by Mike Masnick
Wed, Jun 19th 2013 1:31pm
by Glyn Moody
Tue, Jun 18th 2013 8:02pm
from the well,-look-at-that dept
One of the problems with the debates around copyright and patents is that they too often assume that intellectual monopolies are necessary in order to promote innovation or even basic economic activity. But that overlooks all kinds of domains where that's not true. In the field of technology, free software and the other open movements based on sharing are familiar examples of this kind of thing. Less well known so are the so-called "informal economies" found in many parts of the world.
To its credit, WIPO has commissioned a report on this whole area, entitled "Conceptual study on innovation, intellectual property and the Informal economy" (pdf). Here's how it defines the informal economy (IE):
The most appropriate conceptualization of the IE is as a continuum from formal to informal, where different activities and actors occupy different points along this continuum. The transition from informal to formal status is gradual; single firms, households, and workers may carry out some activities informally and others formally at the same time.
Despite that vagueness, the informal economy is important for many countries:
Estimates suggest that over the past two decades, informal employment or employment in the IE made up more than half of non-agricultural employment in most middle- and low-income countries. Sub-Saharan Africa is the region with the largest estimates for the contribution of the informal sector to gross domestic product (GDP): the IE makes for nearly two-thirds of GDP including agriculture and half of non-agricultural gross value-added (GVA). It is followed by India, with around 50% of total GDP. Then come countries from the Middle East, North Africa and Latin America.
For Techdirt readers, the most interesting part of the report will probably the chapter that concerns the use of what it calls "Mechanisms to appropriate returns from innovation in the informal economy", including "formal appropriation" through intellectual monopolies -- or, rather, their absence:
On the one hand, it can be argued that the absence of formal appropriation and the work in clusters make up the strengths of the IE's innovation system. In this view, the innovation system in the IE largely rests on "collective learning experiences" based on low entry barriers and free flows of knowledge. The dynamics among similar enterprises in collective geospatial clusters determine rates of innovation, economic successes and the value of the cluster. Individual firms or economic units are not the key determinants of innovation and efficiency.
Naturally, as a report commissioned by WIPO, the opposing viewpoint is also considered:
Appropriation efforts must also be considered in light of the social systems -- specifically family structures, community networks and commercial clusters -- within which the IE operates. Knowledge flows are characterized by trust, reputation, reliability, social and cultural signaling, and the willingness to pool resources and collaborate. This facilitates access to information, and critically reduces transaction costs.
Clearly, in this context, the notion of formal appropriation of ideas can be considered alien and inadequate in this IE context. As one study suggests, actors believe that formal IP based on exclusions and proprietary knowledge is not compatible with the knowledge diffusion and learning processes of the IE which are based on communities, clusters and the exchange of information.
On the other hand, and in contradiction to the above view, it has been argued that the presence of perpetual copying and absence of appropriation mechanisms is seen as a barrier to scaling up innovative activity in the IE. Entrepreneurs are unable to develop their businesses beyond a certain stage as they lack exclusive rights to or control over their innovations. Therefore, they have fewer incentives to invest in machines or human capital (e.g., training new apprentices), and are unable to reach certain economies of scale.
There seem to be a lot of assumptions in there -- for example, that those operating in the informal economy don't pay their taxes fully. That's conflating the black economy, where taxes are certainly dodged, with the informal economy, which is about how work is organized, not its compliance with the law.
Similarly, the assertion that companies will give up innovating just because others don't try to patent everything they produce is contradicted by the experience of open source, which eschews patents, but has driven an accelerated pace of innovation in the world of proprietary software.
Firms may also forgo the possibility to specialize in different styles and techniques, as copying is the norm. The absence of branding or certificates/labels, leading to anonymity of the sector's products in the eyes of consumers, is said to prevent producers of good quality products from being rewarded.
Due to this systematic effect, only small incremental improvements in processes and some incremental improvements or adaptation of products are likely to be achieved. Economic growth and productivity gains in the informal sector are hence below par. The IE might also have a negative influence on the formal sector. The reasoning behind this is that informal firms that fail to comply with various economic regulations or to meet their tax obligations are able to expand and take market share away from formal firms, even when they are less efficient overall. At worst, economists are concerned that informal firms may also undermine the incentives of formal sector firms to innovate, adopt new technologies, develop their IPRs or develop brands.
Despite these biases, the report is a valuable contribution to an area that has been largely overlooked until now. The more that WIPO and its world become cognizant of the very different nature of the informal economy, the better it will be for them -- and for future debates about patents and copyright.
by Mike Masnick
Tue, Jun 18th 2013 3:50pm
from the that-would-be-a-very-bad-idea dept
Of course, the grandstanding politicians who jump on moral panics absolutely hate Section 230. They always have. As we've discussed in detail over the years, the type of politician that focuses on grandstanding on moral panics the most is always a state attorney general. They make grand public pronouncements against companies they don't like, often with absolutely no legal basis, and then browbeat them into a "settlement" just so the companies can stop having to deal with the AGs lying about them in public all the time. Chris Tolles, the CEO of Topix, gave a great detailed explanation of how various AGs ganged up on him, basically issuing a press release accusing him of doing horrible things, totally misrepresenting what the company did, but without naming a single law they violated (because they hadn't). In response, Tolles did what most people would think you should do in that case: explain to the AGs what Topix actually did, and why it was perfectly reasonable. In response, the AGs (more of them this time) issued another press release, taking direct statements that Tolles had told them further out of context, and making the company sound even worse. Eventually he "settled" because fighting them was costly.
We've seen this over and over and over again. AGs have attacked Twitter and Craigslist and Facebook and Comcast and Google and over and over again.
Of course, the lack of a legal basis often stymies these attempts, and a big thing that gets in the way: Section 230. So it should come as little surprise, as noted by Eric Goldman today, that the states Attorneys General are planning to ask Congress for an exemption to Section 230 when (you guessed it) states AGs bring a case. He heard it today while on a panel at the annual meeting of the National Association of Attorneys General, where he was on a panel about Section 230. During the discussion, Goldman says that an unnamed Attorney General (he didn't catch which one) made a comment about the plan.
Section 230 has been under attack for some time, but going to Congress to try to make that kind of exception would be a huge disaster. It would allow these AGs to continue with bogus grandstanding campaigns, but actually with the ability to create massive problems for companies actually trying to offer usable, open platforms for users. Nearly every company would need to proactively filter any kind of user generated content, and would be at risk of tremendous legal liability if "bad stuff" got through. This would be a huge attack on internet innovation, all so some ambitious politicians can try to make more headlines by attacking tech companies. The state Attorney General position is considered the classic "stepping stone" position, which many politicians use to run for Governor or Senator in their state, and one way to help with the campaign is to get lots of headlines around "protecting the children" and whatnot. So, basically, these politicians would be breaking one of the key elements that has allowed internet innovation to thrive, to help them get a few more headlines in their quest for higher office.
by Derek Khanna
Wed, Jun 5th 2013 12:12pm
from the share-your-stories dept
On Thursday, Chairman Goodlatte's legislation will be before the House Judiciary IP Subcommittee. Unfortunately, while the wireless industry and others who have been against unlocking will be represented, there will be no witnesses at the hearing who have been part of our campaign for unlocking (however, Consumers Advocacy may be an advocate for the consumer on this issue). This is very disappointing news.
I met with some of the Members and their staff on this unlocking issue - and I was asked to submit formal written testimony to the committee. This testimony will be available to all Members during the hearing to consider while they also hear from their witnesses. I have been writing up a thorough presentation on the facts and why unlocking is important for the mobile market, liberty and consumer choice. Now I'm asking for your help and perspective. If you have a story on how unlocking affected you, I'd like to hear it. If you have information that should be relevant to the testimony, I want to include it.
In particular, Chairman Goodlatte's legislation would legalize unlocking, but only temporarily, allowing the Librarian of Congress to rule all over again. At the same time, it will keep this technology as illegal for businesses to develop or sell.
If you are an entrepreneur who would like to offer a service for consumers in this category I would love to hear your story. What is the actual impact of unlocking being illegal, and if it were legalized for consumers and businesses what new market models may flourish?
Does anyone have any information on the impact of this restriction upon the resale market? Has anyone been sued or prosecuted for this? I am particularly interested in stories from our service members who may have to unlock their phones abroad. Has anyone ever called their phone provider and asked to unlock after their contract expired and were told no? These are stories I want to include.
Please comment here, e-mail me at Khannaderek@gmail.com, tweet me at @derekkhanna, or comment at Facebook.com/derekkhanna. I'm looking forward to hearing your suggestions.
In the wake of my report on copyright reform, my last day on the Hill was January 6th. Since that time, I have dedicated the past five months to this campaign, which I believe is a critical post-SOPA battle. As I argued on Boing Boing, this is a test of our ability to move positive action for small, winnable battles. If we can win on this issue, we will be able to build on this coalition going forward. Here is another article on how to approach reforms to copyright law.
So again, I want to thank all of you, I hope to hear data and stories from you. And I want to give credit where credit is due. Many were involved in this campaign, including Public Knowledge and Sina Khanifar. Without Jennifer Grancik with Stanford Law there may never have been an unlocking exception to begin with. And without thorough coverage from Techdirt, this issue may never have risen to prominence.
by Mike Masnick
Sat, Jun 1st 2013 9:00am
from the make-stuff-in-your-home dept
- 3D Print on the cheap: The interestingly named Buccaneer 3D printer from the also interestingly named Pirate3D Inc. is one of the cheapest 3D printers around these days, running a bit less than $400. And I remember when people were excited that such printers finally got under $2,000! There are a few other 3D printers around a similar price out there, but it's nice to see that the Buccaneer is focused on both ease of use of the 3D printer, while also trying to make the device itself look nicer than many other 3D printers. Cheaper, easier, nicer looking? Those are things that help 3D printing go mainstream.
- 3D print without 3D printed parts: Honestly, I just found this project more amusing for the fact that it's a 3D printer where the makers spend a lot of time mocking 3D printer output. It's the OpenBeam Kossel Pro, a 3D printer without any parts manufactured by a 3D printer. As the creators point out, 3D printing is great for rapid prototyping, but sometimes good old fashioned mass produced injected molded parts are the right tool for the job, and can make things cheaper on a mass scale. So they've made a 3D printer that is too elitist for its own parts.
- Make by cutting down, not building up 3D printing is great for building stuff, but sometimes you have to work in the other direction. The folks at Otherlab in San Francisco have built the Othermill, a small, relatively inexpensive CNC mill device so that you can build stuff, such as electrical parts/circuit boards etc.
- Print on stuff: Okay, so the first items above are all about building stuff, but what do you do with that stuff once it's built? Well, you might want to label it, and that's where Tag On That has you covered. It's a printer that lets you label, well, pretty much anything. They claim that it takes the same technology that puts labels on things like phones, computers and keyboards, and puts that into the hands of the everyday consumer. I have to admit, the first time I saw the "print head" template "squash" into the item it was printing on it, it made me smile. I had no idea that's how you do that.
- Print money. Oh, and finally, just because it's funny, we'll link to Regular Everyday Normal Guy Jon Lajoie planning out his Kickstarter campaign to make himself super rich rather than just pretty damn rich. Videos possibly NSFW depending on where you work.
by Mike Masnick
Thu, May 30th 2013 8:01am
from the oh-really-now? dept
Basically, the paper tries to paint a rosy picture, rewriting history left and right -- where the labels were dragged kicking and screaming very, very, very slowly into the future by various tech services, often having to fight expensive and damaging legal battles. The RIAA describes this as a "success" story, one "of vigorous licensing of new models by large and small record labels, large investments in music services and related technology, and a vibrant digital market that dwarfs the growth in other media industries."
This is kind of hilarious if you actually lived through any of this. Every new service got threatened or sued. The "authorized" services from the RIAA were purposely designed to be awful, expensive and fragmented. Yes, the music industry has moved forward, by inches, over the past 15 years, but never willingly and never with the kind of speed and embracing of innovation that was necessary. Marks also, somewhat ridiculously, pretends that Carrier ignores the content side of the equation. He did not. He repeatedly made it clear from the various interviews that everyone understood the importance of content, which is why they all desperately wanted the recording industry to move forward with them, which it resisted at every turn.
Professor Carrier also mischaracterizes the relationship between technology and copyright. Professor Carrier inappropriately pits copyright against innovation as though the two are boxers sparring for control rather than partners that work collaboratively and interdependently. The desire of consumers to listen to music has been a driving force for technology and recording companies to build and invest in new platforms and configurations, from vinyl record players to cassette players to CD players to iPods.The only mischaracterization here is from Marks. Carrier (and the people he speaks to) are pretty clear that the innovators wanted to work with content creators. It's just that the RIAA and its labels did everything they could to make that impossible. Yes, eventually walls were broken down, but way later than was reasonable. The industry refused to license digital music at all for years. It put restrictive DRM on it that made it less valuable. It sued left and right and scared innovators and investors entirely out of the market. It had no interest in actually working with innovators. All it wanted was massive upfront payments.
In the end, though, the crux of the RIAA's argument entirely misses the point of Carrier's piece. It basically says "look, there are lots of services today, what are you complaining about?" But the point was never that killing Napster stopped innovation, but rather that it hindered the pace and nature of that innovation. And the RIAA doesn't address it at all. There's a difference between the direction of change and the rate of change, and the key point is the rate of change, but all the RIAA wants to discuss is the direction, which is meaningless. Innovation can't be denied forever, so of course the direction will move forward. What Carrier's piece discussed, quite clearly, was the pace -- and the RIAA wants to avoid that, and pretend that everything that happened between 15 years ago and now didn't happen to get here. If we were at the point we're at today in 2003, they might have a point. The fact that it's taken us this long and we're still just reinventing radio... well, we've got a long way to go and should have been much further along.
The final response to Carrier's paper comes from law professor Randy Picker, who generally is a pretty strong supporter of copyright. His paper is called Copyright and Innovation: Deja Vu All Over Again, which basically argues that, yes, tech and innovation are in conflict, but because Carrier's paper doesn't suggest any reasonable solutions, it adds little of value.
The real question is not whether copyright matters for innovation; the entire history of copyright and distribution technology suggests that it does. Instead, we need to focus on a more nuanced way in which particular copyright settings can matter for innovation. “The Untold Story” does very little of that. So the article is critical of the efforts of music industry incumbents to protect their positions through litigation and also critical of possible reforms to copyright suggested by academics (including by me). But the article does not really say much about how one would write a copyright statute with distribution innovation in mind.Notice some built-in assumptions, which may not actually be true. Either way, he looks specifically at three areas of copyright law that are often criticized: duration, secondary liability and statutory licenses. He points out that duration is mostly meaningless, since so much infringement is recent material. On the other two points, he admits that they create uncertainty for businesses, but then suggests that existing rules on both have been set to favor innovation:
The critical question here is how we should calibrate the tradeoffs between copyright enforcement and open-ended innovation. Both Sony’s test and the DMCA safe harbors tilt in favor of innovation and sacrifice the enforcement of copyright. Defenders of those regimes often focus on precisely the way in which the safe harbors enable innovation. The classic vision of Silicon Valley innovation is two guys in a garage, not two guys with their lawyer. Critics of those regimes, and “The Untold Story” points to this work, want more tailored rules to better balance protection of copyrights and innovation, but the discussion is precisely about that tradeoff and the relationship between innovation and copyright has not been lost on anybody participating in that discussion.Of course, it's not clear that it's actually a tradeoff at all. This assumes that "greater enforcement" actually leads to some noticeable benefit -- and we've seen little evidence to support that (at least in any long term manner). On the other hand what we have seen -- which Picker totally ignores -- is that when innovation occurs it tends to massively expand the markets for the creators themselves. The point I've made repeatedly is that a mere four years after Jack Valenti said that the VCR would be the "Boston strangler" to the movie industry, the home video market was making more money than the box office.
These aren't "tradeoffs." These are maxima reductions. They're removing efficiency from the system to protect an inefficient, legacy way of doing business. That doesn't help expand the market. True innovation creates a bigger pie. It may be challenging at first, because people haven't totally figured it out, but it's not about one party losing and one winning. This isn't a zero sum game, like many seem to think. The "tradeoffs" are between a smaller pie and a bigger one, and Picker seems to be upset if the law favors a bigger pie. I can't see how that makes any sense from an economic standpoint.
Not surprisingly, I don't find either of these responses particularly compelling or convincing. They're arguing things based on claims without a basis, and ignoring reality. What Carrier's paper did so well was bring actual reality into the picture: the stories of entrepreneurs and investors whose innovation was chilled or stopped. The RIAA can pretend it didn't happen and Picker can pretend that it doesn't matter, but basic history and economics say that both are not true.
by Mike Masnick
Wed, May 29th 2013 1:33pm
from the good-for-them dept
Thankfully, some are already pushing back against the RIAA's crazy desires, and the Internet Association has pointed out that this move by the RIAA highlights the industry's real end goal with SOPA: to make the internet responsible for propping up their business model.
“The DMCA provides a framework that appropriately balances the interests of copyright owners with the rights of users and the development of new and innovative products and services. The RIAA's statement that it wants to change the DMCA lends support to those who suspected that SOPA's stated objective of targeting offshore websites was really a stalking horse to achieve the RIAA's true objective — to amend the DMCA by having Internet companies police user activities,” Internet Association CEO Michael Beckerman said in a statement to MT. “Congress should reject the RIAA’s invitation to amend the DMCA.”Of course, a reasonable argument could be made that the DMCA's safe harbors are already too far tilted towards copyright holders, considering the number of bogus takedowns we talk about regularly. A much more reasonable system would be a true notice and notice system, in which those accused of infringement would be given an opportunity to respond to a takedown notice before the content itself is taken down. That simple change would help prevent the all too common case of the DMCA being used for censorship.
Separately, the RIAA's end goal goes way beyond just making internet companies police user activities. They want nothing less than to have the internet re-crafted in their own image, protecting an obsolete business model while limiting any competition and disruption they don't like.
by Mike Masnick
Wed, May 29th 2013 11:35am
from the hard-to-count-what-we've-lost dept
The Wisconsin Law Review, which published Carrier's paper, asked a few people to write responses to Carrier's paper, and they recently published the different responses, including one from a lawyer at the RIAA, one from another law professor... and one from me. This post will be about my paper -- and I'll talk about the other papers in a later post. My piece is entitled When You Let Incumbents Veto Innovation, You Get Less Innovation. It builds on Carrier's piece, to note that the stories he heard fit quite well with a number of other stories that we've seen over the past fifteen years, and the way in which the industry has repeatedly fought innovation via lawsuits.
You can read the whole paper at the link above (or, if you prefer there's a pdf version). I talk about the nature of innovation -- and how it involves an awful lot of trial and error to get it right. The more trials, the faster what works becomes clear, and the faster improvement you get. But the industry's early success against Napster made that nearly impossible, and massively slowed down innovation in the sector. Yes, a few players kept trying, but it developed much more slowly than other internet-related industries. And you can see why directly in the Carrier paper, where entrepreneurs point out that it's just not worth doing something in the music space, because if you want to actually do what the technology enables, the kinds of things that are cool and useful and which consumers would really like... you'll get sued.
Take that away and you get less trial and error, and slower innovation (and less interesting innovation). Look where we are today, fifteen years later. We've basically reinvented radio and put it online. We're barely getting past that stage. You can read the whole paper for more on that, but I did want to highlight one key section in the paper: which is how the content industry always completely downplays the importance of the technology and services. Any time there's a successful new service -- whether it's iTunes or Netflix or Spotify or Pandora or YouTube -- you'll find stories about the incumbents trying to denigrate and mock it, or even outright kill it. They talk about how those services are "nothing without our content," and they get angry if any of those services make any money.
This is ridiculous. Yes, the content is important, but if it was just the content, then those services never would have become successful in the first place. The reason those services are successful was because they actually innovated and provided convenience, access, ease of use and other nice features that were missing before. Too many copyright maximalists simply can't bring themselves to admit that you need both the content and the services working together. When you trash those services, and attack them or try to saddle them with ridiculously high fees, you break down what works, and you actually drive more people to infringing alternatives. Here's a snippet from my discussion on this point (with footnotes removed):
Throughout all of this, a unique pattern emerged. The labels would always massively overvalue their own content, while simultaneously undervaluing the various innovative services. Phrases along the lines, “without our music, they’d be nothing” were heard frequently in arguing why it was all about the content. The truth, however, is that it was the combination of the two that were important. Yes, the services needed the music to work, but so too did the labels need these new services to adapt to a changing marketplace. This should have been obvious from the fact that people would flock to these new services, yet failed to show up to the record labels’ own attempts to innovate or provide something new. However, as soon as any service showed any kind of promise, even if “licensed,” the labels would seek to kill the golden goose by claiming that the rates were unfair, and the innovators were making money unfairly off the backs of the copyright holders (by which they meant the labels, not the musicians, of course).I find this tragic. If the entertainment industry had recognized early on that the tech industry wasn't an enemy, but a provider of wonderful new tools and services that helped to expand their market, we'd be much further along. Getting these things right takes time and experimentation, but the legacy players refuse to accept that. They want a perfect solution that fully replaces their old business 100% (or more) without any disruption -- and they want to accrue all of the benefits, without any going to the actual innovators. That, of course, doesn't help anyone, least of all the actual content creators.
Take, for example, the brief heyday of music video games like Guitar Hero and Rock Band. For a year or two, the recording industry fell head over heels in love with these games, because people were playing them quite a bit, and they were (briefly) willing to pay a slight premium to get access to music from well-known bands and musicians. Rather than build on that, the industry did two things: it focused all of its attention on those kinds of games, absolutely flooding the market and making people get sick of the game genre, and demanded much higher royalties.
The viewpoint seemed to be that there could be almost no benefits for the innovators. Nearly all of the benefits had to accrue to the labels, or it would be seen as a problem. In fact, the one exception that got through was iTunes, and that was quickly seen as a “problem” by the labels, even as it was dragging them, kicking and screaming, into the marketplace for digital music. The view is one of an extreme zero-sum world, where if someone else is benefiting, it must mean that the labels were losing out. They didn't even hide this view of the world. Doug Morris, then head of Universal Music (now head of Sony Music) explained to a Wired reporter that investing in new innovations that weren’t paying money upfront meant that “someone, somewhere is taking advantage of you.” As laid out in the article, Morris was uninterested in technology, and didn’t even know how to hire a competent technology person, so his focus was on making sure everyone paid up immediately. Anyone making money in the music world without first paying a massive cut were dubbed “thieves.”
There's so much innovation and opportunity available in the music space -- it's just sad that we've only made baby steps since Napster, when we should be leaps and bounds further along.
by Leigh Beadon
Wed, May 15th 2013 11:43am
from the it's-innovators-who-need-freedom dept
There's a lot of buzz about Sen. John McCain's proposed Television Consumer Freedom Act (pdf and embedded below), a bill designed to encourage cable companies to unbundle the TV stations they offer, and force the networks to do the same. It also takes away the weak bargaining chip that some networks have attempted to play against Aereo, in which they threaten to pull their broadcasts from the open air, by making them sacrifice broadcast licenses in order to do so.
Everyone on the consumer side agrees that they'd like to have à la carte choices from cable companies, but beyond that there's no shortage of debate as to how effective the bill is likely to be and whether the end result would actually be any better for those consumers. The television market is badly distorted at all levels by monopoly interests and those whiffs of not-quite-collusion by groups of companies with a shared interest in maintaining the status quo, but is this bill capable of overcoming that? And is the practice of bundling really at the heart of the problem, or just a good public face for the deeper issues?
This is hardly the first attempt to stop the practice at either the network or cable provider level. Some courts have already found bundling by cable providers to be legal and not anticompetitive; meanwhile Cablevision is currently pursuing an antitrust suit against Viacom for the network's bundling of stations that it sells to providers. Most of the details of the latter are under seal, but one notable point is Viacom's claim that it already offers channels individually, they just cost way more. If that's true of all Viacom's content, then it wouldn't be affected by McCain's bill anyway, which still permits bundling as long as there is an à la carte option.
And even if it's not true, it just underlines the core problem of this approach: the bill doesn't give networks any reason to make individual channels affordable or desirable. They either already offer an expensive à la carte menu that nobody orders from, or they could easily do so. Moreover, it's not as though the justification for bundling offered by the networks is completely falsified: they can spend more money on niche channels and programs by subsidizing them with the revenue from more broadly popular fare. Of course, it's not as though that justification isn't exaggerated and twisted to suit their needs either, nor is it true that the same fundamental idea couldn't exist without bundling. Networks get more value from niche programs than just transmission fees: they care about audience reach, brand-building, competing with other forms of content, accumulating accolades for prestige shows and even, believe it or not, making good television. There's no reason their businesses could not be structured to continue subsidizing niche programming with popular programming in a slightly less direct manner.
So the final solution, as always, needs to be found in the market — and that's already happening. Basically every single noticeable trend in media consumption habits, not just in television but in music and publishing and every format, points towards a more à la carte world. It's not news that the networks and cable providers have dragged their heels on this in the hope of milking their incumbent position a bit longer, nor is it news that they are privately a lot more freaked out by the cord-cutting movement than their public statements admit. Ultimately, it will be consumers making choices that force these companies to either adapt or perish.
But for that to happen, innovators do need to be able to actually give the consumers those choices. If the market has become so badly distorted that innovators are being locked out, then legal action and new laws are needed. And that's why the aspect of the bill that is likely to be the most effective (not to mention the most interesting) is the way it all seems to come back to Aereo.
The fight that Aereo started sits at the core of almost everything in the bill. Network owners don't like Aereo because they don't want to lose their retransmission fees from cable providers. Cable providers don't like Aereo because they don't want to lose the appeal of the major networks which, despite the ascendence of cable channels, still sit at the core of their service bundles — and because, generally, they don't want cord-cutters to have more options. McCain's bill basically says: Aereo or no Aereo, consumers need choices, and they're going to get them, whether you like it or not.
Is it a worthwhile step? Yes — or, at least, it's hard to see how it could do any harm, even if it does prove ineffectual. Is it the best approach? No. It almost feels like a bet on Aereo's failure. If Aereo were permitted to innovate, rather than being forced to jump through endless technological hoops and still spend more time in court than in the workshop or the boardroom, then the market would already be giving consumers what they want and pushing the networks and cable providers to become more competitive. If there is to be legal reform, it shouldn't be another layer of conditions and caveats on broadcast licenses and the retransmission fee structure that attempts to force the hand of the networks and cable companies, it should be a clarification (and probably a relaxation) of the rules, removing the legal and regulatory uncertainty that holds disruptive startups back. Television doesn't need a Consumer Freedom Act — consumers already have lots of freedom, they just don't have many choices in how they exercise it. The heart of McCain's bill is in the right place, but a Television Innovator Freedom Act is what we really need.
by Mike Masnick
Tue, May 7th 2013 8:57am
from the patents-are-not-a-proxy-for-innovation dept
But you'd be wrong, as the reports authors, Roberto Fontana, Alessandro Nuvolari, Hiroshi Shimizu and Andrea Vezzulli, quickly discovered.
A stunning 91% of all of the technologies receiving the prize were not actually patented. That's covering approximately 3,000 technologies winning this award as the most innovative advancement of the year over a period of about three decades. What's interesting to me is that this actually matches very closely with one of my favorite studies on patents, from economist Petra Moser, who looked at historical patenting rates from the 19th century using data on products displayed at the Crystal Palace exhibition of 1851 and the Centennial exhibition in Philadelphia in 1876, which against showed very few of the "economically useful" inventions were patented. Over 80% were not patented. Of course, you might think that back in the 1800s there was less interest in patenting, but this new study suggests a rather similar rate to what Moser found from 150 years ago.
The R&D 100 certainly seems to be a good way to look at key innovations. It's judged by a distinguished panel of experts, looking at two key criteria: i) technological significance (i.e., whether the product can be considered a major breakthrough from a technical point of view); ii) competitive significance (i.e., how the performance of the product compares to rival solutions available on the market). Both of these would seem like significant indicators of innovation. And, as the authors note, many big innovations can easily be found on the list:
Throughout the years, key breakthroughs inventions such as Polacolor film (1963), the flashcube (1965), the automated teller machine (1973), the halogen lamp (1974), the fax machine (1975), the liquid crystal display (1980), the printer (1986), the Kodak Photo CD (1991), the Nicoderm antismoking patch (1992), Taxol anticancer drug (1993), lab on a chip (1996), and HDTV (1998) have received the prize.Tellingly, even to apply for the award, innovators have to show just how much the innovation was an improvement on what else was available on the market, They have to submit a "competitive matrix" showing this. In other words, these prize-winning innovations tend to be actual innovations in the market that drive the state of the art forward. You could suggest that they are innovations that truly "promote the progress," as (unlike our patent system) to get this award you literally have to show how the innovation promotes further progress.
As you can see from the key findings, very, very little of the innovations that won the prize was also patented either three years before or three years after the prize was awarded:
Of course there are some differences depending on what industry the innovation happened in, as well as where the innovation was originated. The researchers broke down all of that information as well:
Of course the point that stood out as most interesting to me was the very low rate of patenting in the "chemistry" industry. This covers pharmaceuticals as well. And, of course, we're always told that this industry really "needs" patents because of the ease of copying as compared to the cost of innovating. That doesn't seem to be supported by the data at all. Yes, it's the highest percentage patented in the US, but still only 14% of such innovations are patented in the US.
All in all, this is a really interesting paper and a significant contribution to the discussion over whether or not patents are really a good judge of innovation. It would seem from the data available that the answer is a very loud "no." In fact, it would appear that very few of the most significant and important innovations are being patented. That should, at the very least, raise considerable questions concerning those who argue that our patent policy is necessary to encourage innovation, or those who argue that numbers from the patent system are a good judge of innovation.