Update: Well, that didn't take long. Dropbox has already blocked Boxopus.

Every time some sort of file sharing service is shut down or someone else is arrested, we hear the regular crew of supporters of the existing copyright regime declare victory. But, every time, people just shift to some other service and move on. None of it leads people to suddenly spend money again when they hadn't before. TorrentFreak recently had an article about a service calls Boxopus, which uses Dropbox's API to automatically download content from torrents to a Dropbox file. Think of it as torrenting in the cloud. From a user perspective, there are plenty of advantages, including the fact that the content is then available on all your synced devices. Of course, there's also the fact that for an end user, it's somewhat anonymous -- since Boxopus is the "downloader" rather than the user themselves. So if the content is infringing, it's more difficult to track them down (though, I would imagine not impossible, if someone got access to Boxopus' logs). Apparently, a number of services have already implemented this as a download option. Of course, this probably just means that Boxopus will soon be targeted as a "problem" even though it has plenty of non-infringing uses, and actually could be quite handy for all kinds of authorized activities in a more cloud-centric universe.

Either way, what strikes me about this is a simple fact: the technology always advances. It sees areas where people try to stop it, and figures out a way to route around it. Whether or not people like this, it exists, and tons of other, similar offerings will likely exist in short order. You can fight the tide -- as some seem to want to do -- or you can look at ways that you might take advantage of tools like this. Only one of those is a winning strategy.

The day before the EU's International Trade committee (INTA) recommended that the European Parliament should reject ACTA, the EU commissioner with responsibility for the treaty, Karel De Gucht, had given a speech to its members, trying to win them over. Although it was short, it turns out to be highly revealing about the European Commission's future ACTA strategy. Here's what he said:

If you decide for a negative vote before the European Court rules, let me tell you that the Commission will nonetheless continue to pursue the current procedure before the Court, as we are entitled to do. A negative vote will not stop the proceedings before the Court of Justice.

That is, whatever happens next week, the European Commission will wait for the European Court of Justice (ECJ) to rule on whether ACTA is compatible with EU law. If it is found to be incompatible, De Gucht admits that rather than accept this ruling, the European Commission will try to find some trick to circumvent it:

If the Court questions the conformity of the agreement with the Treaties we will assess at that stage how this can be addressed.

This implicitly confirms that the referral was simply a way to buy time, rather than an honest question about ACTA's legality.

Even assuming the ECJ rules eventually that ACTA is compatible, there could still be a problem if, in the meantime, the European Parliament has voted not to ratify it. Here's what De Gucht says he would do in that case:

First, I would consider proposing some clarifications to ACTA. For example on enforcement in the digital environment. We could look at this in the light of the discussions you will have had on legislative proposals which the European Commission is set to put before the Parliament and the Council. Or for example, we could seek to clarify further the meaning of 'commercial scale'.

Remember that ACTA is now signed, and cannot be altered; so De Gucht is instead trying to fob off European politicians with this vague idea of "clarifications" -- as if more vagueness could somehow rectify the underlying problems of an already dangerously-vague treaty. That's clearly just a sop; here's the real plan:

Second, once we will have identified and discussed these possible clarifications, I would intend to make a second request for consent to the European Parliament. Whether the Parliament will consider it under this legislature or the subsequent one, will be for you to decide.

This is an extraordinary admission. De Gucht says that even if the European Parliament unequivocally refuses to ratify ACTA next week, he will simply ignore that result, and re-submit it at a later date.

In other words, De Gucht won't accept the idea that the European electorate, through their representatives in the European Parliament, might possibly want to reject something they were not allowed to know about until late in the negotiating process, and to which they were unable to provide any meaningful input. In his view, ACTA must be passed, and ACTA will be passed -- whatever anyone else thinks about it.

Let's hope that the members of the European Parliament bear in mind this undisguised contempt for the democratic process in Europe -- and for them -- when it comes to voting on ACTA next week, and any time thereafter it might be re-presented to them under De Gucht's shameful plans.

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A few years ago, Oscar Pistorius was not allowed to participate in the Olympics because, as a double amputee, his prosthetic legs might have given him an advantage over athletes who weren't using prosthetic legs. Prosthetic technology doesn't stand still, so it's understandable that the Olympic committee didn't want to allow devices that could give future athletes extremely unfair mechanical advantages. Here are just a few interesting prosthetic developments that might change the perception of "disabled" persons.

• Prosthetic limbs don't have to look like medical devices or dead body parts. Artificial legs can be made with a variety of different designs, and the manufacturer of these bespoke legs occasionally requests help from volunteers who can "donate" their legs as a scanned template for prosthetic designs. [url]
• Last May, Claire Lomas finished a marathon in a $70,000 bionic suit -- after being paralyzed from the chest down in 2007. She walked about 2 miles per day, so it took her about two weeks to complete the London Marathon. [url]
• MIT researchers have created a glucose fuel cell that could be used to power brain implants or other implantable electronics that could control prosthetic devices. This device could get all the sugar it needs from cerebrospinal fluid, so it wouldn't need batteries (although external prosthetics would still need to be powered separately). [url]

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

US Trade Representative (USTR) Ron Kirk continues to insult the intelligence of the Senate. During a recent hearing Senate hearing at which Kirk appeared, Senator Ron Wyden once again quizzed Kirk about the lack of transparency the USTR has (video link, key point starts around 89 minutes and 30 seconds) regarding the Trans Pacific Partnership (TPP) agreement. Except, this time, Wyden went one step further. He pointed out that while many in Congress have no real access to the document, special interest company representatives are given special logins to the USTR's site, allowing them full access to the text of the document. We've pointed out many times before that Kirk seems to have given himself over entirely to the special interests, and this kind of access only shows how true that is. But where Kirk returns to being a disingenuous apologist for these special interests is to argue that this is no big deal because anyone in Congress can see the document too.

Wyden: What I've learned is that when trade agreements are negotiated, industry advisors sit in a far stronger position than virtually everyone in the Congress. For example, an industry advisor from the Motion Picture Association can sit at their desk with a laptop, enter their username and password, and see the negotiating text of a proposed trade agreement. Virtually no one in the Congress has the ability to do that. How is that right?

Kirk: Well, Senator, I want to make it plain, that it's not just industry, but it's all of the members of our trade advisory commissions which are established by this Congress, and they're cleared advisors, they have security clearance and they represent a broad range of interests from both industry and environmental groups, business groups.... Every member of Congress, any member of Congress, that wants to see the text of a trade agreement we're negotiating has the ability to do so, as long as we're doing so in a secure environment that's private, so I would only offer that one clarification that any elected official in this body has the ability to see the same text as any of those cleared advisors.

Kirk's answer is insulting in how misleading it is. He chooses his words very carefully, so let's break this down to expose why Wyden is concerned, and why Kirk's answer is no answer at all. Remember, folks on the MPAA and other "industry advisors" (of which there are no internet company representatives) have a direct login, so they can access the latest negotiating docs wherever they'd like. Kirk's response, in which he claims that any member of Congress can see the same text is technically true, but it is not the same level of access. What Kirk meant is that any member of Congress can go to the USTR offices by themselves and be shown a copy of the negotiating text on a so-called "read and retain basis." That means: no notes, no copies, no staff -- even staff that have all the necessary "security clearance" as Senator Wyden himself found out when he had a trade expert on his staff obtain the necessary security clearance, only to find that the USTR denied him access to the documents.

So, let's compare: the MPAA and other industry groups can log into a website at their own convenience. They are even allowed to (with certain limitations) share parts of the text with others, supposedly for the sake of getting an "analysis" of what the text means. But when a Senator -- who is the chair of the Senate subcommittee on International Trade -- wants to take a look at the same document, he has to go to a "private room" where he will be shown the document, but not allowed to make copies, take notes or bring along his own staff expert on the matter.

Who does it sound like Ron Kirk is listening to more in this case? The MPAA? Or the Senator who's supposed to have oversight concerning the agreement. I tend to think the word "corrupt" is thrown around too easily, but at this point, is there any way to look at this situation and not judge it to be a case of massive corruption?

We'd pretty much thought that the Righthaven saga was over. After all, the company had gone into receivership back in December, and the court-appointed receiver had been auctioning off what little assets the company had in an attempt to satisfy all of the court-ordered attorneys' fees that Righthaven owed to the lawyers of some of the many defendants that Righthaven sued for copyright infringement on a repeatedly-rejected legal theory. At the same time, the CEO/founder of Righthaven, Steve Gibson had stopped showing up in court, had taken another job, and was being investigated by the Nevada State Bar.

As far as the court-appointed receiver, Lara Pearson, knew, Gibson and his wife Raisha "Drizzle" Gibson (who had been "COO" of Righthaven) no longer had anything to do with the company.

And then... she discovered that Gibson had somehow secured another law firm to supposedly represent "Righthaven" in its appeal of the Hoehn case (the first of the big losses that resulted in attorneys' fees being owed). That firm apparently tried to file some documents in the appeal six months late. This was quite a surprise, and Pearson reacted, as she should, by sending notices to both Gibsons, to the law firm that they employed and to the court explaining why this was ridiculous. In the letters, you can tell that Pearson is quite reasonably angry with the Gibsons, whom she reminds no longer have control over the firm, and makes it explicit to them that they were fired back in December. On top of that, she explains her intent to take legal action against the Gibsons for legal malpractice:

Your actions have caused, and continue to cause ongoing harm to Righthaven and its finances. To put an end to this damage and prevent future harm, I hereby remove any and all authority for you to act on behalf of the company, and formally place you on notice that the company will be taking legal action against you for your ultra vires acts as well as for claims of legal malpractice, which led the company to its current state.

.... Recently, it has come to my attention that you engaged the services of Miller Barondess LLP in Righthaven v. Hoehn.... I was neither informed of nor did I authorized this action, nor did I authorize any expenditure. Engaging yet another law firm and pursuing an appeal that both the Ninth Circuit and the District of Nevada have declined to find has a substantial likelihood of success is not in Righthaven's best interest...

Presently, Righthaven must satisfy more than $350,000 in judgments entered against it.... For you or anyone else acting on behalf of Righthaven to incur new fees or engage in any activity other than mitigating these liability is directly contrary to the company's best interests.

[....] To be clear, you are fully terminated from any position with Righthaven LLC. You are prohibited from taking further action on its behalf, and may not hold yourself out as an officer, employee, or representative of the company. Any further actions you purport to take on Righthaven's behalf shall be met with requests for injunctive relief and personal sanctions...

The letter to the law firm that Gibson retained is equally direct:

Mr. Gibson does not and has not had authority to enter new contracts and incur new expenses for the company, which presently must satisfy more than $350,000 in judgments entered against it.

I was unaware that Mr. Gibson had retained your firm until Mr. Hoehn's counsel inquired about this development and whether I had approved it. Mr. Gibson has no authority to act on behalf of Righthaven -- and even if he did, the act of pursuing this appeal would add further costs onto Righthaven's already substantial debts -- which I would not have approved... I demand that you cease all billing activity immdiately. I also demand that you provide me with a full accounting of all funds in trust for Righthaven.... All future actions taken with respect to Righthaven require my approval, as I am the only person with the authority to make decisions on Righthaven's behalf unless and until my receivership is terminated.

Finally, in the filing with the court, Pearson notes that this action indicates that Gibson has been hiding certain Righthave funds/assets:

Instead of satisfying Righthaven's substantial judgments, Gibson has elected to allocate Righthaven funds that have been concealed from me to pursue appeals over rights that Righthaven no longer owns, and has done so in a manner that further imperils what is left of Righthaven's assets with additional attorneys' fees awards and sanctions.

One of the common themes we see over and over again is people filing lawsuits just because they're upset about something (to a lesser extent, this also applies to DMCA takedowns). We just wrote about Judge Posner's shredding of Apple's patent litigation strategy, noting that just because you're "really annoyed," it doesn't mean you get to sue. Famed venture capitalist Fred Wilson has riffed on this idea, talking about how he loves investing in innovators rather than copycats, and he feels a visceral emotional anger when he sees an innovator copied, but that's no reason for a lawsuit:

I have often felt that "palpable sense of injustice" when our firm is an investor in the innovator and a copycat competitor shows up. But there is a difference between being pissed and having a legal claim.

Indeed, as we've written before, we recognize the emotional response that comes about when this happens. It's natural to get angry when someone copies you. But is it a reason to go legal? That's much more difficult to justify. In fact, as Wilson notes, often someone copying you can be a good thing:

Knockoffs create competition for the innovator and keep them honest. And they provide an opportunity for those that cannot, for some reason, work with the innovator.

And, as he notes, if the original company is a true innovator, they'll keep innovating and stay ahead of the competition anyway:

If the innovator keeps innovating, as Apple and [YCombinator] have, they will do fine and will enjoy the spoils that come from creating the category and leading it.

And that's really the key in all of this. Competition is not a static snapshot. Time doesn't stand still. Innovation is an ongoing process. Copycats are often a bit behind the leader, but as long as the leader truly understands its market, it's in a much better position to continue innovating and leading. The copycats act as incentive to increase that innovation, and that seems like a pretty good thing, if we believe that greater innovation is a good thing. People have a natural reaction where they think that "copying" is bad -- but if you look at the overall impact, and the fact that it results in greater innovation from the leader as well, it turns out the opposite is true.

I know we've written a few times now about David Lowery's now infamous shaming of an intern because she apparently doesn't give him enough of her money, but that story keeps getting attention. Thankfully, a lot of that attention comes in the form of people from all over the music business popping up to explain (1) how Lowery's factual claims are false , (2) his ethical claims are silly and (3) it's time to get with the future, rather than pine for a mythical past that never existed. Here's a collection of some of the more interesting such posts.

First up, we have Jeff Price from Tunecore -- the company that helps thousands of artists release and sell music. Jeff has more data on how artists make money than probably anyone else alive. And he says that nearly all of Lowery's factual claims are wrong, or at best, misleading. Here's a snippet, but the whole thing is worth reading:

Well here’s some truth about the old industry that David somehow misses.

Previously, artists were not rolling in money. Most were not allowed into the system by the gatekeepers. Of those that were allowed on the major labels, over 98% of them failed. Yes, 98%
.

Of the 2% that succeeded, less than a half percent of those ever got paid a band royalty from the sale of recorded music.

How in the world is an artist making at least something, no matter how small, worse than 99% of the world’s unsigned artists making nothing and of the 1% signed, less than a half a percent of them ever making a single band royalty ever?

Finally, as much as I hate to say it, being an artist does not entitle the artist to get money. They have to earn it. And not everyone can.

This is a point that Lowery and his friends always ignore: because they don't count all the bands that failed under the old system. Those artists don't matter to them. The fact that those guys can make some money today where they made $0 before means nothing to them. The only artists who count are the artists who used to make lots of money, but don't make much money any more. Another example of Lowery being wrong that Price responds to is the claim that recorded music revenue to artists has been going down. Price has data:

This is empirically false. Revenue to labels has collapsed. Revenue to artists has gone up with more artists making more money now than at any time in history, off of the sale of pre-recorded music.

Taken a step further, a $17.98 list price CD earned a band $1.40 as a band royalty that they only got if they were recouped (over 99% of bands never recouped).

If an artist sells just two songs for $0.99 on iTunes via TuneCore, they gross $1.40.

If they sell an album for $9.99 on iTunes via TuneCore, they gross $7.00.

This is an INCREASE of over 700% in revenue to artists for recorded music sales.

Yeah, but you have to actually work at it now. Go read Jeff's entire writeup. It's pretty damning for Lowery.

Next up, we've got famed musician/producer Steve Albini's response, in which he notes that Lowery's facts are wrong and he's pining for a past that doesn't exist and ignoring all sorts of new opportunities:

In addition to vastly overstating the generosity of record labels toward artists in the old paradigm, Lowery openly sneers at the booming avenues for income that define the new music industry, merchandising and live performance.

As is true every time an industry changes, the people who used to have it easy claim the new way is not just hard for them but fundamentally wrong. The reluctance to adapt is a kind of embarrassing nostalgia that glosses over the many sins of the old ways, and it argues for a kind of pity fuck from the market.

It's doomed thinking. When it became obvious that the studio recording industry was not going to remain an analog domain, we built Electrical Audio to be as self-sufficient as possible so we could continue to use those methods we thought had important advantages despite changes in the greater industry. We didn't whine at the moon and expect the rest of the industry to indulge us. We also bought a Pro Tools rig to accommodate the sessions that weren't going to be done in the analog domain regardless.

Adapt to conditions or quit. Bitching is for bitches.

Next up, we've got successful "internet-era" musician Jonathan Coulton, who Lowery and his friends are claiming wrote a post supporting them. But that's only if you read the beginning, where Coulton claims that he agrees with Lowery. If you actually read the whole thing, Coulton's point is much more clear. He agrees that artists should get compensated, but scolding your customers is no way to do it. In fact, he talks about how exciting the future is going to be where more and more stuff is available for download for free, and how that will shake up lots of industries, beyond just music -- and just how exciting that is:

This is my bias: the decline of scarcity seems inevitable to me. I have no doubt that this fight over mp3s is just the first of many fights we're going to have about this stuff. Our laws and ethics already fail to match up with our behaviors, and for my money, those are the things we should be trying to fix. The change is already happening to us, and it's a change that WE ARE CHOOSING. It's too late to stop it, because we actually kind of like a lot of the things that we're getting out of it.

My one quibble with Coulton is that he seems to accept it as fact that artists make less money these days. His own experience and number from folks like Jeff Price above show that's simply not true. It may be true that the small circle of folks, like Lowery, who had some success in the past under the old system, and who then fail to adapt, may make less money, but that's the nature of a competitive marketplace.

Former record label guy Ethan Kaplan, whose insights we've discussed before, also weighed in with a more philosophical take, which is worth reading too. He makes two key points. As a guy who ran technology for Warner Music, he certainly has first hand knowledge about the role of innovation in the music business, and according to him, innovation was seen as a problem, because it broke the gatekeeper basis on which the old labels were built:

Innovation was antithetical to value for content, as it diminished the use of accessibility to increase relative worth.

Get that? He's pointing out that the labels' entire model was built on them being the gatekeeper -- limiting accessibility, in order to artificially suppress supply to keep prices high. The problem with innovation is that it inevitably moves towards greater efficiency. And that means pulling down artificial barriers. In the end, that's what Lowery is really complaining about, even if he doesn't realize it. He and his friends who once had some success as musicians face a more difficult world not because of unethical kids or because of technology... but because the way they used to make money was based on an artificial barrier that limited supply and competition, and allowed them to artificially inflate prices. It was good for them, but sucked for everyone who was kept out of the market. Why do you think this same crew is now arguing for a "new elitism" and directly insulting artists who succeed through more open means? It's because they want to go back to a limited supply. That's not happening.

And that brings up Ethan's second key point. There is no right to make money:

It is not a musician’s god given right to make money from their art. No one ever said this would continue as is.

This is a hard lesson. It doesn’t mean that copyright isn’t important. It doesn’t mean that artists can’t make money. It just means that it’s not a given, nor is it the responsibility of others to make this possible.

No one has ever had a "right" to make money from what they create. They have a right to try to do so. And many people have figured out how to do so under the current system. Those complaining don't seem to understand that you don't just get to sit back and have people give you money. You have to work at it, every day. That's the lesson Amanda Palmer provided everyone with her massively successful fundraising. She didn't raise that money based on any "ethical" arguments or anything having to do with copyright at all. In fact, she's explained how infringement has always helped her. She's able to do that because she works hard every single day to not just create great music, but to connect with her fans at a very deep level. She doesn't scold her fans -- she celebrates them. And because of that, she can make a ton of money and her fans love her for it.

Finally, we've got musician Travis Morrison, who was in a decently successful band (Dismemberment Plan) for a while and now works for the Huffington Post. He points out that this argument that there's some sort of ethical issue with the "kids these days" ignores the fact that past generations got music for free too, and for him, it was a huge boost to both his fandom and his desire to become a musician:

Music is so important to people. It is majorly important to young people. And to me? Literally somewhere below water and air but above food. And I just went for it. I bought a lot of music; I got a lot of free music from whatever sources were at hand; I just had to have it by any means necessary. If you duped a copy of a Dismemberment Plan record in college or something, it's cool. I guess I'd like to have the money, but you know what, I hope you just listened to it with even 1/10 of the consciousness I gave to the music I listened to as a kid--copied, stolen, or bought. And you know, maybe take some of the sermonizing from my peer group with a grain of salt. I think some of them did some of the things I did. Or... maybe a lot of them.

He's basically reinforcing the original point that Emily made and which kicked this whole thing off. Access to music and compensation of artists are two separate issues. The fact is that people know that the technology today enables access to pretty much every piece of music around. And it's a shame that we try to suppress that. The issue of compensation is somewhat separate from that -- and plenty of smart musicians are figuring it out. But arguing that access automatically means you need to compensate musicians at a high level (remember, Spotify's no good according to this bunch) or it's "unethical" just doesn't make sense, and has never made sense.

This debate has been interesting, but I'm glad to see that tons of people who live directly in that world have been coming out to correct the many inaccuracies in Lowery's post, which a few too many people took as gospel without understanding the details.

What is it with super rich sports owners and SLAPP suits? Remember Redskins owner Dan Snyder? Well here's a situation that seems even more ridiculous. Ranaan Katz is a minority owner of the Miami Heat, who just won the NBA championship. You might think he'd be pretty happy right now. Instead, he's suing a blogger and Google, claiming a copyright violation over of an "unflattering photo." Seeing as the photo in question is now quite newsworthy, here it is (and we're happy to explain fair use theories to Katz's lawyers, if they'd like):
The full story is even more ridiculous as you dig into the details. It turns out this is the second time that Katz has gone after this blogger. The first time was for defamation. For what? For running a blog that talked about Katz and his company... and, from the sound of things, posted legal documents that apparently Katz didn't want posted.

Where it gets really bizarre is the massive overreach on the defamation side of things. Because the bar for defamation on a public figure it quite high, Katz's lawyers claim that he's not a public figure -- despite being an owner of the Miami Heat, despite being a well-known successful real estate developer, and despite the fact that there's a street named after him and an "official day" in his honor. Instead, his lawyers have argued that getting the press to report on Katz's legal overreach is an attempt "to make Katz a public figure" even though he clearly is one and has been one. Either way, the blogger, represented by Marc Randazza, responded strongly to the ridiculousness of Katz' original lawsuit. You can see that response below, calling out the fact that a demand for an injunction against any future publication on the blog (as Katz requests) is clear prior restraint and based on no accepted legal theory in a defamation case.

Separate from that lawsuit, it looks like Katz and his lawyers have now tried a second approach, which appears to be an attempt to use the DMCA to censor. He claimed that the "unflattering image" above violates his copyright. A DMCA takedown was apparently issued to Google, who refused to comply. So now both the blogger and Google have been sued. Of course, it's unclear to me how he even holds the copyright in the photo, since he didn't take it. Either way, given the previous actions in the case, it certainly feels like this is a SLAPP-style suit, filed just to be a nuisance to the blogger who didn't fold under the defamation claims (and yes, to Katz's lawyer, that's an opinion). Update: I've added the filing in the copyright lawsuit below, which adds one other detail: the photograph is not registered for copyright in the US. Katz's lawyers point out that since the photo was originally from Israel it doesn't need to be registered, which is true, but could limit the effectiveness of any lawsuit. Separately, according to Randazza, Katz claims to have had the copyright in the photo assigned to him from the original photographer. None of that changes any of the analysis here about the lawsuits in question.

Of course, all this has really done is activate the Streisand Effect, and get a lot more attention to Katz, to the lawsuits, to the blog and, of course, to the photo itself. You would think that someone with so much money and business success would have thick enough skin to know how to ignore such things. In the meantime, Randazza has pointed out how bizarre it is to go from suing an individual blogger to adding one of the largest companies in the world to the fight on the other side, for no good reason:

My guess is that their strategy is this: If you keep whiffing against a small time blogger, you might as well then just pick a fight with one of the biggest companies in the world. Sit back and get your popcorn and watch how this one works out. I want to thank Mr. Katz for bringing in an 800 lb gorilla to help me in his unsupportable SLAPP suit.

We have yet to speak to Google's lawyers about this case, but we expect that they will be receptive to standing up for the First Amendment along with us.

Sometimes I think there should be mandatory training on the Streisand Effect before one is allowed to become a lawyer.

There's a fairly constant pattern in the world of copyright enforcement. The media companies claim that piracy is "destroying" their industries, although they never offer any independent evidence to back this up. They "demand" that governments "do something" -- by which they mean introduce harsher penalties for unauthorized downloads. Because of the hypnotic effect that musicians and artists seem to have on politicians, governments happily oblige, even though there is no evidence that such laws will help artists. After the laws come in to force, online sharing may dip for a while, but soon returns to previous levels, so the media companies start whining again, and demand yet tougher penalties.

Of course, if any of those participants in this never-ending cycle stood back and looked at what was happening, they would see that the very fact the copyright companies keep coming back for more and harsher copyright laws offers clear proof the current approach just isn't working. Instead, they seem to believe that even though it has failed to work every time in the past, if the penalties could just be made sufficiently cruel and painful, suddenly everything would be OK.

Unfortunately, it looks like it's Japan's turn to undertake this exercise in futility:

Japan’s legislature has approved a bill revising the nation’s Copyright Law to add criminal penalties for downloading copyrighted material or backing up content from a DVD. The penalties will come into effect in October.

The Upper House of the Japanese Diet approved the bill by a vote of 221-12, less than a week after the measure cleared the lower house with almost no opposition. Violators risk up to two years in prison or fines up to two million yen (about $25,000).

An earlier article by the same author, Daniel Feit, on Wired, spelt out some of the insanely restrictive rules that will soon apply:

it would be illegal in Japan to make any copies of any movies or games, illegal to upload the data, illegal to download the data, illegal to sell copies of the data and well as illegal to sell a device that enables playback of the copied data. All of these actions would carry stiff penalties.

The new law's effects might be even more ridiculous:

Japanese attorney Toshimitsu Dan told IT Media that even watching a YouTube video could be grounds for arrest "if the viewer is aware that downloading [such material] is illegal."

Since people will inevitably carry on doing all these things, Japan's legislation will simply crimininalize an entire generation. That means that some of them will probably end up in prison for completely trivial infractions; it will also lead millions more people to question their respect for laws that are so at odds with what they regard as normal and fair.

Perhaps dimly aware that tough sanctions won't work – or maybe just greedy – some music groups want Japanese ISPs to install a system that they claim can spot unauthorized uploads even before they reach the Internet. As TorrentFreak explains:

Once a match is found, rightholders want ISPs to automatically block the allegedly infringing content. But according to one report, there may even be requests to send out warning letters to uploaders. If implemented this would amount to the most invasive "3 strikes" style regime anywhere in the world.

To add insult to injury, ISPs are expected to pay for allowing the music industry to spy on their users 24 hours a day. Since that cost will inevitably be passed on, that means that customers will be forced to pay for the pleasure of undermining their own privacy, having their ability to upload legitimate material curtailed, and receiving unwarranted threatening letters. Sounds like the Japanese recording industry has been watching Terry Gilliam's "Brazil" too much.

This latest call for total surveillance on top of probably the harshest laws passed yet against unauthorized downloads raises an important question: when the current measures fail -- as they surely will -- what will the copyright industries demand next in a further forlorn attempt to deter file sharing? Life imprisonment? Amputation of the mousing fingers?

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Karl Bode, over at Broadband Reports, absolutely destroys stock analyst Craig Moffett for doing his usual song and dance. If you're unfamiliar with Moffett, Bode has the details:

Like any good short-sighted investor, Moffett has urged companies to not upgrade their networks, insiting that caps and overages are the "next generation of communications." The irony of course is those telcos who listened and didn't upgrade their networks are now having their lunch eaten by cable providers on a massive scale, which, if Moffett's firm and client investment interests lean heavily toward cable operators, is something that's working out rather well for him and them.

Less network investment, less competition, higher prices. Great for investors, not so great for you

Bode's piece focuses on Moffett's silly analysis that the DOJ's interest is in how Comcast and Time Warner are trying to stifle Netflix and Hulu and that will somehow increase prices (huh? what?!?) because they'd take away Moffett's preferred solution of anti-consumer data caps.

However, I wanted to focus in on the larger issue here: the idiocy of short-term Wall Street thinking over long term strategy. Wall Street functions on a quarterly basis mostly -- with an occasional nod to looking out a full year, but rarely anything further than that. This creates stupidly short-sighted incentives that are deathly towards anyone with any long term goals or strategy. It argues that any big strategic investments don't make sense, because they cost lots of money in the short term, but you won't see payback until outside the myopic window of vision of these Wall Street analysts.

Perhaps that's great for day traders, but as Bode notes, it's bad for the public. And here's the thing: it's actually even worse for companies. It's unfortunate how many companies find themselves slaves to Wall Street analysts views in making their strategic planning efforts. Because that holds them back from actually making the important big strategic investments they often need for the future. Every so often you have a more visionary leader who simply ignores the folks like Moffett. You get situations like Ivan Seidenberg at Verizon, who ignored Moffett and invested in fiber -- which is why it's still competitive today. Unfortunately, as Seidenberg got closer and closer to retirement (which happened last year), the company backed away from continuing its build out. Short term thinking over long term thinking.

In some ways, this is the flipside to the Innovator's dilemma. It's an explanation for why big legacy companies fail to respond to disruptive innovation: because they can't. Because they can't put in the effort to be ready for disruption and instead leave themselves wide open to such disruption by not investing in their future, but rather by listening to the Craig Moffetts of the world -- such that the money that could be building a company for the future instead ends up in the hands of Moffett's real clients: the short-term investors.

If we want to build a stronger economy that builds jobs and continues to innovate, we have to figure out a way to diminish the power of Wall Street's short-term focus, and how to incentivize companies to understand what investing for the long run means.

Wikipedia founder Jimmy Wales is speaking out against the attempt to extradite Richard O'Dwyer from the UK to the US. As we've been detailing over the past year, O'Dwyer ran a site called TVShack.net, that was a search engine for TV shows. It pointed people to the results, some of which were authorized -- and some of which were infringing. But, of course, a search engine should not reasonably be blamed for the results in points to. In fact, the admin of an extremely similar site in the UK, TV-Links, had faced criminal charges in the UK, but was found not guilty, because just linking to infringing content is not a crime. And yet... the US has pushed really hard to extradite O'Dwyer, and tragically, the UK has approved this charade.

Wales recently met with O'Dwyer and learned the details of the story, and was quite reasonably horrified:

Given the thin case against him, it is an outrage that he is being extradited to the US to face felony charges. No US citizen has ever been brought to the UK for alleged criminal activity on US soil. There is a disparity here that ought to raise concerns at the highest levels of government in both the US and UK.

From the beginning of the internet, we have seen a struggle between the interests of the "content industry" and the general public. Due to heavy lobbying and much money lavished on politicians, until very recently the content industry has won every battle. Internet users handed the industry its first major defeat earlier this year with the epic Sopa-Pipa protests over planned copyright laws that culminated in a widespread internet blackout and 10 million people contacting the US Congress to voice their opposition.

O'Dwyer is the human face of that battle, and if he's extradited and convicted, he will bear the human cost.

Wales has set up an online petition addressed to the UK government seeking to stop the extradition of O'Dwyer. Who knows if it will actually have any impact, but getting more people to speak out about this ridiculous overreach by ICE and the Justice Department would be a good thing.

For many years I've been a big supporter of Craigslist, both as a user and an observer of innovative businesses. I've even argued that the company itself is too modest in pretending that it isn't a profit-maximizing firm. I've frequently defended the company when it was attacked with bogus lawsuits. However, for years, I've been baffled by Craigslist's insistence on being isolationist against the rest of the internet. Almost exactly seven years ago, we were disappointed to see they were shutting down a search tool that made Craigslist easier to use. And, over the years, we've seen this same consistent pattern, whereby the company gets upset at anyone who builds on their work -- even if it takes no money away from Craigslist and likely drives more traffic to the site. Just last year, for example, we wrote about Craigslist bullying an online aggregator.

Late last week, it went down this same path yet again, but this time it picked on a service that's really really popular (more so than most of the others it targets): PadMapper. PadMapper is a pretty neat tool if you're looking for a place to live. It builds on a few different listings sites -- including Craigslist -- to provide much more value to the listing itself, such as by including an embedded map. It sends all the traffic to the original site, so it's not taking away any traffic. It's enhancing Craigslist's value. When others increase your value, you should applaud. But, here, as in the past, Craigslist sent a legal cease-and-desist.

Craigslist has regularly defended these takedowns, by claiming that it just wants people to come directly to its site, and that's part of its view of the "community." But, again, PadMapper was driving more people to the site and making it even more useful to them.

What's interesting this time, however, is that given how popular PadMapper is, and the fact that the guy behind PadMapper is asking people to (politely) suggest to Craig and Jim that they rethink this policy, I wonder if the company will finally change its mind. It's been getting a lot of attention in the tech/startup community. Even though Craigslist has done this before many times, this is the first I can remember doing it to a site that is so popular.

As I've said in the past, I think Craigslist is making a big mistake in blocking these kinds of things. I recognize their reasoning, but at this point, it's just silly. The rationale for blocking these other sites just doesn't add up. There's simply no reason to not be "neighborly" and allow others to drive more traffic to them. It's definitely disappointing to see the company keep this policy up for so long.

A few weeks ago, we wrote about influential appeals court Judge Richard Posner, who was slumming it down in a district court for fun (appeals court judges do that sometimes) and gave a brief statement about his plans to dismiss a major patent lawsuit between Apple and Motorola Mobility (now owned by Google). The patent dispute was over smartphones, so given the Google/Apple battle, it was seen as a fight over whether or not Apple's iPhone-related patents might stop Android. After Posner initial announcement, Apple sought a further chance to convince Posner he was wrong, leading to a followup. However, late last week, Posner came out with his full ruling (embedded below) and it's pretty devastating.

The ruling itself is a bit technical, but basically, the companies did a horrible job trying to show any "damages," so Posner noted that the evidence on damages was inadmissable, but without that, what kind of case is there? Apple then tried to claim that they should be able to get "nominal damages," which is basically a tiny (meaningless) sum of money because there was no clear actual damages (or any statutory damages), but a "wrong" was still committed. In other words, Apple really really badly just wanted the court to say that Motorola infringed, even if it meant getting a dollar for it. Posner, while noting that there can be nominal damages awarded by a judge, it makes absolutely no sense to sue for nominal damages -- and thus chastised Apple:

It’s not as if nominal damages were compensation for a nominal harm. They are a symbolic recognition of a wrong that produced no harm, though it may have infringed a right. You can’t go into federal court and say you had a contract with X and X broke it and you’re really annoyed even though you sustained no injury of any sort (in fact you made money because you're contracted at a higher price) so please give me a judgment for $1 that I can pin on my wall.

Motorola, for its part, doesn't get off easy either. Its own damages expert (on its counterclaim) made some outrageous claims that Posner calls out as well, including a ridiculous claim that a single patent taking out of a much larger portfolio could get a license of "up to" 40 or 50% of the entire portfolio. Posner mocks the use of "up to" noting that it "covers a lot of ground." Then, Motorola's "expert" tries to change his story, claiming at least 40 to 50%. Posner notes that this is just as vague, but now vague on the upside, rather than down, and then chides the expert for giving no actual basis for this estimate, before bringing it back around to the obvious real reason for the crazy damages estimate:

“Going for broke” is the inescapable characterization of Motorola’s damages claim. Motorola claims to be entitled to a minimum royalty of 2.25 percent for a license for the patents in the portfolio that contains the ‘898. Though it’s the only patent in the portfolio that remains in this suit, Motorola claims to be entitled to damages equal to (or “up to,” or “at least”—it seems not to have made up its mind) 40 to 50 percent of 2.25 percent, which would be 0.9 to 1.125 percent of sales of Apple devices that infringe the ‘898.

Finally, with both sets of damages requests dismissed, there's the question of injunctive relief (blocking each other from making the product). There again, Posner finds the whole thing to be a waste of time. He goes back to the fact that both companies totally failed in putting forth reasonable damages claims, saying that it's not that it's impossible to do so, just that these companies went too far:

The problem is not that damages cannot be calculated, but that on the eve of trial, with the record closed, it became apparent that the parties had failed to make a responsible calculation.

He goes on to mock Apple's claim that it was losing marketshare to Motorola, noting that even if he granted an injunction, it would be so easy to change Motorola's smartphones to avoid infringement that it would have no impact on Apple's dwindling smartphone marketshare. He also points out that the "value" of most tech patents are really to be used defensively, rather than offensively, and suggests that it's silly to be fighting over such small pieces of the smartphone ecosystem. Basically, letting either party win is pointless, saying it would create a "windfall" for the other side.

Continuing in this vein, Posner again mocks Apple's claim that its brand recognition and goodwill suffered from this competition, relying on a case that focused on a small company that faced such troubles. Posner notes the ridiculousness of Apple using a ruling designed to protect a small company here:

Apple is not a “small company”; its market capitalization exceeds that of Google and Microsoft combined. To suggest that it has suffered loss of market share, brand recognition, or customer goodwill as a result of Motorola’s alleged infringement of the patent claims still in play in this case is wild conjecture.

And then notes that Apple seemed to want to turn this into a show trial about how people love the iPhone:

In its latest written and oral submissions Apple attempts what I told its legal team at a pretrial conference I would not let it do in the liability trials then envisaged: turn the case into an Apple versus Motorola popularity contest. Apple wanted me to allow into evidence media reports attesting to what a terrific product the iPhone is. I said I would not permit this because the quality of the iPhone (and of related Apple products, primarily the iPad) and consumers’ regard for it have, so far as the record shows, nothing to do with the handful of patent claims that I had ruled presented triable issues of infringement. Apple’s “feel good” theory does not indicate that infringement of these claims (if they were infringed) reduced Apple’s sales or market share, or impaired consumer goodwill toward Apple products.

As Posner notes, Apple may have suffered harm from having to compete against Motorola, but that "harm is a perfectly legal one" unrelated to the specific patents in question.

The notion that these minor-seeming infringements have cost Apple market share and consumer goodwill is implausible, has virtually no support in the record, and so fails to indicate that the benefits to Apple from an injunction would exceed the costs to Motorola. An injunction that imposes greater costs on the defendant than it confers benefits on the plaintiff reduces net social welfare.

In the end, he dismisses the case with prejudice (so they can't just refile it), arguing that to do otherwise would just give the companies a second shot at trying again to prove damages.

Via Slashdot, we learn that Microsoft's "Threat Management Gateway" (which some companies apparently use to protect against malicious websites) has classified the website for donations to the Free Software Foundation as "gambling," meaning that it's blocked for many users. This was first discovered by a user on Reddit who received the following notice:

The page you are trying to browse to is categorized as "Gambling"

If you believe you are getting this message by mistake, try contacting your administrator or Helpdesk.

Technical Information (for support personnel)

Error Code: 403 Forbidden. Forefront TMG denied the specified Uniform Resource Locator (URL). (12233)
IP Address: [IP Redacted]
Date: 6/14/2012 6:31:39 PM [GMT]
Server: [server name redacted]
Source: proxy

You can confirm this at Microsoft's site if you type donate.fsf.org in the box. Currently, it shows the following:

What's amazing is the regular FSF page just shows "Technical Information" and "Shareware/Freeware." So it seems that the "Gambling" designation was just added to the donate page. Amazingly, the Reddit user noticed this nearly two weeks ago, and as I type this it's still showing up classified as gambling, though FSF has put in a request to change it.