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Posted on Techdirt - 21 October 2016 @ 12:04am

China's Manufacturers Now Producing Copies Before Original Products Are Even Launched

from the taking-the-tachyonic-train-to-Shenzhen dept

Techdirt has written a number of articles tracking how China is moving beyond its traditional counterfeit imitation culture to one of collaborative innovation, as exemplified by "gongkai". An article on the Quartz site provides a useful update on this world, concentrating on developments in Shenzhen, generally regarded as China's hardware equivalent of Silicon Valley. Things have now progressed from simply copying top-selling products, to spotting future winners on the Web:

Thanks to the internet, factories and designers looking for the next hit product can easily turn to Kickstarter, Amazon, or Taobao to see what gadgets are hot.
The article describes how nimble Chinese operations even produce their own versions before the original is released. For example, Yekutiel Sherman, an Israeli entrepreneur, came up with a design for a smartphone case that unfolds into a selfie stick. After months of research and design, here's what happened:
one week after his product hit Kickstarter in December 2015, Sherman was shocked to see it for sale on AliExpress -- Alibaba's English-language wholesale site. Vendors across China were selling identical smartphone case selfie-sticks, using the same design Sherman came up with himself. Some of them were selling for as low as $10 a piece, well below Sherman's expected retail price of £39 ($47.41). Amazingly, some of these vendors stole the name of Sherman's product -- Stikbox
As the article goes on to describe, enforcing traditional monopolies like patents is so difficult as to be pointless, thanks to the highly-fragmented and fluid nature of Shenzhen's ecosystem. Instead:
Businesses are now forced to come to terms with this new reality. It’s not enough to create a product with a groundbreaking design or features, like a smartphone case that turns into a selfie stick. Companies dealing in the creation of physical goods now must make products that are impossible to copy exactly from the get go, by focusing on a special feature they can protect, or creating a coveted brand name consumers will pay more for.
In other words, the competitive environment in Shenzhen is driving the uptake of approaches that Techdirt has been advocating for years. That's good for customers, who enjoy a greater choice and more rapid innovation as a result, but this shift can be good for companies too, as the Quartz article notes:
Joffe, the venture capital investor, argues that some companies might even benefit from copycatting, as it can bring more awareness to the product itself. "If you have more customers buying the fake product then it creates more awareness for the real product, and it becomes an aspirational thing. At some point they might be able to afford the real thing."
It's well worth reading the whole article for its description of the Shenzhen scene, even if regular Techdirt readers will find the main ideas there extremely familiar.

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Posted on Techdirt - 19 October 2016 @ 11:48pm

Turkey Becomes Brazil: Orders Victim To Pay For Costs Of Trial After Police Blinded Him

from the welcome-to-our-dystopian-future dept

If George Orwell's "1984" has become a how-to manual for the modern surveillance state, Terry Gilliam's dystopian satire "Brazil," released in 1985, is surely the film of the book (one of the possible titles considered for the film was "1984 ½"). Amongst its many brilliant and disturbing moments, there's the following dialog from an interview of Mr. Helpmann, the Deputy Minister of Information:

Interviewer: Nevertheless, Mr. Helpmann, there are those who maintain that the Ministry of Information has become too large and unwieldy...And the cost of it all, Deputy Minister? Seven percent of the gross national product.

Mr. Helpmann: I understand this concern on behalf of the tax payers. People want value for money. That's why we always insist on the principle of Information Retrieval charges. It's absolutely right and fair that those found guilty should pay for their periods of detention and for the Information Retrieval Procedures used in their interrogation.
The idea that people ought to reimburse the costs the state incurs in arresting, interrogating and convicting them is pretty chilling. It's also just moved closer to reality in Turkey, as this story in Hürriyet Daily News reveals:
A Kyrgyz tourist who was wounded during the Gezi Park protests has been ordered to pay a total of 151 Turkish Liras to the Turkish state even though his injuries were caused by state police.

Shavkatbek Saipov, 30, filed a complaint against the police, claiming that he lost his eye after a gas canister hit his face, but the court rejected his claims and ordered him to pay 151 liras [about $50] as "the cost of trial."
As the post explains, Saipov was caught up in the massive Gezi park protests that took place in 2013. Here's what he says happened:
Saipov was walking in Ankara’s Güvenpark as a tourist on June 1, 2013, when police attacked protesters during the mass demonstrations that occurred around the country. Saipov said a gas canister used to disperse protesters hit his left eye after he became stuck in the middle of the police and the protesters.

Despite undergoing two surgeries, Saipov lost his left eye and filed a complaint against the police officers. He also demanded compensation worth 210,000 liras [$68,000], of which 10,000 [$3,250] was for material damages and 200,000 [$64,750] for damages for mental anguish, from the Interior Ministry.
The 151 liras fine may be relatively small, but it creates a troubling precedent for other courts in Turkey to follow -- and for other countries to consider when they vow to provide "value for money."

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Posted on Techdirt - 18 October 2016 @ 11:10pm

Surprise: Now Even Australia's Biggest Business Organization Says It Has Doubts About TPP

from the anyone-still-support-it?-anyone??? dept

As Techdirt has reported, the few studies into the economic impact of TPP that exist show that there is likely to be vanishingly small benefit for most countries. The Australian Council of Trade Unions, representing 1.6 million workers in Australia, is not impressed with the deal, and has just called for TPP to be rejected, according to the Guardian:

"The TPP puts globalisation before Australian workers, threatens the fundamentals of our democracy and drives up health costs," [ACTU’s director of policy] Tkalcevic said. "By destroying thousands of Australian jobs and driving down wages we believe the TPP will lead to higher levels of inequality.

The TPP is a toxic combination of more power to multinationals ahead of democracy and globalisation ahead of Australian workers."
It would be easy to dismiss this as typical left-wing anti-big business rhetoric. But the same could hardly be said about the following:
Australia's biggest business organisation has distanced itself from claims the proposed Trans Pacific Partnership will create hundreds of thousands of jobs and be a "gigantic foundation stone" for Australia's future.
As The Sydney Morning Herald reports, when the Australian Chamber of Commerce and Industry (ACCI) spoke before a Parliamentary commission, it was particularly critical about the nature of the TPP deal, and the lack of in-depth, independent economic analysis:
ACCI argued the agreement did not mandate free trade and had not been assessed by an independent authority such as the Productivity Commission.
The business organization also criticized the opacity of the trade negotiations:
"With the exception of some relatively superficial information on the Department of Foreign Affairs and Trade website, it is difficult to know the detail of what is being negotiated in our national interest," [ACCI's director of trade] Mr Clark said.
It even went so far as to worry about "regulatory chill":
the chamber wanted the inquiry to note that the deal would "further complicate compliance and costs for business" and had not been subjected to an independent Australian economic analysis.

It should also be concerned about the potential for "regulatory chill" from the clauses that would prevent further liberalisation of Australia's intellectual property and labour laws after it had been ratified.
When a country's top business association offers criticism in more or less the same terms as anti-TPP activists, maybe it's time to think twice about ratifying a deal that still lacks any credible justification.

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Posted on Techdirt - 17 October 2016 @ 10:44pm

Tobacco Carve-Out From ISDS Starts To Spread: Another Nail In The Coffin Of Corporate Sovereignty

from the crack-in-the-dam dept

One of the last pieces of horse-trading that went on in order to conclude the TPP deal involved corporate sovereignty, aka investor-state dispute settlement (ISDS), and tobacco. As we reported a year ago, a "carve-out" for tobacco was agreed, which was designed to assuage fears that tobacco companies would use TPP's ISDS mechanism to challenge health measures like plain packs -- something that Philip Morris attempted against both Australia and Uruguay. Now, it looks like the idea is spreading, as Simon Lester points out on the International Economic Law and Policy Blog:

Whether or not the TPP ever gets ratified, the idea for a tobacco carveout seems to have taken hold. Via Tania Voon on twitter, I see that Australia and Singapore have agreed to amend their FTA to include a tobacco carveout.
The wording itself, inserted into the section on corporate sovereignty, is pretty simple (pdf):
Section B: Investor-State Dispute Settlement


Tobacco Control Measures

No claim may be brought under this Section in respect of a tobacco control measure of a Party
It's worth noting that this is not just another carve-out, but a retrospective one, which creates an interesting precedent that might be followed elsewhere. After all, once the principle that tobacco companies should not be allowed to use ISDS to interfere with health programs is established, there's no reason not to apply it more widely, to both future and existing trade and investment deals.

More generally, the appearance of this carve-out for tobacco raises a question Mike asked a year ago: if corporate sovereignty is such a bad idea for this industry, why not for others that can cause harm -- like the extractive industries, for example? And once people start asking these kinds of questions, it's not long before they realize that putting companies above national laws, and letting them sue governments in supranational tribunals, makes no sense at all for any sector. Calls to drop the entire ISDS system have been growing for a while; the latest move by Australia and Singapore is likely to make them louder.

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Posted on Techdirt - 13 October 2016 @ 11:49pm

Digital Republic Bill Uses Crowdsourcing To Promote Data Protection, Net Neutrality And Openness In France

from the what-will-happen-to-your-personal-data-when-you-die? dept

There have been plenty of really bad ideas coming out of France in the digital arena recently, as Techdirt has been reporting. So it makes a pleasant change to be able to write about a new law that has quite a few good ideas. One reason for that might be that the French government used a form of crowdsourcing to help shape what is known as the "Digital Republic Bill":

The bill's text was drafted following a ground-breaking co-construction process in the form of a massive nationwide consultation initiated by the Prime Minister in October 2014. In all, there were more than 4,000 contributions from businesses, government departments and individuals which were received, summarised and examined by the Conseil national du numérique (French Digital Council) which presented its findings and proposals to the government on 18 June 2015.
The first part of the bill is about data and knowledge dissemination, and aims to support openness in various forms. For example, it requires government departments to make information about their activities more easily accessible, and extends the scope of open government rules to include not just central and local government, but also public and private legal entities that operate under a public service mandate. The aim is to provide more government documents online as a matter of course, so that citizens don't need to make formal requests for them -- a sensible approach others should emulate. In addition, the French government will be:
expanding the open data policy to include public and private entities, public service concession holders or entities whose activities are subsidised by the public authorities.
The bill hopes to boost open access to research by creating a new "secondary exploitation right" for academics, under which:
the author may make his/her creation publicly available after an embargo period of 12 months from the first publication of scientific works, as long as this is not for commercial purposes. The timeframe will be 24 months for human and social science works as publishers in this sector do not have such a comfortable financial situation.
That's rather disappointing, since it enshrines long embargo periods even for non-commercial use. While the open access provisions are timid, an attempt to prevent the digital commons from being enclosed is much bolder. The French government proposes to set up:
a common information domain extending to the intellectual public domain, which has not yet been clearly defined, and which is not restricted to intellectual property as it includes elements such as information and ideas that are not protected by intellectual property rights, but still require protection against other exclusive rights.
It's not really clear what that will mean in practice, but it's good the French government is working on this issue. Also welcome, but more conventional, are moves to enshrine net neutrality in French law, and to require data transferability so that customers can easily retrieve and transfer their data between competing online services. Another novelty concerns online reviews. The Digital Republic Bill:
obliges websites publishing online reviews to expressly state whether said reviews have been verified. It stipulates that if websites do verify reviews, they have to clearly specify the main procedures. This new obligation will allow consumers to decide for themselves how much trust they can place in the reviews available and, thus, in the website which publishes them.
A large portion of the new bill seeks to enhance the protection of personal data. It enshrines a general right of individuals to decide how their personal data is communicated and used, and strengthens the powers of France's data protection agency, the CNIL. As a post on the Data Protection Report explains:
the bill would increase the amount of monetary sanctions that the CNIL can impose for privacy violations, which reflects the relevant sanction provisions of the future GDPR [the EU's new data protection law]. The CNIL would thus be able to impose monetary sanctions on a data controller of up to 20 million euros or 4% of its worldwide turnover. The sanction would be limited to 10 million euros or 2% of the worldwide turnover for minor violations of the DPA.
In addition, the bill would authorize certain types of organizations to bring data protection class actions on behalf of consumers in the event of a data breach. This would apply to:
(a) associations protecting privacy and personal data; (b) consumer protection associations; (b) trade unions, when the processing affects employees; and (c) any association created for the sole purpose of filing the class action.
Finally -- in all senses -- one forward-thinking element of the new Digital Republic Bill is that it will give people the right to make arrangements for the storage and communication of their personal data after death:
People will be able to send instructions concerning the treatment of their personal data to the CNIL or to a data controller, and may appoint a person responsible for carrying out these instructions.

Moreover, ISPs will have to inform the user about what will happen to this data after his/her death and let him/her choose whether or not to transfer it to the third party of his/her choice.
As the population of Internet users ages, this is likely to become a major issue. It's good to see France tackling it head-on with the Digital Republic Bill -- one of the few countries to do so. The proposed law now passes to the French Senate, but is unlikely to undergo any major modifications there, not least because it has already been subject to unusually wide consultation thanks to the innovative approach used in drawing it up.

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Posted on Techdirt - 12 October 2016 @ 11:27pm

Bangladesh Brings In Nationwide Digital Identity Cards Linking Biometrics To Mobile Phone Numbers

from the no-scope-for-abuse-there dept

Techdirt has been writing about the apparently unstoppable introduction of the Aadhaar identity card system in India for some time. Judging by this article on Global Voices, it seems that India's eastern neighbor, Bangladesh, has not noticed the serious problems that are emerging with the idea:

On October 2, the Bangladeshi government inaugurated Smart National ID cards (NID) as part of their Digital Bangladesh initiative, aiming to distribute the cards to 100 million people in Bangladesh.
As with Aadhaar, the plan seems to be to use the new cards for a wide range of everyday activities:
Banking, passport details, driving licenses, trade licenses, tax payments, and share trading are among the 22 other services that can be accessed through the cards, with more to follow. The cards will also be associated with an individual's mobile phone SIM card. Once issued, they will be valid for 10 years.
As that mentions, the NID goes even further than Aadhaar by linking biometrics to an individual's mobile phone, making it the perfect surveillance system. That's new, but the main problem with the NID is familiar enough:
The cards hold biometric details of the cardholder: impressions of all ten fingers, as well as pictures of the iris. In total, 32 types of unique citizen data will be "embedded within its microchip," according to Election Commission officials
That means that if details are stolen, there is no way to revoke or change them. Here's what Bangladesh's Election Commisson has to say on the issue of security:
Citizens' data are safe from unauthorised access as the database servers are "fully protected", but there have been no explicit mentions of how the data is stored, and whether or not it is encrypted.
So, pretty much "trust us, it'll be fine," even though massive breaches of "fully protected" databases are becoming routine around the world. Users of the system may not be reassured by the following:
On the first day of card distribution, reported that many citizens had to leave without the smart ID cards after providing their biometric samples, due to a "software malfunction."
And beyond what may just have been teething troubles, there are deeper issues of exactly the kind being faced by India's Aadhaar:
Biometric data collection en masse has also generated unexpected problems, specifically fingerprints: a technical staffer of the Election Commission was quoted saying "difficulties are being faced in cases where the fingers are scarred, or the lines on fingers have become unclear owing to heavy manual labour." This is likely to be a recurring problem given the large percentage of the population in Bangladesh employed in manual labour, or who have been in the past. This brings with it questions of sustainability: If a person gives their fingerprints now, and then engages in manual labour for 10 years, will they still be recognisable by the system?
Sadly, it seems that governments in India and Bangladesh are too excited by the prospect of the "efficiencies" such a digital identity framework could in theory offer -- to say nothing of the unmatched surveillance possibilities -- to worry much about tiresome practical details like the system not working properly for vast swathes of their people.

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Posted on Techdirt - 12 October 2016 @ 3:10am

Antitrust Suit Alleges Pharma Company Rubbished Its Own Product In Order To Stave Off Competition From Generics

from the commercial-motives-played-no-part dept

Techdirt has written a number of stories about how Big Pharma is never content with the patent bargain -- that, in return for a time-limited, government-enforced intellectual monopoly, products will afterwards enter the public domain. Instead, companies have come up with various schemes to extend the life of that monopoly -- and thus to cheat the public of the low-cost generic versions of the drug in question that should have appeared. The Daily Beast points to an antitrust lawsuit brought by 35 states and the District of Columbia against the makers of Suboxone, a prescription drug used to treat opioid addiction, over the alleged use of one such scheme, known as "product hopping". That's where:

a company makes modest changes to a product to extend its patent protections so that other companies cannot enter the market and offer less-expensive generic alternatives.
In this particular example:
Reckitt Benckiser Pharmaceuticals, Inc. -- now known as Indivior PLC -- and MonoSol Rx are accused of conspiring to switch Suboxone from a tablet version to a film, which dissolves in the mouth, in order to prevent or delay generic alternatives and maintain artificially inflated profits.


Over time, the states allege that Reckitt converted the market away from the tablet to the film through marketing, price adjustments and other methods. Ultimately, after the majority of Suboxone prescriptions were written for the film, Reckitt removed the tablet from the U.S. market.
The "other methods" are particularly interesting. In September 2012, Reckitt announced that it was going to "voluntarily discontinue the supply of Suboxone tablets", because it was worried they might be dangerous for children:
The company received an analysis of data from U.S. Poison Control Centers on September 15, 2012 that found consistently and significantly higher rates of accidental unsupervised pediatric exposure with Suboxone Tablets ... than seen with Suboxone Film ... The rates for Suboxone Tablets were 7.8-8.5 times greater depending on the study period.
Curiously, though, Reckitt didn't mention that the study had been commissioned by itself, as the Guardian noted in an article at the time. Quite why Reckitt would want to pay for and then publicize a study that showed one of its own products was dangerous became clearer just a few hours later, when it submitted a "citizen petition" to the Food and Drug Administration:
urging the US regulator to ban any future competitor pills to its suboxone tablets that were insufficiently "child resistant".
In other words, Reckitt effectively wanted the FDA to ban any generic versions of its own tablets, now out of patent, while leaving its patented film formulation on the market to enjoy a new monopoly. As the Guardian reported:
A company spokesman has insisted commercial motives played no part in Reckitt's decision to withdraw suboxone tablets from the market. However, Martin Deboo, an analyst at Investec Securites said: "We view these moves as consistent with Reckitt's strategy of protecting the suboxone franchise by hastening migration to [strip] and raising barriers to entry to generics."
The new antitrust lawsuit will doubtless explore these moves in detail, and the harm they might have caused, both financial and in terms of patient suffering. The plaintiffs allege:
that federal and state healthcare programs, including Medicaid, as well as consumers and other purchasers have paid artificially high monopoly prices since late 2009, when generic alternatives of Suboxone might otherwise have become available. During that time, annual sales of Suboxone topped $1 billion and, since then, rates of opioid abuse in Connecticut and across the country have increased significantly.
That's a useful reminder that pharma patents are not just about monopolies and money, but also about people and pain.

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Posted on Techdirt - 7 October 2016 @ 6:29am

Argentina Not Only Wants To Bring In E-Voting, It Will Make It Illegal To Check The System For Electoral Fraud

from the this-is-fine dept

Earlier this year, we wrote about Australia's refusal to allow researchers to check e-voting software being used in that country. The situation in Argentina seems to be even worse. Access Now provides the background (original in Spanish):

The ruling party in Argentina is driving the adoption of an electronic voting system for national elections. Despite stern warnings from computer security experts about the dangers of the system, the ruling party is persisting with the project and plans to put it to a vote in Congress in the coming weeks.
Techdirt readers hardly need to be reminded about the deeply-flawed nature of e-voting systems, but there's a useful article on Medium (in Spanish) with plenty of links to hispanophone experts from widely-different backgrounds warning against the move.

Imposing an e-voting system may be foolish, but Argentina's plans manage to magnify that folly many times over. A blog post in Spanish by Javier Smaldone explains why:

The proposal provides for imprisonment (1 to 6 years) for conducting activities that are essential in any audit or independent review of the system.

Thus, it is intended to impose the use of computer system in the casting and counting of votes, and as if it were not already extremely difficult for any citizen to be sure how it works (and it is safe), anyone who tries to find out is punished with imprisonment.
It's one thing to bring in an e-voting system that most experts say is a bad idea in theory. But making it effectively illegal to point out flaws that exist in practice is really asking for trouble. Unless this proposed law is changed to allow independent scrutiny of the systems, Argentina will probably find this out the hard way.

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Posted on Techdirt - 29 September 2016 @ 3:00am

UK Government Says Smart Meters Can Definitely Be Trusted Because GCHQ Designed Their Security

from the oh,-that's-OK,-then dept

The idea behind smart meters -- that detailed information about how you consume electricity will allow you to use power more efficiently and thus cut your bills and your home's carbon emissions -- is a good one in theory. And yet smart meters are still not used very widely, even in countries like the UK, where the government has a strategy to install millions of them by 2020. Actually, the likely savings by users are small, but smart meters also promise to allow the electricity industry to lower salary costs by carrying out meter readings remotely, which is one reason why it is so keen on the idea. Another is because smart meters make it is easy to cut off someone's supply if they don't pay their bills.

The slow uptake of smart meters seems in part to be due to public concerns about security. People are worried that their smart meter will spy on them, sending back information to electricity companies that might be intercepted and used for targeted burglary when they are away. Similarly, there are fears that if the smart meter control system were compromised, domestic electricity supplies might be at risk on a large scale.

One of UK Parliament's most important committees, the one monitoring science and technology, has just published a report into the UK smart meter roll-out, offering recommendations for ways to speed it up. Security is an issue it discusses, and one of the committee's recommendations is as follows:

We recommend that the Government consider further how to communicate the level of thought that has gone into designing a secure system for smart metering
More about that "level of thought" is found in an appendix to the report, which contains the UK government's evidence on this topic, including the following statement:
The Department of Energy and Climate Change (DECC) has worked with GCHQ since the very early design stage of the rollout, when the programme was initiated. The engagement with GCHQ has been one of partnership, issue discussion and resolution.
Helpfully, GCHQ has written a long and interesting description of its work on smart meters, and how it has tried to make UK smart meters resistant to attack. The post concludes:
We hope that this article has explained the thinking behind the design of the Smart Metering System. DECC, with support from GCHQ (part of which will be become the National Cyber Security Centre) has security right at the top of the list of things it cares about. Of course, no system is completely secure, and nothing is invulnerable. However, we’re confident that the Smart Metering System strikes the best balance between security and business needs, whilst meeting broader policy and national security objectives.
It's interesting that the post mentions national security objectives. As Techdirt has reported, one of the worst features of the UK's Investigatory Powers Bill that is currently wending it way through Parliament is that it creates a legal framework to allow GCHQ and the other intelligence agencies to hack into any kind of equipment in order to carry out surveillance. Of course, that's really rather easy when you were the one who designed its security systems.

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Posted on Techdirt - 27 September 2016 @ 11:08pm

Local Lawyers Challenge New Kuwaiti Law Creating Mandatory DNA Database Of All Citizens And Visitors

from the hands-off-my-genome dept

One of the most extraordinary government surveillance projects in the world is being rolled out in Kuwait, and involves creating a mandatory DNA database of all citizens and visitors. An article in New Scientist confirms that the system is now under construction:

The government has already begun to enact the law, collecting samples from people they suspect of having falsely claimed Kuwaiti nationality, as well as members of the police and military. From November, all Kuwaitis wishing to renew passports will have to submit DNA samples, while the country's embassies around the world have been told to notify potential visitors that they will be required to give a DNA sample upon arrival in the country.
The good news is that a bunch of public-spirited Kuwaiti lawyers are fighting back:
When the law was passed in July last year, Adel AbdulHadi of the Kuwaiti law firm Adel AbdulHadi & Partners and his colleagues began researching and drafting their challenge to it. Their principal argument is that the law violates privacy and human rights provisions in the country's own constitution, as well as those enshrined in international treaties to which Kuwait is a signatory.
To their credit, the lawyers are funding the challenge themselves, as they feel so strongly that the law should be struck down.

As the article points out, collecting DNA is hardly likely to be a very effective way of deterring would-be terrorists from entering the country. Equally, finding someone's DNA at the site of a terrorist explosion tells you little: by their very nature, such attacks cause tissues from bombers and victims alike to be scattered widely, making forensic DNA analysis difficult. On the other hand, there is considerable scope for abuse:

DNA samples could be used for other purposes, such as identifying illegal immigrants, or determining paternity in country where adultery is a punishable offence.
The New Scientist article offers no views on how likely it is that the legal challenge will succeed. We can only hope that it does, because once such a system is successfully implemented in one country, others are sure to see it as an example that they can follow.

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Posted on Techdirt - 27 September 2016 @ 8:34am

The EU's Proposed Copyright Directive Is Likely To Be A Wonderful Gift -- For US Internet Giants

from the law-of-unintended-consequences dept

A couple of weeks ago, Techdirt ran through the catalog of horrors that make up the EU's new Copyright Directive proposals, pointing out that they would be a general disaster in their current form. Of course, the misery would not be evenly spread: some would suffer more, some less. Indeed, an earlier open letter to the European Commission from a bunch of tech companies (including Techdirt), published on the Don't Wreck the Net site, pointed out one group who wouldn't have too much of a problem with the changes:

The largest companies have the resources and staff to deal with increased regulations and burdens. Startups do not.
That is, the big online companies can weather more or less anything: it's the smaller ones -- particularly startups -- that will have difficulties. That warning was issued before the details were known, and now Joe McNamee from the European digital rights group EDRi has penned a very similar analysis based on the newly-published plans:
There is a lot of noise in the press and among lobbyists about an alleged hostility of the EU towards big American internet companies. Reality is more nuanced and more surprising -- the policies appear to be hell-bent on giving Google new monopolies, to the detriment of European citizens and European internet companies.

The most astonishing of these policies is the proposal in the new Copyright Directive for mass, preventive filtering of information as it is being uploaded to the internet in Europe -- a policy so restrictive and absurd that even China or Russia would baulk at the notion. An anti-Google measure? Hardly. Google actively lobbied the Vice-President of the European Commission about the alleged virtues of its content identification system ("contentID"), even if they hadn’t expected the Great Firewall of Europe to be the result.
Even if the Copyright Directive manages to pass through the EU legislative system without any changes -- which seems unlikely -- Google would be in a strong position, because it already has the content ID technology in place that will allow it to comply. Although McNamee suggests that as a result Google would be "uniquely placed to license such software to European internet providers," it's more likely that it would keep it for its own exclusive use. However, the US company Audible Magic would doubtless be more than happy to license its widely-used content identification system as an alternative. And irrespective of whether it's based on technology from Google or from Audible Magic, it's hard to see how this outcome helps the European tech industry. Moreover, McNamee is certainly right about the likely outcome of bringing in an insane "ancillary copyright" in the EU, which would require Internet companies to pay a fee to use news snippets:
In Germany, where this policy has already been adopted, Google has the economic muscle to simply refuse to pay and suddenly it is not Google, but the publishers, who have a problem. Publishers put their content online in order for people to view it and to make money from advertising that is on their sites. They need Google News more than Google News needs them. So, the outcome is that everybody pays except Google. The Spanish government came up with a cunning plan, they passed a similar law to the one in Germany, but required Google News to pay. Result: Google News Spain shut down, to the detriment of smaller Spanish news outlets in particular and, again, everyone except Google loses.
The rest of the EDRi post points out other fundamental flaws in the proposed EU Copyright Directive. But the key point is that far from stimulating the European digital economy, the EU's deeply-flawed plans are likely to boost the power and the profits of the largest US Internet companies. That may be good news for them and their shareholders, but it isn't really the European Commission's job.

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Posted on Techdirt - 20 September 2016 @ 11:34pm

New Economic Study Indicates EU-Canada Trade Deal Will Cause 'Unemployment, Inequality And Welfare Losses'

from the tell-me-why-we-are-doing-this-again? dept

As Techdirt noted back in January, it is astonishing that the TPP negotiations proceeded for years with almost no detailed analysis of whether they would be beneficial. It was only recently, after the text had been finalized, that a number of studies started to appear which explored the likely impact of TPP in some depth. Strikingly, every single one of them predicted almost no benefit for the US economy from the deal.

The situation for TPP is rather better than for the other big US trade negotiations currently underway, TAFTA/TTIP, where attempts to model its impact are thin on the ground. The same is true for CETA, the EU-Canada trade deal that was supposedly "finished" two years ago, and yet still hasn't been passed because of the text's deep problems, not least because of its corporate sovereignty provisions. Despite the fact that CETA may be quite close to final ratification -- although growing resistance to it in Europe may still stop it -- we have very few studies of what benefits it might bring. The main one is the official analysis that was used to kick off the talks (pdf) in the first place, published in 2008. Here's the key result:

The annual real income gain by the year 2014, compared to the baseline scenario, would be approximately €11.6 billion for the EU (representing 0.08 percent of EU GDP), and approximately €8.2 billion for Canada (representing 0.77 percent of Canadian GDP). Total EU exports to Canada go up by 24.3 percent or €17 billion by 2014 while Canadian bilateral exports to the EU go up by 20.6 percent or €8.6 billion by 2014.
Leaving aside the fact that 2014 has come and gone, it's clear even from these figures that CETA will produce almost negligible annual GDP uplift for both sides, since the quoted figures are cumulative extra growth that would come from CETA. But an important question is just how reliable even these small gains are, since they implicitly form the main justification for the whole deal. A new study from the Global Development And Environment Institute at Tufts University, which also conducted one for TPP last year, offers a useful perspective. Its results are pretty damning, and include the following:
CETA will lead to wage compression. By 2023, workers will have foregone average annual earnings increases of €1776 in Canada and between €316 and €1331 in the EU depending on the country. Countries with higher labor income shares and unemployment, such as France and Italy, will experience the most pronounced wage compression.

CETA will lead to net losses of government revenue. Competitive pressures exerted by CETA on governments by international investors and shrinking policy space for supporting domestic investment, production and investment will reduce government revenue and expenditure. Government deficits will also increase as a percentage of GDP in every EU country, pushing public finances closer or beyond the limits set by the Maastricht treaty.

CETA will lead to job losses. By 2023, about 230 thousand jobs will be lost in CETA countries, 200 thousand of them in the EU, and 80 thousand more in the rest of the world, adding to the rising dependency ratio (the average number of people supported by one job).

CETA will lead to net losses in terms of GDP. As investment and foreign demand remain sluggish, aggregate demand shortfalls nurtured by higher unemployment will also hurt productivity and cause cumulative welfare losses amounting to 0.96% and 0.49% of national income in Canada and the EU, respectively. While the United Kingdom (-0.23%) and Germany (-0.37%) may be least affected, France (-0.65%) and Italy (-0.78%) will lose more than other EU countries (-0.53%).
The full 40-page paper (PDF) goes into the details. Along the way, it provides a highly critical analysis of the underlying econometric model used for almost all of the official studies of CETA, TPP and TTIP -- the so-called "computable general equilibrium" (CGE) approach. In particular, the authors find that using the CGE model to analyze a potential trade deal effectively guarantees that there will be a positive outcome ("net welfare gains") because of its unrealistic assumptions:
In these CGE analyses, the Canadian and EU economies instantaneously and costlessly adjust to the trade reform, and as any increase in unemployment or loss of aggregate income, even temporarily, is ruled out beforehand, CGE analyses can only point to net welfare gains. Blinded by such strong but palpably unrealistic priors, neoclassical CGE modelers have merely defined away the problem. In light of such a lack of intellectual diversity and empirical realism, this paper contends that, already by their design, these studies do not represent a reliable basis for assessing CETA and meaningfully informing policy-makers.
Another new paper on CETA (pdf) points out a further issue with existing analyses of the economic impact: the fact that CETA -- like TTIP -- is mostly about regulatory convergence, rather than simple tariff reduction. And yet no account whatsoever is taken of the negative consequences of these moves in the official study or in those that follow its approach:
The additional burden on regulators from the various additional steps due to CETA -- and even more after its potential extension to other countries -- in the context of diminished regulators' resources, is likely to lead to delays, blockages and a reduction in the standard of regulation. Use of the precautionary principle is likely to be under great pressure in a number of areas. All of this is done in the name of economic gains which turns out in the official impact assessment to be vanishingly small -- the equivalent of a cup of coffee every three months for each European in terms of disposable income -- and if the omitted effects of constrained regulations in the areas of climate change, finance, toxic chemicals, etc., were included in a more thorough assessment, then the economic evaluation would turn out to be heavily negative. Locking such provisions into an international treaty would turn out to be the height of folly.
These two new studies offer valuable perspectives on CETA. It's a pity they weren't produced years ago, when more might have been done to mitigate the harmful effects they reveal. As it is, it seems the only option now is to reject CETA completely.

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Posted on Techdirt - 19 September 2016 @ 1:03pm

Brazilian Court Agrees Wikipedia Can Use Publicly-Available Personal Information For An Article

from the wow,-you-don't-say dept

A couple of weeks ago, we wrote about a victory in the courts for Creative Commons licenses, noting that such judgments were still rather few and far between. That's unfortunate, in the sense that some people still think CC licensing is weird, rarely-used or even invalid. The situation regarding Wikipedia is similar. Even though it has been around for 15 years -- just like Creative Commons -- it too suffers from continuing doubts about its aims and methods, and a relative dearth of legal cases helping to clarify the status of both.

Here's one from Brazil, which has recently been settled in favour of Wikipedia's parent organization, the Wikimedia Foundation. It concerns the Brazilian musician Rosanah Fienngo, who had brought a lawsuit objecting to information about her personal life being included on her Portuguese Wikipedia page. Wikimedia pointed out:

The Portuguese Wikipedia article about Ms. Fienngo contained information about her as a notable public figure in Brazil. This information included some details of her personal life, but this information was derived from public sources, most of which Ms. Fienngo had provided herself, such as an interview Ms. Fienngo gave to the gossip website O Fuxico.
You would have thought that someone who had provided details about her personal life to a gossip website would (a) realize that people might pass on that public information -- that's how gossip works -- and (b) be grateful to those who spread details she herself had chosen to make public. Fortunately, the judge seems to have understood the situation:
The court stated that although the information available on her Wikipedia page concerned her private life, Ms. Fienngo had already disclosed that information to the media herself, so its inclusion on Wikipedia was not an invasion of her privacy.
It's ridiculous that it required a court case to establish that, but the good news is the judgment should help to discourage others from bringing more such suits. Well, probably. Unfortunately, another similarity between the Brazilian Wikipedia case and the earlier Creative Commons one is that Ms. Fienngo could make an appeal, although Wikimedia notes:
We believe that the decision was strong enough that community members should feel free to make editorial decisions to write articles like the one about Ms. Fienngo.
Let's hope they're right.

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Posted on Techdirt - 15 September 2016 @ 9:35am

Hatch Still Trying To Change The Finalized TPP Deal To Make It Even Worse For Other Nations

from the two-edged-sword dept

As Techdirt noted in 2014, by agreeing to the "fast track" procedure for trade deals, Congress has essentially given up its power to change them. That's a two-edged sword. Although it makes the ratification process simpler, because things like TPP and TTIP must be accepted or rejected in their entirety, it also means that political bosses have no ability to tweak the text to make it more likely the deals will be ratified. That's coming back to bite one of the people who introduced the fast track bill, Senate Finance Committee Chairman Orrin Hatch.

He has been trying for a while to get TPP to require the same 12 years' monopoly of drug safety data that the US provides for so-called "biologic drugs," in addition to the normal patent protection they enjoy. The final TPP text specifies eight years, and because of the fast track authority that he worked so hard to put in place, there is no way for Hatch to get the text changed now that it has been finalized. According to a report from Bloomberg, Hatch is apparently hoping that "binding side agreements" with the other TPP nations might do the trick, but there's a problem with that or any similar approach:

Australia, New Zealand and Peru have all indicated at various points during the last six months that they will not change their positions concerning biologics and stand by the agreed-upon language contained in the TPP.

"I don't know what they're going to offer, but they know I'm at 12 years of data exclusivity,” he said of the administration. "They're going to have to find a way of having the countries agree to change that formality in the TPP to 12 years or come up with something that will be acceptable."
That's really pretty extraordinary. After nearly eight years of tough negotiations, concessions were made and a final text agreed by all the countries involved. And now Hatch says it's not good enough, that the US has some special right to ask for yet more, and that countries refusing to up their protection for biologics data to 12 years won't be part of the TPP deal. Understandably, some in those nations at risk of being thrown out of TPP are unhappy about this threat. For example, Dr. Patricia Ranald, Convener of the Australian Fair Trade and Investment Network, said:
"The extra three years of monopoly [beyond current Australian regulations] in the current TPP text is already unacceptable. It is outrageous that the US is demanding an even greater increase from 8 to 12 years. We call on the Australian and other governments to reject this proposal."
In fact, it's even worse than that. As we pointed out a year ago, granting any protection to the clinical trial data used to gain approval for biologics seriously undermines one of the fundamental principles of science: that basic facts cannot be owned, and that progress is made by building on the results of others. Hatch is right that the eight-year term of protection for biologics data in TPP is unacceptable, but he's wrong about what the right term would be: it's not 12 years, but zero.

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Posted on Techdirt - 8 September 2016 @ 2:29pm

Chinese State Patent Troll Absorbed By Smartphone Maker Xiaomi, Adding To Its Patent Hoard

from the but-will-it-come-in-peace? dept

A couple of years ago, we wrote about Ruichuan IPR Funds, which seemed to be a rather odd kind of patent troll -- one that was essentially backed by the Chinese government. Since then, Ruichuan has dropped off the radar in the West, but there have been some important changes in its home country, as reported on the IAM blog:

China's first patent fund is now being run as part of the Xiaomi IP function, IAM can exclusively reveal. When last we reported on the Ruichuan IPR Funds its status was somewhat unclear. The fund's operator, an IP services firm called Zhigu, had apparently been merged with the smartphone company's in-house IP department, but there had been no official word on the move.
Techdirt wrote about Xiaomi -- sometimes called "China's Apple" -- last year. Although it has lost some of its initial shine, it's still a top Chinese company, and one that has global ambitions. As Techdirt readers know only too well, to stand a chance in the West's patent-saturated tech markets, new entrants need a patent portfolio to use as a bargaining counter, and Xiaomi has been busy acquiring one. In June of this year, Bloomberg reported the following:
Xiaomi Corp. bought nearly 1,500 technology patents from Microsoft Corp. in a deal that may smooth potential legal tangles over intellectual property as it pushes beyond China.

The patents cover a range of wireless communications, video, cloud and multimedia technologies, spokeswoman Kaylene Hong said. The acquisition came as part of a broader agreement announced Wednesday with the U.S. software giant, under which Microsoft Office and Skype will come pre-installed on the Chinese smartphone maker devices.
The absorption of Ruichuan IPR Funds by Xiaomi -- which must have taken place with the Chinese government's approval -- is clearly part of the same strategy of bulking up in the patent department as it prepares to expand abroad. The big question is whether Xiaomi is planning to use its new portfolio purely defensively, so that it can sign cross-licensing deals, or whether it will start going on the offense and sue Western companies in their home markets too.

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Posted on Techdirt - 7 September 2016 @ 4:25pm

Austrian Courts Uphold Creative Commons License Terms -- For Now

from the but-it's-not-over-yet dept

Last week, Mike wrote about an important case involving one of the Creative Commons licenses. The fact that some 15 years after the CC movement started and the courts are still trying to bring legal clarity to the use of CC licenses is further proof that the law tends to lag far behind technology. Given their rarity, it's interesting to see another recent case involving a CC license, this time in Austria, pointed out by Alan Toner on his blog.

As the timeline (in German) of the events indicates, the story began in January 2014, when thousands of left-wing protesters demonstrated against a ball organized by the far-right Freedom Party of Austria (FPÖ), held annually in Vienna. Following attacks on property and the police during the protest, one person was arrested, and in June 2014 his trial began.

The left-wing film collective Filmpiraten published a couple of short videos relating to the person involved. Shortly afterwards, the FPÖ used excerpts from the two Filmpiraten videos as part of a report published on its YouTube channel. The FPÖ video was released under the standard YouTube license, which claims full copyright in the material. However, both the Filmpiraten videos used a Creative Commons license -- specifically, the BY-NC-SA license. Under its terms, others may use the material free of charge, but are required to release the resulting work under the same CC license.

The FPÖ video did not respect that condition, so Filmpiraten's lawyers sent a letter asking for its material not to be used. The FPÖ responded by taking Filmpiraten to court, demanding €35,000 (about $40,000) in compensation for what it said were false accusations about its use of copyrighted material. The court case finally began in February 2015, and in July 2016 the judge ruled in favor of Filmpiraten, effectively upholding the Creative Commons license.

One worrying aspect of the case is that Filmpiraten struggled to find the resources to conduct such an expensive and time-consuming legal battle. As a spokesperson for the organization told the Austrian site futurezone, that may be why the FPÖ has adopted this approach -- and why it is now appealing to a higher court in an attempt to get the judge's ruling overturned.

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Posted on Techdirt - 2 September 2016 @ 5:59pm

Bhutan's Gross National Unhappiness: In The Wake Of The Country's First Facebook Defamation Lawsuit, Fears Of Censorship Rise

from the well,-that's-sad dept

The Kingdom of Bhutan is probably best known for its splendid location in the Himalayas, and for eschewing measurements of Gross Domestic Product in favor of Gross National Happiness. In the one Techdirt story so far about the nation, we also reported that Bhutan's government seemed to lack a sense of humor when it came to the Internet. Three years later, the online situation threatens to deteriorate further:

Bhutanese journalist Namgay Zam is facing defamation charges over a Facebook post, marking the first time that anyone in the Himalayan country has been taken to court over their social media activities.
As the detailed Global Voices post makes clear, this is a complicated story, involving not just journalists, but also senior judges and powerful business and political figures. The ramifications of this case are likely to be serious. Here's what the country's prime minister said, quoted on the Bhutanese Web site Kuensel Online:
As of now, Bhutanese are using social media in a sensible manner but often we come across news that takes an unhealthy trend. For that, we do have a social media policy coming into force where we have incorporated certain restrictions regarding what we can share on social media and what we can't share or what kind of news can come into the social media, among others.
It remains to be seen what that new policy will entail, and the extent of the censorship imposed. But it's sad to see a country that cares about maximizing national happiness taking precisely the same route as less enlightened nations.

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Posted on Techdirt - 16 August 2016 @ 11:37pm

Who Should Get The Benefits When You Donate Your DNA For Research?

from the tales-from-the-Blue-Zone dept

A few weeks back, we wrote about researchers calling for up to five years' exclusivity for clinical trial data derived from volunteers. That kind of information, typically derived from trials of a new drug, tends to be highly specific. But there's another kind which can potentially contain millions of valuable data points. In fact, the genetic information contained within every strand of DNA can not only provide important insights into countless diseases and medical conditions, but is the closest thing that exists to a digital summary of the person it comes from.

Because of that unique ability to store key data about people, collections of DNA have become a hugely important scientific resource. And because DNA is so intimately bound up with a single, identifiable individual, they naturally feel a very strong connection to that digital string and how it is used. Both of those traits are evident in this fascinating story from the Guardian about Sardinia's "Blue Zone" with its unexpectedly long-lived inhabitants:

The story starts nearly 20 years ago when Gianni Pes, a Sardinian scientist at Sassari University, visited nearly all of Sardinia’s 377 municipalities to try to prove that certain areas had an unusually large number of people who lived extremely long lives. When they found a town that met their criteria, they marked it on their map with a blue marker. When they were done, the Sardinian Blue Zone was established.
Naturally, scientists are keen to understand whether there is some genetic characteristic shared by these exceptional individuals:
In all, four databases of DNA samples have been collected over the years, with some researchers refusing to collaborate with others.
That hints at the deepening bitterness that has engulfed this area of research, as two groups claim the right to investigate one of the region's DNA databases:
One of them was Shardna, created by a scientist called Mario Pirastu. Another entity, a partly publicly funded group called Parco Genetico, was established at the same time to facilitate the data collection and act as an intermediary between Shardna and the Blue Zone towns. Now the two groups both claim rights to the database.
It's a complicated tale, with many murky corners, and it's worth reading the whole Guardian feature to follow its twists and turns as various companies go bankrupt, and the precious database containing blood samples from 13,000 Blue Zone inhabitants keeps changing hands. But as the Guardian rightly points out, the real issue is not which outfit should get to own the database, but the following:
The conflict has raised the kind of thorny ethical questions that are likely to become more pervasive as scientists tap into the promise of massive DNA databases to learn more about disease. Should a private company be able to profit from the study of a population’s DNA, when the DNA was voluntarily donated?
Needless to say, lawyers are now involved in resolving the more mundane issues of ownership of the Blue Zone blood samples. But even if a court hands down its judgment for this particular case, the larger ethical issues will remain, and become ever-more pressing as the importance and value of DNA databases continues to rise.

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Posted on Techdirt - 16 August 2016 @ 3:28am

University Tracks Students' Movements Using WiFi, But Says It's OK Because It's Not Tracking Students

from the slippery-slope dept

One of the many revelations from the Snowden files was that Canada's spy agency has been tracking people as they connect to WiFi in different public locations. And if Canada is doing it, you can be pretty sure the NSA and GCHQ are doing the same, since neither is known for being backward in using whatever means it can to snoop on huge numbers of people. Of course, you'd expect spy agencies to be up to these kinds of tricks, and you might also be unsurprised to learn that shops are also tracking you using your WiFi connection. But we might have hoped that universities would have been a little more sensitive to privacy issues than the following news on the Australian ABC News site suggests is the case:

The University of Melbourne has moved to allay privacy concerns amid revelations it is tracking students through their wi-fi usage.

The university said the practice, which looked at where people were moving around campus, helped institutions improve retention rates and the experience of students.
According to the article, the university is using the data for the following reason:
The university is trying to work out where people move across the campus to help with planning the new Metro Rail project, which will run through the middle of the campus.
That's certainly a reasonable goal, but the university seems blissfully unaware of the privacy dangers of its data gathering. In particular, the fact that it is interested in which campus room students are in at any given time means that it could probably work out the identities of those using a particular WiFi system by correlating the rooms visited with the different courses taken by each student. The university would then have a record of where all its students went during the day, who they met, and for how long. Apparently meaningless location information is actually incredibly revealing.

There's no suggestion that the university is doing anything like this, or even thinking about doing it. But once advances in technology mean that something is theoretically possible, the pressure to put it into practice can become irresistible, as other students have discovered.

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Posted on Techdirt - 12 August 2016 @ 12:09am

Archivists Grapple With Problems Of Preserving Recent Culture Held On Tape Cassettes And Floppy Drives

from the digital-archaeology dept

Most Techdirt readers probably surround themselves with the latest technology. But there's a slightly unusual class of professionals who are only now beginning to grapple with things like CP/M, 8-inch floppy disk drives and the Apple Lisa. These are the archivists, whose job is preserving cultural artifacts from all periods of history. That includes the recent past, whose technologies now seem paradoxically so strange and distant. The real-life consequences of that growing chasm between today's digital technologies, and those that were commonplace 10, 20 or 30 years ago, are made evident in an article published by the Guardian last week:

In the belly of a former whisky store in the inner Melbourne suburb of Brunswick lies a vast and varied collection of artefacts that feminist scholars can't wait to get their hands on.

Nearly 500 boxes in this dark, temperature-controlled warehouse hold a lifetime of handwritten letters, browning manuscripts and newspaper clippings.

But there are more modern treasures too: floppy disks containing an unpublished book about Margaret Thatcher; two computers, a Mac Powerbook G4 and iMac G5; and voicemail recordings about dinner plans in 1976.
These are all part of the archives of the well-known Australian writer Germaine Greer. According to the article, Greer has been hoarding personal documents and artifacts from the 1950s to the present day, which means they are in both analog and digital forms:
Greer's archive includes floppy disks, tape cassettes and CD-roms, once cutting-edge technologies that are now obsolete. They are vulnerable to decay and disintegration, leftovers from the unrelenting tide of technological advancement. They will last mere decades, unlike the paper records, which could survive for hundreds of years.
It is an irony of these formerly high-tech holdings that they are far less durable than old-fashioned paper-based systems. And researchers studying them face problems of compatibility that simply don't arise with paper. This is a major issue that is only now being faced, as cultural figures of Greer's generation pass on their archives to universities and libraries, who must start to grapple with the core tasks of deciphering and preserving them.

The good news is that once they have been decoded, they can be transferred to other media, and in more open formats that will be easier to access in the years to come. But that still leaves the problem of how to store all these archives in a way that will stand the test of time. Perhaps they will be encoded as data held on the ultimate storage medium, DNA. Or maybe it would just be easier to print the lot out on paper.

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