There's an interesting Technology Review article about a new YouTube video campaign called ThinkR, which is trying to create videos of smart people talking about interesting things (think sort of TED-like, but a little flashier. and at least of the ones I've seen, with less substance). However, the Tech Review article highlights the oddity of an ad firm owned by a media firm making interesting content:

Here's how Radical Media describes its "entertainment" division:

AS THE LINE BETWEEN advertising and entertainment blurs, our Entertainment division is a solution to a changing media landscape. In conjunction with our Design + Digital Group and Integrated Marketing team, we work closely with our agency, network, and brand partners to integrate their visions into the DNA of the content we create.

In addition to films and music videos, Radical Media also makes television commercials and, well, "transmedia."

Here's where it gets really confusing: While Radical Media is essentially an advertising firm, it was purchased in 2010 by the RTL Group, which owns 46 television channels and 9 radio stations and is Europe's largest mass media company. In other words, a media company owns an advertising firm that moonlights as a media company. Huzzah!

It goes on to note that some of their videos... have advertisements before them, and it's possible that "Radical Media produced both the "advertisement" and the "content"!" Of course, I'm not so sure why or if that's all that surprising. As we've been pointing out for years, it's not just that advertising is content, but that content is advertising as well. Good content always advertises something. Bad content doesn't advertise anything, even if it's designed as an "advertisement."

Having an "ad agency" that knows how to make good content, first and foremost, is a lot more important than having a firm that knows how to make a "good advertisement." If you can make good content, you can figure out how it advertises something and act accordingly. If you're just focused on making a good advertisement, you'll often make bad content. So I actually think it's a good thing that ad companies and media companies are focusing on content first. I recognize the risk that many people worry about: that this makes "content" into something that's more "advertorial," but that's not what we're discussing here. It's the exact opposite. Purely "advertorial" content isn't good content. It's deceptive and annoying. When the mix of content and advertising works, it's because people want the content and actively seek it out (think Old Spice Man) rather than "hiding" an ad in the content -- which is more likely to turn people off.

Somehow, these two ideas too often get conflated. But if everyone's focused on creating good content first and foremost, that seems like a good thing -- even if that content comes from "an advertising" firm.

It's no secret that various extremists and terrorists groups use the internet just like everyone else. And, of course, there are places where they communicate. Some politicians, like Joe Lieberman, think that the way you should respond to this is by having companies censor any account that appears to be connected to terrorist organizations that he doesn't like. That this might cause such marginalized groups to feel even more persecuted and angry never seems to cross his mind.

Of course, that's not the only approach. Spencer Ackerman, over at Wired's Danger Room blog, has a fascinating story about a guy at the State Department (with almost no budget) who is trying to ramp up a plan, called Viral Peace, which is basically all about using social media to troll terrorists and extremists online in the hope of convincing some to give up.

The program, called Viral Peace, seeks to occupy the virtual space that extremists fill, one thread or Twitter exchange at a time. Shahed Amanullah, a senior technology adviser to the State Department and Viral Peace’s creator, tells Danger Room he wants to use “logic, humor, satire, [and] religious arguments, not just to confront [extremists], but to undermine and demoralize them.” Think of it as strategic trolling, in pursuit of geopolitical pwnage.

While I certainly appreciate this idea more than the outright censorship plan that Lieberman seems to like, I do wonder if the program might backfire by doing the exact opposite of what they're trying to do. Trolling has its place and can rile people up, but I'm not sure it's ever effective in getting anyone to change their position. In fact, it can often make people dig their heels in even deeper...

Animals may (or may not) be getting smarter, but there sure is growing evidence that animals have more cognitive abilities than we might have expected. In some cases, we're actually breeding animals for intelligence. (Who wouldn't want to buy a genetically engineered parrot with the conversational capability of a 5 year old kid?) Perhaps we'll end up regretting our animal experiments someday when we're faced with super-intelligent birds or insects, but for now, it's interesting to see just how smart our animal pals can get.

• Breeding smarter fruit flies doesn't sound like a good plan to create a race of super intelligent insects. Still, a decent first step has been accomplished by directing the evolution of fruit flies to exhibit the ability to count to four... [url]
• Some baboons in a French laboratory have been observed to be able to tell the difference between real English words and fake words. This study probably says more about the rules of English spelling rather than evidence of baboons being linguistic geniuses. [url]
• For many mammals, the ratio of brain size to body size is a fairly predictable matter, but there are some outliers with larger than expected brains for a given body size. Curiously, the smaller mammals with larger than expected brains tend to survive extinction better and adapt more easily to environmental changes -- but correlation isn't the same as causation. [url]

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

After all the concerns raised about CISPA and other cybersecurity legislation, Senators Lieberman and Collins introduced a heavily revised version of their cybersecurity bill. The entire thing is an insane 211 pages, but as a first pass, the ACLU (who has been highly critical of nearly all previous proposals) sounds cautiously optimistic that the new bill contains important privacy protections. From the ACLU's initial analysis, this version of the bill will:

• Ensure that companies who share cybersecurity information with the government give it directly to civilian agencies, and not to military agencies like the National Security Agency. The single most important limitation on domestic cybersecurity programs is that they are civilian-run and do not turn the military loose on Americans and the internet.
• Ensure that information shared under the program be “reasonably necessary” to describe a cybersecurity threat.
• Restrict the government’s use of information it receives under the cyber info sharing authority so that it can be used only for actual cybersecurity purposes and to prosecute cyber crimes, protect people from imminent threat of death or physical harm, or protect children from serious threats.
• Require annual reports from the Justice Department, Homeland Security, Defense and Intelligence Community Inspectors General that describe what information is received, who gets it, and what is done with it.
• Allow individuals to sue the government if it intentionally or willfully violates the law.

The ACLU specifically calls out Senators Durbin and Franken for helping to get these changes included in the bill. I agree that all of these are important and useful changes compared to what had been in previous proposals. Focusing on civilian agencies rather than the NSA is a big one, since much of the fight over competing visions of the bill were really a turf war over who got to control the information (and the budget): Homeland Security or the NSA.

The bill also removes some of the regulatory requirements for organizations that run "critical infrastructure," in favor of a more voluntary approach to setting up best practices, which may make the bill more palatable for some.

That said, we're still waiting for an actual justification of cybersecurity bills that doesn't include exaggerations of the threats that are out there, or Hollywood-scripted stories about planes falling from the skies that have little basis in reality. Moreover, though the claim has always been that these bills are important because the government is being legally prevented from sharing and receiving vital information, nobody has actually pointed to the specific legal obstacles that exist -- and the government already has information sharing programs that don't seem to require any new legislation. Also, any bill that's 211-pages long is something to be concerned about, as the number of "hidden" easter eggs could be immense and serious. But, compared to previous cybersecurity bills, this certainly sounds like a big step in the right direction.

Earlier this week, we wrote about BMG issuing a takedown to YouTube over a Mitt Romney advertisement that used a clip of President Obama singing one line of an Al Green song. As we noted at the time, this seemed like a clear fair use case. Also, people pointed out that it was clearly an attempt to stifle speech since BMG only went after the Romney commercial, and not the original clips of Obama singing. Realizing this, BMG then also issued takedowns for those videos. If YouTube wanted to retain its DMCA safe harbor provisions, it is supposed to keep those videos down for 10 days and then it could (but does not need to) restore them. However, Google has jumped the gun and restored the videos already (you can see it here), saying that the company made a determination that the content does not violate copyright laws.

At this point, the ball is back in BMG's court. Technically, it can now file a lawsuit against the uploaders of the video if it wants (so, the Romney campaign, the Associated Press and others). Also, it could potentially try to go after Google itself, claiming that the safe harbors no longer apply due to the early reposting. Of course, one would hope that BMG realizes that pursuing any of these strategies would lead to ridicule and, quite possibly, a court issued rebuke for wasting their time with a bogus copyright claim. Unfortunately, for reasons that remain a mystery to me, when it comes to copyright claims, many copyright holders fail to recognize this kind of likely outcome ahead of time.

We've been talking about ACTA and TPP and the ridiculous levels of secrecy around them for a while now, but the US's overly secret policies are showing up in other treaty issues as well. For years, we've been talking about negotiations at WIPO to create a treaty that would provide specific exceptions to copyright law to help the blind get access to works in formats they could read (basically, it would make it so the blind could more easily import braille and other versions that are readable for the visually impaired from other countries). This issue has been out there forever. And while we always hear how important it is that US negotiators rush to get deals like ACTA and TPP done, they've dragged their heels on the treaty for the blind for ages. At the urging of copyright holders, the Obama administration came out against such a treaty a few years ago. And the EU Commission has been against such a treaty for a while as well, claiming that it's just too hard to put in place. Yeah, rush through things like ACTA and TPP... but helping the blind get access to works? That's just too hard...

Over at WIPO, the Standing Committee on Copyright and Related Rights (SCCR) conference is ongoing, and one of the agenda items is this treaty for the blind. One of the key points that have held up negotiations is whether or not this should really be a "treaty." As I understand it, copyright maximalists are scared silly of creating an actual treaty that is focused on "exceptions and limitations," because that might make people realize that exceptions and limitations are a thing they can create whole treaties around... and thus we'd start seeing a lot more of that.

And, in fact, on the agenda at SCCR are two other potential agreements (which are much newer) discussing the possibility of exceptions and limitations in two other areas: education and libraries. As this video, shot by Jamie Love at KEI of Alan Adler, the VP of the Association of American Publishers, shows, he's against these kinds of treaties because the publishers believe that exceptions and limitations are an attack on their rights, and they don't want to support that kind of thing. What's really disturbing, however, is that despite years and years of work on a treaty for exceptions for the blind, and despite the public's reaction to secret negotiations in the likes of SOPA, ACTA and TPP... the US so far has been keeping the text of what's being discussed a secret. Jamie Love has been explaining that this is creating huge problems at SCCR, because very few people know exactly what's in the text, and they feel that they're wasting time. There had been some hope that a basic agreement might finally have been worked out at this session. But, instead, while lobbyists have been briefed, actual advocates for the blind and the public have been left out in the cold and don't even know what's in the latest draft.

There's no way to describe this other than absolutely shameful on the part of the US government and the Obama administration. It's dragged its feet for years on helping the blind over this issue, even while trying to rush through all sorts of copyright treaties that favor Hollywood. And now, despite all of that, having the US (once again) keep the text a secret... it's just shameful.

The US Justice Department really does seem to be completely drunk with power these days. We've written before about how the FBI is famous for abusing the powers of "National Security Letters" (NSLs) that allow them to demand information from service providers, financial firms and the like -- with a built-in gag order. A few years ago, we wrote about an ISP, Calyx, which challenged an NSL it received, and had to fight the DOJ in complete secrecy for years, until the DOJ basically dropped the request and allowed Calyx's Nicholas Merrill to go public with the details of the legal fight.

However, in news revealed this week, there is a second telco that isn't just challenging an NSL -- which is not only expressly allowed under the law, though now the DOJ is required to tell recipients this fact with the NSL -- but also challenging the whole NSL process itself. In response, amazingly, the Justice Department sued the telco, claiming that it failed to hand over the information requested in the NSL, as required by law. There's no way to look at this other than as a vindictive move by the DOJ.

Instead of responding directly to that challenge and filing a motion to compel compliance in the way the Justice Department has responded to past challenges, government attorneys instead filed a lawsuit against the telecom, arguing that by refusing to comply with the NSL and hand over the information it was requesting, the telecom was violating the law, since it was “interfer[ing] with the United States’ vindication of its sovereign interests in law enforcement, counterintelligence, and protecting national security.”

They did this, even though courts have allowed recipients who challenge an NSL to withhold government-requested data until the court compels them to hand it over. The Justice Department argued in its lawsuit that recipients cannot use their legal right to challenge an individual NSL to contest the fundamental NSL law itself.

All of this came out this week after it having been secret for some time, thanks in part to the EFF's efforts to get some of the information public. The Wall Street Journal appears to have identified the telco in question as Credo, a small Northern California company.

The DOJ's response to the challenge -- suing the telco -- is incredibly aggressive, and is clearly designed to create a massive chilling effect for any other organization who might challenge an NSL, despite the clear legality of issuing such a challenge. This kind of response from the DOJ, however, is par for the course these days. It's been quite aggressive in trying to silence those who criticize its efforts, and this is just the latest example. While the excellent Wired article linked above finds it surprising that the government allowed the evidence of this DOJ lawsuit to become public, I don't think it's that surprising. If the goal is to create chilling effects and intimidate lots of others into not challenging NSLs, then letting it be known that you sued a telco who tried would certainly get the job done.

A few months ago, you may have heard about John Brennan, who was going through Portland International Airport, and felt that the TSA screening procedures were the equivalent of harassing him. In response, to protest, he stripped naked... and was promptly arrested for disorderly conduct and indecent exposure. However, a court has now acquitted Brennan by saying that the stripping was an act of public protest, and thus protected by the First Amendment. The judge pointed out that there's already state precedent in Oregon that anti-nudity laws "do not apply in cases of protest."

"It is the speech itself that the state is seeking to punish, and that it cannot do," Circuit Judge David Rees said.

The DA who prosecuted the case is complaining that now anyone arrested for indecent exposure can just claim that it's a protest.

Deputy District Attorney Joel Petersen argued that Brennan only spoke of a protest minutes later. Petersen urged the judge to recognize that distinction, "otherwise any other person who is ever naked will be able to state after the fact" that it was done in protest.

Of course, this now raises the troubling (or appealing, depending on your nature) idea that stripping at the front of the TSA line may become more popular. That said, if you're now... er... itching to disrobe in front of the TSA, it's worth noting that this ruling is specific to Oregon, and who knows how other states might deal with the same issue.

We've covered for years how overly aggressive the Olympics are in protecting their "IP" -- to the point that they often get special laws passed that grant them extra IP rights, which they use to block pretty much anyone who hasn't paid from using the word "Olympics" at all, or even having a non-sponsoring brand shown anywhere (yes, even if that means taping over the brand on toilet fixtures in bathrooms around the Olympic grounds). Hell, we just reported on the Olympics going after a 30-year-old restaurant named Olympic Gyros.

So it struck me as somewhat surprising to get an email from the White House, saying that I should create my own (or join in an existing) "Olympic Fun Day Meetup." Of course, as a participating country, I'm sure that the Olympics grants the US government wider leverage in using its name, but if anyone else in the country suggested something as crazy as creating a special "meet up" around the Olympics, how quickly do you think the Olympics would send in the lawyers to demand a takedown?

We've talked in the past about just how ridiculous publishers are when it comes to doing something like quoting a song in a book. The publishers apparently have no appetite for standing up for the fair use rights of their authors, so they just refuse unless you get a license for absolutely everything, even when it's clearly and obviously fair use. In the latest example of this kind of insanity, it appears that Wiley -- a publisher who already has a reputation as a maximalist -- is telling the author of a book about Android's UI, Juhani Lehitmaki, that he can't rely on fair use to post screenshots of any apps. Instead, it's requiring that he get approval from each and every app developer. Lehitmaki has gone on Google+ seeking permission from a long list of developers:

I need a little bit help with my book stuff and thought to ask it from all of you awesome people here at G+. I'm in a bit difficult situation in the finishing it. I have been in belief that using screenshots of apps as examples of the platform functionality is covered under fair use but apparently I was wrong.

So now I need to acquire permission to use screenshot of different apps I've used so I can keep them in. So if you or someone you know are the copyright holder of any of the following brands / apps or know who to contact please let me know.

He then lists out 22 apps (down to 21 once he got permission from one):

* Google android apps
* SPB Shell 3D (by SPB Software)
* SlideIT Keyboard (by DASUR LTD.)
* Siine Keyboard (by Siine Ltd)
* GO Launcher (by GO LAUNCHER DEV TEAM)
* Evernote android apps
* Twitter android app
* Gameloft android apps
* Tiny Flashlight + LED (by Nikolay Ananiev)
* Able Remote (by ENTERTAILION LLC)
* TED (by TED Conferences)
* Gigbeat - Concerts (by GIGBEAT, INC.)
* TouristEye - Travel Guide (by Tourist Eye)
* Winamp android app
* Pulse News (by ALPHONSO LABS)
* Songkick Concerts (by SONGKICK.COM, INC.)
* Prixing - Scanner & comparer (by PRIXING)
* Catch Notes Notepad (by Catch.com)
* Sony, Android skin
* Samsung, Android skin
* HTC, Android skin
[edit: removed the ones I'm already in contact with. Thank you!]

He notes that all of the screenshots are used as examples of good UI design and are clearly credited. In other words, in each case, the app is portrayed positively.

Here's the thing: he should be pissed off at Wiley for totally failing him as a publisher and being obnoxiously unwilling to stand up for their author. Using screenshots in this manner is fair use. No question. I can't see how any intellectually honest person could go through the four factor test and not find that using screenshots in a book like this are fair use. Wiley should back up their author, but they don't, because they're too scared of a lawsuit and apparently don't have the guts to stand up for fair use rights. It's shameful, and should be a warning to any author not to sign on with Wiley. Why bother signing on with a publisher who makes you go through a silly wasteful exercise like this?

In fact, I'd imagine that many of the app developers are similarly inconvenienced by this process of now having to give Juhani permission. Of course they want their apps featured, but now they have to fill out some sort of release or license just to make Wiley's lawyers happy. This process inconveniences absolutely everyone. Wiley should be ashamed.

Via Wrestling Inc, we learn that wrestler Val Venis will not be appearing in upcoming Raw SuperShow events due to the WWE's past support of SOPA and CISPA. According to a recent tweet, Val told one fan, "#WWE asked me to appear but I just cannot do anything with them for as long as they continue their support of #SOAP/#CISPA". While the WWE was never listed on the official Judiciary Committee list of supporters, the organization made many community sourced lists as a supporter of SOPA. Regardless of when and how the WWE came to be supportive of the unpopular bills, this shows that there is a long lasting bitter aftertaste left in the mouths of those who feel betrayed by organizations that supported SOPA and CISPA.

Yesterday, we wrote about the US Justice Department arguing that there's no problem with the fact (which it admits) that it did not and could not properly "serve" Megaupload as a corporation, since it has no US presence, arguing that as long as it generally makes an effort to do so, and also promises to really serve the company once its execs are extradited to the US, it's perfectly fine. Megaupload has now hit back by pointing out that the DOJ appears to be making up the rules that it would like to exist, rather than following the rules that do exist.

The Government bears the burden of proving that it has validly served Megaupload within the letter of the Rule... and effectively concedes it cannot carry it. So the Government instead urges this Court to rewrite the Rule. It specifically puts forth three alternative arguments that no federal court has ever accepted, as far as we are aware, and for which it cites not a single relevant precedent.

First, the Government argues that, because Megaupload is aware of these proceedings and purportedly had “minimum contacts” with the United States, the Rule has no application. By this argument, the entire Rule can be disregarded wherever the Government deems it unnecessary or perhaps unduly burdensome. Second, the Government contends that, even if it must otherwise conform to the Rule, it may disregard the latter portion of the corporate-service requirement and decline to mail the summons to Megaupload. With this argument, the Government would read out of existence the express mailing requirement of Rule 4(c)(3)(C). Finally, the Government argues that, to the extent it must nod at Rule 4’s mailing requirement, it may ignore the Rule’s express prescription and simply send the summons to an address of its choosing. Here, the Government goes so far as to claim it can deliver the summons to Megaupload’s address in Hong Kong, even though that approach would essentially strike Rule 4(c)(3)(C)’s requirement that the summons be mailed to the company’s “last known address within the district or to its principal place of business elsewhere in the United States.”

But... but... you don't understand. Since the MPAA and RIAA explained to the DOJ that Megaupload is evil and Kim Dotcom is a real life super villain, the rules don't matter, right?

A bunch of the folks who were instrumental in the SOPA/PIPA fight have been working together over the last few months to build The Internet Defense League, which is launching today. Techdirt is a founding member, along with a number of other organizations and sites, including Reddit, Mozilla, Cheezburger, EFF, Fark, Imgur and more. The process is being driven by the awesome folks at Fight for the Future, who were the ones behind the American Censorship Day effort during the SOPA fight. The launch is today, in part because today is also the day that the new Batman movie opens -- and part of the IDL's concept is that when the internet is at risk, it can shine a "cat signal" to alert the internet to jump in and do something: Believe it or not, they've actually put together a few of these cat signals in real life, so look around tonight in a few cities and you might see one.

Taking a page from Kickstarter, the IDL has set up various tiers to which you can donate to get your own personal mini-cat signal or a t-shirt or some other fun offerings.

Earlier this year, I wrote about the Hacking Society gathering, put on by Union Square Ventures. During that discussion, Clay Shirky brought up the idea of an "Internet Volunteer Fire Department" and Tiffiniy Cheng, from Fight for the Future, explained the IDL and how they were already working on it. You can watch that discussion to get a sense of the thinking behind this effort: We're proud and excited to be a part of this effort. We, like many, hope that the IDL is actually a wasted effort and is never actually needed. But, given what we see happening all the time, it seems unlikely that the IDL will never need to be called into action.

Ah, the Olympics. The spirit of cooperation. Of athletic competition. Of the essence of global feel-good-ness, where all the Olympic committees of the world come together to put on a spectacle made of the most brilliant athletes in the world.

Oh, and they also like to stifle links to critical pieces (do we have your attention, boys?), by banning their fans from sharing their experiences via social media, and threatening ICANN for refusing to block Olympic-related terms. And, now, Steve M shares a story from the Philadelphia Daily News about how the United States Olympic Committee has won a 30 year battle they didn't know they were fighting with a gyro shop.

"Three decades after it burst from the starting block, the Greek eatery Olympic Gyro has received a cease-and-desist email from the USOC, the nonprofit corporation responsible for training and funding U.S. teams. The June 7 notice demanded deletion of the word "Olympic" from the food shop's title, claiming copyright of the word under a 1978 law."

This legislative insanity, which I assume is entitled "The USOC Can Do Whatever It Wants Because Olympics Act Of 1978", basically grants the USOC sole usership of the word "Olympic" in the United States, amongst other travesties. They issued a heartfelt email in response to this issue:

"The USOC communications department declined to discuss the matter with the Daily News. But in its email, the organization emphasized the need to "protect the rights of companies who financially support the U.S. Olympic Team," such as McDonald's and Coca-Cola."

Yup, the USOC asserted that it needs to protect the rights of their sponsors (which means they're protecting themselves, by the way) from these no-good gyro shop owners who have apparently been harming McDonald's and Coca-Cola for the past thirty damned years, but with some kind of stealth cloaking device that keeps any such harm from being realized.

Oh, and just for fun, let's look at a few names of the governors of the organizations involved in this story. The USOC is headed up by Larry Probst (not Greek). Coca-Cola is run by Muhtar Kent (not Greek). McDonalds' CEO is James Skinner (not Greek). And the gyro stand formely known as Olympic Gyro's owner is Athens Voulgaridis (more than slightly Greek). The irony of this was apparently not lost on Voulgaridis:

"It's been a part of my life as long as I can remember," Voulgaridis said Tuesday. "We're very Greek Orthodox, we go back [to Greece] often. For them to take something that is Greek and make it theirs for money is frustrating."

But he also states that he isn't going to fight the government. In total, the name change will cost his business $6000 or so, since he has to change both signage and employee uniforms. He contacted the USOC to see if they would help out with those costs, but they declined, explaining that money is valuable and they didn't want to spend any.

The same Daily News article also mentions that the USOC went after a knitting group named Ravelry that was organizing something of a knitting olympics competition to coincide with The Games:

"We believe using the name ‘Ravelympics' for a competition that involves an afghan marathon, scarf hockey and sweater triathlon, among others, tends to denigrate the true nature of the Olympic Games," the letter from USOC said. "In a sense, it is disrespectful to our country's finest athletes and fails to recognize or appreciate their hard work."

Yes, you read that correctly. Knitting competitions denigrate the true nature of the Olympic Games. Which I happen to agree with, assuming that this "true nature" they're talking about revolves around screwing with people for no good reason.

A few years ago, we wrote about a ridiculous situation in which big pharmaceutical companies were keeping prices artificially high by paying other drug companies to delay entering the market with generic drugs. The really scary part about this was that the big pharma companies would abuse patent law to force smaller drug companies into these deals. They'd file a patent infringement lawsuit, where they knew they had no leg to stand on, but the infringement filing forces the smaller generic maker into negotiations, where they often agree to a "license" which includes the delay -- but the money flows in the opposite direction of a typical license. In other words, the whole lawsuit and the license is basically a sham to try to hide the agreement to prevent competition in the market. And, of course, as you probably know, when there's no generic competition, drug makers are able to charge absurdly high prices for their drugs. As soon as there's competition, the price often falls by more than 90%. Thus, the big drug companies have plenty of incentive to buy off the competition like this.

Many people have believed that such deals are clear antitrust violations -- and a lawsuit against big pharma Schering-Plough (owned by Merck) tested this theory, only to be dismissed by the district court. That original ruling really twisted logic in a few knots to come to its conclusion -- and the good news is that, two years later, the 3rd Circuit appeals court has reversed the ruling. The ruling is long, but interesting. It starts out by noting that other court's ruling on this matter seem to take the concept of "patent validity" way too far. As we've discussed in other contexts, patent validity says that you have to assume a patent is valid -- but in these cases, the court notes that this unfairly biases the situation in which the bogus patent infringement lawsuits are filed to extract these "pay-for-delay" deals.

First, we take issue with the scope of the patent test’s almost unrebuttable presumption of patent validity. This presumption assumes away the question being litigated in the underlying patent suit, enforcing a presumption that the patent holder would have prevailed. We can identify no significant support for such a policy. While persons challenging the validity of a patent in litigation bear the burden of defeating a presumption of validity, this presumption is intended merely as a procedural device and is not a substantive right of the patent holder.... Moreover, the effectively conclusive presumption that a patent holder is entitled to exclude competitors is particularly misguided with respect to agreements – like those here – where the underlying suit concerned patent infringement rather than patent validity: In infringement cases it is the patent holder who bears the burden of showing infringement.

The court then discusses the Hatch-Waxman Act, which is at the heart of these disputes, noting that its intent (to increase availability of generics) seems to be the exact opposite of what happens with these pay-for-delay deals. But where it gets interesting is that the court says that having one company pay another to delay market entrance should be seen "as prima facie evidence of an unreasonable restraint of trade." This is definitely a big ruling -- though its potential disagreement with other courts may get this issue over to the Supreme Court before too long.

It's nice to see the court get it right after the lower court seemed so confused by the issue.