It appears that the judge handling the issue of what to do with Megaupload data -- a situation we've been covering for a while -- finds the entire situation just as annoying as many observers do. He's decided that the evidence should not be destroyed yet... but has also ordered all the various parties who are fighting over this to get together and see if they can broker some sort of deal. Given the various positions by all the parties, I'm not sure this is possible.

The government doesn't care about the data (and possibly wants it destroyed such that evidence against their case goes away). However, at the same time, the government has no interest in giving Megaupload back any of the millions of dollars it seized to pay for the maintenance of the data. In fact, the government seems so against this data ever seeing the light of day that it's actually making the argument that even Carpathia may be liable for copyright infringement, because it made money from Megaupload. This is a rather unique (and totally wrong) interpretation of secondary liability rules, but the DOJ seems so insistent on destroy this evidence that it's apparently not above tarring and feathering independent third parties. Of course, if it really believed that Carpathia may be guilty too, you'd think it would want to preserve the evidence, rather than destroy it.

Megaupload would gladly take on the data and pay for it if it could actually use the seized money for that purpose. The MPAA, however, is completely against this, insisting that all of society would collapse should the data go back to Megaupload (only a slight paraphrase). That said, Greg Sandoval at CNET, who handled the original report (linked above) notes that it appears the judge is not particularly convinced that there's a huge problem if Megaupload is given the data back.

The digital revolution of the education system has yet to really take off. Many students communicate with their teachers via email and have figured out how to use word processors (instead of typewriters), but the widespread use of technology in classrooms hasn't exactly caught on. Cool projects like the Khan Academy are starting to ramp up, but introducing cheap laptops or ebooks into public schools hasn't met with wild success. (Though, if you've heard of any inspiring programs, let us know in the comments.)

• Peru spent $225 million on an education initiative that involved One Laptop per Child and 850,000 basic laptops for schools throughout the country. Unfortunately, the results so far have not shown much improvement in math or reading scores. [url]
• India's $35 tablet, the Aakash, is being revised and will probably cost closer to $50. The next version will be called 'Aakash 2' (not the 'new Aakash') and offer a capacitative touch screen. [url]
• Wilco Electronics is bidding on a contract to make Aakash tablets and to create a pilot program for these devices in underserved Philadelphia schools. But if Peru is any indication of what will happen.... [url]
• To discover more interesting education-related content, check out what's currently floating around the StumbleUpon universe. [url]  

By the way, StumbleUpon can recommend some good Techdirt articles, too.

Last week we saw the Socialists and Democrats, the second-largest bloc in the European Parliament, turn against ACTA. Combined with the stated position of the Green party there, that means ACTA is closer to being thrown out when the vote for ratification takes place in Brussels this summer.

The deciding factor is how politicians in the centre-right coalition of Liberals and Conservatives will vote, and there are now signs that they too are contemplating rejection, according to this article in taz.de (German original):

Word from Conservative circles is that the treaty won't be defended tooth and nail if the other parties are against it.

One of the key centre-right members in the European Parliament, Daniel Caspary, said that the relevant EU committees must be given enough time to make their reports before the final vote, but added, significantly:

"If we reject ACTA, we should tell the European Commission exactly why, and present them with alternative proposals."

The fact that even the centre-right parties are now seriously thinking about rejecting ACTA, and what to do next, means that while ACTA may not be dead in Europe yet, it is looking increasingly moribund.

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Last week, I had the pleasure of meeting, briefly, Tim Kuik, the head of BREIN, the Dutch anti-piracy group that has been fighting against file sharing on a variety of fronts. We had an enjoyable conversation (as part of a larger discussion) in which he insisted that he and BREIN recognized the future opportunities of the digital market, and that BREIN was not interested in trying to put the genie back in the bottle -- in response to my suggestion that too many in the industry were trying to do exactly that. That may be true, but it's difficult to see how that's the case when immediately after this we hear of stories about BREIN going to court to shut down a proxy by the Dutch Pirate Party to point people to The Pirate Bay -- a site that BREIN has forced ISPs to block.

Of course, blocking sites on the web is impossible, and the silly continued whac-a-mole against proxies seems like a huge waste of time and resources that could have been put towards helping to develop compelling new business models. But, a much bigger concern is the process by which this latest proxy was shut down. Or, rather, I should note it's not so much the process, but the lack of due process. That is, a court ordered the proxy to be taken down without allowing the Dutch Pirate Party to testify on its own behalf:

The Pirate Party was not heard in the matter (ex parte) and according to board member “blauwbaard” the judge ignored their requests to be heard.

“The judge has decided to ignore our express and valid request to have the injunction either denied flat-out, or to at least be heard in the matter before a decision was made,” blauwbaard states in a response.

“This decision is even more strange because BREIN was allowed to bring over 20 pages of arguments to convince the judge to stretch a quaint rule of IP-law, meant to block the sudden appearance of mass quantities of counterfeited goods, far enough to be applied to the website of a political party.”

A court ordering a website taken down without allowing the site itself to speak on its behalf? That seems pretty extreme. A proxy is simply a redirect in a case like this. It's something just about anyone can do, and chasing after each and every proxy -- and then not allowing them to speak for themselves in court, seems like a perfect example of trying to put the genie back in the bottle, no matter how much BREIN insists that's not their goal.

And, unfortunately, the story gets even worse, the more it moves forward. The Dutch Pirate Party replaced their proxy with a page that linked to other proxies as well as an explanation of their position. This seems like a classic free speech situation. Except... BREIN claimed that even those links to other proxies violated the injunction, and have demanded the party take them down as well. The Pirate Party appears to be getting ready to fight this, noting that BREIN keeps trying to rewrite the specifics of the court's order (i.e., trying to stuff that genie back into the bottle) every time a different website shows how ridiculous it is to ban internet access to a website.

Here's an interesting development in the legal battle between Microsoft and Motorola in Germany that we discussed recently. It seems that Microsoft is worried that the German court might award Motorola an injunction against it, and so has asked a US judge to stop Motorola from using it in that case -- and he agreed:

In an unusual case, a U.S. judge ruled on Wednesday that Motorola cannot enforce an injunction that would prevent Microsoft from selling Windows products in Germany, should a German court issue such an injunction next week.

So this is a US judge forbidding a company from applying an injunction that it might be awarded in Germany, by a German court. That sounds rather like one jurisdiction is interfering with another, but Microsoft apparently thinks that's reasonable:

Microsoft argued that if the judge would allow that German injunction to go forward, which ultimately might compel Microsoft to negotiate a license according to German law, the U.S. court would lose its opportunity to make its own ruling on similar licensing issues. The U.S. court should be the one to rule on that issue, Microsoft argued, because Microsoft filed its lawsuit against Motorola over the terms of a licensing deal before Motorola filed its suit in Germany.

It's striking that Microsoft isn't such a big fan of patent courts -- especially efficient ones that produce their judgments rapidly -- when it is on the receiving end of patent lawsuits, rather than the one making the threats.

It's also pretty rich that Microsoft should complain about the possibility of an injunction being granted against it by another jurisdiction when that is precisely what it is trying to do by filing an action against Motorola in the International Trade Commission as well as in a US District Court. If Microsoft says German courts shouldn't get involved in its dispute with Motorola, it's equally ridiculous that an international trade body should be dragged into a domestic dispute between two US companies, as Techdirt has noted before.

Basically, Microsoft is just whining because it thinks it's going to lose in Germany, and has gone running to the US judge in an attempt to subvert that country's judicial system. It's a huge pity that he acceded to this ridiculous request: it creates a terrible precedent that's likely to lead to more such interference in the legal systems of other countries -- including foreign courts ordering companies not to obey US rulings -- and a general weakening of respect for the rule of law around the world.

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We've argued that data caps for internet access are silly, and even as they're becoming more popular for both wired and wireless broadband data offerings, it seems more people are recognizing this. The NY Times has an article about data caps that makes the key point upfront: no one knows what a megabyte is:

But what, exactly, is a megabyte?

If a sampling of pedestrians on the streets of Brooklyn is any guide, most people have only a vague idea. One said a megabyte was “the amount of something we have to use the Internet,” adding, “We should have three or four.”

Miranda Popkey, 24, was closer: “It’s a measure of how much information you store. If there are too many of them, I can’t send my e-mail attachment.”

A megabyte is, in this context, 1,000 kilobytes — or about the size of a photo taken with a decent digital camera, or roughly one minute of a song, or a decent stack of e-mail.

Therein lies the problem: Counting things like minutes and text messages is fairly easy, but there is no intuitive or natural way to gauge data use.

It's actually much worse than that. The fact that it's not easy to mentally keep track of these things without significant effort means that there's a real extra cognitive cost in using broadband with caps. You have to sit there and think about what you want to do online. You have to think:

1. How much room do I have before I hit the cap?
2. How much data will this content actually take up?
3. What if I'm wrong?
4. How much does it cost if I go over?
5. Wait, what if this is taking up a lot more data then I thought?
6. How much more data will I need this month?
7. No, seriously, what if I confused things and watching this video uses up my entire allotment?

Etc. It can go on and on like this -- and the really serious problem is the fact that this cognitive cost is a very real cost, and it means people will just do less online, and will avoid using the service altogether. The caps are adding a punishment to something that people want to do, meaning that they'll do less of it, and therefore value it less.

It still amazes me how short-sighted many ISPs are that they aren't looking to capitalize on this more by competing by getting rid of caps. Of course, one key reason is that there just isn't that much competition, and so the short-sighted view can win for the time being. But it's a dangerous long-term strategy. Pissing off customers as a business model isn't a very good idea.

I recently had an interesting discussion with a politician who really, really understands the various issues that we regularly discuss around here. I brought up the question of whether or not some of this was a "generational" issue, and he (being of a somewhat older generation) said he didn't think that was necessarily the case, and indicated it was, perhaps, more about the amount of knowledge that people had about these issues. He pointed out that there are plenty of people who start out as copyright maximalists (or even supporters of the current status quo), but who, as they learn more, move in the other direction. Yet, it's extremely difficult to name anyone who goes in the other direction. Thus, over time, more and more people will move in the direction of understanding these issues, rather than fighting against progress and innovation.

That said, while it is not an entirely generational issue, it should be acknowledged that the younger generation -- those who are "digital natives" -- seem to grasp these things much more clearly and much more quickly. In part, it's because this is entirely natural to them. They don't just understand the technology, but they live the technology and can't imagine a world in which it is limited. If anything, they want to go even further.

Fred Wilson recently put up a great blog post discussing how he was taking his daughter and some of her friends back to college, and overheard them talking about SOPA (an issue that Fred was heavily involved in fighting, but he was not the one who brought it up). I heard very similar stories from others, including a lawyer who was extremely active in fighting SOPA who explained how his college student son -- who had previously shown absolutely no interest in his father's work on copyright law issues -- was suddenly posting up a storm on Facebook about the bills.

In the past, many of the debates around copyright and internet freedom were really the realm of policy wonks. They could (and would) make lots of noise. And that noise perhaps kept the worst of the worst ideas from moving forward, but did not stop the constant expansionism of the copyright maximalist lobby. Where SOPA/PIPA changed things was that it really was the public -- the people who aren't policy wonks -- who realized that something really bad was happening. And they spoke up. Of course, when the general public joins in on discussions like this, sometimes they get some of the tangential facts confused -- and the copyright maximalists have seized on those slight mistakes or exaggerations to insist that the whole opposition was based on "lies" (amusing to hear considering their consistent parade of flat-out lies in favor of constant copyright expansion). However, what they're failing to understand is that for people who truly understand the power of the internet, this isn't about a particular bill or a particular policy. It's about something that is a very part of their identity.

As Fred noted:

Their generation grew up with a computer on their lap and now in their pocket. They were on Facebook before they were supposed to be. Their first phone was a smartphone. They prefer to watch a movie on their laptop lying on their bed than in the movie theater. And as a young woman said at Princeton last week, they want "life, liberty, and blazing broadband".

That mantra isn't about "piracy" or wanting things for free. It's about a recognition of just how powerful and important the internet and internet freedom is as a fundamental principle of their identity. While some may not think this is a good thing, the internet has become indelibly intertwined with our lives in a way that is impossible to unwind. Thus any attempt to push back against that core mantra is not seen as a "policy fight" or an issue of "Silicon Valley vs. Hollywood."

It's an attack on their very identity.

For those who still look upon internet policy making as a mere technology debate, or a mere intellectual property policy issue (or even as a specific business or industry interest), they will forever miss the point and come at the debate from the wrong perspective. When you're talking about a core principle of your very identity, you don't compromise. You pursue "life, liberty and blazing broadband," and you don't let anything get in your way.

On Friday, the House Intelligence Committee released a new draft of CISPA, the dangerous cybersecurity bill that threatens to give the government access to huge amounts of personal data. Despite small improvements in some areas, the bill still has huge problems and lacks adequate privacy safeguards—and the House is going to vote on it next week. As part of a final push to let Congress know what people think of this bad legislation, several organizations have launched public action campaigns that you can get involved in.

Firstly, there is the Congress Wants Too Much Information campaign on Twitter. Multiple groups are asking you to tweet your thoughts on CISPA with the hashtags #CongressTMI and #CISPA. U.S. citizens can look up and tag their representatives' Twitter accounts—and you can also include @HouseIntelComm, the authors of the bill. The groups behind the campaign suggest pointing out examples of data that could, but shouldn't, be shared under CISPA, such as:

@Myrepresentative Does the FBI need to know what books I checked out from my local library? #CongressTMI Stop #CISPA

@Myrepresentative Does the military need to know I send my Mom lolcat pictures? #CongressTMI Stop #CISPA

@Myrepresentative Does the NSA need to know I watch Netflix from my work computer? #CongressTMI Stop #CISPA

Now is also the time to directly contact members of Congress by phone or by email. There are tools to make this easier from the ACLU, the EFF and Free Press.

Pressure is also increasing on the companies that back CISPA, especially those in the technology sphere. In addition to contacting Congress, you can send a message to CISPA's private supporters by signing AccessNow's petition to all of them, and Demand Progress' petition directed specifically at Facebook.

CISPA still enjoys a lot of support in Congress, but the growing public backlash means the bill's future is uncertain. With continued effort, Congress can be convinced to back off and work on crafting smarter, more narrowly tailored cybersecurity legislation that protects people's privacy.

Of equal importance is the bigger message this sends to lawmakers. There are many people who still think what happened with SOPA was a fluke, driven by the technology lobby and a few key tech companies. But the growing opposition to CISPA—a bill supported by many of the same tech giants that opposed SOPA—proves that it was something much more significant, and that the online community will not be ignored when it comes to decisions that govern the internet.

As we recently reported, ACTA has been dealt a serious blow by the EU Rapporteur's recommendation that the European Parliament should reject the treaty. In a fascinating leaked document (pdf) obtained by EDRI, it seems that even the G8 countries have accepted that ACTA is probably dead -- and have started working on a successor.

Although the short (three-page) document appears to have avoided ACTA's mistake of mixing two totally different issues -- physical counterfeits and digital copying -- and concentrates on the former, there are still major ramifications for the online world, as EDRI points out:

The Internet section, while avoiding the issue of policing of digital copying, is partially copied and pasted from the White House annual report on IPR Enforcement.

Moreover, like ACTA, the initiative is also a thinly-veiled attempt to implant the US's approach in countries around the world:

The G8 document seeks to export the entire US policy on the role of intermediaries in the trade in physical counterfeits. In particular, it seeks to make American companies into a form of global non-judicial police force / government, with responsibilities ranging from "educating" citizens to policing and, ultimately, punishing companies and citizens on the basis of allegations.

The main way the new plan hopes to do that is through "voluntary cooperative efforts", of the kind employed by ACTA, SOPA and the planned six-strikes scheme in the US, which handily avoids the need for new legislation:

Promoting voluntary cooperative efforts to tackle the proliferation of illegal Internet pharmacies. G8 countries could pledge to facilitate voluntary cooperative efforts among businesses in the pharmaceutical supply chain to stem the flow of counterfeit medicines. The voluntary industry actions could include options ranging from the financial (e.g. blocking credit card payments), to the physical (e.g., shippers refusing transportation), to the virtual (e.g., taking appropriate action against unlawful websites).

The other interesting feature of the leaked "non-paper", as it calls itself, is the way that the Internet is being demonized for its involvement with the increased flow of fake medicines:

Reports of counterfeit drugs being found in U.S. supply chains are now a frequent occurrence. These drugs pose grave threats to public health. Increased access to the Internet, coupled with new methods of manufacturing and distributing illegal pharmaceuticals have created new challenges to safeguarding the legitimate supply chain.

It's hard not to see this as a further attempt to paint the Internet as a dangerous, lawless place that needs "taming" because of the "grave threats to public health". I suppose it's a change from asking us to think of the children.

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One of the more annoying things about debates on copyright law, is that when we talk about alternative business models that do not rely on copyright, some people feel the need to insist that this means making less money -- or, even, making no money at all. There is just this assumption that an alternative business model means something along the lines of "give it away and pray," when nothing could be further from the truth. Yet this kind of thinking is so ingrained, that even in stories of artists making a ton of money, some maximalists simply assume that they're not making any money. We saw this recently in the comments to one of our recent posts about Jonathan Coulton which talks about how he made $500k last year -- at which point, someone said that such examples are useless since no one will pay.

It appears that Paramount's "Worldwide VP of Content Protection and Outreach" Al Perry also fits into the same unthinking mode. We've already discussed Perry's recent talk to Brooklyn Law School, but there was one section that caught my eye and deserves a separate post. It comes right at the beginning:

Perry opened by noting that one has to articulate a problem before seeking to solve it, and he refers to the problem as “content theft.” He pointed out that copyright law gives creators the right to monetize their creations, and that even if people like Louis C.K. decide not to do so, that’s a choice and not a requirement.

Now that seems bizarre and totally unsupportable. Remember, Louis CK made over $1 million in just a few days -- an amount that he admits was much higher than what he would have received just for a straight up performance. In what world does going direct-to-fans, building a good relationship, automatically mean no money made at all? Not the one we're based on.

Recently, we saw a huge reaction to the story of how a patent lawsuit was threatening to silence a little girl by shutting down a speech-assistance iPad app that is her only means of communication. For many people, the focus of that story was the human cost of patent warfare—a valid and important topic to be sure. But the story also points to another, larger issue that is bound to get more attention in our increasingly entrepreneurial culture: the health and wellness industry is in serious need of disruptive innovation.

TechCrunch has a post looking at another area that is very similar to speech assistance devices: hearing aids. The market for these devices is old and stale, dominated by a few key players who have cushy exclusive deals with doctors that allow them to charge exorbitant prices (averaging around $3000), but a year-old startup called Embrace Hearing is beginning to shake things up by selling $300+ hearing aids directly to consumers. They discovered that 75% of Americans who qualify for hearing devices don't actually use one, and the number one cited reason is high price. But they also know that those high prices are mostly artificial:

Audiologists (health care professionals who specialize in hearing, and the loss thereof) control the majority of sales in the U.S. market. While these specialists provide essential services, they use the sale of hearing aids to their own gain, often charging markups of three to five times — because they can.

Not only that, but the clever business people they are, they bundle re-fittings and follow-up visits into the cost, generally using this as the explanation for why hearing aids cost so much. The Embrace co-founders say that the reality of the situation, however, is that only 20 percent of customers make five or more visits to audiologists in the year after being fitted for the device. For those who fall into that category, the insurance and other benefits might make sense, but for most it doesn’t.

That, my friends, is what you call a market opportunity. Interestingly, the TechCrunch post doesn't discuss patents, instead focusing on other factors that have limited the market: the aforementioned exclusive deals with doctors, the lack of entrepreneurial presence since hearing aids aren't a "sexy" product, and the fact that many people are uncomfortable bypassing a healthcare professional when purchasing something like this. Embrace Hearing is turning all these problems into opportunities: they work with a new manufacturer who has no exclusive deals, they are trying to make hearing aids sexy (social stigma is the #2 reason people who need them choose not to buy them), and they are working on an online tool for testing your hearing.

I do wonder, though, if they will face patent problems in the future. Their German manufacturer is presumably operating in good faith, but that's never stopped a good patent showdown before, since aggressive companies like to use their patent portfolios as a way to control the market and crush competitors, regardless of how valid those patents are or whether any genuine infringement is taking place. If Embrace Hearing grows and is perceived by the incumbents as a threat, it's quite likely that they or their manufacturer will face litigation. Of course, all this just tells you they are on the right track: when the kings of a particular market defend their thrones through exclusive deals, patents and other monopoly protections—rather than by actually competing—it's a surefire sign that the market is underserved. And where there's an underserved market, entrepreneurs will eventually move in to capitalize on it. When that happens, existing monopoly protections can only delay the inevitable, but they can cause very real harm by doing so—and in an industry that effects the quality of life of millions of people, the public backlash against these monopolies can be huge. Any company that operates in the health and wellness space by selling at huge markups and relying on exclusivity would be wise to start thinking about their future in the long-term: if they don't meet the demands of the market, someone else will.

As a way of fighting unauthorized sharing of digital files, DRM is particularly stupid. It not only doesn't work -- DRM is always broken, and DRM-less versions quickly produced -- it also makes the official versions less valuable than the pirated ones, since they are less convenient to use in multiple ways. As a result, DRM actually makes piracy more attractive, which is probably why most of the music industry eventually decided to drop it.

Sadly, the world of ebooks seems unable to learn from that experience, and insists on making the same mistakes by using DRM widely. But it turns out that there are even more problems in the publishing domain, as this fascinating tale of how DRM acts as a barrier to entry in the online bookstore market makes clear:

In June of 2011, my friend Emily Gould came up with an idea for a new kind of online bookstore: one that would sell only e-books, but would strive to offer the personalized customer service and curation of a local independent bookshop.

But there was a problem:

Publishers told us that if we did not have digital rights management (DRM) technology, they weren’t interested in letting us promote and sell their products. DRM is the set of technologies that encrypt and prevent the reproduction of e-book files. A new bricks and mortar bookstore, even the tiniest one, could have easily opened accounts with all the major distributors. But to sell electronic versions of those exact same books, publishers told us that you have to be a mega corporation.

That's because DRM is not only annoying for the readers, it's also expensive for the online booksellers that are forced to use it:

In order to provide DRM, you need at least $10,000 up front to cover software, server, and administration fees, plus ongoing expenses associated with the software. In other words, much bigger operating expenses than a small business can afford. By requiring retailers to encrypt e-books with DRM, big publishers are essentially banning indie retailers from the online marketplace.

That might just sound like typical big-company indifference to the plight of small startups, but it's actually worse -- it's suicidal. Techdirt has already written about one reason why that's the case: DRM helps lock readers into Amazon's platform. But the article quoted above provides us with yet another: lack of competition in ebook retailing.

there’s an even more compelling reason that we need indies to exist in the e-book market: The Amazon/Apple near-duopoly on e-book sales is cripplingly destructive for readers, writers, and publishers. Once one of the big "A"s can freely set the price of e-books, they can determine the conditions of the market for everybody. They can charge consumers anything, pay publishers very little (for who will exist to sell their products otherwise?), and leave writers hoping for some small crumb of the pie. Everyone who reads or writes or cares about books has a reason to support the existence of a viable alternative.

And yet the big publishers are doing the opposite. Their insistence on the deployment of DRM with their books is making it hard for independent online booksellers to thrive, which increases the power of the two giants of the sector, thus weakening the bargaining power of the publishers and writers. So DRM turns out to be not only stupid, ineffectual and unfair, but also doubly bad for the very companies who blindly insist on its use.

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