As expected, the SHIELD Act, which would allow those sued by patent trolls over bogus patents to seek legal fees, has been reintroduced in Congress. As I said when the bill was originally introduced, I think it's a good thing, though just a very, very small step towards dealing with the larger problems of the patent system. I signed onto a letter from EFF and Engine Advocacy in support of the bill, but really wish we could go much further in reforming the system. Unfortunately, the story coming out of Congress is that while there may be some interest in this bill (and it's not clear if it's enough to pass), there is zero appetite for any additional changes. That's unfortunate.

The patent system today is a massive economic sinkhole. It is not contributing to innovation. It is not encouraging innovation. It is actively hindering it. Yes, it is making some patent lawyers very, very wealthy, and they don't want that to stop. But it is doing nothing to help the broader economy. That we can't even seem to take a serious look at what the patent system is doing to the innovation economy is really unfortunate.

We may think we're pretty smart, but animals like dolphins are pretty smart too. For over 30 years, scientists have been trying to determine how smart dolphins really are. Bottlenose dolphins have a brain-to-body-weight ratio that is only second to humans, and they also have a very complex neocortex, the part of the brain that is responsible for traits typically associated with human intelligence, such as problem-solving and self-awareness. Researchers have even found that dolphins have von Economo neurons, which are associated with emotions, social cognition, and the ability to sense what others are thinking. Besides dolphins, people may be underestimating the intelligence of animals in general. Here are just a few links related to animal smarts.

• Recently, divers off the coast of Kona in Hawaii caught video footage of a bottlenose dolphin asking a human for help to get out of a tangle of fishing lines. The dolphin swam up to one diver as he gestured with his hand for it to come closer. The diver removed a fishing hook out of the dolphin's left pectoral fin, and at one point the dolphin had to surface for air, but it went back so that the diver could finish untangling it. [url]
• Dog owners can now figure out just how smart their dogs are with Dognition. It's a web app that lets dog owners record the results of their experiments, which involve playing games with their dogs designed to assess five dimensions of intelligence (empathy, communication, cunning, memory, and reasoning). The data collected from the Dognition project could help scientists better understand the way dogs think and behave. [url]
• Dogs are able to subtly alter the timing, pitch, and amplitude of their barks to produce a variety of sounds that could have different meanings. While humans may have trouble distinguishing between a "food growl" and a "stranger growl," studies have shown that dogs can recognize the meaning of particular barks and growls of other dogs. [url]
• Here are eight other animals that show notable signs of intelligence: Chimpanzees have DNA that is more than 98% identical to human DNA; elephants exhibit self-awareness; cephalopods are curious and have the ability to learn and use tools; crows are crafty; squirrels can be deceptive; dogs can understand people's intentions; cats are extremely adaptable; and pigs can distinguish between familiar scribbles on a screen and ones that they have never seen before. [url]

If you'd like to read more awesome and interesting stuff, check out this unrelated (but not entirely random!) Techdirt post.

Two years ago, we wrote about a ridiculous situation in which the NY Yankees (disclosure: I'm a lifelong Yankees fan) were opposing a trademark application by a small company who sought to trademark "Baseball's Evil Empire" for the sake of selling merchandise with that brand on it. As we noted at the time, it wasn't that long ago that it was considered perfectly legal for anyone to make t-shirts and other merchandise bearing the names of your favorite sports teams. But then the trademark lawyers got involved and, with sports leagues seeing the potential for lots of money, they shut that down. This seems to be another case of that sort of thing, but with a twist. In this case, the NY Yankees, who were opposing the trademark, have never used the term "evil empire" to reference the Yankees. Instead, the team was called that a decade ago by an executive of the rival Red Sox. In fact, in its own opposition, the Yankees even made the point that the term had a "negative connotation" and they didn't like it -- so it seems extra bizarre to then take "ownership" of the term via trademark.

But, in this case, the Yankees still won. The Trademark Trial and Appeal Board ruled that even though the team has never used the name, and even though it's a pretty generic and overused term, there is a likelihood of confusion and that people now associate the term with the Yankees. While I could see rejecting the term as not deserving any trademark at all, the idea that this is likely to cause confusion seems like a stretch. The team has shown no inclination in embracing the term (and its own filing showed that it felt the phrase was negative). The TTAB and the Yankees seemed to put a lot of weight in the fact that the Yankees sometimes use Star Wars music to suggest they were directly embracing the term, but that seems extremely weak, at best.

There's also a good conversation at Mike Madison's blog post on the story, in which someone notes that it would be fine if the TTAB made it clear that no one should have the trademark, but in this case, the court seemed to act as if the Yankees have the trademark, despite having nothing to do with the phrase. It repeatedly refers to the phrase as if it were the Yankees' own mark.

Meanwhile, it appears that the company that originally filed for the trademark, Evil Empire Inc., isn't giving up either, claiming it will continue making and providing Evil Empire gear, saying that the team "has never shown any indication that it plans to sue for trademark infringement over the use of the name on apparel." In other words, it's betting that despite blocking its own trademark application, the Yankees won't now go on to sue over Evil Empire's continued usage. That seems like a pretty big risk.

That said, the whole situation highlights (yet again) the nuttiness that is the end result of an "ownership society." Evil empire is a simple phrase that references Star Wars. The idea that it alone should be controlled by the New York Yankees seems preposterous.

Well, it's been a couple of days, so I guess it's time to update you on the latest version of North Korean propaganda that tries to impress our sense of humor. You should recall that the reclusive nation released a bizarre video about the coming destruction of New York City, complete with video game footage from Modern Warfare 3. That was followed up by their brothers-in-dumb, the Iranian government, who thought the best way to show off their new flying machine was to photoshop its image over a mountain, rather then show it actually...you know...flying.

Well, North Korea is back at it, with another odd video, with all the effeminate flame animations you've come to expect and text that I sure as hell can't read. With that said, I'm sure the text says something about how the North Koreans have developed the latest in orc technology and elven code systems, being as how they decided to use the soundtrack for The Elder Scrolls IV: Oblivion to set the mood.

I'd like to take this moment to offer a small bit of advice to my friends in Pyonyang. If you put a video out on YouTube to tell the rest of the world how crazy awesome powerful you are, so much so that you're going to smash America, part of that video should be to demonstrate that you can come up with an inspirational tune. I mean, if you can't even put together something like Call Me Maybe, it's kind of difficult to take your plans for our destruction seriously.

In the meantime, hey Bethesda? You guys want to DMCA this or are you laughing as hard as I am?

The following is a guest post from David Balto, former Federal Trade Commission Policy Director. Mr. Balto represented SunGard Data Systems in the US v. SunGard case described in this post.

Antitrust merger enforcement is a unique area of the law. It requires an assessment of whether a merger carries the potential of significantly harming competition. Courts are not very good at predicting the future and justifiably are very reluctant to prevent or unwind an acquisition without strong evidence of likely anticompetitive effects. Appropriately the antitrust enforcers rarely turn to the courts to try to stop business conduct that is typically procompetitive.

This cautionary approach is particularly necessary in software and other high tech markets. Antitrust analysis works best in traditional products, such as industrial products, that have existed for years in which the characteristics of products and the dimensions of competition are well defined. But in software the products are rapidly evolving, demand is ever changing, and the nature of competition can change overnight. Today's so called dominant firm may find itself an afterthought as the market turns to a whole different set of solutions. Not surprisingly, in the past decade the two litigated challenges to high tech mergers, Oracle's acquisition of PeopleSoft and SunGard's acquisition of Comdisco, resulted in stunning defeats for the Department of Justice's Antitrust Division.

That is why many observers were puzzled when the Antitrust Division sued to unwind the merger between Bazaarvoice, a social software and data analytics company, and PowerReviews, a small provider of online reviews that had less than $12 million in total revenues at the time of the transaction. (No one can seem to recall anytime the Division has sued to block a merger of a firm with an amount as paltry as $12 million in revenue). The merger involves the exciting software for providing ratings for products on the Internet, a product that did not exist a few years ago. Although the Division seems to highlight some documents that seem to suggest potential anticompetitive effects, the wooden analysis of the complaint reflects a simple structural view that overlooks the many dimensions of competition and the dynamic nature of the market. Rather than fully probing the likely competitive effects and dynamism of the online retail industry, the Division describes markets, consumer choices, and entry conditions that do not reflect reality. As a result the complaint is plagued by internal inconsistencies and fails to recognize the true price constraints that mitigate the potential for any harm the DOJ predicts as a result of this transaction.

The DOJ Fails to Articulate a Proper Relevant Market

Antitrust analysis may sound daunting, but it is very straightforward. The lodestar in any antitrust case is to define the relevant market – that is to determine what are the products that effectively compete with one another. In a merger challenge, if the government does not properly define the relevant market then the case is over. Defining the market can be very challenging, especially in dynamic markets such as software. Not surprisingly, the government's defeats in challenges to software mergers have typically been because they did not define the relevant market properly.

The DOJ defines the relevant market as "product ratings and review platforms," or "PRR platforms," and explains that these platforms "collect and display consumer-generated product ratings and reviews online." It is axiomatic that defining a relevant market establishes the boundary between products that do compete and those that do not, and determines the firms or products that constrain the relevant firm’s exercise of market power. As the Ninth Circuit has opined, "A relevant market is identified by considering commodities reasonably interchangeable by consumers for the same purposes. Put another way, the relevant market includes all sellers or producers who have actual or potential ability to deprive each other of significant levels of business." As the literature makes clear, if a putative relevant market is too narrow, and does not account for competitive forces that serve as a real price constraint on the parties, then the analysis risks condemning perfectly legitimate and competitive behavior by imputing market power where it does not exist.

On this count in Bazaarvoice, the DOJ does not get to first base. The DOJ's alleged PRR platform market is too narrow and falls prey to the mischaracterization of market power risk embodied in the literature. PRR platforms are one of many social-technological tools that retailers and manufacturers use to communicate with end-user customers. Bazaarvoice and PowerReviews compete against numerous firms that strive to empower the consumer's voice through social media to "collect, organize, and display consumer-generated product ratings and reviews online." Manufacturers may use popular network-driven social media tools such as Facebook, Twitter, Google+ and Yelp or more nuanced social media tools such as YouTube, Pinterest, and LinkedIn to give the consumer a voice in online product reviews. Alternatively, manufacturers and retailers can include social media tools that are similar, but not identical, to consumer reviews such as question-and-answer, and community forums.

These alternative platforms constrain Bazaarvoice, PowerReviews, and other companies that provide third-party review and aggregating services. When a retailer or manufacturer considers purchasing services from these companies, they do not look only at these two options, but also at the available outlets for consumer review generation provided by the ever-increasing array of social media platforms.

In defining markets, the courts rely on a wide variety of evidence including econometric price studies, other pricing evidence, win/loss data, and testimony of customers. None of this is present in the DOJ complaint. Instead the DOJ relies largely on the defendant's documents, but this is a thin reed indeed. Many of these documents are outdated and ignore the realities inherent in this fast-moving industry. It is debatable whether these documents reflected the true nature of competition at the time they were created. It is certain, however, that these documents no longer reflect the current state of competition. For instance, the DOJ twice references an April 2011 email in which a Bazaarvoice executive characterized the nature of the industry and opined that alternatives to Bazaarvoice are "scarce" and "low-quality." In the intensely rapid changing world of the Internet, documents from 2011 are about as relevant as a floppy disk. Instead of 1) demonstrating that this was in-fact true in 2011, and 2) reestablishing that this description remains accurate, the DOJ's complaint merely assumes that both are the case. However, this description does not align with today's online retail industry or its intersection with social media. These are industries highlighted by dynamism, and it would be incorrect to believe that the relationships between PRR platforms and other social media outlets for consumer reviews have remained stagnant.

Even If One Accepts the DOJ's Relevant Product Market, the DOJ Fails to Recognize the Dynamic Nature of Competition

As explained above, a product market of PRR platforms is not a proper relevant market for antitrust purposes. Even assuming arguendo that PRR platforms constitute a proper market, however, the DOJ's complaint fails to discuss adequately the nature of competition within these parameters.

Two fatal flaws plague the DOJ's analysis. First, the DOJ fails to offer any explanation for portraying the PRR platform market as consisting of just two meaningful competitors and numerous fringe competitors who offer no real constraint. The DOJ attempts to justify this portrayal by analyzing the nature of competition between Bazaarvoice and PowerReviews within the "Internet Retailer 500," but it is unclear why the government focuses so closely on this tiny market segment and it is even less clear whether an impact solely on that segment would violate the law. The DOJ even concedes that the PRR platform industry "can range from simple software solutions a company has developed with internal resources to sophisticated commercial platforms offering a combination of software, moderation services, and data analytics tools." However, despite this wide range of styles and services, the complaint analyzes only a small segment of the market and suggests that these large sophisticated companies have only two effective alternatives.

The Division has made this mistake in the past, and it did not end well. In Oracle the DOJ "failed to prove that there are a significant number of customers (the 'node') who regard Oracle and PeopleSoft as their first and second choices." Instead, the DOJ tried to make the unilateral effects argument with the unpersuasive facts that it had. Judge Walker admonished the DOJ, stating the "Plaintiffs' attempt to show localized competition based upon customer and expert testimony was flawed and unreliable. Moreover, plaintiffs' evidence was devoid of any thorough econometric analysis such as diversion ratios showing recapture effects." (A "diversion ratio" shows how much of one competitor's business will shift to another competitor if there is a price increase.)

The complaint against Bazaarvoice is equally flawed. The diversion ratios will simply not tell a story wherein a sizeable portion of all participants in the DOJ's (already flawed) market perceive only Bazaarvoice and PowerReviews as next-best options. If the evidence of diversion ratios were available, the DOJ would have presented it already. In fact, this is a consummated merger – the real-life data should show this effect if it is true. Instead, the data likely tells a story of widespread, dissimilar, and largely unpredictable cross-elasticity of demand. It is probably the case that no "node" in the PRR platform industry exists because the dynamic nature and subjective needs of clients dictate that there is no significant captive set of consumers choosing only between Bazaarvoice and PowerReviews.

Second, the DOJ completely ignores the concept of self-help in the social media consumer reviews industry. At its core, the products supplied by Bazaarvoice and PowerReviews are based on simple technology. These companies create software that appears on a retailer's website and enables consumers to provide first-hand product reviews. The companies also provide differing analytic and syndication services, both of which are a function of nothing more than intelligent use of data. There is nothing stopping retailers and/or manufacturers from creating the same service and extracting value from the data. Unsurprisingly, companies often perform some or all of these tasks themselves. Amazon stands out as a leader in providing consumer review platforms and uses the data to drive marketing and sale decisions. Zappos, the online shoe and apparel company from Henderson, Nevada provides its own consumer review platform on its website, and uses this information not only to improve sales and marketing, but to provide an added level of consumer care.

Like the question of the consumer "node," the DOJ has also failed to account for internal solutions as a price constraint. Once again the DOJ is forgetting an important lesson from a past defeat. In SunGard, the DOJ tried to block the merger of two firms that provided computer disaster recovery services, which sounded like tremendously sophisticated and complex services. But the court found that self-help ("internal hotsite solutions") was a perfectly adequate option for many customers. The DOJ had portrayed the notion of internal hot sites as expensive and difficult to create, and suggested that not enough customers would turn to internal solutions to prevent the merging parties from raising prices. Judge Huvelle disagreed, and pointed out that, not only did internal solutions exist in some capacity, but that the incentive to create internal solutions would increase alongside any increase in price. Furthermore, the evidence demonstrated that customers had varying needs, and "any generalizations regarding customer behavior cannot be arrived at with any certainty, since it depends on a host of factors, including the type of equipment a customer must duplicate, the particular circumstances and needs of the customer, and in some cases, the size of the customer's operations."

The same can be said for customers of social media consumer review -- any attempt to predict the future needs and behaviors of customers is nothing more than generalization and speculation based upon incomplete data, an uncertain technological future, and dynamic and varied customer needs.

The DOJ Fails to Account Adequately for Entry and Expansion, Both of Which are Likely

The DOJ asserts that anticompetitive harm resulting from this transaction will not be corrected by additional competitors entering the market or existing participants expanding. The rationale for this assertion lies primarily in the DOJ's contention that Bazaarvoice's syndication network creates an insurmountable entry barrier. This statement ignores the fact that PowerReviews entered the market and competed effectively without offering a syndication product on par with Bazaarvoice's. Furthermore, the DOJ makes no attempt to quantify the number of Bazaarvoice customers that take advantage of the syndication offering. In fact, many manufacturers and retailers choose not to utilize this service, instead preferring to outsource to another vendor or perform the analytics in-house.

Notwithstanding these factual oversights, the assertion that Bazaarvoice's syndication network is a barrier to entry fails. The aggregation of data through the creation of consumer reviews is a profitable endeavor, but it is also an easily repeated endeavor. Bazaarvoice's reviews and sophisticated analysis may make it a better competitor but it does nothing to cement Bazaarvoice as an enduring competitor in the face of an improved service. Allegations of network effects as barriers to entry are made far too lazily, and the DOJ would have the trier of fact believe that a piece of data can only be captured once, or is a zero-sum game. This is just not the case. There is competition for data just as there is competition for any other product. Finally, as the value of data continues to increase, retailers and manufacturers will have less incentive to continue outsourcing this portion of the business to Bazaarvoice.

Unsurprisingly, entry is already occurring in this alleged market. Reevoo and Yotpo are new entrants looking to disrupt competition, while Amazon and Google are established market participants looking to grow their profits at the expense of companies like Bazaarvoice. The DOJ's entire theory of harm is premised on a presumption of stagnancy that runs contrary to the nature of the high-tech and electronic commerce industries.

Conclusion

Antitrust enforcement in high tech markets poses special challenges -- to recognize the dynamic fast paced nature of competition, the fluidity of product markets, and the opportunities for new forms of rivalry. Unfortunately, the complaint in the Bazaarvoice case takes a static approach hinged to a few outdated documents. Without more it is unlikely a court will take the draconian step of unwinding this merger.

There has been a lot of discussion lately about "cybersecurity" "cyberwar" "cyberattacks" and all sorts of related subjects which really really (really!) could do without the outdated and undeniably lame "cyber-" prefix. This is, in large part, due to the return of CISPA along with the White House's cybersecurity executive order. Of course, the unfortunate part is that we're still dealing in a massive amount of hype about the "threats" these initiatives are trying to face. They're always couched in vague and scary terms, like something out of a movie. There are rarely any specifics, and the few times there are, there is no indication how things like CISPA would actually help. The formula is straightforward: fear + handwaving = "we must have a law!"

However, I think we may now have come across what I believe may top the list of the worst articles ever written about cybersecurity. If it's not at the top, it's close. It is by lawyer Michael Volkov, and kicks off with a title that shows us that Volkov is fully on board with new laws and ramping up the FUD: The Storm Has Arrived: Cybersecurity, Risks And Response. As with many of these types of articles, I went searching for the evidence of these risks, but came away, instead, scratching my head, wondering if Volkov actually understands this subject at all, with his confused thinking culminating in an amazing paragraph so full of wrong that almost makes me wonder if the whole thing is a parody.

The piece starts off, though, by playing up those supposed "risks," discussing how companies face "economic devastation" due to the "theft of valuable trade secrets." Here's an exercise: name one such company that has been so devastated. We'll wait. Then he talks about how these hacks could lead to "disclosure of consumer and employee information." Of course, he seems to be mixing and matching the types of hacks he's talking about. The "trade secret" stuff is generally corporate espionage, whereas the leaking of data tends to just be more general malicious hacking. Very different issues that probably require very different responses. But they're lumped together here.

So we've got an ill-defined problem, but have no fear, because the answer is here: Congress!

At the core of the problem is Congress’ failure to act. For years now, Congress has tried to enact meaningful cybersecurity legislation.

Any analysis of whether or not the attempts at "meaningful cybersecurity legislation" would have any impact at all on the kinds of attacks discussed in the first paragraph? Why, no. Because that would be useful. But that's okay, because Congress needs to act!

The risks are too large and the consequences of failing to act can result in serious economic consequences.

Again, can someone point to any evidence of cybersecurity issues having "serious economic consequences" to date? Yes, it's possible they might in the future, but let's put these things in perspective.

And then we get to this. I warn you ahead of time: reading the following paragraph may cause certain knowledgeable brains to experience something akin to spasms.

Recent cyber-attacks have illustrated the ability of terrorist groups and foreign governments to cause havoc on the Internet. The United States Sentencing Commission’s website was destroyed when activists attacked the site to protect the federal prosecution of Bart Swartz which eventually led to Mr. Swartz committing suicide. For years, the Chinese government has launched massive daily attacks against our government and private industry which are aimed at disrupting government operations, stealing trade secrets and undermining economic activity.

Let's break this down. Bit by awful bit.

Recent cyber-attacks have illustrated the ability of terrorist groups and foreign governments to cause havoc on the Internet.

Where and how? So far, the only example of any government causing any sort of "havoc" appears to have been the US with Israel with their attacks on Iran via Stuxnet, Flame and possibly some other very targeted malware attacks. What "terrorist groups" or "foreign governments" have actually caused any actual "havoc on the Internet"? The answer is none. It's certainly not what comes next:

The United States Sentencing Commission’s website was destroyed when activists attacked the site to protect the federal prosecution of Bart Swartz which eventually led to Mr. Swartz committing suicide.

Yeah. Okay. (1) The United States Sentencing Commission's website was temporarily hacked (and later taken down). It was not "destroyed" in any sense of the word. (2) Activists are neither the "terrorists" nor "foreign governments" we were promised in the preceding sentence. (3) Taking down the site briefly did not cause "havoc." (4) BART Swartz??!??!? (5) The hack was to protest the federal prosecution of Aaron Swartz, not to "protect" it. (6) While many of Swartz's friends and families do say that the prosecution likely led to his suicide, no one can say for sure. (7) Nothing about the hack by Anonymous had anything to do with "cybersecurity" nor would CISPA have protected the Commission's website (better programming might have). Basically, this sentence is just about as wrong as it could possibly be, and has nothing to do with what the article is about, other than drumming up fears about "cybersecurity."

For years, the Chinese government has launched massive daily attacks against our government and private industry which are aimed at disrupting government operations, stealing trade secrets and undermining economic activity.

There's been plenty of talk about these Chinese hacks, which definitely do appear to be happening. But, what economic activity has been undermined? So far, the hacks may have been a nuisance, but it's unclear that they've done any real damage. It is also unclear how CISPA helps stop such hacks, other than making Congress feel like it's "done something."

Are there issues with online security that need to be taken seriously? Yes, absolutely. Do we need legislation to deal with those problems? That's debatable, and we're still waiting for some evidence not just of scary sounding threats, but that this kind of legislation will actually help. Unfortunately, this article keeps us waiting. But, it did make us laugh. Unintentionally (we think).

A few folks have sent over variations on two different reports concerning the music industry, with some suggesting that this is "proof" that the recording industry's "war on piracy" has been effective on two fronts: increasing sales and reducing piracy. Of course, for many years, we've questioned whether or not reducing piracy actually increases sales, so we looked closely at the numbers and they don't seem to say what some people think they're saying. The Hollywood Reporter has a good summary of both reports. One comes from IFPI, celebrating that "global recorded music revenue" rose 0.3% in 2012. That is, obviously, a tiny increase, but it is an increase. Of course, as we've noted, "recorded" music revenue is merely one piece of the wider music industry ecosystem -- and that entire ecosystem has been growing for quite some time.

The second report comes from one of the industry's favorite researchers, NPD, claiming a massive decline in music file sharing (based on consumer surveys). I've found NPD's data to be suspect in the past, but let's just assume this is true. Then, can we reach the conclusion that the industry's anti-piracy efforts both worked and that it led to increased sales?

Actually... no. Not even close. We can see this pretty clearly just by looking beyond the recorded music market, to the wider file sharing space. Various reports have made it clear that widespread file sharing (mostly of infringing content) has continued to grow quite rapidly during the same time period. Sandvine reports (pdf) that BitTorrent traffic increased 40% over the same basic time frame. Or, zero in on a different market beyond music. How about software? The BSA's annual report continues to show increases in "piracy."

What does that say? Well, if wider anti-piracy campaigns were effective, we wouldn't just be seeing a decline in music infringement. We'd see similar declines across the board. But the overall space and some other, similar, markets are showing increases in infringing content spreading.

That leads us to the much more reasonable hypothesis: the reason that music piracy is down and revenue is up is because the industry has finally started allowing more innovation into the market. Not surprisingly, this is exactly what we've been arguing for years. If you let the tech industry create useful new services that better provide the public with what they want, you get services and products that people are willing to pay for. And when that happens, infringement decreases, because the legitimate and authorized services are better than infringing. It's why music infringement fell off a cliff in Sweden when Spotify launched there, despite also being the home of The Pirate Bay. Notably, when music infringement plummeted in Sweden, other types of infringement did not similarly drop.

In other words, for all the complaints about these new services, and the many, many attempts to hold them back or neuter them, letting new services grow and thrive seems to be the best "anti-piracy" measure that the record labels could have used. And yet it still thinks it needs to focus on punishing fans and limiting services.

Almost exactly two years ago, we wrote about ICE and the DOJ arresting Brian McCarthy, the operator of Channelsurfing.net, one of the domain names they seized in one of their seizure parties earlier that year. As we noted at the time, Channelsurfing itself appeared to host no video content, but rather embedded video content from elsewhere. We had trouble understanding how that was a criminal copyright violation. Some of our usual critics in the comments insisted that the courts would take down McCarthy and that he was in clear violation of criminal copyright statutes and would end up in jail. That still seemed fairly dubious -- and that's now supported by the feds agreeing to "grant amnesty" to McCarthy by "deferring" the trial.

What this really means is that they effectively came to a plea bargain-type of deal, whereby McCarthy is not found guilty and doesn't have to spend any time in jail. He does still get treated under what appears to be effectively a parole type system -- in which he needs to stay out of trouble for a while, and has to regularly check in with a "US Pretrial Services Officer" (and he can't leave his local region without permission from the same). He does still have to pay back the amount that the feds claim he earned illegally.

Who knows what's happening fully behind the scenes, but it seems likely that the Aaron Swartz suicide, and the new focus on over-aggressive US prosecutors' attempts to coerce guilty pleas out of individuals in vaguely similar situations, might have led US Attorney Preet Bharara and his assistant Christopher Frey to realize that it might be best to cut a deal and run. Actually taking a case like this to court would be a PR disaster for the DOJ following the whole Aaron Swartz thing, and people at the DOJ must recognize that. Given that the DOJ similarly had to drop other cases that came out of domain seizures, including the ones involving Dajaz1 and Rojadirecta, the gung ho attitude to the DOJ took towards seizing websites based on the RIAA and MPAA's questionable claims of infringement is increasingly looking like a complete disaster without any significant results.

I can't imagine what went wrong here. You'd think an official Youtube account for a movie studio wouldn't be lacking in non-infringing content to upload. Nonetheless, India's Saregama Movies somehow ended up with a pirated movie as an official upload. Not only that, but the pirated version had gathered nearly 166,000 views before being taken 'round back and privatized by the studio. Twitter user Last Avenger screencapped the miscue in all its glory.

A search for Kamal DDR will bring up hundreds of listing, all pointing to various torrent links. Kamal DDR apparently "supplied" this copy to Saregama, although exactly how that ended up on the official channel rather than the studio's own un-pirated version remains a mystery.

Returning to the scene of the self-inflicted crime (as it were), viewers are now greeted with the familiar skewed-emoticon-o'-public-embarrassment.


No explanation for this switch-up has been provided by Saregama, so we're left with speculation. Could it be that torrenting the file was easier than finding it on the server? Was this preserved on a Saregama hard drive as evidence and labelled unclearly? Was this a disgruntled employee's last act? Rogue administrator? Are the phone calls truly coming from inside the house, torrentially-speaking? It also appears that this issue may not be limited to this film. Roughly a third of the links on Saregama's Upload list dead end with a "page not found" message.

Maybe original and pirated copies mingled freely within Saregama's local storage, much as they do on the open market. India's struggle with truly rampant piracy (as compared to the non-rampant piracy that is fretted about constantly by lobbyists and ICE heads) has been well documented and yet the country still cranks out roughly 80 million films (estimated) every year.

At the end of the day, Saregama's house is (mostly) back in order. Only the quizzical private-video-face remains, along with a selection of full-length films from the Saregama catalog (many with English subtitles) and a few unanswered questions.

For many years, we've talked about just how bogus the numbers are that get thrown around for "losses" and "job losses" due to copyright infringement. And yet they keep getting repeated. Two years ago, we were particularly stunned by a report from the ITC that claimed $48 billion dollars in losses directly due to Chinese piracy. But, as we looked at the methodology, the whole thing was completely ridiculous. It was based on just asking a bunch of companies how much they thought they must have lost to Chinese infringement. Not only is that a horribly unreliable and biased way to try to determine what's actually going on, it's difficult to see how companies would even know that information in the first place.

Outside of piracy, we've also noted that the stats used to support "cybercrime" and "cybersecurity" efforts are often just as bogus. And here we have a story that brings the two subjects together.

SongLifter points us to a NY Post article about Chinese cyberhacking which builds off of the Mandiant report that got so much attention. The article is bizarre in that it claims that the US isn't fighting back against Chinese hackers and somehow that we're sitting on our hands while a great "cyberwar" is being waged against us. Apparently, the author, Ralph Peters, is wholly unaware that some of the only confirmed "attacks" via a computer system were by the US. All this "woe is us" hand-wringing is just bizarre. But then Rogers tosses out these bogus and debunked numbers as if they're proof that we must attack China online:

According to the US International Trade Commission, Chinese intellectual property theft cost the United States $48 billion in 2009, as well as taking away 2 million jobs. Since then, the amount of theft has worsened, so the total loss is likely around $300 billion. But US companies, afraid that making their losses public will shake consumer confidence, won’t go public with their outrage.

Except, there's no way those numbers are even close to accurate. Again, they're based on self-reporting, and any estimate of "value" is guaranteed to be grossly overweighted. Then, take those numbers and, for reasons that make no sense at all, you don't just "grow" the $48 billion, but expand it more than six times to claim it must be up to $300 billion by now? Really? And we're using that totally bogus and made up number as the basis of an argument for why we need to kick off a "cyberattack" on China? As if that won't escalate things even further? Incredible.

Cyberwar. Cyberwar never changes, mostly because it has never existed. Since the dawn of the new millenium, when the movie Hackers was still Congress's best approximation of the threat of compromised computers, thoughts have been spilled in the name of expunging this stupid hyperbole, this made-up threat with a trumped-up enemy. We're told the threats are everywhere, from an Iranian government that provides more laughs than danger, to a pirate wing of the Chinese military, to simple psychotic terror-hacking wings. Sadly, it is left to a pathetically small few media members to push back against the nonsense.

If stealing secrets is an act of war then America is currently at war with all of its allies. Espionage is what governments do so they don’t have to go to war...directly. What appears to be upsetting the Congressman is that the Chinese are using espionage to make money in a way that the United States didn’t think of first.

In the year 2013, after millenia of technological progress coupled with man's fear of it, the tidal wave of a complicit mainstream media could hold itself back no longer. As such, the world has been plunged into an abyss of cyber-nuclear threats, and bullshit.

The Times wasn’t content with using other peoples’ reports based on circumstantial evidence so it went out and got one of its own. The study by Mandiant has come under some fairly withering criticism.

-It doesn’t appear to say anything new. CEO Kevin Mandia: "Mandiant’s not the first company to blame China for the hacks, but it was our turn to carry the ball for a little bit." Translation = “We were working for the NYT and that’s some golden PR.”

-Did I mention it was based on circumstantial evidence? Jeffrey Carr does a superb job of explaining why Mandiant saw exactly what it expected to find and then offers several other equally valid possible perpetrators, including Russia, France and Israel.

But this threat has not, as some have predicted, caused the end of the world. Instead, the fake apocalypse was just the prologue to another crappy chapter of human history. For man had succeded destroying the fourth estate for the betterment of the cyber-defense industry.

Here is my boilerplate response on the security weakness of U.S. utilities in regards to cyber attacks: "Yes, there is a problem. It is not a crisis. To do any significant damage any such attack would most likely have to be associated with a physical attack." (The sky is not falling, Chicken Little, but I bet I could make a whole lot of money convincing you otherwise.)

Cyberwar. Cyberwar never changes, because it has never existed.

The Internet as a mass medium is still relatively young, so it's no surprise that its function in society and in our daily lives is still being defined. One important question concerns the nature of our actions online: to what extent are they public? Here's one rather extreme view, expressed by Jürgen Maurer, vice-president of Germany's Federal Criminal Police Office, as reported by Der Spiegel (original in German):

Anyone on the Internet has left the private sphere, and finds themselves in a kind of public sphere.

That's no mere detail, of course: actions that are perfectly acceptable in the private sphere may not be in public, and vice versa, so it's crucially important to know where you are at a given time. For example, there are many things you might get up to in the privacy of your own home that would not be allowed in public. Similarly, it's generally regarded as OK for the police to keep an eye on what happens in public places, but their interest in people's bedrooms most certainly wouldn't be.

Since Maurer seems to believe that anything you do online, however personal and intimate, takes place in "a kind of public sphere," perhaps he'd like to follow that through, and start posting all his Internet activity online for the public to enjoy. Or maybe his idea of the public sphere online really just means "a place where the police don't need to get a warrant to spy on people...."

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The good folks at Reason TV have put together a new video called How Patent Trolls Kill Innovation: It more or less rehashes the story that we've covered in the past concerning patent troll Uniloc suing the indie developer of X-Plane over a ridiculous patent (6,857,067) that never should have been granted in the first place, and is now being claimed to broadly apply to pretty much anyone who sells apps in mobile app stores. The video has a bunch of great quotes from Julie Samuels, the newly appointed "Mark Cuban Chair to Eliminate Stupid Patents", highlighting just how screwed up the system is.

"You can't separate the problem with the patent troll from the problem with software patents," says Samuels. "There are hundreds of thousands of software patents floating around that are really broad, that are really vague ... and a lot of them are bought up by patent trolls."

Nothing in the story or the video will really be all that new to regular Techdirt readers, but it's great to see more attention being given to the problems of patent trolls and how they harm innovation. It's also great to see it come from Reason.TV, a part of the libertarian Reason Foundation -- as there is still some dispute among the wider "libertarian" crowd as to whether or not the patent system is good or bad. It's felt like there's been a growing recognition that the answer is "bad," and hopefully videos like this represent a recognition that the scale is tipping.