A few months ago, we wrote about a presentation from the Bay Area Economic Council, in association with Engine (I'm on their steering committee, but had nothing to do with this), showing that high tech jobs were a high point in the economy. Unlike many other sectors, those jobs were growing -- and contrary to what many believed, they weren't just concentrated in one area, but were spread out across the US. Furthermore, their economic contribution tended to be significant. Basically: the tech industry is increasingly important to our economy, and policy makers should be careful not to muck that up. This week, the Bay Area Council Economic Institute, commissioned by Engine, put out the full report on this, entitled Technology Works: High Tech Employment and Wages in the US (pdf). Once again, it highlights the importance and success of the tech industry. A few high level points:

• Since the dot-com bust reached bottom in early 2004, employment growth in the high-tech sector has outpaced growth in the private sector as a whole by a ratio of three-to-one. High-tech sector employment has also been more resilient in the recent recession-and-recovery period and in the last year. The unemployment rate for the high-tech sector workforce has consistently been far below the rate for the nation as a whole, and recent wage growth has been stronger.
• Employment growth in STEM occupations has consistently been robust throughout the last decade, outpacing job gains across all occupations by a ratio of 27 to 1 between 2002 and 2011. When combined with very low unemployment and strong wage growth, this reflects the high demand for workers in these fields.
• Employment projections indicate that demand for high-tech workers will be stronger than for workers outside of high-tech at least through 2020. Employment in high-tech industries is projected to grow 16.2 percent between 2011 and 2020 and employment in STEM occupations is expected to increase by 13.9 percent. Employment growth for the nation as a whole is expected to be 13.3 percent during the same period.
• Workers in high-tech industries and STEM occupations earn a substantial wage premium of between 17 and 27 percent relative to workers in other fields, even after adjusting for factors outside of industry or occupation that affect wages (such as educational attainment, citizenship status, age, ethnicity and geography, among others).
• The growing income generated by the high-tech sector and the strong employment growth that supports it are important contributors to regional economic development. This is illustrated by the local multiplier, which estimates that the creation of one job in the high-tech sector of a region is associated with the creation of 4.3 additional jobs in the local goods and services economy of the same region in the long run. That is more than three times the local multiplier for manufacturing, which at 1.4, is still quite high.

These are all important points, but the biggest one may be that tech work encompasses so much these days. It's not just "Silicon Valley" at all, but all kinds of jobs for all kinds of companies. Tech isn't an industry. It's not just a job function. It's a part of nearly every aspect of our economy.. It makes other parts of the economy more efficient and increases opportunity in many different areas. And because of that, "tech" jobs are growing all over the place. When I see that (as the report notes) places like Boise Idaho, Augusta, Georgia and Peoria Illinois are seeing the greatest amount of high tech job growth, that's a really good sign. We run into problems when all you have is a "company town" where an entire industry is based out of one place. This isn't about "the tech industry" but the fact that every single industry is a tech industry, and tech jobs are everywhere -- and, given their economic impact, incredibly important.

Despite some earlier legal battles, it appears that the Washington DC council has made it official that Uber should be fully legal to operate in the city, providing easy rides for hire via your mobile phone. Uber, of course, has run into problems with local regulatory boards across the country (though it frequently, and mostly successfully, turns those conflicts into marketing opportunities). Still, it's nice to see DC figure out a way to make it clear that Uber is absolutely legal there. Apparently the company had to agree to one "concession": to make sure that it really is serving all parts of the city, they had to build into the app a notice to report any discrimination. Seems reasonable enough. While I actually think Uber execs kind of enjoy butting heads with local officials, and rallying the legions of Uber fans behind the cause, I think they'd also agree that, in the long run, it's better for everyone to just have the damned service (which is pretty cool, honestly) be considered legal.

You are what you eat, and your brain reflects what you've taught it. It shouldn't be too surprising that our brains change based on what we do with them. There's some interesting science behind why you never forget how to ride a bike, and here are a few more examples of lessons our brains seem to keep forever.

• Being bilingual was once considered to be detrimental to cognitive processes, but more studies are finding evidence that bilingualism can enhance certain mental skills. Bilingual people appear to be better than monolinguals at monitoring their environment more keenly, noticing changes that monolinguals miss out on. [url]
• Children who learn how to play a musical instrument have detectable differences how in their brain responds when listening to complex sounds (even years after they've stopped playing). Some researchers claim to be able to tell whether a person has ever played an instrument only by looking at his/her brain scans. [url]
• Karate experts can deliver blows with much greater force than might be expected by simply measuring their muscle strength, and measured brain structure differences seem to explain that years of training help the cerebellum to coordinate muscle movements and deliver more forceful punches. Now let's see some brain scans for gamers who are good at QWOP.... [url]

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

Cross-posted from Project DisCo.

As I have discussed before, patent trolls pose a unique threat to technology startup companies. The limited resources and small launch windows that constrain life as a startup company make them vulnerable to patent trolls. Trolls leverage the sheer cost of fighting a patent challenge — even if the odds of winning are high — against the precarious situation of most startups and seek settlements. Unlike established companies who can afford to take a long-term view and usually fight trolls at all costs to deter future troll lawsuits (aka 'we do not negotiate with terrorists"), small startups do not have this luxury. As Brad Burnham of the prominent VC firm Union Square Ventures has written, trolls seek to hit startup companies at the most vulnerable times, either right after they receive a major cash infusion — like Etsy and Hipmunk – or right after that startup announces that it is being acquired:

“By pouncing after the merger is announced, but before it closes, [patent trolls] hope to extort a quick cash settlement.”

There is a unique and discrete market failure at work here. ;Since the majority of patent trolls lose when the case goes to court, companies should — and the big companies usually do — fight the baseless charges. However, since startups are uniquely vulnerable — and bear the high costs of litigation even if they win — there is little incentive for them to fight these bogus suits and parasitic market actors (which, I may add, would have significant positive externalities as these trolls target many companies). As a result, they often end up settling. This is an unfortunate example of game theory where individual incentives don't align with the public good. Paulgb (who appears to be web developer Paul Butler) in a forum at Ycombinator summed up the situation nicely:

The patent trolls know that the rational (in the game-theory sense of the word) decision for the victim company is to settle, because the cost of taking it to court (in both legal fees and lost time) exceed the cost of the settlement.

It's like an asymmetric game of chicken. Both players know that the troll has the advantage of having less to lose in a "collision" (a lawsuit), so the troll can count on the victim to "swerve" (settle). If the victim was able to eliminate the cost of a collision, and the troll knew that the cost of a collision to the victim company was eliminated, it would make more sense for the troll to swerve (drop the claim).

Since the America Invents Act (the "AIA") recently passed Congress after an excruciating multiyear journey — and in the end failed to address most of the systemic problems that plague the current patent system — there is little short-term hope or Congressional appetite for another major patent reform fight. However, until the political capital refills, there are smaller, more discrete fixes that eliminate some of the worst abuses of the current patent system.

One of these, the Saving High-tech Innovators from Egregious Legal Disputes (or "SHIELD") Act proposed by Rep. DeFazio (D-OR) and Rep. Chaffetz (R-UT), would help solve the market failure described above by making it easier for startups (and all tech companies) to recoup the costs incurred over the course of a frivolous court battle. Changing the expected value of the final payout would incentivize more startups to fight trolls and bust their bogus patents. There is a "public good" component at work here, as fighting these frivolous suits would help break trolls and bust their bogus patents before they turn on others in the industry. (Lodsys is one particularly egregious example of this.) This may benefit bigger companies as well, as trolls often use settlements from nuisance suits against startups to fund bigger, more ambitious lawsuits, as Burnham notes:

Trolls go after the smaller companies first. They pick on startups because undercapitalized small companies cannot afford to be ideological. When faced with the prospect of extensive legal fees and a huge distraction, they do the pragmatic thing – they settle. The troll can accept less from a startup because the troll can later argue the startup has a small market share and a limited ability to pay. A smaller settlement does not preclude larger settlements with bigger players later...

The trolls then use the money extorted from young startups to fund the more expensive and ambitious cases against larger more established companies with deeper pockets. These folks have more to lose but they also have more resources to defend themselves. I don't often think about the plight of large companies but this attack has a direct impact on young companies.

Although the SHIELD Act is a no-brainer, some disingenuous criticism has arisen from those that profit from our out of control patent system. They claim that the Act conflicts with our international trade obligations, most notably Section 27.1 of Trade-Related Aspects of Intellectual Property Rights Agreement (TRIPS), which states:

[P]atents shall be available and patent rights enjoyable without discrimination as to the place of invention, the field of technology and whether products are imported or locally produced.

They argue that because the SHIELD Act targets the industry where the problem is most acute — high-tech/software — that it violates the discrimination prong of TRIPS.

This is a red herring. First of all, the WTO — which administers TRIPS as part of its charter – ruled that treating industries differently is not necessarily discrimination as long as there are “legitimate reasons” for doing so.* Given that patent trolls are unique to high-tech markets — so much so that the DOJ and FTC are investigating them in a hearing next Monday in that context — there are legitimate reasons for focusing on software patents, which present their own unique set of problems.

Second, even if we take "discrimination" to mean "differentiation" (which, once again, the WTO said explicitly should not be the interpretation), then we — along with the European Union, and most other signatories to TRIPS — are already in violation. (At least 11 TRIPS signatories don't allow for software patents at all.)

In a great paper by Professor Colleen Chien (which is an SSRN placeholder for a larger paper on the subject), she shows that we already treat different inventions differently, including exempting surgeons from being found guilty of infringing patents on surgical methods, the drug patent Bolar exemption [35 USC § 271(e)], the prohibition of patents on tax strategies, and the singling out of business method patents for special post-grant review as part of the recently passed AIA.

Professor Chien's list is not even exhaustive, as Jamie Love has pointed out other differential treatment in the past. In fact, foregoing explicit differential treatment in a statute is not full protection from violating TRIPS as the WTO notes:

Discrimination may arise from explicitly different treatment, sometimes called "de jure discrimination", but it may also arise from ostensibly identical treatment which, due to differences in circumstances, produces differentially disadvantageous effects, sometimes called "de facto discrimination".

So, one could even could even argue that because there is already pretty clear "de facto discrimination" against the high-tech industry in how the current patent statutes have manifest themselves through jurisprudence and differential enforcement, that this bill would actually make us more TRIPS compliant.

As Professor Chien rightly points out:

There is no "legitimate interest" in imposing millions of dollars in defense costs based on a non-meritorious suit, or in racking up legal fees that far exceed the economic value of the patent, when a reasonable offer of settlement has been made.

Ultimately, the TRIPS point is a very peculiar position to take: that international law mandates a one-size-fits-all system, and therefore Congress is forced to permanently disadvantage one of our chief export industries. This cramped reading would seem to be more of an indictment of the TRIPS Agreement than the SHIELD Act — which furnishes one more reason why it is an unreasonable interpretation.

Failing to pass this little bill that will do a lot of good — or even bring it to the floor for debate — under the flimsy contention that this would violate a flexible TRIPS commitment would be a travesty. At the very least, Congress should make SHIELD Act opponents argue on the merits of this bill rather than mischaracterizing language in international trade commitments and characterizing the bill as non-starter. As Bessen and Meurer have shown, the stakes of the patent troll problem are too high to let this bill die on fabricated deference to an international treaty.
_____________________________________

Note:

* There has only been one WTO case interpreting Article 27 of TRIPS, the Canada-Pharmaceutical (WT/DS114/R). Although the decisions of the Dispute Settlement Body (DSB) of the WTO are non-binding, they are treated as a persuasive authority and serve as our best current guide to the thinking of the WTO on the interpretation of "differentiation" versus "discrimination" as contemplated by Article 27. In fact, the Report of the DSB notes, "Article 27 does not prohibit bona fide exceptions to deal with problems that may exist only in certain product areas."

Last week, we wrote about how student Richard O'Dwyer cut a deal with the feds to end the extradition attempt and criminal charges against him for running TVShack.net, a links site similar to other UK sites that had already been deemed legal. We noted that as a part of this "deferred prosecution," O'Dwyer would need to come to the US and pay a "small sum." He's now done so, and the court has ordered that he pay £20,000. That's still a decent chunk of change, but not a crippling amount like what we've seen in cases like the Jammie Thomas or Joel Tenenbaum cases (which were very different types of cases, but arguably over much lesser charges -- civil vs. criminal for one thing...). It still seems ridiculous that he needed to pay anything at all, but getting the case over, for an amount that he can "afford," while avoiding jail seems like a pretty big victory for him -- especially given the language that the feds (and Hollywood) have used to describe O'Dwyer. In the meantime, guess how much of the £20,000 will be going to the artists O'Dwyer supposedly was harming?

So we've had a couple stories recently about the immense failures of taxpayers being forced to shovel money to Hollywood studios via various local "incentive" programs to try to convince the studios to film their movies in various locations. The studios, with the help of the MPAA, of course, continually argue that these programs create jobs, jobs, jobs. However, as the NY Times investigation pointed out, those "jobs" really don't seem to be appearing. Instead, film crews ship in a crew from LA or NY and hire just a couple of locals for low-level jobs... which last a few months and that's it. The impact on the local economy appears to be minimal. And, basically, the studios just keep asking for more money playing different locations off of one another.

Adding more data to this mess (which has grown massively in just the last decade), Adam Thierer points to a survey of studies looking at how successful those programs have been in various states... and found that nearly all of them have flopped. The various studies show that the return for such subsidies tends to be less than par (i.e., a loss) in nearly every state studied. There were only two exceptions: New York and New Mexico -- and both of those studies were done at the behest of the local film offices. With New Mexico, in particular, a separate, independent study found the exact opposite to be true, and found that the subsidy resulted in significant costs to the economy.

“Based on fanciful estimates of economic activity and tax revenue, states are investing in movie production projects with small returns and taking unnecessary risks with taxpayer dollars,” noted a 2010 Tax Foundation study. “In return, they attract mostly temporary jobs that are often transplanted from other states.” Studies of specific state incentive programs confirm this finding, almost universally finding miniscule revenue gains for every dollar of film subsidies offered. The adjoining table, derived from a meta-survey of film incentives studies by the Center on Budget & Policy Priorities, illustrates how much revenue was lost per net job created by film tax credits as well as how little revenue each program generated for every dollar of state revenues awarded.

State	Net Revenue Foregone per Net Job Created by Film Tax Credit	Revenue Gained from Feedback Effects per  Dollar of Film Subsidy Claimed($)
Massachusetts	$88,000	$0.16
Connecticut	$33,400	$0.07
Louisiana	$16,100	$0.13
Louisiana	$14,100	$0.18
Michigan	$44,561	$0.11
New Mexico	$13,400	$0.14
New Mexico	($400)	$1.50
Pennsylvania	$13,000	$0.24
New York	($2,000)	$1.90
Arizona	$23,676	$0.28

The only two studies that have revealed positive results for such film incentive programs were both conducted by Ernst and Young on behalf of the New York and New Mexico film offices. All others have shown consistent negative returns.

In case it's not clear, that last column shows the return per dollar spent on subsidies. If it's less than a dollar, it means that taxpayer money is being lost and it's not benefiting the local economy. If you're wondering why there's such a big difference in those two New Mexico studies, the full report goes into detail of just how weak the methodology was for the NM study claiming economic benefit. It involved massively overestimating the tourism benefits, contrary to actual data, and then double counting much of the supposed "benefit." For example, the study claims that a significant "benefit" is the salaries provided to producers and directors... but those are rarely local residents:

As discussed above, such highly skilled talent tends to be imported from other states, especially California and New York. Consequently, these individuals likely spent a much smaller percentage of their compensation in New Mexico than resident employees did. While non-resident employees do spend money on food, housing, meals, and other items while working in New Mexico, those expenses are covered by allowances, which did qualify for the film subsidy and, therefore, whose economic impact had already been taken into account. E&Y’s apparent assumption that highly paid non-resident employees spent most of their salaries in New Mexico, on top of their living allowances, amounts to double counting.

Basically, nearly all of the evidence shows that these programs harm the economy, rather than help it. But they do seem to help studio bosses.

So why are states (and countries) so eager to hand over taxpayer subsidies to Hollywood?

As the ITU's World Conference on Telecommunications (WCIT) continues in Dubai, a rather important "debate" has slowed any progress to a crawl. The key thing that is being worked on, of course, is new International Telecommunications Regulations (ITRs). Most of the debates we've talked about to date have been about what kind of mandate the ITU might have on things outside its direct areas of interest, as indications were that they wanted to expand the ITRs to cover things like the internet, online security and more. But a key fight shows how it goes beyond even just that. The big debate at WCIT right now is over a simple definition that could have massive implications: will the ITRs apply to "recognized operating agencies" or just "operating agencies." Seems simple, right? Not really.

Currently, the ITRs apply to "recognized operating agencies" which tend to be the huge telcos, often either state owned, or formerly state owned (and often still closely aligned with the government). Basically, the big national telcos that everyone is aware of. Those are considered "recognized operating agencies." But, if they take out the word "recognized" then it would cover: "any individual, company, corporation or governmental agency which operates a telecommunication installation."

Have you set up a WiFi network in your home? Well, then, you just might be included in that definition. See how that one little word could make a massive difference in the impact of the new ITRs? Basically, it's a question of whether or not the new rules will apply to the giant national telco companies... or everyone. Countries are taking sides and there's a bit of a stalemate, as noted by .nxt:

Lined up against this measure [of expanding the coverage to everyone] are Canada, CEPT, Citel, Japan, Korea, Mexico, Poland and the United States. For it are the Arab States, African States, Brazil, India, Iran, Philippines and RCC.

The conference chair is now pushing for a sort of "compromise" that certainly sounds a lot like siding with those in favor of the massively expanded definition. He's in favor of using "operating agencies" rather than "recognized operating agencies" but then trying to allow for "exclusions" to the definition by pointing to Article 38 of the ITU Constitution. Of course, that doesn't clarify anything. It just makes things more confusing.

Even if Article 38 could be used to "exclude" certain entities -- say, individuals and small businesses -- there would still be a massive problem. Beyond the fact that these rules would apply to many more companies who have no idea what's going on, it's a fundamental shift in thinking about the ITRs. It goes from rules that are limited to just a few giant telcos to ones that are de facto inclusive of just about everyone... leaving only "exceptions." In some ways, it reminds me of the switch in copyright from an opt-in system, to one in which everything was automatically covered with just a few "exceptions." That sort of thing has been a disaster on the copyright front, and would be an equal, if not bigger, disaster for telecom rules.

As reported here back in August, the Australian Law Reform Commission (ALRC) is taking a long, hard look at current copyright laws and has been gathering submissions from a variety of businesses and rights holders in response to 55 copyright-related questions. The submissions have been posted at the ALRC website for public view.

Unsurprisingly, many representatives of legacy industries have responded with suggestions that the status quo be protected and any major or minor modifications of current law in favor of "fair dealing" or "exceptions" be discarded immediately. If any changes have to be made, these industries would prefer that they skew entirely in their direction. For some reason, the MPAA has chimed in, despite the fact that this entity's views on copyright are widely known, thanks to the fact that it never, ever shuts up about it. 

The MPAA's response (RTF) opens up with stating it support of the Australian Film Bodies' views, before gently (but firmly) reminding the ALRC that Australia signed some very skewed and restrictive trade agreements with the US, lest there be any questions about which country's rules it should be following.

While both the Terms of Reference and the “Guiding Principles” make reference to Australia’s copyright law obligations with respect to copyright, it is important to recognize that these are not simply random or uncoordinated requirements with which Australia has agreed to comply. Australia is an active participant in an evolving international dialogue that articulates comprehensive norms and minimum standards for participation in an dynamic global marketplace in works of authorship and other copyright materials... In addition, the copyright and enforcement provisions of the Australia-United States Free Trade Agreement (AUSFTA) are of particular significance, not only because AUSFTA was, at the time of its adoption, a state-of-the-art pact between Australia and one of its most important trading partners, but also because it has contributed significantly to the template for the Trans-Pacific Partnership (TPP) Agreement negotiations, in which Australia is now actively engaged along with ten other trading partners around the Pacific Rim.

The MPAA goes on to point out that the "three-step test" for limitations and exceptions to existing copyright law means that no one's going to be creating blanket exemptions for "private use" or "backup copies" which, according to the MPAA "falls well short of compliance with global norms." The MPAA also warns the ALRC to not get any funny ideas about adopting American-style "fair use," something it enjoys using ("MPA members, who, after all, are users as well as creators of copyrighted works, depend upon it in their business and creative operations...") much more than it enjoys being forced to respect it.

The enactment as part of Australian law of a new system based on the fair use doctrine would not bring with it this century and a half of judicial precedent that allows counsel, and the companies and individuals they advise, to rely upon the doctrine. Indeed, at its introduction, the new system would be unsupported by any binding precedent at all.

Hmm. I would imagine our fair use doctrine began without any binding precedent as well, because when things start, it's usually on the ground floor. Then there's this bit of hypocrisy, considering the MPAA spent a couple of paragraphs reminding the ALRC that it was subject to trade agreements composed by the USTR, an American entity.

Since it is inconceivable that, as part of any new system of copyright exceptions in Australia, its courts would be directed to slavishly follow U.S. precedent, it is inescapable that there would be considerable uncertainty about the resolution of claims based on the new system in Australian courts. This is likely to create a deleterious level of unpredictability for copyright owners, copyright users, and the public. Whatever social benefits might fairly be attributed to the fair use doctrine under U.S. law would be unlikely to survive the passage across the Pacific to Australia. 

"Inconceivable." The MPAA keeps using that word. I do not think it means what it thinks it means. The MPAA has clearly pushed for Australia, along with many other countries, to follow US precedent when it comes to copyright length, restrictions and enforcement. Those negative aspects seem to "survive the passage" without any deleterious effects. But somehow, "fair use" just can't make the trip unscathed.

Judging by the followup paragraph, it looks like the only reason fair use couldn't make its way across the ocean is because the MPAA would have its boat scuttled and its crew tossed overboard to be eaten by shrieking eels. Here's the MPAA's real fear: someone might get something for free!

An additional uncertainty involves the impact of a change in Australian law on existing licensing agreements. Since the likely purpose, and even more likely a result, of borrowing from fair use to amend Australian law would be to expand, at least to some degree, the scope and applicability of exceptions to copyright protection, it is almost inevitable that some licensees would be compelled to re-examine whether they any longer needed to obtain a license for particular uses, or whether they could instead rely upon the expanded exception resulting from the new fair use provision. 

The MPAA states that any new exemptions would "destabilize settled markets for the licensing of copyrighted material." Good old MPAA. It loves "settled markets." The IP world has been changing very quickly over the last 15 years, but the MPAA's ongoing response is determined stasis, making it look for all the world like a plate spinner who's down to his last plate, but is spinning the HELL out of it, all the while yelling "NOBODY TOUCH ANYTHING!" 

If there's one thing authority figures hate, it's anything that goes counter to the narrative and/or puts their pet projects in an unfavorable light. A New York City artist is learning this the hard way after he and some friends took aim at the police department's drone program, plastering the city with satirical ads touting the "safety" provided by the new eyes in the sky.

On September 16, 29-year-old “Essam” and a group of friends blanketed lower Manhattan with posters designed to look like official New York Police Department signage. “Drones: Protection When You Least Expect It,” read the slogan below simple ideograms of families running from unmanned aerial vehicles. Essam and his team disguised themselves as employees of the outdoor advertising firm Van Wagner, which manages the advertising space on bus stations and kiosks throughout the city. All told, they swapped out about 100 ads.

“We see this trend throughout history of military technology always coming to the civilian world,” the Army veteran told Animal New York. He says his goal is for the conversation about domestic police use of drones “to reach a mainstream level where we are talking about this at the dinner table.”

Needless to say, the PD was highly unamused. Its "weeks-long manhunt" for the artist finally culminated in an arrest... and a handful of trumped up charges.

Essam Attia, 29, was hit with 56 counts of criminal possession of a forged instrument, grand larceny possession of stolen property and weapons possession after allegedly having an unloaded .22-caliber revolver under his bed at his Manhattan apartment when he was arrested early Wednesday.

He posted bail, which was set at $10,000 bond or $2,500 cash, and is due back in Manhattan Criminal Court on Dec. 3.

Attia hoped to generate some awareness and kickstart discussion about the increasing prevalence of law enforcement drone usage. Unfortunately, it looks as though the NYPD is only interested in providing its narrative, one that is free from criticism or transparency. It also seems to be particularly bad at actual "police work." Essam signed many of the posters with his artist signature ("ESSAM") and participated in a barely-anonymous interview and yet it took a "weeks-long manhunt" to track him dow.

Calling his lookalike posters "forged" is stretching the truth to fit a hefty criminal charge, one that appears to have been levied solely out of spite. Perhaps if Essam had just placed his posters over the NYPD's, he wouldn't also be facing the grand larceny charge, but that's just quibbling over theoretical outcomes. The larger issue is the First Amendment. No one ever guaranteed free speech without consequences, but it does seem like this pursuit of an artist who honestly did nothing more than make more New Yorkers more aware of their PD's tactics has very little to do with bringing a criminal to justice, and everything to do with harshly shutting down criticism in order to deter further critiques of the NYPD. 

We'd heard this last week, but it's now been confirmed that, due to significant lobbying pressure by the entertainment industry and (even more so) the US Chamber of Commerce, Derek Khanna, the Republican Study Committee staffer who penned the first thoughtful policy brief on copyright reform to come out of US government offices in a long time, has been let go from his job. There was expected to be some staff turnover in January, as the new RSC leadership took place, but several Republican members of Congress explicitly asked incoming RSC boss Steve Scalise not to retain Khanna in response to the copyright brief.

If this is how the "new" GOP expects to interest young people, it seems to be going about it exactly backwards. Khanna wrote a thought-provoking paper that expressed views that many people believe to be true -- in a voice that is rarely heard in Congress. And, for that, he got fired. While the RSC and various copyright maximalists have been insisting that the paper was not properly vetted, we've had it confirmed that this is simply not true. The paper went through the standard procedure of any RSC brief, and was properly reviewed and vetted. It's just that once lobbyists hit the phones to various members of Congress (friends of Hollywood, mainly), pressure was put on the RSC to retract the document, and to jettison Khanna.

This is not going to interest very many young people, when a thoughtful critique of policy that finally raises issues that concern many leads to the staffer in question getting the axe. Khanna, for his part, has been valiantly continuing the conversation via his Twitter feed, but various lobbyists are now ensuring that elected officials can safely stick their fingers back in their ears.

The USTR has released the various comments sent in for its annual "notorious markets" report. This is related to its annual Special 301 report, and it's where the USTR basically takes the list of sites and countries that the entertainment industry (and the pharmaceutical industry) don't like... and declares them "notorious" for not doing enough to please the execs in those industries in cracking down on infringement. TorrentFreak points us to the latest filing from the MPAA, which is chock full of... not a single surprise. Basically it just names all the websites that it doesn't like because they challenge its business model. Same old story. But where it gets a little interesting is where the MPAA gleefully talks up how totally awesome it was when the feds shut down Megaupload, and implies that life would be that much grander if the feds did that kind of thing more often:

This year's seizures of Megaupload.com and Megavideo.com by the Department of Justice illustrate the extent and impact that hosting hubs have on the online landscape. Prior to the seizures, Megavideo.com (Alexa 177) and Megaupload.com (Alexa 72) were estimated to receive 3,447,7741 and 2,640,8452 unique visitors each month, respectively. Megaupload.com alone was estimated to have consumed 11.4% of the Internet bandwidth in Brazil. When these two websites were taken down, many linking websites, custom search engines, and custom streaming scripts that relied on the sites for content became inoperable. Some websites were abandoned by their operators, others lost traffic, while still others shifted their business model. For example, Wupload.com (Alexa 918), which was featured in MPAA's filing last year, disabled file sharing. Affiliate programs that paid uploaders for content were also discontinued or removed by many hubs. Further, infringing content was purged by operators in bulk, which was followed by uploaders who deleted their own files to prevent the hubs from profiting on the uploads without paying incentives. In sum, the impact of these seizures was massive and the hub landscape is still recovering.

I have to admit that I'm not sure I understand the comma notation in those unique visitor numbers (don't you normally put a comma every 3 digits rather than 4? Is that a phone number? Are they talking about 3.4 million or 34 million?).

But, either way, the whole bit of glee over Megaupload is fairly unseemly given a few key points. First off, the absolute disaster of the case against Megaupload so far. Eventually, they may get their act together, but to date, it's involved missing or destroyed evidence, questions about the warrant, illegal spying, more requests to destroy evidence and general attempts to demonize the people involved. While Megaupload may eventually be found guilty, that's far from certain at this point. All of these errors are certainly raising significant doubts about the DOJ's ability to understand what's actually happening.

And it's that last fact which highlights why the takedown process here is totally broken. Even if Megaupload is eventually cleared, the company will have lost more than a year (and likely more) to fight the lawsuit, and the company, as it is, is basically dead. It's still never been adequately explained why the MPAA can't do what the law requires, and take the targets to court, seeking an injunction. These aren't drug lords they're dealing with. They can be tracked down and found (without resorting to illegal spying). That's not to say the sites should be legal, necessarily. That's fact-specific. But, the idea that the US government, at the urging of Hollywood, should just take down a business, without letting the site owner even express their side, is so extreme as to be laughable. You would think that, given how badly this whole thing may backfire in its face, that MPAA would have started backing away from the whole "Megaupload is a perfect example" stump speech by now. But it seems to want to play out that lie for a while. To then play that up as a good example really suggests that the MPAA is in denial and still thinks that the scary caricature of Kim Dotcom that it has built up in the minds of Hollywood execs, is still a legitimate thing.

Ah, it really was just recently that we were talking about the seminal Supreme Court case, Gottschalk v. Benson, in which the Justices made it clear that you cannot just patent an algorithm that converts numbers:

It is conceded that one may not patent an idea. But in practical effect that would be the result if the formula for converting BCD numerals to pure binary numerals were patented in this case. The mathematical formula involved here has no substantial practical application except in connection with a digital computer, which means that if the judgment below is affirmed, the patent would wholly pre-empt the mathematical formula and in practical effect would be a patent on the algorithm itself.

I'm reminded of that, after seeing Dealbreaker's headline about how world famous mutual fund investor, Bill Gross, of PIMCO, has patented the methodology for his bond fund -- or, as Dealbreaker correctly points out, he "patented a way to count." Indeed, the patent in question, US Patent 8,306,892 is somewhat hideous, describing not much more than the concept of an algorithm that weights regions based on GDP. The key claim:

A computer-implemented method of managing a fixed income financial index, the method comprising: storing in a computer memory a regional weight for each of a plurality of regions of the world, each of the regional weights based at least in part on a gross domestic product for the region; storing in a computer memory, for each of the plurality of regions, a category weight for each of a plurality of categories of fixed income financial instruments issued from the region; storing in a computer memory asset data for a universe of fixed income instruments representing each of the plurality of categories of instruments in each of the plurality of regions, the fixed income instruments comprising one or more of the following: (i) fixed income securities, (ii) fixed income derivatives, or (iii) fixed income forwards; programmatically allocating, via execution of instructions by one or more computer processors, one or more constituent instruments from the universe of fixed income instruments to each of the plurality of categories in each of the plurality of regions; programmatically determining a constituent weight for each of the constituents allocated to each of the plurality of categories in each of the plurality of regions; programmatically calculating a subindex for each of the plurality of categories in each of the plurality of regions, each subindex based at least in part on the allocated constituents and the respective constituent weights, wherein the constituent weights for a first subindex comprise market capitalization weights and the constituent weights for a second subindex comprise gross-domestic product weights; and programmatically transforming the subindices, the category weights, and the regional weights into a value for the financial index.

It doesn't take a patent specialist to figure out that this is basically patenting a spreadsheet for weighting countries on a few different factors. It seems to be the exact kind of thing that was disallowed by the Supreme Court under Gottschalk v. Benson. And yet, the USPTO waved it right on through. Kinda makes you wonder what the hell patent examiner Samica L. Norman was thinking in approving such a ridiculous patent.

Every few months, it seems, we hear about yet another attempt in Europe to implement the absolutely ridiculous idea of the "right to be forgotten." We wrote about it in 2010, 2011 and again earlier this year. It's a silly idea for a variety of reasons. The general idea is that someone, say, who has committed a crime, but is then rehabilitated / served his time / whatever, deserves a "fresh start" and the stories of the crime and punishment should be erased from publications. Europeans who support this wacky idea argue that it's a form of a privacy right. But that's ridiculous. It has nothing to do with "privacy" at all, as the fact that someone committed and convicted of a crime is a public fact, not private info. Telling people (and publishers) that they can't talk about factual information, or even leave available factual stories written at the time just seems completely offensive to anyone who believes in the basic idea of free speech.

And, of course, there's an even bigger problem. The whole idea isn't just silly and complex, but it's totally impossible. And it's not just me saying that. As Stewart Baker points out, the European Network and Information Security Agency (ENISA) has put out a report making the basic impossibility of a "right to be forgotten" quite clear:

Consider Alice viewing Bob’s personal information on a computer screen, while she is allowed to do so (i.e., before Bob has invoked his right to be forgotten). Alice can take a picture of the screen using a camera, take notes or memorize the information. It is technically impossible to prevent Alice from doing so, or even to recognize that she has obtained a copy of Bob’s personal data.

They seem to make that clear just by the image they chose to put on the cover of the report: That said... given the very admission that this is impossible, you'd think the recommendation would be (perhaps) to find something a little more productive to work on. But, no, that would be wishful thinking. Instead, despite the admission that the whole endeavor is doomed to be a failure for the simple fact that it's impossible, they still discuss ways that it might be implemented. And their ideas? Well, to double down on the impossible with crazy regulations. Take for example, the following two "recommendations" in the final section, one right after the other:

• For any reasonable interpretation of the right to be forgotten, a purely technical and comprehensive solution to enforce the right in the open Internet is generally impossible.
• A possible pragmatic approach to assist with the enforcement of the right to be forgotten is to require search engine operators and sharing services within the EU to filter references to forgotten information stored inside and outside the EU region.

Got that? So it's impossible, but let's regulate the hell out of search engines and tell them what they can't link to. Perhaps if they'd stopped after the point at which they determined it was "impossible" we'd all have been better off.

The latest in the saga of New Zealand's Government Communications Security Bureau (GCSB) -- their version of the NSA -- illegally spying on Kim Dotcom, is that he's been cleared to file a lawsuit against the GCSB for its activities and the GCSB will be told to reveal some of the details of its secret electronic spying setup.

The order for the GCSB to reveal top secret details came as the High Court at Auckland ruled the spy agency would now sit alongside the police in a case probing the unlawful search warrant used in the raid on Dotcom's north Auckland mansion.

Chief high court judge Helen Winkelmann said the GCSB would have to "confirm all entities" to which it gave information sourced through its illegal interception of Dotcom's communications.

She said her order included "members of Echelon/Five Eyes, including any United States authority". The Echelon network is an international intelligence network to which New Zealand and the United States are members, along with Australia, Canada and the United Kingdom.

You have to imagine that New Zealand officials are seriously regretting falling for the DOJ's version of the Megaupload story without bothering to actually check the details, huh?

It seems like the whole world is slowly coming to grips that our printing-press-era rules may not be the best way to stimulate creation and regulate information flows in hugely complex digital networks. The EU is now officially taking the lead in the worldwide discussions on copyright reform. This move may give much needed support to governments that have tried to touch on the topic, but for *some reason* withdrew or ignored good initiatives and advice.

Commissioner Barnier's recent speech about "Making European copyright fit for purpose in the age of internet" was a sign of hope, but closer inspection revealed that he was planning no more than some relatively predictable updates of the current rules. Although the gesture was nice, it was more likely a reframing of his untenable previous maximalist position and lacked any fundamental meaning.

It appears now that two colleagues of his, Neelie Kroes (Digital Agenda) and Androulla Vassiliou (Education and Culture), have expertly called Barnier's bluff and have taken the lead for full and much needed copyright reform. All three will sit on the board of a yearlong "structured stakeholder process", which will commence at the start of 2013. This exercise will assess whether "the market" is able to address the current deficiencies of copyright in the following six topics: "cross-border portability of content, user-generated content, data- and text-mining, private copy levies, access to audiovisual works and cultural heritage."

In 2014 the three Commissioners will sit down again together, analyze the findings and decide whether concrete policy action is needed. Fortunately, we can already note that, indeed, substantial legislative reform will be needed to address the four areas the Commission is focusing on, namely:

1) Mitigating the effects of territoriality in the Internal Market;
2) Agreeing appropriate levels of harmonization, limitations and exceptions to copyright in the digital age;
3) How best to reduce the fragmentation of the EU copyright market;
4) How to improve the legitimacy of enforcement in the context of wider copyright reform.

Note how the first three areas are surprisingly similar, if not the same thing. The European copyright structure is based on territoriality, so addressing these three points requires extensive reform from many angles and on many levels.

The fourth area of concern (legitimizing enforcement) is the Commission admitting that ACTA was a bad idea. The Commission, just like Congress in the US after SOPA/PIPA, both realize they need to tread very carefully with any proposal that has an effect on fundamental rights on the internet, or internet freedom,as it we now call it. This is where the civil society and the actors who joined forces to stop ACTA, SOPA and PIPA can now step up and present a positive and realistic agenda for reform. Let's not have the "copyright reform" movement be hijacked by special narrow interests who think they're getting clever now by reframing the debate.

While the open democratic discussion on copyright reform will not commence today, hopefully this is a move in the right direction, which should open a window of opportunity for meaningful reform. Knowing the European Commission and their talent for delay-tactics, especially on the copyright dossier, it's not likely we'll have any real copyright reform any time soon. However, we do now have a firm commitment from a major international government that the copyright system is in dire need of a very close inspection.

Hopefully the British will now feel supported in implementing the recommendations of the Hargreaves report. Perhaps the Dutch will also feel justified to proceed with the idea to make their copyright system more flexible. Overseas governments may also feel reinforced to open the discussions on their copyright systems and join the EU in finding the new way forward. But will the EU's move encourage the GOP to republish their recent insightful report on copyright reform?

Whatever the knock-on effects may be, there's much more work to be done than suggested in this initiative to analyze the workings of the copyright system properly and to come up with a model for meaningful reform. However, this initiative deserves close attention by all interested groups to help steer it in the right way.