What do RICO, the asbestos crisis, and gay marriage all have in common with S. 2560, the proposed Induce Act?

This is not really a trick question. RICO, asbestos, and gay marriage all represent instances in which the legal system has, in the eyes of political conservatives, proven itself imperious, as in the dictionary definition: "haughty," "arrogant," "overbearing," "domineering."

The system has taken basic principles or language intended to cover limited situations and expanded them to and beyond the limits of their logic, thus producing results that transcend the bounds of good sense and the intent of the original lawmakers and pre-empt political decisionmaking.

Thus RICO is used against not against mobsters but tobacco companies or abortion protesters, asbestos has turned into a nightmare that bankrupts by-stander companies without helping the real sufferers, and gay marriage may be legalized nationwide by four Massachusetts judges rather than debated in legislatures.

Conservatives can produce a longer list of horror stories without breaking a sweat, and the proposed Induce Act is viewed as another in this line. Its proponents vow that it is intended only as a weapon against those who are cynically trying to make money by appropriating the value of the sweat of the brows of the creators of music and movies, not against honest tech innovators. But how can they guarantee this? If the language is susceptible to over-interpretation, then there will certainly be battalions of lawyers pushing for these, and there is no shortage of judges who will go along.

Add to this brew that the issue is arising in the middle of bitter political year, that a major proponent of the bill is "Hollywood," and that another large villain in the conservative anti-pantheon is "the trial lawyers," who are blamed for the legal mess, and it is not surprising that many conservative organizations have grabbed their rhetorical arms.

They are abetted by the tech companies, which have their own bitter experiences with legal system, and no faith at all in any guarantees that lawyers will be reasonable. [See "The Class Action Industrial Complex," Forbes (subscription required), Sept. 20, 2004.] The corporate instinct is to oppose any bill that is not totally unambiguous, and such a feat of draftsmanship is hard to find this side of Utopia.

The result of these swirling forces is that conservative groups and tech companies, both of which should be on the side of property rights and markets, have been enrolled on the side of the pirates. But this is not where either belongs in the long term, so both sides need to figure out how to craft a law, or develop legal doctrines, that will recognize that they both represent legitimate and vital interests that simply must be protected.

How they are to accomplish this, given the context of a badly sprained legal system and legal profession, is, shall we say, a bit of a challenge. The difficulty of the problem is also illustrative of how the neglected rot in the legal system is spreading.

posted by James DeLong @ 1:15 PM | General

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TechDaily (subscription required) this afternoon has a Delphic report on S. 2560. It notes that Rick Finkelstein, President of Universal Pictures, flew in to lobby the Judiciary Committee for stronger copyright protection, but adds that Universal "refrained from endorsing the bill in its current form because of last minute changes."

The report goes on to note that lobbying this week has been "intense," but that despite this, or perhaps because of it, Thursday's mark-up session may not attract enough attendees to approve the bill. In other words, the Senators, caught in a furious cross-fire among content, tech, telecom, and other industries are heading for the hills.

posted by James DeLong @ 5:20 PM | General

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Anyone who appreciates irony will revel in the news that the Supreme Court has granted cert in the eminent domain case of Kelo v. New London. The issue is whether a state is constitutionally allowed to exercise its power to take property "for public use" when its purpose is to transfer the property to a private corporation which promises to generate more tax revenue for the government than comes from the existing use.

The irony? The beneficiary corporation involved is Pfizer, the big pharmaceutical house, which is thus putting itself squarely on the side of government's plenary power to do anything it damn well pleases with anyone's property.

Of course, in other contexts that are far more important to them, the pharma companies are desperately defending their property rights (in the form of patents) against whimsical governments that would destroy the research goose that lays the long-term golden egg of innovation by appropriating the fruits of that research for the sake of short-term demagoguery.

So Pfizer ought to be on Kelo's side, not New London's. Perhaps the public policy office should start talking to the real estate department.

posted by James DeLong @ 9:26 AM | General

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The current version of the Induce Act is scheduled to be marked up by the Senate Judiciary Committee on Thursday. Unfortunately, there is still no meeting of the minds between the tech and content worlds on the language of the bill.

The intent is to attack the cynical purveyors of file-sharing that are up to their tails in copyright infringement, as described by Mary Beth Peters (Register of Copyrights) in congressional testimony earlier this summer.

Furthermore, the tech world agrees that creative property must be protected against appropriation. (It better agree: No one will buy tech toys unless vibrant content is available, and this will not happen unless the people who create this content can make money. Also, the tech world lives by its IP in the form of patents. Were I a content company, if the Induce Act fails I ould put some of my lawyers to work drafting the "Patent Sharing Act of 2005.")

However, once a law is on the books it becomes a weapon for opportunistic lawyers, and of course the common law creativity of judges lauded in recent blogs is not always exercised wisely. (As someone once noted, "The trouble with a call for new ideas is that most new ideas are bad ones.")

So the tech world remains skittish, dreaming up horrible hypotheticals under which the law might be deployed against the iPod, or even against the personal computer itself. It is egged on by the academicians and public-interest types who are really opposed to protecting creative products at all, and who have no interest in solving the problem.

The content people keep reassuring everyone that the intent of the law is limited, but so far no language has been found that satisfies everyone of this, and no one can guarantee against opportunistic law suits by unknown parties in the future, so the tech people are loath to take a chance.

Still, it seems like a solution should be possible. The key distinction is between the person who simply sells a product or service and who does not want to be and should not be responsible for the use made of it, and the person who actively fosters infringing uses. It is the difference between selling a copying machine or setting up a copying center and establishing a business that advertises "books pirated here." In the file-sharing context, it is the difference between selling software which customers can use to share files of any sort (infringing or not) and setting up a business that encourages a continuing stream of piracy.

The distinction is not without complications, but surely the interested industries agree on the desirable outcome and can come up with a combination of statutory language and legislative history that will achieve it.

The tech world needs this as much as do the content people. Perhaps not this week, but sooner or later the need to protect creative content will become imperative, and at that point the tech world better have a bill it likes, or it will most certainly get one that it does not.

posted by James DeLong @ 2:34 PM | General

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National Review Online has an interesting article on "The Transatlantic Innovation Gap," comparing America and Europe on pharmaceutical research.

A key point: "More important than cultural disparities are the differences in regulatory regimes. In spite of recent legislative efforts, Europe still doesn't have a decent regime of intellectual property protection, which leaves companies uncertain about the profitability of any investments they are looking to make. America's fortunes turned when it got serious about promoting R&D through the 1980 Bayh-Dole act. Europe's fortunes deteriorated because of a constant stream of regulations, all aimed at limiting the freedom of research institutes to do their work quickly and efficiently."

posted by James DeLong @ 10:04 AM | General

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Today's Wall Street Journal (subscription required) has two interesting pieces on music. One is on the proposed Induce Act, and it emphasizes the proposed changes championed by the Consumer Electronics Association, which would, says WSJ, "target only those computer programs that exist primarily for 'indiscriminate, mass infringement of copyrighted works,' and whose commercial viability depends on that infringement."

This approach would reduce the fears of the tech world, which is concerned that the proposed legislation would be used against hardware devices, with the iPod as the poster child.

The other article is an interview with Gunter Thielen, CEO of Bertelsmmann. His comments on the piracy issue: "I think the downloading problem won't be solved until we're able to electronically interfere with the process. There are some new technologies being tested and I think they will be ready pretty soon. . . . . In one or two years, we'll have taken care of the problem . . . . The combination of technical advancements, user-friendly services and litigation will lead to a reduction in unauthorized downloading."

I am increasingly convinced that Theilen is right -- that a right of self-help, limited by liability for damages caused by mistakes, is a crucial part of any long-term solution. The brouhaha over the Induce Act reinforces this view, too.

posted by James DeLong @ 2:52 PM | General

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Techies have often responded to the copyright woes of music and movie people by urging them to get a new business model (more or often less politely). My question for the day: why doe the burden of reinventing itself does lie only on "old" business methods? The P2P business model (legality of downloads aside) is nifty, but surely could use refinement. This need for redesign offers the best hope of success for "paid" content services like the revamped Napster.

Raw P2P services are, well, seedy. The success rate of searches is uneven, the quality of downloads more so, and the failure rate of download attempts is high. There are issues with viruses, security problems (as unwitting users accidentally share excel spreadsheets), one is liable to stumble across nasty porn, and so on. What are the implications of this?

To start, it means a business history of P2P might well end up looking like the history of chat rooms. A bit of raw data: The first chat room, PLANET, was born of ARPNET in 1973. In 1988, Jarkko Oikarinen developed Internet Relay Chat. In the mid 1990's newbies flocked into general-purpose, un-moderated chat rooms springing up everywhere. In the late 1990's, AOL served about 15 million users, and found that the average user spent about 19% of his time in chat rooms. Today, chat's growth has slowed and the average user spends much less time in chat. And more experienced users prefer targeted and focused instant messaging or just plain email. Moderated forums open for limited times and limited purposes offer a nicer environment. The unmoderated forum is mostly for the brave, foolish, or twisted. Concerns about children's safety lead MSN to close its free chat rooms in 2003. Chat rooms have gotten a lot of attention from law enforcement, too, with IRC providers like CIT/Foonet shut down for intentionally hosting hackers.

Getting back to P2P, in earlier blogs (e.g. 9/14) I've posed the challenge of how content providers can remake the market in the (relative) absence of enforceable boundaries. How will paid compete with "free"? The history of chat shows that a too-chaotic, dingy sort of medium may driver users to more controlled environments. Thus legal music downloading services are having success in getting consumers to pay up. So content providers may take heart. But this mini-history of chat shows that techies should take heart as well. Neato tech can survive and reinvent itself despite (needed) attention from law enforcement focussed on real bad guys and a dose of accountability.

posted by Solveig Singleton @ 9:33 AM | Internet: P2P, Search Engines...

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As part of a recent home move, I just signed up for VoIP, at $15/month for 500 anywhere minutes. I can keep my old 202 phone number instead of converting to a new 703 one, and I get all sorts of extras, such as voicemail, that I have not sorted out yet. While I was at it it, I spent all of $115 on three new cordless phones.

Incredible!

posted by James DeLong @ 1:56 PM | General

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Richard Posner's creative suggestion about a Fair Use solution to the problem of excessive copyright extension triggers some philosophical thoughts.

Too much current debate over intellectual property focuses on cramming the arguments into existing legal pigeonholes. This approach puts things backwards. Legal rules are a derivative of a society, generated out of the culture as people work out their relationships and promote efficiency and fairness. The most famous statement of this is Oliver Wendell Holmes' "the life of the law has not been logic, it has been experience." (Not by coincidence, Judge Posner is the editor of The Essential Holmes, a compendium of Holmes' writings.)

As technology and economic change occurs, the old rules -- pigeonholes -- become inadequate and we must create some new ones. But these do not come initially out of the legal mandarinate, which tends to be locked into the old ways. Rather, new rules should come from the experience of the people who are working with the system, and who have a sense of what is possible and needed. They should be ratified by the legal system, and this may best be done by common law processes, which are more tentative and prone to revision than legislative solutions.

As a previous post noted, this bottom-up process has occurred with respect to property rights in the past, in contexts such as the American West, and is also occurring right now in the tech world.

Posner's suggestion is within this tradition. Given the computer revolution, it would be easy to make available information about those copyrights which holders care about. So it becomes unfair and inefficient for them to put potential users to the expense and trouble of ferreting out the holders at considerable expense and risk of heavy penalties for error. A common law judge, especially one imbued with the law-and-economics views of seeking the person who can avoid a problem at the least cost, then has little trouble in agreeing to convert this sense of the involved community into a legal rule, using as his clay the broad principle of Fair Use.

But this is a relatively easy case, because no one benefits from the inefficiencies and higher costs. Other issues, such as contributory infringement or the Induce Act, are far more contentious, and discerning any community consensus is far more difficult.

But not necessarily impossible. For example, producers and purchasers of software reached agreement very quickly that purchasers should be allowed to make extra copies for extra machines as long as the purchaser is not usually runnning more than one machine at a time. The bargain was ratified by contracts rather than laws, which may indeed by the best approach -- it is, again, tentative and partial rather than cast in stone, and subject to revision if producers want to begin to offer new value propositions, such as cut rates for those who do not need the extra copies.

posted by James DeLong @ 1:43 PM | General

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The most recent (2004 Q2) Tech Environmental Quality Index (TEQI) is available from the Association for Competitive Technology. The TEQI is a detailed and very useful chart summarizing pending legislation, litigation and other events affecting the world of tech policy. IP events are covered.

posted by James DeLong @ 1:33 PM | General

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posted by James DeLong @ 2:01 PM | General

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posted by Solveig Singleton @ 9:10 AM | Internet: P2P, Search Engines... , Legislation and Legislators , Patents

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posted by James DeLong @ 2:46 PM | General

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posted by James DeLong @ 1:53 PM | General

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posted by Solveig Singleton @ 10:10 AM | Software

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posted by Solveig Singleton @ 3:30 PM | Access: Commons, Fair Use, Orphan Works, Public Domain , DRM & Watermarks, etc.

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posted by @ 2:25 PM | General

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posted by Solveig Singleton @ 5:49 AM | Free Culture Movement , Free Culture Movement

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posted by Ray Gifford @ 3:41 PM | General

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posted by James DeLong @ 1:15 PM | General

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posted by Solveig Singleton @ 10:00 AM | Art , Internet: P2P, Search Engines...

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posted by Solveig Singleton @ 2:58 PM | Internet: P2P, Search Engines...

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posted by Solveig Singleton @ 9:38 AM | Internet: P2P, Search Engines...

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