Novell and Microsoft have been spending the last few days releasing dueling statements concerning the implications of their recent agreement. Novell insists that Linux doesn’t infringe any Microsoft patents, and that their patent agreement with Microsoft shouldn’t be interpreted as an admission to the contrary. Which raises the question of why you’d pay $40 million for superfluous protection. Microsoft says that they “have agreed to disagree” on the subject.
It’s not clear where this is going to end up, but one thing that’s absolutely clear is that this has become a PR nightmare for Novell. A lot of people in the Linux community seem to feel betrayed by Novell’s behavior. The agreement has already done damage that will take months for Novell to repair.
Braden asked on Monday how “a boycott would materially hurt Novell.” Below the fold, I’ll see if I can elaborate a bit more on why I think the open source community has so much leverage in this sort of situation.
An argument by Milton Friedman about “consensual crimes”, however, pushes me more in the anti-IP camp. Libertarians, of course, decry such “crimes” for moral reasons, but his argument manages to be both consequentalist and general. He points out that consensual crimes have a naturally higher enforcement cost and worse effect on civil liberties.
The reason is that for a normal crime, such as theft, there is someone actively trying to stop the crime, and with the interest to report it and help solve it. For a crime such as prostitution, neither the buyer nor the seller are being harmed. Hence neither will report it, and neither will help solve it. On the contrary, both have an interest in hiding it. So to catch someone at such a crime, you need to spy, to mole, to entrap – because the participants aren’t going to help.
Regardless of your moral beliefs, anyone with a practical bent understands that enforcing laws has costs, and those costs must be measured against the benefits of stopping the bad activity. This argument adds some consequentalist punch to libertarian morality by suggesting that the class of activities we think should be legal (consensual ones) will naturally be more expensive to ban than the class we think should be illegal (nonconsensual ones). In the specific case of IP, the copier/user and the copied are engaging in consensual activities – as with prostitution, it is only some distant authority who wishes this activity to stop.
There’s clearly something to this. The recording industry’s war on file sharing does have some similarities to the war on drugs. But even if we were to conclude that it was hopeless and ought to be abandoned (which I’m not willing to do), I think the implications would be less sweeping that Friedman suggests.
Wow, there’s something for everyone
on YouTube! I have to give props to the American Antitrust Institute for their
slick film on antitrust regulation (to steal from Tim’s recent post, I avoid saying
"antitrust enforcement" or "antitrust authority" – and so should you – because
these phrases impart too much credence to antitrust law).
The film – called Fair Fight in the Marketplace – is an example
of a public policy organization making a difficult regulatory issue easier to
understand, while at the same time persuading the audience to its way of
thinking. Predictably, their film touts the theoretical aspirations of antitrust policy, and leaves out the messes that are often created by antitrust regulation.
The movie starts from a premise that antitrust law actually works for consumers. However, most believers in free markets find that reality doesn’t match this assessment. While the ideals of antitrust regulation might be
appealing, its reduction to practice has been a costly endeavor. Milton Friedman
had this to say about antitrust in a 1999 Cato Policy Report:
My own views about the antitrust
laws have changed greatly over time. When I started in this business, as a
believer in competition, I was a great supporter of antitrust laws; I thought
enforcing them was one of the few desirable things that the government could do
to promote more competition. But as I watched what actually happened, I saw
that, instead of promoting competition, antitrust laws tended to do exactly the
opposite, because they tended, like so many government activities, to be taken
over by the people they were supposed to regulate and control. And so over time
I have gradually come to the conclusion that antitrust laws do far more harm
than good and that we would be better off if we didn’t have them at all, if we
could get rid of them.
In a classic 1983 article in Regulation magazine, Fred Smith, President of the Competitive Enterprise Institute, has this to say in "Why Not Abolish Antitrust?":
Antitrust laws, in their static way, ban activities for which officials and scholars have not yet discovered the rationale; markets are more dynamic than that.
One can go on and on about antitrust regulation. But the main point is this: way too many people place too much faith in the antitrust dogma without measuring its real results. Like any form of economic regulation, there needs to be a cost/benefit analysis. It’s fair to say that antitrust regulation has costs that exceed its benefits.Too bad "Fair Fight" left out this fair criticism.
Just like millions of other Americans, it seems former Sen. John Edwards is keen to get his hands on a PlayStation3. So much so that an Edwards staffer last week contacted the Raleigh, North Carolina Wal-Mart to reserve one for Edwards and his family. Later the same day, however, Edwards gave a speech denouncing Wal-Mart, telling a story about how his son chided another student for buying shoes there.
Shoes of course aren’t Playstations, which–it seems–are a necessity. Still, the discrepency didn’t escape the notice of Wal-Mart. The next day, the company issued a press release –tongue firmly in cheek–inviting Sen. Edwards visit his local store. The release went on, however, to note that:
…the PlayStation3 is an extremely popular item this Christmas season, and while the rest of America’s working families are waiting patiently in line, Senator Edwards wants to cut to the front. While, we cannot guarantee that Sen. Edwards will be among one of the first to obtain a PlayStation3, we are certain Sen. Edwards will be able to find great gifts for everyone on his Christmas list–many at Wal-Mart’s “roll-back prices.”
This isn’t exactly your typical corporate PR language. Someone in Bentonville, it seems, was pissed, and wasn’t afraid to let it be known. And rightly so. Wal-Mart has done far more to improve the lives of ordinary Americans than any politician, Sen. Edwards included–yet has long been a whipping boy of those politicians. It was right to hit back.
No word yet, on whether the senator ever got that Playstation.
Via Jim Lippard (who’s a GC employee), here’s a story about Global Crossing’s criticism of the FCC’s decision to extend the 1994 Communications Assistance for Law Enforcement Act to IP-based networks:
The agency also plans to stand firm with the May 2007 deadline, he said. In fact, the days of “endless” extensions for achieving CALEA compliance are effectively over for any broadband or voice-over Internet protocol company, he said, because most deployed their equipment after October 1998, thereby exempting them from relief.
Kouroupas and Global Crossing aren’t alone in balking at the mandate. A group of organizations and companies that included Sun Microsystems, Pulver.com, the American Association of Community Colleges, the Association of American Universities and the American Library Association lodged an appeal against the rules last fall. But a divided appeals court panel upheld the FCC’s rules, dismissing the group’s argument that Congress never intended CALEA to force broadband providers–and networks at corporations and universities–to build in surveillance hubs for the police.
One of the most important lessons of politics in recent years is that language matters. The words we use to describe the policies we advocate have a profound effect on how we think about them. Our choice of language has powerful effects in framing how we think about a subject. Sometimes, this effect can be benign or even beneficial. As a libertarian, I like the political implications of the terms “death tax” and “undocumented worker.” I’m not so crazy about the terms “gun control” and “war on terrorism.”
I’ve become convinced that the phrase “intellectual property” is a particularly potent bit of framing. And, in my opinion, it has become a serious obstacle to thinking clearly about the legal regimes of copyrights, patents, trademarks, and trade secrets. There are often debates, on TLF and elsewhere, that are framed in terms of whether we should be “for” or “against” intellectual property. This, it seems to me, completely obscures the real issues in the “intellectual property” debate. No one (even Levine and Boldrin) is in favor of abolishing the trademark system. Likewise, no one is in favor of extending “intellectual property” into every conceivable area of our lives (consider David Friedman’s silly proposal to give people ownership of words). Everyone believes that “intellectual property” is appropriate for some areas of the economy, and inappropriate in others.
Don Marti makes a good point about the enforcibility of the GPL in the face of deals like the Microsoft/Novell pact:
The GPL is not a top-down EULA. It’s a legal “codification” of a set of cooperation and information-sharing norms, which includes an agreed mutual defense policy on patents. So whether or not the Microsoft/Novell deal is a millimeter below or a millimeter above the letter of the law isn’t that big of a deal
Siobhán O’Mahony wrote, “Informal enforcement of license terms draws upon the normative roots of the license and occurs primarily through on-line public forums. The GPL codifies a strong norm of reciprocity that has long been an important part of the programming culture…. In the eyes of both legal scholars and informants, the GPL’s strength stems not necessarily from its legality, but from the public collective opinion of community members.”
Novell is holding an IRC meeting about the deal (via LWN.net). Novell’s “inner circle”, which negotiated the separate peace, has to sell the rest of its stakeholders on discarding the cooperation norms under which they had been working in favor of a “weasel words” interpretation of the letter of a license. I don’t see how they can pull this off.
Today, AEI is launching a brand new magazine titled The American. It’s a bimonthly print magazine combined with a website at American.com. The website is edited by David Robinson, who TLF readers last encountered in July, when I quoted his musings over at Ed Felten’s blog. Robinson asked me to do an article on Zune and the DMCA as one of the inaugural articles on the website:
After the release of its Zune media player last Tuesday, Microsoft faces some awkward questions about compatibility. For the last two years, Microsoft has promoted a digital music format called “Plays for Sure,” which it licenses to other companies that want to build their own player devices or music stores. But Zune uses a brand new and incompatible system. Consumers who purchased music in the “Plays for Sure” format won’t be able to play it on their Zune devices. Microsoft may get extra flack for locking its own loyal customers out of a previous version of its product, but walls between digital music platforms have a long history. “Plays for Sure” music and the new Zune format have always been incompatible with Apple’s wildly popular iPod, and with the iTunes music store.
Compatibility issues didn’t always plague the music industry.
You might think those compatibility problems would represent a market opportunity for third-party software developers. But copyright law stands in the way. The Digital Millennium Copyright Act (DMCA), enacted in 1998, prohibits “circumvention” of copy protection such as that found in Microsoft and Apple’s music formats. The copy protection gets called digital rights management (DRM). Format-conversion software is, in most circumstances, illegal unless authorized by the company that created the format. Hence, the DMCA gives software companies a legal tool to bar competitors from building products compatible with their own, promoting the balkanization of the digital media marketplace into a cacophony of mutually incompatible formats. Not only does that inconvenience consumers, it also reduces intra-platform competition and effectively locks small entrepreneurs out of the market for media hardware and software.
I think the magazine itself sounds like an exciting project. As their about page describes it, The American is “a magazine of ideas for business leaders. Modeled on Henry Luce’s original vision for Fortune Magazine, it surveys the full scope of American life through the lens of business and economics.” Check it out.
Reader X. Trapnel appears to have a newly created blog, and he has a provocative and well-argued post arguing that copyright and patent are examples of Bastiat’s broken window fallacy. I made a much more limited version of this argument back in May, where I pointed out that it was a mistake to measure the worth of peer-produced projects like Wikipedia by the revenues they generate. But X. Trapnel goes much further and argues that the entire argument for patent and copyright law are examples of the fallacy:
Just as in the Bastiat story, you have the helpful onlooker who says “But everyone must live, and what would become of innovation if every innovator could have his insight copied by the first free-rider who came along?” Just as in the Bastiat story, this is wrong. What is seen is the way in which the protected firm uses his IPR to generate monopoly profits, some of which are then plowed back into R&D, generating a pleasant stream of innovation. What is not seen is what would happen in the absence of this protection: the innovator would have to keep innovating in order to maintain his market, leveraging his expertise into further productive developments, while newcomers would be able to experiment on their own with the knowledge produced by the first. Money that once went to monopoly rents would go instead to other, more productive things–including further innovation.
The neo-Schumpeterian retort is that this is hopelessly naive: innovation requires large capital investment and the reasonable hope of monopoly rents to recoup it. But this is mere question-begging, and its plausibility lies, again, with the distinction between What Is Seen and What Is Not Seen: when we give innovators monopoly privileges of this sort, we thereby tilt the playing field dramatically towards heavily capitalized firms by jacking up the costs of the inputs (eg., prior innovations, a skilled legal team, insurance against lawsuits) to production. As a result, What Is Seen is capital-intensive innovation; What Is Not Seen is the less capital-intensive innovation that the legal regime has stamped out.
As I’ll explain below the fold, I think this argument has a certain plausibility (especially for patent law), but ultimately I don’t find it persuasive.
Every week, I look at a software patent that’s been in the news. You can see previous installments in the series here. This week’s patent comes to us courtesy of Ars Technica, which reports that Comcast has successfully beaten back an attempt by Caritas Technologies to extend this patent to apply to VoIP. This is good news for the IP telephony market.
The patent covers teleconferencing in which control functions are done via the Internet, while the actual calls are placed via the traditional telephone network. I think that’s a pretty obvious idea. But instead of belaboring that point, I’d like to talk about patent scope a little bit.
The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology. Learn more about TLF →
The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology.