Nintendo Pays Innovation Tax To Patent Holder

from the good-for-innovation? dept

A year ago, we noted that Hillcrest Labs was going after Nintendo, claiming that the Wii violated its patents. And, like so many other patent holders, Hillcrest got to take two separate cracks at Nintendo, suing in court and also filing with the ITC to block imports. Recognizing just how ridiculously costly it is to defend both the lawsuit and the ITC process, it looks like Nintendo has just agreed to pay up. The company still insists that the Wii doesn't infringe, but the system is stacked against companies who actually innovate. It's so costly to defend yourself, that it's usually just cheaper to settle. Consider it a tax on innovation... except the tax doesn't even go to anything useful.

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Sirius XM Passes RIAA Tax On To Consumers

from the but-of-course dept

Not quite sure how I missed this earlier (update: oops, turns out we didn't miss it -- so consider this an encore presentation), but Bret alerts us to the news that with the ever increasing royalty rates pushed by the RIAA in the form of its "spin-off" Sound Exchange, and codified by the Copyright Royalty Board (for whom I still do not understand how anyone can justify its existence), that Sirius XM has simply added a $2 RIAA tax to everyone's monthly bills to help pay for the new performance royalties. Yup, because the RIAA and its members haven't been able to come up with a business model that works, they get the courts to tax you for listening to your satellite radio (on top of what you already pay and what they already pay to songwriters and publishers) and that gets passed on to you. Just imagine what will happen if the RIAA gets its wish and gets to add a similar tax to terrestrial radio stations as well. If you thought radio was chock full of commercials before...

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German Green Party Pushes File Sharing Legalization Tax

from the an-idea-no-one-likes dept

It seems like an idea almost no one likes. Many users are against the idea of needing to pay a tax for file sharing they don't do, and the recording industry hates any idea that "legalizes" file sharing. And yet, the Green Party in Germany seems to be pushing forward with an idea to legalize personal file sharing via a special tax users would pay via their ISP bill. Apparently the plan would involve paying different amounts based on the speed of your internet connection, which seems a bit bizarre. What does the speed necessarily have to do with how much file sharing you do? Oh yeah, the other problem? No one seems to have any idea how to distribute the proceeds of such a tax.

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Netherlands Considers Internet Tax To Fund Newspapers That Can't Compete

from the well-there's-a-bad-idea dept

A bunch of folks have been sending in various versions of this translated article from Holland, noting a proposal that's been brought forth to tax internet connections in order to give the money to industries that are having trouble competing, such as newspapers. It's not at all clear that this proposal has any chance of going anywhere, and there appears to be significant opposition -- but it's really amazing that anyone would think this is a good idea in the first place. Did people suggest an automobile tax to give to the horse carriage makers a century ago?

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UK Gov't Considers Google Tax?

from the but-why? dept

Calvin was the first of a few folks to send in this story about how some in the UK gov't are discussing a series of different proposals to raise tax revenue to pay for the production of news programs on TV, with one option being creating a search engine tax, directed at Google. It seems that basically everyone admits there's no actual justification for the tax other than "Google is making a lot of money, and we need that money." Of course, it's worth pointing out that it sounds like the discussions are still quite preliminary and there are plenty who don't think it's a very good idea. The same group has also been tossing around suggestions for a broadband tax or a digital download tax that would be used in the same manner. Considering how early on the discussions are, it doesn't seem like much to get worked up about, but it is quite silly that this is even up for discussion in the first place. As people point out in the article, this would be taxing a successful growing company, helping to slow down its growth, to help fund an operation that hasn't been growing. That doesn't seem likely to help the economy very much.

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Massachusetts Wants GPS Driving Tax, Too

from the big-brother dept

For several years, authorities in Oregon have been pursuing a plan to put GPS units in every car in the state to track and tax drivers' mileage. Now, Massachusetts wants to get in on the act, and replace its gas tax with a mileage-based tax (via Boing Boing) generated by GPS units in cars. The state wants to ditch its gas tax because rising fuel efficiency is leading to decreasing tax revenue, so the new plan would instead charge drivers a quarter of a cent for each mile they drive. The state's governor is talking not just about boosting tax revenue, but says he likes ideas that are "faster, cheaper, simpler." It's not clear how replacing the current gas tax by forcing drivers to install GPS trackers in their cars and building an infrastructure to gather data from them, then assess and collect a mileage tax will be fast, cheap or simple. This doesn't even mention the myriad privacy concerns of giving state employees access to records of Massachusetts drivers' activity. This idea continually pops up, whether as a tax idea or a new way to charge for auto insurance -- but it never seems to hold any more value beyond a soundbite.

Carlo Longino is an expert at the Insight Community. To get insight and analysis from Carlo Longino and other experts on challenges your company faces, click here.

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Venture Capitalist Explains How Patents Can Be A Tax On Innovation

from the not-all-vcs-demand-them dept

Whenever we get into discussions on the massive downsides associated with patents, someone has to chime in with some ridiculousness about how "venture capitalists won't invest in companies without patents." There are a few easy responses to that -- including, if the VC you're talking to demands patents to invest, he or she is probably so clueless you're better off going elsewhere. That may sound flippant, but it's not. Patents have so little impact on the success of a startup that anyone focused on patents before investing has probably never helped lead a brand new startup to success. If they had, they'd know that it's execution that matters significantly more than any "patents."

Besides, over the years, we've seen more and more venture capitalists come to the realization that in many cases, patents do a lot more harm than good. We've written about a few venture capitalists who have come out about problems with patents -- and over the weekend Union Square Ventures' Fred Wilson (a friend, and Techdirt reader), wrote about just how much damage patents have done towards innovation -- specifically with some of his portfolio companies. Specifically, he's talking about having those companies sued by non-practicing entities (he uses the term "trolls" which we like to avoid). He also mentions -- in the comments -- how USV doesn't require companies to have patents, and he's invested in plenty of companies without patents.

At one point, Wilson writes:

I'm a fan of allowing market forces to work in most cases, but not in the area of patents.

But, of course, patents are not a proper market mechanism. They're the opposite of one. They're about the gov't creating monopolies. That's not "letting markets work." It's declaring that the first company to claim an invention gets to control the market, rather than letting the actual market decide which company can best execute in delivering the product to the market. A supporter of free markets shouldn't support the patent system. It's not a free market at all.

From there, though, Wilson kicks off a good discussion on how to deal with such things. He points out that it's often cheaper just to pay off the patent holders (and most companies do that), but that just encourages them to continue creating a "tax on innovation." So, instead, he wants to discuss what reforms can be put in place, with two initial suggestions:

1. If you sue someone for infringement and lose, you pay the defendants' legal costs.
2. "Use it or lose it." If you're not putting the patent into practice, you don't get to use it.

There are problems with both of these, unfortunately. The first is utterly dependent on the already screwed up judicial process for patent lawsuits (hello East Texas!). There are plenty of awful patent lawsuits where the patent holder wins. So, I'm not against this proposal as a way of making patent holders think twice about totally bogus lawsuits, but it's not going to stop a lot of suits. In fact, it may just encourage more suits in the hopes that hitting one "big one" pays for all the bad ones.

The second one is also a little troubling, because if a patent is valid (a huge if), you could potentially see a situation where it makes sense for the company to license it rather than develop it. Instead, however, I'd offer an alternative: if the patent holder is not developing a product based on the patent, then (a) the courts cannot issue any kind of injunction to stop the production of the product by others (which is the direction we're moving in thanks to the MercExchange decision) and (b) any damages should be greatly limited to the cost of a reasonable license plus a small penalty.

However, if Wilson is serious about looking for ways to fix the patent system, he should look to support an independent invention defense that would invalidate the patent. This one change would solve so many of the problems with the patent system. Since the patent system was designed to encourage independent invention, it shouldn't be discouraging it and denying those inventors who came up with an idea on their own the ability to commercialize their inventions. Furthermore, since patents are only supposed to be granted on inventions that are non-obvious to a person skilled in the art, the fact that multiple individuals came up with the same idea should be proof enough that the idea doesn't pass that test.

It's no secret that I'm not a fan of the patent system at all. There is so much evidence out there that patents do nothing to increase innovation and plenty of evidence to show how they actually stifle innovation, that I think the patent system actively works against its stated purpose ("to promote the progress of science and the useful arts"). However, if we must have such a system, then put in place an independent invention defense which also invalidates the patent, and we'd be a lot further towards a reasonable system -- especially since it's so rare to find patent infringement lawsuits that involve any actual copying.

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New York The Latest To Propose Taxing iTunes Downloads

from the for-no-reason-at-all dept

Earlier this year, some politicians in California, which is struggling with massive budgetary problems, proposed adding a tax to iTunes downloads. Now, Governor David Paterson in New York is proposing the same thing. There's no functional reason for this, other than the fact that the state desperately needs money, and so it's trying to add taxes to just about anything it can find. Of course, back in the old days, the point of a sales tax like that was to contribute to gov't-funded infrastructure (roads and such) that allowed folks to go and buy something. There's no such rationale for taxing internet downloads. It's a blatant money grab and Paterson seems to have no problem admitting that.

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Italian Authors Want A 'You Must Be A Pirate' Tax On All DSL Connections

from the you're-a-criminal! dept

Plenty of countries have different types of "blank media" levies, which act as something of a "you must be a criminal!" tax. Basically, industries have convinced governments to force consumers to pay a lot more, on the assumption that they're all criminals, and rather than pushing the industries to innovate new business models, they just get to collect that "tax." In the US, the RIAA has suggested such a tax should be added to broadband connections, though there seems little chance of that happening any time soon.

However, Sean alerts us to an effort under way in Italy to do exactly that. Apparently the Society of Authors and Editors has asked the government to impose a tax on all DSL connections (the article's in Italian, but Google has a decent translation). Hopefully this is one of those outlandish proposals that goes nowhere, but it's worth paying attention when these sorts of proposals are being pushed, as they have the inevitable tendency to spread.

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New York Politicians Think About Repealing Amazon Tax, But Let It Drop

from the so-much-for-that dept

Back in April, we noted that some NY state politicians were trying to put in place a rather sneaky legal change that effectively would force Amazon to collect sales tax in New York, despite not having a physical presence there. The "trick" was to claim that if you had any affiliates in the state, you had a local presence. Affiliates, of course, can be nothing more than an advertiser. So, based on this change of law, effectively anyone who has an advertiser in NY is considered to have a local presence there and must collect sales tax. Both Amazon.com and Overstock have sued over this law, and Overstock has even gone so far as to cut off all NY affiliates in response (showing how the law probably hurts NYers a lot more than it helps them).

Saul Hansell, over at the NY Times, picked up on an odd fact, however. Just weeks after this passed, a separate bill was introduced to repeal it. Yet, that bill appeared to have no sponsor, but the state Senate actually voted and approved it. After some digging, Hansell got an explanation: saying that the original bill was part of a larger bill that was approved, but many felt that they wanted to address just this specific issue. Of course, it appears that the state senators' interest is not matched by the corresponding state assembly (who would also need to pass such a bill). Over there, they'd just as soon leave the matter as is, and let the courts (and taxpayers) sort it out.

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Italy Reveals Everyone's Income... On Purpose

from the whoops dept

Last week I saw the headlines mentioning that Italy had revealed taxpayer info, and naively assumed that it was yet another story of yet another accidental data leak by a government agency. After all, we've seen so many. However, thanks to reader Luca Mirabelli for pushing me to take a second look at the story. It turns out that rather than an accidental release, it was very much on purpose. Vincenzo Visco, a deputy economy minister, decided to publish the details of everyone's tax returns on a publicly available website, including details such as what they earned, taxes paid and date of birth. He claimed that he did this as a "simple matter of transparency and democracy." The data was quickly pulled down due to (reasonable) fears that the release violated Italian privacy laws. According to Luca, Visco also claimed: "In the USA, tax filings are already public, check any American TV-movie and you'll see" though I can't find that statement in any English translation.

While many people do seem angry at Visco, he is correct on one point: he was actually following the law. There's an Italian law from 1973, requiring that tax documents be available to the public. It's just that, historically, that has meant having to trek to the tax office to get access to the documents. We've seen similar complaints about other "public" info that is now much more widely available, such as court documents. It seems the real problem here is that law -- which makes everyone's tax returns public. Though, Visco certainly should have realized what a questionable move this would be, and focused on amending the law, rather than going ahead with just making everyone's tax returns available online.

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Company Betting On GPS-Based Driving Tax

from the we-know-where-you've-been-driving dept

Back in 2003, the state of Oregon considered a driving tax, which would involve putting GPS devices on cars so the government could see how far you drove, and then tax you for it. The idea being that those who drive more should pay a larger portion of taxes to support the roads they drive on. Of course, for many, many people, the idea of the government keeping tabs on where you drive and how far you go seems rather Big Brotherish -- and those people note that you can accomplish pretty much the same thing (making heavy drivers pay more taxes) simply by taxing gasoline. Soon afterwards, the head of California's DMV suggested that a similar taxing and tracking plan made sense. Over in the UK, they've looked at similar proposals as well. It certainly seems a bit early to bet on such a concept as the next big thing, but that apparently hasn't stopped one company from building a device for exactly this purpose and showing it off at a recent conference. The company is smart in positioning it less as a device for tracking drivers and more as a way of "creating toll roads out of every road." The News.com article then goes on to rail against the very idea of toll roads -- but perhaps that's because they're quite rare here in northern California. In other parts of the country, they're a lot more common. Rather than worrying about the toll road aspect, it seems like the idea of government agencies having immediate access to information about where you drove at what time is a lot more troublesome.

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