun is 100% committed to ensuring that anything 'stamped' Java is compatible. Folks really depend on that assurance.

He believes that Red Hat locks Enterprise customers in, just like Microsoft does, by steadily moving away from the LSB, by patching and forking code (including using a very non-standard Linux kernel) and so applications get certified or only work in the Red Hat codebase and no other Linux distro. Such an example is Oracle, where they do not support any Linux distro other than Red Hat-based ones.

Does the open source community embrace any group that chooses to develop and distribute code freely? If so, then the folks at OpenNETCF.org must be part of that open source community, even though they are all loyal Windows users.

OpenNETCF.org members develop extensions for the .Net compact framework and share the source code with anyone who wants it and is willing to agree to the license terms. The code license is the same "shared source" license that got Microsoft some play on Slashdot earlier this year. The developers at OpenNETCF.org say they are working in the spirit of the open source movement.

Me: Substituting tax for copyright gets rid of the main mechanism, market
prices, by which consumers communicate their needs to producers. No good
substitute for this mechanism has been found. (If surveys and sampling work
so well, why don't we run the entire economy that way?).

JZ: Well, the Neilsen ratings have been used for TV for decades. They might be laughably inaccurate, but they really do determine the hundreds of millions of dollars -- far larger than the entire music industry! -- that change hands thanks to ad buys on free TV. Is selling ads on free TV any less a market mechanism because the rates are agreed upon between broadcaster and advertiser nearly mechanically on the basis of those surveys?

Also - the "market" for CDs is itself distorted by the act that it's government entitlement to begin with that determines the scope and nature of what a producer is able to unilaterally hold back and therefore charge monopoly rents for. Even monopolists operate according to market forces, of course, but with the industry as concentrated as it is, and the relationships among current rights holders (performance licensing organizations, record companies, radio stations, etc.) as tangled as they are, the status quo is one in which there is a substantial amount of
friction in the market. (Indeed, nearly everyone seems to wish for a reconfiguration of the entitlements to allow for new business models.)

Surveys are a second best substitute for the price determined by a willing buyer and willing seller -- but of course a market itself is only a second best to rank abundance! Hence no market in the air that we breathe. The intangible goods in question here are abundant, and it's only the instrumental desire (a legitimate one, to be sure) to maximize their production through the right incentives, that points towards the creation of a market. But my point is that any market here is one whose very existence and boundaries will be (and are) determined by government policy intervention. (This is not so the way a "normal" market in, say, corn, might develop, even with laws prohibiting the stealing of corn. And putting corn subsidies aside. :) )

Me: Switching the complexity to the tax system and a bureau to dole out the
proceeds to make it less visible to consumers is not a good thing. Those best
able to navigate bureaucracies will continue to benefit disproportionately, and
hardly anyone will care. But we will all pay.

JZ: Yes, there are serious public choice problems to the extent the allocatory bureaucracy has any discretion in what it does. (Also perhaps a hydraulic pressure among the benefiting special interests to keep increasing the size of the pie to be distributed by pushing the surcharges/taxes higher and higher.)

Me: With the copyright system, true, the government sets the ground rules
(as usual with statutes) and the courts step in as arbiters in the case of
disputes. But the government is not present in the vast majority of exchanges
involving copyright, which are not disputed. But with a tax system, government
is present as a middleman in every single exchange. On balance, concerns about
free speech tip me in favor of copyright. (If one is wavering on this point, consider how a tax scheme would go over with the publishers of books!).

JZ: Every single exchange involving the use and publishing of music to the
public has a staggering array of rights holders at the trough. It is an odd form of freedom when one has to clear rights to, say, broadcast an interview with someone conducted at a public place when music happened to be playing in the background. The current system, ostensibly free of direct government restriction or participation, is one where those wishing to use the new tools of technology to "rip, mix, and
burn" their own speech are essentially stymied -- unless they want to risk
the government being called in to punish them.

Me: By doing away with market prices, it makes consumers less sensitive to
prices, which in turn reduces the incentive of producers to innovate to lower
their costs.

JZ: I think producers always have an incentive to lower costs, unless it's a Pentagon contractor-like cost-plus incentive scheme! No matter how much someone is making through monopoly pricing, cheaper inputs are always better. Hence the poor quality of food at the stadium to go along with the high prices, no? Consumer sensitivity
would be displaced from individual transactions -- this is a feature, since now they can enjoy all the music they can stand to listen to! -- to overall size of market, perhaps through objection to an increase in the overall tax.

Me: It would end competition and innovation in business models for delivering content. If there is something beyond P2P or disks, we will never know.

JZ: I'd have thought the opposite -- thanks to a clearing of the legal brush that has choked the mobility and derivability of music and movies, Fisher's proposal would make it easy to innovate with these materials -- creating new derivative works and new distribution models. The publishers would be behind this, because they'd profit
each time someone moves the work (or a derivative) over the Net. This seems a great incentive for downstream creativity, while allowing the forces that already are in place to distribute widely to continue to do so.

Previous blogs related this one may be found here, here, and here. Clearly, we could go on like this for some time.

The American Association for the Advancement of Science late last week presented Carl Zimmer, a science journalist and author, with one of its 2004 awards for online science journalism. The award was for a series of three essays on evolution that Zimmer posted on his Web log, or blog, called "The Loom".

The piece competed against submissions from The New York Times and the Seattle Post-Intelligencer.

Blogs are increasingly becoming a part of the policy process for lawmakers. Many legislative aides in Congress read blogs on policy issues, and policy think tanks such as the Progress and Freedom Foundation have started blogs and are incorporating feedback from legislative staffers on them.

Perhaps the single greatest flaw of politics is that it encourages people to behave romantically rather than realistically — to confuse intentions with results. To dream is marvelous, wonderful, human; but to dream without constraint and regard to reality is to turn dreams into nightmares.

[F]or twelve years -- until 1929, when Stalin finally took over -- he lived in a kind of dream world, a mythical country where idealistic intellectual[s] . . . actually ran things, quite literally, a country of the mind. Theories failed; peasants died, the land itself dried up in despair. Still they worked twenty hours a day and swore they had the answer. (Dark Star, p.60)

Second, with regards to the question: do companies have little to fear from triple damage if they build patent databases of their industry (which would include patents from their competitors), 50% said YES and 50% said MAYBE. This is an interesting shift, because in years past the results of my survey were more 33% YES, 33% NO, 33% MAYBE. That is, companies should be more willing to build such databases.

[T]he term "competitive" too often distracts attention from a deeper and more important point about the essence of a market economy. This deeper point is that the market process is one of cooperation. Whenever a firm in the market increases its net worth, it does so by improving its cooperativeness with customers and suppliers. It becomes a better cooperator. It works better, more effectively, with its suppliers. It works better, more effectively, with its customers. The amount of cooperation is extended; the efficacy of cooperation is deepened.

We might truthfully say that profits earned in markets are measures of a firm’s success at cooperating. The better is a firm at cooperating, the higher are its profits.

- TRIPLE DAMAGES IF YOU LOOK AT COMPETITORS' PATENTS?

Time for my periodic survey. A company wants me to build a database of all of the patents in its field of products. I have been asked a few times, but never hired, because of corporate counsel's concerns that doing so automatically leads to willful infringement.

So in light of caselaw since the last time I asked, should companies feel free to build organized databases of their competitors/related patents for use by their employees? YES, NO, MAYBE.

The last few times I asked, the answers was 1/3 yes, 1/3 no, 1/3 maybe, which means no one had any idea what the real answer was.

Newswires over the weekend report that scientists at Texas A&M have created and patented a non-hot version of the very hot habanero pepper.
The question is ....... why? It's bad enough we have flavorless grapes and watermelons when they took out the seeds, now non-hot hot-peppers?

DoJ’s efforts to investigate criminal violations of 506 by users of filesharing software are likely to uncover lots of parties who have violated the law, yet may not warrant criminal prosecution.

It is critical that we bring the moral force of the government to bear against those who knowingly violate the federal copyrights enshrined in our Constitution. But many of us remain concerned that using criminal law enforcement remedies to act against these infringers could have an overly-harsh effect, perhaps, for example, putting thousands of otherwise law-abiding teenagers and college students in jail and branding them with the lifelong stigma of a felony criminal conviction.

There is no, repeat no, risk that civil enforcement under PIRATE would supplant civil enforcement by property holders – DoJ would never let that happen – they have expressly stated again and again that they will move to enforce IP rights only when enforcement by private rightsholders is ineffective or impossible.

It would also, as a practical matter, be incredibly foolish for private rightsholders to stop bringing strict-liability enforcement actions in the hope that DoJ would bring civil enforcement actions in which it must prove all the elements of a criminal violation – including criminal scienter. Private enforcement remains a far more powerful tool than DoJ civil enforcement under PIRATE – and that fact alone should ensure that private enforcement remains the preferred means of enforcing IP rights.

As a result, DoJ civil enforcement power would be useful only in very unusual contexts – like the one that we have in the P2P space. DoJ’s efforts to investigate criminal violations of 506 by users of filesharing software are likely to uncover lots of parties who have violated the law, yet may not warrant criminal prosecution. (In other words, if DoJ were to start targeting high-volume filesharers, it would probably discover that many were actually teenagers and college students who are otherwise law abiding.) In this unusual circumstance, civil enforcement would let DoJ avoid having to choose between bringing criminal charges that might be unduly harsh or letting unlawful conduct go unpunished.

"My wife is a filmmaker, and has had good luck via the Internet -- tens of thousands of people have watched the trailer for her film, and lots have ordered it. She's not delivering the full-length film online, though." (Emphasis added.)

Personally, I think Sun has done lots to show that they can't actually be trusted. Solaris 10 isn't out yet (despite what the article suggests at one point), so I am not holding my breath here. Only once they have released Solaris 10 under an Open Source licence will we know if this is actually a Free Software licence, and if so which one. The reality of what they are doing totally depends on what licence they choose and we will only know for sure once the source code is released under their chosen licence. [sic]

Sun is on the Dark Side, they can't be trusted and only idiots would join that "community".

To some extent that is true of every corporate ally that exists in Free Software. IBM is our friend, not because they have some righteous goal to bring free software to the masses, but because they see its potential to open doors that would otherwise be closed to them. The same is true of Sun, though they might not see that yet.

"The Pirate Act is another masquerade by Hollywood to make taxpayers foot the bill for its misguided war on promising new technology," Rumenap said. "Right now, Hollywood is trying to ram this flawed bill -- a handout for Tinsel Town fat cats -- through Congress without hearings or debate."

An examination of standards-setting by the U.S. and Europe in digital mobile phones can provide "a window on how next-generation Internet, telephone, or television networks will work," according to a new paper released today by The Progress and Freedom Foundation. Standards are "the lingua franca of digital networks," writes Andrew L. Russell, and he provides a case study on the role of standards in 2G mobile phone deployment in Europe and the U.S.

American consumers are subsidizing other countries in the western world. We pay about 50 percent more for patented drugs--but we invest about 20 times as much in pharmaceutical R&D. This is known as the "free rider" problem. Since it is the U.S. market where new breakthrough medicines are invented and introduced, the rest of the world gets a free ride by mandating prices lower than ours. They are still higher than the drug companies' marginal production costs but below the costs necessary to recover the investment required for future research and development. And if these drugs are sent back to the United States, we become a free rider on ourselves, and that situation wouldn't last long.

[T]he National Institutes of Health advocates using a lot more drugs to achieve the result that really matters--good health. Instead of worrying about restraining or reducing drug costs, we should be focusing on staying healthier and achieving better health outcomes. That's the heart of the matter.

I hadn't thought of linking the undesired complexity of both tax and copyright with a suggested solution that, as you point out, substitutes tax for copyright. I'm still thinking it through, but so far I'm still undeterred. That's because Prof. Fisher's alternative compensation scheme may be complicated underneath -- with a complex set of digital turnstiles embedded at various network points to measure the relative popularity of various instances of music and other entertainment -- but it's still refreshingly simple on top. The question of complexity isn't just an abstract Occam's Razor-like concern, but rather a fear that the complexity of a legal (or tax) code ends up being unfair to citizens -- they can't exercise rights (or hang onto money) to which they are legally entitled, because they can't figure out the system and the cost of a lawyer to negotiate the paths is utterly distortive. If someone wants to make fair use of another work, the cease and desist letter that too often results makes the user err on the side of exclusion, which is unfortunate for them and for the rest of the public that can and should enjoy the new work even under our existing scheme. A flat sales tax or some other gross simplification to the tax code has obvious substantive rawbacks apart from its benefit of simplicity (and absence of lobbyist-inspired loopholes). The simplifications to copyright -- from the point of view of both user and producer -- that Fisher calls for doesn't, in my view, have many major drawbacks, and that simplification on the copyright side would again far outweigh the new (and surprisingly undistortive to consumer and producer behavior) complications on the tax side. In the big picture, libertarian thinking might welcome a way to get the government *out* of the business of enforcing these byzantine copyright rules -- especially since such enforcement is so often are expressed as, for better or worse, restrictions on speech -- even as the ACS brings government back in to maintain the incentive scheme of content production by becoming the arm's-length collection and distribution agent for payment for many works as a whole. Knowing that a libertarian would, all else equal, prefer neither, what's worse, when gov't tells people what they can and can't say (and still becomes a tax collector when it presides over infringement suits), or when the gov't gets out of copyright enforcement but adds a small tax to an already-overflowing taxation scheme?

I expect I will have my own response to his response in a few days.

When watching the movie Ray recently, I was struck by a scene where Mr. Charles is negotiating to leave Atlantic Records and join a much larger label, ABC. The versatile musician insists on owning the master versions of his recordings, something we learn not even Frank Sinatra has in his contract. Mr. Charles prevails, and the accomplishment is so significant a disappointed Atlantic executive can’t help but be happy for him.

This obviously is a great example of a free market; Ray Charles knew ABC would go to just about any length to record him, given the way his recent songs had crossed over to and topped the mainstream charts. But it’s also an important case study in intellectual property. Ray Charles knew that a large advance with a luxurious tour would be a fleeting reward for his genius, whereas by owning the masters of his ABC recordings, he could ensure years of cash flow for himself and his estate, and protect the music’s integrity as well. He also could have done what many modern artists do, namely allow ABC to own the recording but ensure in his contract's language that he would see a percentage of revenues from future use of his music. Have you ever stood in a supermarket shopping line and eyed a "Best Of" CD of B.B. King or Wilson Pickett (another former Atlantic artist) for only $5? The compilation can sell for so little because King and Pickett aren’t seeing any money from those compilations. Although it's hard to know what is fact and what is fiction in a biopic, Ray Charles appears to have avoided that fate.

But I’m probably overthinking a great movie, made even greater by the use of Mr. Charles’ actual recordings in the movie. If only the director of Ray had included "One Mint Julep" it would have been perfect.

The idea that animates the entire undertaking . . . is expressed in the discussion of editing policy:

"However, one of the great advantages of the Wiki system is that incomplete or poorly written first drafts of articles can evolve into polished, presentable masterpieces through the process of collaborative editing. This gives our approach an advantage over other ways of producing similar end-products. Hence, the submission of rough drafts should also be encouraged as much as possible."

In other words, the process allows Wikipedia to approach the truth asymptotically. The basis for the assertion that this is advantageous vis-à-vis the traditional method of editing an encyclopedia remains, however, unclear.

Is this a surprising result? Not really: Take the statements of faith in the efficacy of collaborative editing, replace the shibboleth "community" with the banal "committee," and the surprise dissolves before your eyes. Or, if you are of a statistical turn of mind, think a little about regression to the mean and the shape of the normal distribution curve. However closely a Wikipedia article may at some point in its life attain to reliability, it is forever open to the uninformed or semiliterate meddler.

The user who visits Wikipedia to learn about some subject, to confirm some matter of fact, is rather in the position of a visitor to a public restroom. It may be obviously dirty, so that he knows to exercise great care, or it may seem fairly clean, so that he may be lulled into a false sense of security. What he certainly does not know is who has used the facilities before him.

Filing lawsuits is a controversial strategy for Hollywood, and the demagoging has already begun—for example, as MPAA out [sic] it, “Suing 13 year olds and taking their college money isn’t the best approach.”[“Movie Makers Plan to Sue Internet File Swappers,” Washington Internet Daily, November 5, 2004, p. 1.] Yet few question the legal liability of downloaders under copyright law. And the stakes are high for the industry and consumers: the billions in revenue lost through Internet downloading could mean higher prices for law-abiding movie fans or could discourage production of financially risky pictures.

Moreover, direct legal action against infringers is far preferable to many of the other approaches to the P2P download problem that have been discussed in Washington. Many, for instance, have urged federal regulation of PCs, DVDs, and other devices that could be used to copy movies and music, in order to make infringement more difficult. Other proposals would extend legal liability to manufacturers of these devices. Policymakers, however, should be extremely wary of such a regulatory approach. Any regulation of the fast-changing world of the Internet and consumers electronics would likely hinder valuable innovation, as well as increase costs to consumers.

Of course, lawsuits by themselves are unlikely to solve the P2P download problem. Continued education also needs to be pursued so that potential file-swappers understand why the unauthorized downloading of copyrighted material—like other forms of theft—is wrong. Another part of the solution is likely to be development of new technologies that allow copyright holders to make copying protected works more difficult.

For any covered software, we will:
defend you against any claims made by an unaffiliated third party that the covered software infringes its patent, copyright, or trademark or misappropriates its trade secret, and
pay the amount of any resulting adverse final judgment against you (after any appeals) or settlement to which we consent..

"We enhance the intellectual-property indemnifications we give our customers," [Steve] Ballmer said at the [at the Microsoft annual] meeting. "We can stand behind our products in a way that open source can't because they have no one standing behind them."

[David] Kaefer [director of intellectual-property licensing] said the argument is resonating with some customers who are concerned about liability. "More and more customers are realizing you don't get what you don’t pay for," he said.

But the terrible vulnerability of this amorphous shared licensor/copyright holder structure is that the open source code base has no single unified owner who will assume liability, and coordinate a collective defense for the open source community, when end users get sued. And, although this came as a shock to many nonlawyers, both individual and enterprise end users of GPL software that violates a third party's patent rights or copyrights are directly liable (for up to $150,000 per instance of copying for copyright, and up to the lost profits for patent violations) and cannot get these exposures covered by the vendors who licensed them the software or recommended it to them. And if you are paying for legal defense yourself - which can easily cost $3 million in the case of a single patent defense, for instance - the rational course may well be to settle for the nuisance value of the suit rather than fight to the death. Plaintiffs know this, and they know they can extract monies from uninsured defendants even with unmeritorious claims. This is why OSRM looks not only for legitimate claims against Linux, but also superficially plausible ones - what lawyers like to call "colorable" claims.

www.bustpatents.com/ervbasin.doc

www.bustpatents.com/ervbasin.ppt

The film industry, which employs so many people in California and entertains so many people around the world, must move aggressively to protect itself.

We wish there was a basic solution to this problem. We wish everything was for free and that nobody had to pay anyone. But that is not the world in which films can be made. And if films are not made the loser will not only be those of us whose talent and hard work is the creative vision on the screen, but also the very public whose 'love affair' with this most American of art forms began so many decades ago.

Why should anyone invest in legitimate digital entertainment services if they will be forced to compete with free -- a sure road to bankruptcy? Stern legal enforcement is necessary to signal to potential investors that the movie industry is serious about supporting efforts to create legitimate channels.

[T]here is a world of difference between sharing a few copies of a song or a movie and uploading entire libraries of albums or movies. Someone who shares thousands of works, giving no consideration to the economic well-being of creators, has fundamentally broken their end of the copyright bargain. If they never compensate creators, file sharers should not be surprised when the industry slaps a lawsuit on them.

Again, many critics will blast the industry for this move. But what are their alternatives? Hopefully, copyright skeptics would agree that targeted individual lawsuits represent a vastly superior enforcement strategy to imposing contributory or vicariously liability on P2P software providers or Internet service providers (ISPs).

[I]t is crucial that the motion picture industry develop new business models that treat the low cost, ubiquity, and speed of the Internet as an opportunity, not a threat. Because the technology for downloading movies is not yet as advanced as the technology for downloading music, the industry has some time to work out an approach to leverage new and emerging delivery systems to its advantage. We believe that if the motion picture industry provides easy access to a wide array of movies, at a reasonable price, and also provide consumers the flexibility of use to which they have become accustomed, it will profit handsomely, just as it has for the past 20 years in the home video and DVD market.

Imagine a group of music lovers trying to develop a set of legal rules that will maximize their long-term enjoyment of music by promoting both the creation of content and the development of technological means by which they will receive it.

It is far from clear what exact rules they would come up with, but there can be no doubt that one legal regime that would be rejected out of hand is the one established by the Ninth Circuit's decision in this case, which will allow Grokster and other unauthorized file-sharing services to operate with impunity.

Back during the Dem primaries I checked a couple of online databases of political contributions for some local zip codes and then tried some famous ones like 90210. The Beverly Hills, Malibu, and Santa Monica zip codes showed that while a predictable number of actors contributed to Democratic candidates, President Bush received significant financial support from people on the production and business side of the entertainment industry.

But messing with the American innovation of stock options could put a damper on America's unique culture of entrepreneurship and risk-taking. And this, in fact, may be what European bureaucrats are counting on.

Most European companies don't utilize broad-based stock options, but they are a crucial part of America's economic engine, instrumental in the growth of companies from Microsoft to Home Depot. This new standard would either reduce earnings for innovative companies or reduce their use of stock options to attract and motivate employees. Either way, "it would reduce our competitive advantage," says John Palafoutas, the American Electronics Association's senior vice president for domestic policy.

Alfred Berkeley, former president of the Nasdaq stock market, also warned in a letter to FASB about the EU's hidden agenda. "Unable to unleash the the creative power of their own economies," he wrote, European bureaucrats "see options as unfair competition and need to pull us down to their own miserable levels of opportunity and performance."