It's been nearly two years since Google revealed that it had been collecting (but not using) some data from unencrypted WiFi networks as it drove around with Google's StreetView vehicles. While the data collection was associated with its efforts to use WiFi networks to help determine location info, it was stupid and looked bad. However, as we've explained repeatedly, the real issue there was simply people not protecting themselves by using encryption on WiFi. The simple fact here is that anyone on those networks could collect the same info easily. In recent weeks, the news came out that not only did the FCC clear Google of breaking the law with the activity, but so did the DOJ. Add that to the FTC investigation that found nothing wrong with the activity, and that's now three federal agencies that have said collecting such data didn't break any laws. The FCC did fine Google $25,000 for not being particularly cooperative -- which does reflect poorly on Google. But the simple fact of the matter is that what Google did in collecting this data isn't illegal. If you don't just kneejerk into "Google's evil" mode and want to understand why, Mike Elgan recently did a nice explainer.

That said, over the weekend, Google released the full FCC report redacting just names -- and even the name of the key engineer has since been revealed. The FCC had released a report that redacted a lot more info. The report reveals a lot more of the background here, and it's giving new ammo to critics, who are insisting that it shows a much more evil situation than had come out before. Specifically, it shows that Marius Milner -- working on Google's famed "20% time" -- came up with the code, and shared the details with some others, including one who debugged the code, and a supervisor. Milner, among other things, helped create NetStumbler, a tool that plenty of folks have used to monitor WiFi networks.

Some are trying to claim that this shows the effort was planned and not an "accident." Though, in actuality, the details still suggest nothing nefarious at all. It was still just this engineer coding it up, rather than some big plan. And yes, he shared the fact with a few others, but none of them seem to have paid much attention or done anything. In fact, while it was suggested to some that such data might be useful, that idea was dropped when people told the engineer that it wouldn't. There still doesn't appear to be a single shred of evidence that Google ever touched this data or did anything with it. Furthermore, the whole reason that three federal agencies all closed their investigation without charging Google with anything is because -- as many people pointed out from the beginning -- nothing illegal was done. Broadcasting your internet connection over an open WiFi network means that anyone can collect that data. That's not illegal. It may be silly for individuals to do that, but the responsibility is on them.

Also, pretty much every mainstream press report on this whole thing totally ignores that Google could not get access to any encrypted data -- meaning that most email, financial transactions, etc were always protected anyway. Instead, lots of reports talk about "emails and passwords," but that's only true if people used insecure sites in the first place -- and, again, they would be just as vulnerable to anyone who wanted to capture that content.

In the end, it's no surprise that Google haters will try to make more of this than is really there -- they have to grasp at whatever straws they can find. However, about the only thing this really seems to show is that Google had ridiculously poor process and controls concerning putting code into live projects. That allowed this code to get in there, without anyone really thinking through the consequences. Google has more or less admitted that these weak controls were a problem in the past and things are better these days. Of course, you can also understand why Google would have loose controls in the first place, seeking to encourage people to be creative (the reason for the 20% time concept in the first place). The problem, of course, is that if you have someone with nefarious intent -- or just tremendous naivete -- bad stuff can occur. In this case, it seems being naive was the key issue, rather than anything nefarious, and with three federal agencies all coming to the same conclusion that no laws were broken, it's pretty bizarre to see people still freaking out about this. It's fine not to trust Google. But that distrust shouldn't lead to simply making up crimes that don't exist.

Having failed to pass SOPA, Congress is apparently looking for other ways to keep the big copyright players happy. The latest is a letter sent by 16 senators to the FTC urging the commission to "protect American manufacturers" by cracking down on the fact that foreign companies often use unauthorized software:

"This unfairness harms the affected companies and their employees, as well as consumers and the broader economy," the senators wrote. "It also stifles innovation by forcing law-abiding American businesses — large and small — to compete against those businesses that reduce their operating costs through the use of pirated IT."

Except that much of that is misleading. First of all, it's unclear that the companies in question would have bought the software otherwise, so arguing that it impacts the software companies isn't necessarily true. It is true that US companies have to compete against those other companies, but is the cost of the software they're using really the difference maker here? Besides, for all types of software there is growing competition from open source alternatives. If US companies want to compete, why not adopt more open source alternatives?

Also, what exactly do these Senators think the FTC can do here? The FTC has no jurisdiction over foreign companies and how they operate at home. Finally, even if the FTC could magically stop these companies from using unauthorized software, the end result is likely that those companies would simply shift to alternatives, such as open source software themselves.

There's something a little... disturbing about how gleefully Microsoft seems to want to sic antitrust regulators on Google. Given that the company went through its own long antitrust battle, you'd think that it would know better than to continually invoke the government's antitrust legal beagles against others. Instead, it seems to have taken the position that if it had to go through the antitrust rollers for so long, why shouldn't other successful companies. We've noted in the past Microsoft's fingerprints showing up on bizarre and silly antitrust claims against Google -- which have so far gone nowhere -- but Microsoft seems really intent on saddling Google with a long and costly antitrust battle. I guess Microsoft thinks it's easier to fight Google that way than, you know, actually innovating and competing in the marketplace. It's pretty sad just how anti-innovation these efforts are.

Either way, Microsoft appears to be stepping up its "saddle Google with antitrust charges" battle by hiring Randall Long from the FTC. Long was the key "anti-Google" lawyer within the FTC, who led multiple antitrust investigations into Google, and recommended that the FTC block Google's acquisition of AdMob (something he was outvoted on). Microsoft doesn't even seem to want to hide the fact that his role will be to lobby politicians in DC to hit Google with antitrust charges. The WSJ's report on the hiring is pretty explicit:

As part of his new job, Mr. Long will likely continue those efforts before the FTC and other agencies, a person familiar with the matter said.

Of course, if Long actually follows the rules, he shouldn't be allowed to do anything concerning any FTC investigations into Google for quite some time. The ethics rules are pretty clear -- even barring "behind-the-scenes" help on such investigations:

Except as provided in this section, or otherwise specifically authorized by the Commission, no former member or employee (“former employee” or “employee”) of the Commission may communicate to or appear before the Commission, as attorney or counsel, or otherwise assist or advise behind-the-scenes, regarding a formal or informal proceeding or investigation...

That certainly suggests that Long cannot and should not "continue those efforts before the FTC" for some time. Either way, it's yet another example of the questionable revolving door between government and the private sector, where ex-government officials end up in roles that have a very close connection to their former government role (or vice versa). Even assuming that Long follows all the rules, as I'm sure he intends to do, this kind of thing just looks really bad.

We've already discussed EPIC's silly attempt to legally force the FTC to punish Google for its new privacy policy, but it seems like it didn't need to bother. There is a fair bit of interest around the globe in smacking down Google for the new policy. Even the FTC (which fought EPIC's demands) has said that Google's new setup offers a "brutal" choice to users, in that they agree to the site-wide policy or cut off their Google accounts. But the biggest threat appears to be coming from the EU, where Justice Commissioner Vivane Redding has flat out stated that the new policies violate EU rules and regulations. The Canadians actually say the policy is a step in the right direction, but that the company hasn't been clear enough with users. Google, obviously, disagrees with these complaints, but there's no way this doesn't somehow end up in a legal proceeding on both sides of the Atlantic.

For what it's worth, I tend to fall in the middle of these, leaning towards the same view as what the Canadian privacy commissioner said. There is actually some benefit for there being a single privacy policy across all sites, but giving users just over a month to process all of this, what it means, and how they want to deal with it does seem a bit abrupt. Also, as much as Google tried, it really failed in showing why this might benefit users, and may have crossed that "uncanny valley" line of suggesting that this would be used in somewhat creepy ways. Furthermore, it does feel like the new setup is a bit extreme in terms of the choices that people have. It would seem that a much more flexible policy would make a lot more sense.

There are ways to avoid having Google collect too much info on you, but they are a bit clunky, even if Google insists otherwise. It seems that a much better policy would have been to have given much more notice for such a change, along with much greater control for the users in terms of how it's implemented. I don't understand the gleeful cries of some suggesting that the new setup is a sign of "evil," but from a positioning standpoint, Google didn't do a very good job at all in explaining this to users.

Two former FTC chairs, James Miller and Daniel Oliver, have written an opinion piece chiding the current FTC for its antitrust investigation into Google. As we've noted in the past, politicians seem to be going after Google simply because it's a convenient target that's big, and not because of any clear harm for consumers. Some Google competitors don't like Google very much, but that's no reason to call out the antitrust guns:

Antitrust is for consumer welfare, not competitor welfare.

In the Reagan years, we were always suspicious of whining competitors. We were suspicious because our view of antitrust law, shaped by Robert Bork and other scholars, was, and still is, that antitrust law should maximize the welfare of consumers, not of competitors.

Has anyone heard consumers complaining about Google? We have not, probably because consumers are under no pressure to use Google. They do so because they get what they want from Google, and they get it for free.

Furthermore, they point out just how quickly things change in the online world:

When Google was started in 1998, Yahoo was the dominant search engine -- by far. Today Yahoo struggles to survive. Only a few years ago, Microsoft seemed a giant, standing astride the digital world. Today its business model is threatened, the competitive marketplace shifting under its feet from licensed software to cloud-based computing. Last year's hot IPOs -- Yelp, LinkedIn, and Groupon -- didn't even exist five years ago.

I would have no problem with the FTC going after Google if there were significant evidence of consumer harm, but no one seems to be able to show that there is any. At all. They just show that Google is big. But, big companies online seem to have a way of fading quickly... mainly by missing the next big thing. Already, we've seen Google struggle (multiple times) to compete with Facebook on social networking, which is taking over a bigger and bigger part of online life (and shielding much of that content from Google). So, once again, we have to ask why there's such a focus on investigating Google these days, other than because some competitors don't like competing.

Copyright maximalism has proceeded along two axes. The first is the term of copyright, which has been steadily extended from the basic 14 years of the 1710 Statute of Anne to today's life + 50 or 70 years, depending on the jurisdiction. The other is the scope of copyright, where there are constant attempts to make yet more fields of human endeavor subject to it – for example fashion or food.

It's a sad sign of how pervasive this idea of granting a copyright monopoly on everything has become that all sorts of people are starting to offer suggestions - like this proposal from privacy groups to give people copyright in their faces:

The Federal Trade Commission recently held a workshop on facial recognition technology, such as Facebook’s much-hated system, and its privacy implications. The FTC has promised to come down hard on companies who abuse these capabilities, but privacy advocates are seeking even stronger protections. One proposal raised was to provide people with copyright in their faceprints or facial features. This idea has two demerits: it is unconstitutional, and it is insane. Otherwise, it seems fine.

The author of those words, Derek Bambauer, points out two Constitutional problems. First, that it's the author of a work that gets the copyright, and that would be the person who fixes your face as a photo, say. This would lead to the fun situation where somebody else would own the copyright to your face. The other issue is that you can't copyright facts, and your face, however expressive you might make it, is just a physical fact in its natural state.

Bambrauer also notes deep practical problems with the idea:

So, the proposal is unconstitutional. It’s also stupid: fixing privacy with copyright is like fixing alcoholism with heroin. Copyright infringement is ubiquitous in a world of digital networked computers. Similarly, if we get copyright in our facial features, every bystander who inadvertently snaps our picture with her iPhone becomes an infringer – subject to statutory damages of between $750 and $30,000. Even if few people sue, those who do have a powerful weapon on their side. Courts would inevitably try to mitigate the harsh effects of this regime, probably by finding most such incidents to be fair use. But that imposes high administrative costs, and fair use is an equitable doctrine – it invites courts to inject their normative views into the analysis.

Much the same could be said of existing copyright works in the online world. "Bystanders" of digital content – for example, people who record their children dancing to music - are regarded as infringers by the recording companies, even though their "use" is entirely a function of the ubiquity of material covered by copyright.

Fortunately, courts do indeed try to "mitigate the harsh effects of this regime" by declaring such things fair use - in some countries at least. But it's a pity that the stupidity of trying to enforce copyright for such incidental uses isn't as manifestly self-evident as it is for the idea of giving people copyright in their faces.

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I have no problem calling out Google when I think the company does questionable things, but I'm really at a complete loss over the desire of some in DC to attack the company these days. The best I can figure it out, they don't like the fact that Google is successful. Back in September there were those bizarrely clueless hearings against Google, which displayed (yet again) a technically clueless Congress wanting to "do something" about a situation they clearly didn't understand.

It appears that we're starting to see the next step in this charade as Senators Herb Kohl and Mike Lee are calling for an antitrust investigation by the FTC. Of course, we're pretty sure the FTC has been investigating Google for antitrust issues for a while now, so it seems a bit strange to send this letter (embedded below) now.

The letter is really quite ridiculous, and demonstrates the insanity of DC these days, where the highly misleading to downright bogus claims by lobbyists for one side are quoted by politicians as fact, with no admission where the numbers come from. Thankfully, the folks at TechFreedom wasted little time in writing what seems like the definitive response to Senators Kohl and Lee. You really should read the whole thing, but just a snippet:

To begin with, the letter asserts that "Google faces competition from only one general search engine, Bing," suggesting that only Bing (and it, only ineffectively) could keep Google in check. In essence, the Senators are prejudging an essential question on which any case against Google would turn: market definition. But why would the market not include other tools for information retrieval? Is it not at least worth mentioning that more and more Internet users are finding information and spending time on social networks like Facebook and Twitter, while more and more advertisers are spending their money on these Google competitors? Isn't it clear that search itself is evolving from "ten blue links" into something more social, multi-faceted and interactive?

In a remarkable leap, the senators then identify the specific alleged abuse that Google’s alleged market power leads to: search bias. That's remarkable because, other than the breathless claims of disgruntled competitors (given plenty of air time at the September hearing), there is actually no evidence that search bias is, in fact, harmful to consumers—which is what antitrust is concerned with. (Read both sides of this debate in TechFreedom's free ebook, The Next Digital Decade: Essays on the Future of the Internet.)

As our colleague, Josh Wright, has thoroughly demonstrated, this "own-content" bias is actually an infrequent phenomenon and is simply not consistent with an actionable claim of anticompetitive foreclosure. Moreover, among search engines, Google references its own content far less frequently than does Bing (which favors Microsoft content in the first search result when no other search engine does so more than twice as often as Google favors its own content).

Making matters even more ridiculous is that the Senators parrot the claims of Google competitors/companies, who seem to just be jealous of Google, without questioning the sources. Thankfully, TechFreedom is around to step up and help provide some context and debunk some of the more ridiculous claims:

The letter also reports, again with no caveats, claims by the CEOs of Yelp! and Nextag that "75 percent of Yelp!'s web traffic consists of consumers who find its website as a result of Google searches, and . . . 65 percent of Nextag's traffic originates from Google searches," and that losing this much traffic to Google preferencing its own content would be catastrophic. But the letter fails to mention that most searches for brand names on Google are "navigational" rather than "informational." As Google competitor Expedia’s CEO recently explained:

The majority of, at least Expedia’s, and I believe Hotel.com’s traffic that comes from search to our site actually come through people searching for Expedia, for example. So in typing in Expedia in Google or so on, typing in Hotels.com in Google. So of the 25% for Expedia, for example, the majority of that traffic is someone who’s already looking for Expedia, and that person is going to find Expedia one way or the other because they are searching for something very specific. (Expedia earnings call, 10/28/10, quoted here).

Indeed, a recently published independent academic study conducted across search engines concluded that 52% of "business queries" (and 72% of organizational queries) were navigational. In other words, most of the Google traffic going to these sites was likely from users who simply typed in "Yelp" or "NextTag" as a convenient way of getting to those sites. Such searches are not diverted (and not even claimed to be diverted) to Google’s own sites, and the first search result for the search term “Expedia” will always be expedia.com. Thus, the majority of these searches that are claimed to make up 75% and 65% of the complaining companies’ traffic is not in any way threatened by Google’s business model, and is completely irrelevant to assessing the effect of Google preferencing its own content.

Furthermore, the letter does not mention Yelp's recent boast that over 40% (and growing) of its searches are now conducted on its mobile app—insulating it from whatever "power" Google might exercise over traditional searches.

Oops. If this were an honest debate about Google's practices, you'd think that the Senators would have been at least a little skeptical of such easily debunked claims by these companies. Unfortunately, in the world of politics today, that's not how things work. Actually looking at facts or understanding what they're trying to regulate is ignored in favor of going after targets that generate headlines.

And, of course, if you're looking for a thorough, detailed and devastating response to any time anyone grandstands about search engines without understanding any of the details, you should always go to the master on the subject, Danny Sullivan, who writes, Dear Congress, It's Not Ok Not To Know How Search Engines Work, Either, picking up on last week's meme about SOPA. Sullivan notes that the letter from Kohl and Lee is "jaw-dropping," not just in how one-sided it is, but in how superficial it is. Again, you should read the entire thing to get tidbits about how the letter seems to not even know what guidelines the FTC has already put out, and about how the Senators (rather shockingly) blatantly misquote Google VP Marissa Mayer and don't even understand what she's saying. But there's also this section, where it appears the Senators have simply no idea about the relationship of Microsoft and Yahoo and what it means relative to Google:

Bing: A Microsoft & Yahoo Production?

What really set off my alarm bells was this:

Bing, a partnership of Microsoft and Yahoo

Despite substantial amounts of staff time and money spent to have the hearings, the committee mistakenly believes that Microsoft’s Bing search engine is a Yahoo and Microsoft production.

It’s not. Bing is a wholly-owned part of Microsoft. Yahoo has no ownership in Bing.

But wait. Isn’t there a partnership? Yes, but one that gives Yahoo a minor role handling Bing’s ad sales to “high volume” advertisers. The deal came after Bing was launched. It wasn’t an essential part of it, nor does it help with Bing building consumer market share against Google.

If the committee fully understood the competitive space, they’ve have said instead:

Yahoo Search, a partnership of Microsoft and Yahoo

That would be far more accurate. That’s because Yahoo no longer has its own core search technology, nor its own search ad serving technology.  It gave all these up to partner with Microsoft (it would have kept them in a deal with Google. See our side-by-side comparison).

Heck, Yahoo’s former CEO Carol Bartz was quite specific that her goal was to use Bing’s technology as a way to somehow beat Bing at its own game. Bing wasn’t a partnership to her; it was the competition.

Bing & Yahoo Distant To Google?

Perhaps the committee thought that the “partnership” was the overall “search alliance” between Bing and Yahoo? If that was the case, then why did the letter go on to say

…which is a distant second in market share and is losing an estimated $2 billion annually…

Those stats only make sense if you’re talking about Bing itself, having a 15% share to Google’s 65% in the United States, as recently reported. If you’re talking about Bing and Yahoo combined, they come up to 30%, much healther competition.

It's really quite amazing that Congress can get away with such blatantly dishonest grandstanding -- but, on tech issues, Congress still seems to think that its own blissful ignorance is a plus when it comes to regulating. For those of us who live in this world, that's pretty damn scary.

A few months ago, we mentioned the ridiculousness of the the Children's Online Privacy Protection Act, which has strict rules for any sites that target services to children under the age of 13. It's one of those "for the children!" laws that are so popular with politicians, but which never seem to have any basis in evidence, and never seem to consider the unintended consequences. Under the law, as we noted, any site that wants to target kids has to meet certain very high standards, requiring permission from parents. In theory (and in a total vacuum) perhaps this sounds good. But the real impact is that very few sites look to create useful internet services for kids... and kids learn pretty early in their youth how to lie about their age online.

Jeff Jarvis recently was on a conference call about COPPA where he asked an FTC attorney some questions about COPPA, the actual research behind it, and the unintended consequences -- and seemed to get back the conference call equivalent of a blank stare:

I asked Mamie Kresses, senior attorney for the FTC’s Division of Advertising Practices, whether there had been any study about how truthful children are reporting their ages online. They have no such research, she said. I asked whether the FTC had any data about how often parents use the means of notice and consent COPPA provides. None, she said.

The most disturbing unintended consequence of the regulation, I think, is the chill it likely puts on serving children online. In the early days of the web, I started the Yuckiest Site on the Internet — about goo, bugs, and science — to serve young readers at the local news sites I ran. After COPPA, my employer decided the risk in serving young people and even inadvertently recording a child’s name or targeting an ad was too great.

We don’t know how many sites have not been started to serve children online. Isn’t this the group we should be serving best? I asked Kresses whether the FTC had done research on the extent of a chill. No, she said.

Finally, I asked whether the FTC had revisited the reasons for COPPA. What harm are we trying to prevent by restricting identity online — and is it effective? She responded with circular logic: They are giving parents the opportunity of notice and consent regarding children’s information.

From there, he points out that we shouldn't base our entire policy on the assumption that the worst case scenario will happen to all kids. As he notes, kids are still kidnapped, but we still let them play outside. This doesn't mean we should let them run wild online -- just like we don't let kids run wild outside, either. But the rules, as set today, effectively say that children can only run outside in a few very inconvenient parks. We're overprotecting. And, as Jarvis notes, the ability to play online is important:

Children need to play online, too. They should create and get credit for their creativity. They should be able to establish a relationship with an educational site where they can track their own progress. Technology and the net don’t just present danger; they afford opportunity. But by focusing only on the former, we can risk losing sight of the latter.

We all know that there are bogus product reviews online. At times, it's difficult to take reviews seriously because of this. So, to some extent, it seems like a good thing that the FTC is apparently cracking down on bogus online reviews, as demonstrated by its decision to fine a company called Legacy Learning Systems Inc., to the tune of $250,000. Apparently, the company had an affiliate program, and those "affiliates" posted all sorts of positive reviews of the company's educational DVDs for things like "Learn and Master Guitar."

However, part of this is troubling. I have no problem with the FTC going after bogus reviews. Where it could get questionable is fining LLS for the actions of its affiliates. Lots of companies have affiliate programs, and it seems to set a dangerous precedent if the company is blamed for any actions taken by those affiliates. If the company was encouraging fake reviews or something along those lines, perhaps it would move liability back to the company, but it's not at all clear that's what happened here. Now, the FTC's press release on this is a bit vague. At one point, it suggests that the company had a special "review ad" affiliate program. If that's the case, then perhaps the company was specifically soliciting fake reviews, in which case the liability could potentially be justified. But later in the press release, the FTC seems to suggest it doesn't matter:

"Whether they advertise directly or through affiliates, companies have an obligation to ensure that the advertising for their products is not deceptive," said David Vladeck, Director of the FTC's Bureau of Consumer Protection. "Advertisers using affiliate marketers to promote their products would be wise to put in place a reasonable monitoring program to verify that those affiliates follow the principles of truth in advertising."

Perhaps our various Section 230 experts can weigh in on this, but I can't see how the above statement fits with Section 230. If the affiliates are doing deceptive practices on their own, without direct encouragement from the company, then I can't see how the company itself is liable, and I certainly can't see a legal obligation to put in place a "reasonable monitoring program." In fact, I would think that Section 230 says the exact opposite.

Once again, I have no problem with cracking down on fake reviews, but shouldn't it be the reviewers themselves who are liable for being deceptive? Blaming the company in cases where they might not know seems only likely to make the whole concept of affiliate programs too big a liability for most companies to bother offering.

While the Senate moves forward on a patent reform bill that won't solve any of the significant problems with our patent system (and will make certain aspects worse) and the Patent Office itself has apparently decided to throw in the towel on improving patent quality, it looks like the FTC has finally realized that perhaps it needs to step up and try to fix at least part of our severely broken patent system. Paul Alan Levy points us to the news that the FTC has released a massive 300 page report (pdf and embedded below) about the patent system, in which it clearly comes out against the problem of patent trolls, which it euphemistically refers to as "patent assertion entities." The report chooses this term, rather than the more common "non-practicing entities" because it notes that some non-practicing entities can be good (i.e., universities), and the real problem tends to be with operations who are focused just on using patents to sue.

The report notes that such trolls are a serious problem in the marketplace, as they appear focused on hindering innovation from companies that have actually innovated, rather than on "developing and transferring technology." Even better, the FTC actually notes the key claim we've been making for years (and which almost everyone else in government has ignored), that the "invention" stage is only one part of the ongoing process of innovation:

Increasing activity by patent assertion entities (PAEs) in the information technology (IT) industry has amplified concerns about the effects of ex post patent transactions on innovation and competition. The business model of PAEs focuses on purchasing and asserting patents against manufacturers already using the technology, rather than developing and transferring technology. Some argue that PAEs encourage innovation by compensating inventors, but this argument ignores the fact that invention is only the first step in a long process of innovation. Even if PAEs arguably encourage invention, they can deter innovation by raising costs and risks without making a technological contribution

The key point that the FTC makes is that one of the key problems here is that patents are (often on purpose) written to be quite vague, meaning that they totally fail to serve their purpose as giving notice for what they cover (and for actually teaching anything). Part of the report appears to be heavily influenced by the research of Bessen and Meurer, which went into great detail on the notice problem with patents, and just how costly it has become to various industries.

The key suggestion, then, from the FTC is for the US Patent Office to get rid of vague patents, by raising the bar on rejecting "indefinite" claims. Currently, like so much of the USPTO, the bar used to determine if a patent claim is indefinite is quite low. The FTC is hoping that the USPTO will raise the bar. Along those lines, the FTC is urging patent examiners to make sure that what a patent actually covers is really much more explicit, including establishing a clear record in the proceedings while reviewing the patent to establish what it actually covers, rather than allowing vague and indefinite language through. In fact, the report seems to suggest that the USPTO would be better off focusing on eliminating indefinite claims even more than judging nonobviousness.

On top of that, the FTC asks the courts to be much more aggressive in limiting ridiculous damages awards for patent trolls, especially condemning the widespread use of questionable "expert witnesses" who come up with unrealistic "rules" for how much a company should have to pay for infringing a patent.

I was also happy to see that the FTC clearly spent time exploring the fact that so much patent infringement has absolutely nothing to do with anyone "copying" the inventions of someone else, but rather independent invention. While it does not come down in favor of an independent invention defense yet, it does seem open to it, if some of the other recommendations in the report do not succeed in cutting down on the problems of the patent system. Its main worry appears to be that changing the liability for "inadvertent" infringers would create a dramatically different patent system, for which there's not enough economic evidence to know what will happen. Of course, we could point out in response that all of the changes put in place that massively increased the scope of the patent system were done with a similar lack of economic knowledge. However, I am pleased to see that the report at least calls for more research to see how such changes might impact the market.

On the whole, I definitely don't think the report goes far enough in its recommendations, but at this point, that's a pretty small quibble. This is one of the few times that we've seen a government agency really research and acknowledge many of the key problems with the patent system, and then suggest real changes to fix those problems. The FTC clearly spent a lot of time on this, and spoke with many of the top experts in the field, citing some fantastic research on the subject.

Of course, the big question is will it matter? There are lots of recommendations for improving the system -- with many directed at the PTO and the courts. But what if they're totally ignored (as seems likely)? Would the FTC take a stronger stand in going up against patent abusers? That would be quite a step, and would generate plenty of attention, but given where the system stands today, it seems like it might be necessary. Kudos to the FTC for actually pulling this report together, rather than going with the typical bland assertions about how patents automatically increase innovation and therefore more patents are, without question, better. There's a lot more in the report, but on the whole, it really does seem to recognize the massive problems inherent in the patent system.