I don’t know how I missed it, but Reason‘s Ron Bailey had a great interview with libertarian entrepreneur Peter Thiel back in May. There’s a lot of discussion of the singularity, a concept I’m finding less coherent the more I think of it. The basic concept is that at some point computers will get powerful enough that we’ll be able to build machines that are smarter than the smartest human, and at that point history becomes unpredictable because the smarter-than-human robots will start doing things that we can’t understand with our puny human brains.
It seems to me that this story has three really serious problems. Continue reading →
Some readers might be interested in Cato’s 2007 annual report, which is now available online. Most of the report summarizes the excellent public policy work my colleagues did during 2007. Cato’s financials and a list of corporate and foundation donors can be found on pp. 46-47. The corporate sponsors with significant interests in technology policy are: Comcast, the Consumer Electronics Association, Freedom Communications, Microsoft, and Time Warner. Cato’s 18 corporate sponsors together contributed just 2 percent of the budget in 2007.
[Note: This is the fourth in a series of essays about the legacy of the Supreme Court’s FCC v. Pacifica Foundation decision, which celebrates its 30th anniversary on July 3rd. Part 1, presented a general overview of the issue. Part 2 sketched a short history of FCC indecency regulation. Part 3 discussed the misguided logic of the Court’s reasoning in Pacifica as it stood in 1978. This installment will examine why that logic is even more misguided in light of modern developments.]
Whatever legitimacy
Pacifica’s “pervasiveness rationale” might have once had, it has been largely eroded by modern media developments.
First, the pervasiveness rationale for media regulation fails today because new content tailoring technologies make it easier than ever before for parents to manage media in their homes and in their lives of their children. It is impossible to consider video programming an “intruder” in the home when tools exist that can help parents almost perfectly tailor viewing experiences to individual household preferences.
When Justice Stevens argued in
Pacifica that broadcast signals represented an “intruder” in the home, he supported that claim by noting that: “Because the broadcast audience is constantly tuning in and out, prior warnings cannot completely protect the listener or viewer from unexpected program content.” While that may have reflected the state of technology and TV viewing at the time, it is completely at odds with modern realities. In 1978, the viewing experience was a more passive affair and consumers had very few ways to control that experience unless they turned off the television altogether. Today, by contrast, viewers (including parents) have the tools to “tune in and out” at will, and they have abundant “prior warnings” about program content thanks to the existence of ratings, program information, and electronic program guides. These tools help parents restrict or tailor the viewing experience in advance according to their values and preferences.
Continue reading →
GamePolitics.com points out that Minnesota will reimburse the video game industry to the tune of $65,000 for their attorneys fees it incurred when challenging Minnesota’s 2006 “fine-the-buyer” law. The Minnesota law was unique in that it sought to impose fines on the buyers rather than the sellers of games rated either “M” for Mature or “AO” for Adults Only under the industry’s voluntary ratings system. Other state and local laws that have been struck down in recent years imposed penalties mostly on game retailers who sold games rated M or AO to minors. In a scathing opinion handed down back in August 2006, James M. Rosenbaum, Chief District Judge of the District Court of Minnesota, struck down the Minnesota law as unconstitutional.
But here’s what’s really important about the fact that the industry recovered legal fees in this case and others. As the Entertainment Software Association noted in its press release about the Minnesota settlement: “The ESA [has] prevailed over similar unconstitutional laws in nine other jurisdictions [and] now has been awarded close to $2 million in fees and expenses spent in defending gamers, developers and publishers’ First Amendment rights.”
As I have noted previously, these cases make it clear that there is a significant opportunity cost associated with censorship efforts. That $2 million in recovered legal fees could have been plowed into educational efforts to help explain to parents how to use the excellent voluntary ratings systems or console-based parental control tools that are at their disposal. Moreover, that $2 million in recovered industry legal fees does not account for the resources that state and local officials put into these regulatory efforts. So, we are talking about a much greater deadweight loss for society and taxpayers.
Continue reading →
Craig Allen Nard and John Duffy wrote a great paper last year on the problems created by the centralization of patent jurisdiction in the Federal Circuit. I thought this passage was really striking:
The PTO is perhaps the best institutional candidate for a peer competitor. Indeed, the Supreme Court itself seems to have recently encouraged the PTO to serve as a check on the court by providing another viewpoint in cases on petitions for certiorari. In the last six terms (2000–2005), the Supreme Court has called for the views of the Solicitor General (CVSG) on fifteen certiorari petitions filed by private parties in Federal Circuit patent cases. These cases accounted for over 16% (fifteen out of ninety-one) of all CVSG orders entered by the Supreme Court during the period even though patent cases occupied less than 3% of the Court’s docket. The response to such a CVSG order invariably is a brief signed by the Solicitor General (SG) and the PTO (and sometimes by other components of the government); and where the SG and the PTO have recommended granting certiorari, the Court has uniformly followed the recommendation. Thus, by issuing a comparatively large number of CVSG orders in patent cases, the Supreme Court appears to be trying to use conflicts between the Federal Circuit and the PTO as a substitute for conflicts among federal circuit courts, which is the normal criteria used by the Court in ruling on certiorari petitions.
Jurisdictional competition is crucial to the efficient working of our legal system. Duffy and Nard argue that Congress undermined jurisdictional competition in patent law when it centralized all patent decision-making in the Federal Circuit. The passage above suggests that the Supreme Court clearly understands the benefits of jurisdictional competition, but Nard and Duffy argue (and I think I agree with them) that asking for briefs from the Patent Office is a poor substitute from the kind of robust inter-circuit competition that would result from the decentralization of patent jurisdiction.
My final contribution to the June edition of Cato Unbound is up. I criticize Doug Lichtman call for “more complicated [copyright policy] interventions that, by design, influence the development of technology tools and services”:
Back in the late 1990s, companies started to develop MP3 players that are essentially miniature musical jukeboxes. The recording industry sued to block their sale, but was unsuccessful. The result was a surge of innovation, culminating in the iTunes/iPod ecosystem that now dominates the digital music marketplace. It’s tough to say what would have happened if the recording industry had won that lawsuit, but I think it’s safe to say that it would have taken longer for portable music players to emerge on the scene, and that the digital music ecosystem would be less advanced today.
Fast forward a few years, and we can see that hard drives are now large enough that one could easily build a set-top box that does for your DVD collection what the first iPod does for your CDs. Insert each DVD you own once, and the box copies it to your hard drive. From then on, you can watch any DVD you own with the touch of a button. And of course, you’d likely be able to do much more than that: stream movies wirelessly to different TVs around your house, stream them to yourself while you’re on the road, transfer them to an iPod or other mobile device to watch on the road, and so forth. Even more important, the existence of a competitive DVD jukebox market would likely produce spin-off innovations, just as the MP3 player did, with people developing devices, software, and accessories that interoperate with the DVD jukeboxes.
Unfortunately, Hollywood sued the first DVD jukebox out of existence. And this time, thanks to the DMCA, they’ve won. CDs have no copy protection, so under copyright law anyone is free to make a device to play or manipulate music on CDs. But DVDs do have copy protection, so in effect no one may innovate in the DVD marketplace without Hollywood’s blessing.
Libertarians are rightly uneasy with government “industrial policy,” efforts to reshape the marketplace by legislative or administrative fiat. In a sense, I think the theory Lichtman articulates suffers from much the same defect. Policy makers will never know if the extra creative works supposedly stimulated by the DMCA are worth more than the foregone innovations. We should therefore be suspicious of proposals to encourage the development of one part of the market at the expense of another. Such efforts rarely turn out as well as policymakers hope.
I’ve just finished reading this amazing paper by Gerard N. Magliocca about the 19th-century phenomenon of “patent sharks.” In the 1860s, the Patent Office inaugurated an experiment with eased standards on design patents for farm tools. The result was a flood of low-quality patents, and the emergence of a new character in the patent system: the “patent shark” who would show up in a small town with a fistful of patents and use them to extort money from hapless farmers whose farm tools may have been covered by the shark’s patent portfolio.
Farmers’ groups reacted with outrage and pushed Congress for legislative solutions that will sound eerily familiar to anyone who’s familiar with today’s patent debates: an “innocent user” defense that would shield a farmer who unwittingly uses a patented tool and changes to the rules regarding damages for infringement. These changes were never passed by Congress because they encountered the staunch opposition of the holders of other types of patents, who feared that they would undermine the rights of all patent holders.
The problem was ultimately solved when the Patent Office—and later the Congress—formally restored the higher bar for patentability that had prevailed prior to the Civil War. In other words, the solution to patenting was to abolish the class of patents that had created the “patent shark” problem in the first place. Magliocca suggests that the solution to today’s patent troll problem may be to abolish software and business method patents, the favorite of today’s patent sharks.
He notes several similarities between utility patents in the 19th century and software patents today. But one factor that I don’t think he emphasizes enough is the simple breadth of the subject matter being covered. The best patents—pharmaceutical patents, say—apply to a well-defined industry. Pharmaceutical companies need to monitor pharmaceutical patents in order to determine what they’re allowed to do. In contrast, every business on Earth uses software and “business methods.” Therefore, every business on Earth is a potential target. That means it’s much easier for trolls to find potential victims. It also means that the targets—many of whom don’t think of themselves as being in the software industry or the “business method industry”—will be ill-equipped to respond to the lawsuit.
Precisely the same observation applies to 19th century patent sharks. Because most people in the 19th century were farmers, patents on farm tools were likely to be infringed by millions of individual farmers who lacked the expertise to evaluate the patent and the resources to hire lawyers to defend themselves. Hence, 19th-century farmers, like 21st-century “business method” users, were easy pickings for patent sharks who preyed on their targets’ lack of preparation for patent litigation.
Magliocca closes his paper with the following slightly frustrating observation:
With respect to design patents granted in the past on incremental improvements, there was no real evidence that they helped anyone. The only concrete result was a school of rabid sharks. By contrast, it is hard to say that patents for software or business methods do not spur creativity in a meaningful way. Abolishing these patents may well cause more harm than the trolls do. Without more evidence on the effect opportunistic licensing has on high-tech investment, this analysis cannot rule out the possiblity that there is a justification for these technology patents that breaks the parallel with the design patents that were abolished during the nineteenth century.
To a large extent, I’m sure this is just an instance of academic caution. But while I suppose it’s true that the analysis in the paper “cannot rule out the possiblity that there is a justification for these technology patents,” I don’t think it’s “hard to say that patents for software or business methods do not spur creativity in a meaningful way.” That is, indeed, what the vast majority of software developers will tell you, and it’s also what most software executives would have told you until they started amassing patent portfolios of their own. It is, moreover, strongly suggested by the evidence Bessen and Meurer have amassed on the subject.
Tim Lee has published a Cato TechKnowledge piece discussing the growing problem of “orphan works” – copyrighted material the owner of which can’t be found. He highlights the work of our own Jerry Brito.
Oakland Wireless appears to be in trouble. Add it to the list.
[Actually, is anyone out there keeping a running tally of the muni failures? If so, let me know so I can just start linking to it instead of all the random blog links. ]
With California’s law against talking on a cell phone while driving taking effect next week, Mike Masnick is asking what else should be banned while driving.
I think the TLF audience of public policy sophisticates could add to the tenor and quality of the list. I’ve done my part (comment #42), and I obviously need a life.
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