Meeting on the Future of the Internet - Mired in lack of transparency

Level of Transparency these days depicted above

Why is transparency such a difficult proposition nowadays? It seems to be constantly popping up as an issue in nearly any large bureaucratic process. There are only two possible answers of course - either a belief that true democracy (which requires information as a basis for choices) is untenable as a governing mechanism, or that democracy is undesirable to those "leaders" unwilling to conduct transparent proceedings. I would lean towards the latter. For those more interested in the reasoning behind this, I've written another post here on a concept called 'the iron law of meritocracy' that may be relevant. Anyhow, I digress from the purpose of this post and that is point out that the future of the internet is now being discussed and possibly decided behind closed doors in the World Conference on International Telecommunications (WCIT) from Dec 3rd to Dec 14th, 2012. 

It may be redundant to stress the importance that the internet has made in the world today, as anyone reading this is likely to have a very healthy appreciation of the tremendous role the internet has played in leveling the field for information spreading, opinion sharing and ability of dissenting voices to be heard and recognized. Yet, even aside from the direct role that the internet has played, it has also had cascading effects, much like a vaccine for an eradicated disease which has benefitted generations of people aside from the ones who've been given the vaccine. The reason that it has been able to play such a large role is the unregulated and decentralized nature of the internet. Of course, the infrastructure behind it and optimizing it's spread and growth may require some regulation, but it is important to not let this be the disguise under which the internet itself is controlled. About a decade ago, a group of 4 engineers in Microsoft wrote an impressive, almost 'prophetic', paper entitled "The Darknet and the Future of Content Distribution" on how the growth of a network system such as the internet would ensure that information continues to spread at a increasingly faster rate as technology grows, regardless of attempts to restrain it, due to it's inherent decentralized nature. Whether this continues to remain true remains to be seen. 

An agency of the UN known as "International Telecommunication Union" (ITU) is hosting the WCIT to go over and revise the decades old International Telecommunication Regulations (ITRs) which govern standards and regulations for information and communication technologies. The ITU, as noted by Wired, does a lot of important work, such as "sets spectrum and technology standards, has done much to improve global interoperability and efficiency, and helped increase access to information and communication technologies in developing nations." Having said that, the preparatory documents to the important  upcoming meeting have been very secretive, with only member governments and a few other parties being given access rights. Some leaked documents have made their way out though and have shown to be potentially very worrying as they include proposals for restrictions on online privacy, free expression, access to information, and ICT use around the world. 

Civil society, of course, quickly banded together and proceeded to draft and sign into documentation their concerns of the effects this would have on human rights (available as a petition here, do check and sign if you agree), to which the ITU secretary stated, "WCIT-12 is not in any way going to be challenging Article 19, or indeed any other article in the Universal Declaration of Human Rights". While a mere statement seems to hardly address the concerns, if true, it doesn't explain the lack of transparency or the high barriers it takes to join the proceedings ($2,000 - $35,000 annual membership costs). These high barriers leave out some of most important stake holders in the whole process - civil society and human rights organizations. Not to mention that the current process is giving all power to governments, when we currently have governments of the most powerful democracy (USA) and the largest democracy (India) occupying spots 1 and 2 respectively on Google's list of user surveillance requests - an indication of clear disregard for information privacy and freedom of speech. Yes, the country with the most power in the ITU, is also the one that is number 1 by a large margin in Google's list. How much confidence does that inspire in the decision making process of the ITU? I can't claim to be very convinced, especially when what is required for true growth from here is more power to other voices from around the world and not more centralization. 

Hopefully, in a couple of weeks, we will be able to say that the Internet is still as mobilizing as it has been thus far. 

For those interested in following more on this, you can check out the following:

A recent event by Stanford "Is this the End of the Internet"(video), 

Google's Take Action page, 

The WCIT Leaks page 

CDT's analysis of the key proposals

As well as the petition mentioned above. 

(Thanks to Kruttika for the links)

Corruption in Customs: Strategies to Get More Out of International Trade

All countries, including Turkey, participating in the WTO believe that there has been some economic benefit in adopting the WTO agreements; however, there is considerable disagreement as to how much benefit the agreements have actually produced. A study by the University of Michigan found that if all trade barriers in agriculture, services, and manufactures were reduced by 33% as a result of the Doha Development Agenda, there would be an increase in global welfare of $574.0 billion. A 2008 study by World Bank Lead Economist Kym Anderson found that global income could increase by more than $300 billion per year, $250 billion of which would go to the developing world. Others had been predicting more modest outcomes, e.g. world net welfare gains ranging from $84 billion to $287 billion by the year 2015.

Corruption in customs as one of the trade barriers which act as an additional tax or fee impedes the free trade; therefore causes huge losses of share that the developing countries would have in benefits of international trade. If Anderson’s above mentioned estimate is true, basically we might content that 250 billion USD gets less and less at every corruption case occurring in the customs of developing countries.

Corruption also causes inefficiency in business having bad impact on international trade. When the customs officials harass firms with demand of bribery, firms spend human and monetary resources resulting in inflation of labor and operational costs. This problem is even worse for small and medium enterprises as the bribe amounts that they have to pay at customs might substantially affect their capacity to do business across borders. Even if my main focus is in Turkey, I think developing countries where corruption in customs is widespread share similar features with regards to main reasons of corruption and strategies to combat against it. In my opinion in order for the efforts to combat against corruption in customs to be effective we need an integrity and ethical government oriented approach to the problem. Ethical government requires all the powers – legislature, bureaucracy and judiciary – to act in conformity with ethical principles. An ethics system that excludes one of these powers or branches of government is ready to collapse any time; thus preventing our chance to make improvement in this fight. Only a comprehensive reform process starting from the restructuring of customs administration can break countries out of existing vicious circles linking corruption and under-development. In order to achieve that, we need to be reformist. In order to achieve this, we need strong intent of highest ranking administrators in our case, i.e. Minister of Trade and Customs- to eliminate all kinds of corruption and inefficiency at customs because attitudes, perceptions, and actions of them are fundamental to any efforts to initiate and sustain reform. High ranking administrators have to take determined positions against corruption to be models of integrity for low ranking officials who work at the heart of operations. Second, what we need is not partial projects targeting specific areas of customs like computerization or modernization projects. What we need in Turkey and other developing countries where corruption is widespread, is a more revolutionary approach which is restructuring the customs administration. First, we need to change our perception about corruption which will be conducted through training programs for customs officials, seminars for firm representatives doing business across the border, conferences for raising awareness of society that corruption is an epidemic, not a right, tax or usual course of business.

Second, we need to build a very clear and standardized procedural system through concise and accessible legislation, eliminating all grey areas that cause opportunities of corruption. Third, we need to make sure that if a customs official violates his ethical and criminal obligations under codes of conduct at various laws defining corruption, the penalty system is applied to everyone equally and strictly without any exemptions or exceptions. With regard to corruption investigations carried out by the Turkish Inspection Boards, the need for a prior authorization from the hierarchy when investigating some categories of public officials hampers the investigation. There is an urgent need for better co-ordination of the system currently in place for combating corruption. The designation of a body with sufficient independence responsible for promulgating and monitoring the implementation of anti-corruption measures could be helpful in this respect. Also in Turkey, asset disclosure records of customs officials are unavailable to the public and whistle-blower protections are virtually non-existent. Journalists investigating corruption face intimidation and harassment with one fatality occurring over the reporting period.

A recent empirical study on corruption at customs of Bolivia, Pakistan, and Philippine might be taken as an example of methods for eliminating corruption at customs because each one of the countries are highly different from each other and they carry some similar features with Turkey in sense of international trade and development.

The study shows that the strategies based on repression and positive incentives are effective in regulating a situation of low corruption and preventing its further development but experience shows that these tools cannot correct a situation of widespread corruption. Therefore, I advise, restructuring of the procedures that leads to an important reduction of the opportunities of corruption should be at the core of the strategy. Furthermore a high degree of transparency in design and implementation should be maintained. Obtaining the active support of groups benefiting from reform, proceeding step by step, combining restructuring with changes in management, monitoring implementation and securing computer systems are also crucial for the comprehensive reform. Above all, as I have mentioned before political will remains key for a successful implementation. The case studies showed that it is crucial to have strong commitments on the part of both political leaders and the customs director.

How can we make drugs cheaper?

WHO members and observers have currently gathered (Nov 26-28th) at WHO headquarters to discuss and try to implement an R&D treaty which would de-link R&D costs from drug prices. In simple terms, this means that if implemented, it would lead to a huge jump in affordability of medicines around the world, by diverting the massive costs from the consumers to a large global fund, externally managed. (presumably governments chip in). As to why they costs should be diverted... The simple one to me is that people do not (consciously) choose to be sick; so there is no reason for rich people to have cures while poor people can only watch. Of course, there needs to be a practical, 'fair' way to do this. That's what this current treaty is looking into.  

[I said 'consciously' in the above line, because it is true that issues of general health, hygiene, educated choices, etc all play a part in people falling sick; as does simple bad luck. While it definitely requires inter-disciplinary attention, I believe trying to solve health and education issues as primary ones is the most sensible approach] 

This treaty has been under negotiation for more than 2 years now and that in itself is a big step as, if implemented if would mark a big change in approach towards the current market based pharmaceutical innovation system. Why is this important? Because the current system comes with several problems that are caused directly by this linkage between R&D costs and drug prices. Let me lay some out: 

1. Drugs are not like other market goods where the market tells you which drugs are most appreciated. Rather, drugs are taken for combination of the following reasons: Disease + doctor's advice + insurance considerations. Thus the usual 'free market' considerations do not take place here. Diseases are something no one values; doctor's advice is somewhat trustworthy, but still not the person's own judgment; and insurance, when present, quite often determines what drugs people eventually go in for, if anything at all. 

2. Having innovation dependent on the market causes innovations to be directed towards the market. Simple basic logic. This means that drugs are not made for diseases or afflictions which affect poor people more than rich people. This is highlighted in the case of developing country diseases, which rarely, if at all, affect developed countries (i.e., Richer markets). With much of the current capital present in the developed countries, this leaves the poorer countries at the mercy of the pharmaceuticals present in the richer countries. 

3. Following on from the above point, if/when drugs are made for diseases that are present in poorer countries, they are generally priced at a very high rate as compared to the Purchasing Power Parity (PPP) of those in poorer countries. A lot of public backlash regarding pricing strategies have fortunately led to some drugs being differentially priced in different countries in recent times. There is still much to be done though. Similarly, even poor people in richer countries are priced out of these drugs. In fact, in some cases (insurance-less for instance), access to these medicines may be much harder for them as compared to people in poorer countries due to inflated insurance based prices. 

4. Aside from the above mentioned circumstances, having a health system where the incentives for pharmaceuticals are laid out based on purchasing rather than treating/curing, is somewhat counterintuitive. For instance, it may not make any good business sense for a pharmaceutical company to find a vaccine for a disease, since that would mean eating into their future customer base. Similarly, it also makes more business sense for pharma companies to find palliatives rather than actually curing a disease in a person, as it would mean they need to constantly buy more medicines. I have no idea about pharmaceutical processes, but I find it amazing that the common cold has not been cured, while baldness creams of all sorts have reached the market, not to mention that man has landed machinery on Mars. 

And the reasons go on.. But I think these are the main ones. 

So, while WHO members meet to discuss and try to come up with a treaty that would solve these issues... There is one notable organization that is protesting it - The Wellcome Trust. 

A statement from them as per KEI: 

It is essential to engage with industry effectively. We are concerned that the report's emphasis on the delinkage of R&D costs from the pricing of end-products may hamper this. The pharma industry are important partners and should be galvanised to develop business models that address the needs of the poorest consumers.

For an organization that has a statement of "Our funding supports the brightest minds in biomedical research and the medical humanities, with the aim of improving human and animal health." as the first line on their website ... This surely is a stupid way of telling the world that they care more about the welfare of existing institutional players, than the reason that those players and institutes exist - i.e., than for 'improving human and animal health'. Not to mention, that this treaty doesn't ask pharmaceuticals to do charity work, but wants to change the flow of funding as coming from a global fund, rather than the patients. 

Academia struggles to pay up as Journal prices soar!

What is "Open Access"? Explained by PhD comics

In yet another story headlining publishing houses, India's top science officials have expressed concern over not being able to afford subscriptions to international science journals, budgeted at Rs 500 crores for the 5 year period covered by the 12th five-year plan (2012-2017). 

The issue is concisely captured in the quote in the LiveMint article here: "“I’ll try my best to get this (budget for journals) passed, though I doubt whether the Planning Commission will allot Rs.500 crore just for journals,” Ravi (Science minister at the time) said last week as part of a longer speech on the 60th anniversary of the National Institute of Science Communication and Information Resources (Niscair), a CSIR body. Access to academic journals is a basic necessity for professional scientists. Researchers compete to publish their best research in top academic journals and the frequency of articles in top journals is crucial to career progression as well as the general advancement of science." 

According to the article, prices have gone up about 5 times since the previous 5 year plan! It's not only Indian officials who are uncomfortable with the rise in prices. Tired of rising prices, Harvard too, had issued a memo earlier this year requesting their faculty to make their work available freely and/or in open access journals. 

(On a tangentially related note, there is an interesting piece advocating the abolishment of law reviews here) 

But why this sudden rise in prices? Off the top of my head, and (please note, full disclaimer) without looking into the working of the publishing industry and the data etc, I would like to hazard a guess as to what is probably one factor. 

Copyrights are a set of incentives to encourage proliferation of knowledge and information. When it comes to academic work, there are several incentives present for research - the primary ones being reputational benefits, requirements for positions and promotions, and scientific curiousity. The incentives for academics to publish this research, accordingly, also primarily stem from these factors.

However, copyright steps in and gives (financial) incentives to "Publishers" instead of academics, to increase publications. (And in doing so, it disregards the incentives that are already present for the academics to publish). And as all businesses go, business sense requires going after more profits. This does not mean that publishing houses do not require capital or revenues to continue operating, of course. I would not even go so far as to call them a 'necessary evil'.. and would simply call them 'necessary'. However, our policy seems to be geared towards the 'middleman', rather than the creators. And without strict regulation, it is but natural that the middleman rises in importance in the whole equation. The sudden rise? Because with the internet and of course the recession, they seem to be losing control of their hold on the market, and are trying to grab back as much as they can, so they can continue as before. 

With the rise of the digital world however, much of the capital required to disperse information is no longer required. The printing press is replaced with a computer and an internet connection. However, in order to organise the flood of information, there definitely needs to be some organization and quality control. Will open access journals step up to fit this role? We are yet to see. However, given the rising costs of journals, academic institutions may start seeing it fit to invest more into quality control of open access, than traditional methods. Indeed, UK has already said they are going to fully support open access journals in physics, allowing readers free access to journals for particle physics. There may be some controversy over their particular business model, but it shows a big move towards experimenting with non-traditional methods. I see it quite likely that other countries / institutes will be following suit, or trying their own methods of promoting open access. 

I'll leave you with what seems to be a good source for finding open access journals - the Directory of Open Access Journals. 


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As posted by me on SpicyIP.com

Can Open Access coincide with Patent law?

Can Open Access principles coincide with Patents? I review a paper which says this just may be possible. As posted by me on SpicyIP.

[Warning: Long post that mostly reviews a paper describing a type of license which may reduce unnecessary patent litigation as well as promote an 'open access' approach. Actual review starts from below the dotted line. ]

Who would've thought patent-wars could have become a topic of discussion amongst even those with traditionally no interest in 'lawyery stuff'! Good or bad, one side effect that the Apple-Samsung fiasco has had, has been to turn the public's attention span towards the topic of patents. For example, the New York Times published a 7 page article online entitled "The Patent, Used as a Sword" that seems to be doing the rounds on the social network circles. Most of those 7 pages are in detailed instances of patents harming innovation. Just before that, The Atlantic even went to the extent of pulling out a 'legal' paper to review for their audience, in their article entitled, "The Case for Abolishing Patents". 

However, it's not just a few general public news sources that feel that patent laws have gone out of control. Indeed, quite a few academics and practitioners have been writing on this for years. Way back in the 1950s, Fritz Machlup, who had written 'An Economic Review of the Patent System', asserted to the US Congress that "If we did not have a patent system, it would be irresponsible, on the basis of our present knowledge of its economic consequences, to recommend instituting one. But since we have had a patent system for a long time, it would be irresponsible, on the basis of our present knowledge, 

to recommend abolishing it." Unfortunately, since then, patent rights have only grown stronger, and of course the TRIPS Agreement was thrown in to make sure they don't go anywhere. And the various other "free trade" agreements are being signed, lobbied for, etc to harmonize these stronger rights. All this has led to several patent thickets  massive litigation expenses amongst other things, in turn leading to a diversion of resources from their optimal use - actual working of technology, and further innovation. 

At the same time, civil society and academics have been playing an increasingly active role in standing up for, and representing public interests. It is in this context that I will be reviewing a proposal that is discussed in Berkeley Professors Jason Shultz and Jennifer Urban's soon to be published paper entitled "Protecting Open Innovation: A New Approach to Patent Threats, Transaction Costs, and Tactical Disarmament". [I was lucky enough to have been part of a seminar in which an earlier version of this draft was presented and discussed]. Their proposal rides on the same spirit that the Creative Commons movement did in the Copyright arena and is certainly an interesting one, and is possibly a solution to at least the software patent issues, if not more sectors. 

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Their starting premise is similar to that of Machlup's, mentioned above. However, Shultz and Urban are trying to find a solution to the problems that Open Innovation Communities face by virtue of not taking the 'patent' path to do their innovation. We'll go with their term "Open Innovation Communities" (OICs), but I think they are really referring to any 'community/company/person' who is averse to a strongly pro-patent approach to innovation. But first - why do these communities choose to not take the patent path?Shultz and Urban identify three main reasons: 

a) The enormous resources required to acquire a useful patent portfolio. 

b) On principle. Many innovators, especially in the software field, view patents as unnecessary restrictions on the flow of information, and ones that help big corporates bully smaller innovators. There are also those who do not want to contribute to the mess that they feel the patent system has created already. 

c) There is nothing keeping a 'defensive' patent portfolio from being used offensively. 

This third reason, while being the basis for most of their paper, seems to be curiously phrased. Unless they are worried that their successors will use a portfolio gathered for defensive purposes, for offensive purposes later on, this doesn't seem to be that much of an incentive to stay away from the patent system. However, if there was a way to ensure that others use patents only defensively, there may be more of an incentive for innovators to engage more with the patent system. Such a system, wherein innovators are obliged to only use patent portfolios defensibly is in fact what Schultz and Urban go on to propose. 

[Defensive use of patents would mean to acquire patents only to defend themselves from lawsuits brought on them for infringement of someone else's patent, or from patent trolls.] 

Having identified these reasons, they flip them around to see the 'values' that might incentivise OICs. They are:

a) Collective benefit outweighs the collective costs (including fiscal, legal, information and transaction)

b) Cultural and political alignment with OIC values - ie, openness, and free-er flow of information, along with the view point that the dominant 'incentive' theory (exclusion rights are required to incentivise production) is not the only one present; and in fact the 'exclusion' approach comes in the way of their own preferred approach, be it motivation from benefit to reputation, importance of developing know-how, stimulating demand for a related product, etc. I.e., it disturbs their freedoms. 

c) When the 3rd condition is flipped around, it is seen that 'innovation conditions' which provide reliability and reduce risk of all participants are desired. (the most important criteria in my mind) 

In other words, a strategic 'patent' equivalent to the GNU General Public License and Creative Commons approach that exists in the 'copyright' field.  In their words, "By conditioning79 the license terms upon the licensee’s commitment to freedom and openness, copyleft OICs argue, they can ensure that as the network of users grows, new users enhance the value of the network through ongoing commitments to the same principles and norms. This both creates reliability by creating enforceable norms and limits gamesmanship." 

After extracting principles and values important to OICs, they take a look at the 4 existing patent defense strategies and the limitations that exist with them. Of these four, the first is of most interest, primarily because it fails due to a substantial failing of the patent system - information gathering.

Defensive Publication: While publishing information about OIC technology ideally should serve as prior art so that future patents aren't granted on this technology, in reality this doesn't work too well. This is because Patent offices need to be able to find this information, as well as that OICs engineers are generally the ones who put out the information and not in the same way that a lawyer would read or organize it. On top of that, patent attorneys can easily 'write around' prior art claims so that boolean  or linguistic searches do not throw up the same results.

The other three strategies include Patent Pledges, 'Peace' provisions and patent pools. A combination of vagueness, unreliability or insufficient incentives seem to limit these models and hence they go on to propose their own new innovative model - the Defensive Patent License.

"The DPL is a standardized open patent license designed to encourage the creation of a broad, decentralized network of OICs that both patent their innovations for committedly defensive purposes and license them on a royalty-free basis to any others who will do the same." With the objective of fulfilling the above three mentioned value based criteria, the DPL is offered with the following four conditions:

1. 1) Every DPL user (i.e. licensor or licensee) will forgo any offensive patent infringement actions against any other DPL user; 
2. 2) Subject to Condition 4, every DPL user will offer her entire current and future patent portfolio under the DPL;
3. 3) Every DPL user will bind any successor-in-interest to any part of her patent portfolio to her obligations under the DPL; and 
4. 4) If a DPL user wishes to stop offering her patents under the DPL, she may do so but only with six months’ notice to existing DPL users and future parties. She must continue to grant, and may not revoke, any licenses that are in place before the end of the notice period. Once she stops offering the DPL, other DPL users are free to revoke their licenses to her at will. 

If you take in the implications of these four conditions, you see that it is quite a simple, yet effective model. They go on to explain how such a model would better address the limitations that other defensive patenting techniques face while at the same time maintaining the values dear to the OICs. The basic information gathering issue is addressed by all DPL members having to register on a DPL website which would coordinate the members and their patents under the DPL. By pooling in their resources in this manner, their access to knowledge and technology increases by several factors, and their risk decreases at the same time.

While they have great points and certainly make a strong case for the initiation of such a model, I do have certain concerns regarding it.

a) It encourages patenting where patents would not otherwise be granted.

• This is described as an advantage of the system, but I'd rather frame it as an advantage to the system. More patents in the DPL pool help the DPL be more successful. But for companies to patent when they otherwise wouldn't, seems wasteful on it's own. Whether it would be wasteful in aggregate, would depend on the success of the DPL. And there may be a cyclic problem here, as little success = less patenting = little success. 
• By encouraging patents here, it removes incentives for patent-free innovation such as prizes, which may fall more squarely within OIC values. Having said that, it seems likely that OICs are more prevalent in certain sectors of technology such as software, computer based, mobile, etc. And the only major sector where 'prize systems' are still one of the few alternative innovation options are in the pharmaceutical world, where the the capital investments are simply too large to share freely. 

b) As noted by them, requiring an 'all-in' approach, would be problematic for many companies, especially the larger ones or ones that have a multi prong business approach with proprietary technology along with 'open' technology. They simply say that on consideration, an all in approach seems less harmful, than a partially in approach which may increase gamemanship (as companies may only put in less useful patents). However, they also leave open the possibility of allowing partial portfolios through means of specific technical standards, or some such objective criteria. The partially-in, based on objective/standardized criteria seems a much more 'business' friendly approach to me. 

All in all, it seems to be a very well thought out 'fightback' to the crazy patent wars, thickets and trolls that we have happening regularly now, especially in the software patent world. I wouldn't want to be the one in charge of maintaining the DPL website with such vasts amount of information on it, but that seems like a technicality that can be figured out along the way since the website itself does not do any 'enforcement'. The draft license is available in the index of their paper. You can also hear Shultz and Urban speak about it here. And for those of you who want to contribute or check over the language of the DPL, it's available for comments on their website here. 

An 'innovative' decision in the Apple Samsung case?

As posted by me on SpicyIP. 
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" For us this lawsuit has always been about something much more important than patents or money. It’s about values. We value originality and innovation and pour our lives into making the best products on earth." 

- Tim Cook, in his memo to Apple's corporate employees after the $1.049 billion dollar verdict that went Apple's way in it's smartphone patent battle with Samsung, in US District Court, Northern District of California.   

 "Good artists copy. Great artists steal" 

- Steve Jobs, 1994 

This post was meant to review the implications that this decision would have on innovative activity, however I came across some very interesting bits while I was looking deeper into the decision. As far as my take goes on it, the short version is that while Apple is no saint, Samsung did willingly copy certain features and designs. And Samsungs 141 pages of internal documents pretty much admitting the same certainly helped their decision. However, the jury did a very suspect job in deciding the verdict here and there are certainly shoddy aspects that went into the decision. In any case, this is not over yet and this will almost certainly go into appeal. Having said that, at least on first look, it appears that this is good for innovative activity. For the long version and the implications and explanations, read on.

Apple started off by claiming almost everything they could think of - a huge list of trademarks, trade dress registrations (including on the packaging boxes!), design patents and utility patents. Frankly, some of their claims just seem ridiculous to me - take a look at the analysis of the claims in this link here. Judge Koh got the list trimmed down substantially and the trial started with one registered trade dress claim, limited unregistered trade dress claims, 4 design patents and 3 utility patents - by Apple. The 3 utility patents were the 'pinch to zoom', the 'bounceback to signify no more scrolling space' and the 'tapping to zoom' patents. These claims were to be examined against about 25 Samsung products each. And 5 counter patent claims by Samsung including the 2 FRAND patents regarding 3g technology. These 2 patents cover industry standard technologies so it should've been a given that Apple was using them. There were settlement talks which failed which could only mean that Apple and Samsung could not agree on settlement terms. Apparently Apple had asked Samsung for $30 per phone. If this is true, I think I can understand why Samsung refused to settle this and may have even come out better with the $1 billion in damages. 

A 9 member jury decided the verdict after being given a 100 page jury instruction document and a 20 page verdict form with about 700 questions and came back in less than 22 hours of deliberation! That is to say, 9 ordinary members of society unanimously decided a complicated and nuanced suit, which also happens to set precedence for this issue, in 22 hours. I frankly think a panel of well read IP scholars would've had trouble deciding and agreeing on all these issues in such a short period. That is, not to say that the jury was malicious, but it does seem quite likely that with a weekend ahead of them and with their mindset already favouring Apple after Samsung clearly infringed upon some of the patents at least, the jury went ahead and hurried through the process. And unsurprisingly, there is proof that the jury was not as thorough as it could've been.

Inconsistencies: 

In one instance, the jury said that Samsung did not infringe, but then assigned about $2million in damages for inducement. When there is no infringement, proving inducement to infringe seems a bit of a stretch. In another instance, they ruled no infringement at all but still had damages for a few hundred thousand dollars. It makes one wonder then, one what basis they handed out any of their damages. Judge Koh sent these inconsistencies back to the jury and the jury asked the judge what the inconsistencies were. These were then sorted out and Samsung had ~$2million removed to bring the total damages down to $1.049 billion.

There are some other aspects which I haven't quite understood about the verdict yet. Apple went into the case with an injunction against the Galaxy Tab for infringement of design patent, yet amongst the devices that the jury decided on, the iPad was the only clear loss for Apple with the jury stating there had been no infringement. 

More confusingly, with respect to some of the software patents, some devices were found to be not infringing. Given that Samsung's phones all run the same Touchwiz interface on Android 2.2 or 2.3, how is it that most Galaxy devices were found to infringe upon the 'bounceback' patent for instance, but not the Ace or the Intercept. I'm really curious as to what was different about the few devices they found non-infringing when all the others were found to be infringing. 

To be perfectly honest, it almost seems like the jury was randomly throwing in a few questions in Samsung's favour so as to not appear like they've gone all out in Apple's favour. 

Added to this: Samsung's 2 FRAND patents (patents which are required to be licensed on Fair, Reasonable and Non-Discriminatory terms as they are necessary to comply with standard setting bodies) were being used by Apple. What's important here is that Samsung offered Apple these licenses at a 2.4% rate or at $14.40 / iPhone or iPad and Apple claimed that this was unreasonable. The infringement seems a given in this case and the question seems to be more surrounding FRAND terms. Instead the jury just found non-infringement in this case. Presumably, they were convinced by Apple's argument in court that Apple bought the parts from Intel, and Intel had valid licenses from Samsung and that patent exhaustion would apply in this case. Personally, I am confused why Apple negotiated (and disagreed with) licensing terms with Samsung if it did not need to at all. 

                                                

Statements from the jury:

A few statements from the jurors with added emphasis by me: 

Most tellingly, the statement from the jury foreman Velvin Hogan, that the jury had reached the decision without needing the instructions. 

In an interview after the trial, he also then said "We wanted to make sure the message we sent was not just a slap on the wrist," We wanted to make sure it was sufficiently high to be painful, but not unreasonable." 

Unfortunately, not just one but two of the rules that the jury didn't read (as mentioned above), specifically say that the damages were not to penalize but merely to compensate. 'Jury'-activism much?

After the trial, CNET spoke to a another juror. 

"It didn't dawn on us [that we agreed that Samsung had infringed] on the first day," Ilagan said. "We were debating heavily, especially about the patents on bounce-back and pinch-to-zoom. Apple said they owned patents, but we were debating about the prior art [about similar technology that Samsung said existed before the iPhone debuted]. [Velvin] Hogan was jury foreman. He had experience. He owned patents himself...so he took us through his experience. After that it was easier. After we debated that first patent -- what was prior art --because we had a hard time believing there was no prior art."

"In fact we skipped that one," Ilagan continued, "so we could go on faster. It was bogging us down."

He continued on to state that they were not impatient through the process though. 

It may be too late for Apple to start hoping that the jurors stop speaking out about their jury duty as these statements are probably already cause enough for Samsung to take up with the court. 

Conclusions and Implications:

As for this case, the only conclusion seems to be that this is far from concluded. There seem to be enough grounds for Samsung to appeal and in the meanwhile Apple is sure to go in for stronger claims as well. This is a battle that will probably go on to the Supreme Court. 

The big question is what the implications to innovation are and what the effect this will have on consumers - and I agree largely with what the team at Verge seems to think about this. The implications to Samsung beyond the money in damages will not be much. Apple does not have any injunctions against Samsung. It certainly is a possibility that Apple will now ask for these injunctions, but it is too early to tell which way that will go and if it'll matter at all. Most of these phones are being phased out and the new line have either worked around Apple's patents already or are not endangered by them.  The Android OS development will no doubt have a huge role to play in this but one can rest assured that Google is observing and making notes from all these developments. The software developments here have been proven against Samsung's Touchwiz interface and claiming them against HTC or Motorola or any other company would probably not be bolstered too much by this decision. I could be wrong however and I think Rajiv will be following up on with a post on the impact this will have on the Android ecosystem.

Given that Samsung already has such a large section of the smartphone market, this decision will certainly not throw them off completely, if at all. But they will be more wary of their competitors' patents. Microsoft with their new Windows phones will probably be very happy with this decision as this might help boost their products. 

However, given that patents are here, whether they like them or not, companies will be more likely to (a) be more wary of them and (b) cross-license and settle. Apple was able to wield such power this time because they had a huge advantage coming in strong with patents. This is not likely to happen again since eyes are always following patent filings nowadays. One can also hope that weak patents (such as 'rectangle with rounded edges') will be challenged before they can be used as offensive patents. Software workarounds will probably become the norm - so there will be plenty of duplicative work but given  the three factors which somehow combine here - (a) that companies will be more wary of patents and (b) at the same time want to increase their market share, while (c) software workarounds are relatively easy to do, I would guess that innovative activity is likely to increase. Unfortuntely, more immediately, all the litigation expenses that companies are all going through with these patent wars, will probably translate into higher costs for the consumer. 

I'm less sure what this means for Apple though. Apple has been very trigger happy in these patent wars so far and I'm really not sure what they're so worried about to be filing suits all over the world at the rate they are. Apple makes beautiful, easy to use products and frankly, Apple consumers generally already know what they're buying when they buy Apple products. 

But these court cases represent huge litigation costs for them and one that they are apparently willing to make. It does also seem to appear that their product improvements have not been as large in the past year or so and Steve Jobs' demise is probably a factor in this. Are they worried that they can't keep up with product development and hence are trying to stop their competitors? Because if this is the reason, they may have unknowingly triggered faster improvements from their competitors by being so over-zealous with their patent rights. But then again, Apple has given surprises to the market before - perhaps they can still continue to surprise. In any case, these patent wars certainly do represent a huge waste in resources and it is very very unfortunate that it seems to be leading to companies wasting resources duplicating efforts with workarounds rather than forging straight on. The only clear winners here seem to be the patent lawyers and it is certainly a good time to be one. 

--

For this post I collated data from several websites and news sources across the internet. However much of my information came from several pages within the very informative Groklaw and The Verge.

Google may need to change their motto

(As posted by me on SpicyIP)

Coming this week, Google will be making what could be a ground breaking step in it's search algorithm. Google will start downranking sites in proportion to the the number of valid copyright removal notices that the site receives. According to Google, "This ranking change should help users find legitimate, quality sources of content more easily". While on the surface, this seems like a good anti-piracy move, I shall explain why I think it could be a major problem. 

I had earlier covered some of the problems with the 'personalization' that online giants seem to be doing. That argument was more controversial - essentially claiming that they are not giving people what they want, but rather that they are giving people what Google (for eg) thinks they want (based on their search history) and this limits their information intake and presents a less balanced / less neutral result. I would go further to add that even if they kept giving people what they wanted on a search term, ie, something they're looking up information on, but limiting it to results based on the user's history, this is akin to encouraging a society where views are discouraged from being contradicted and debate and discussion takes a backseat. 

However, this new change to algorithms gives rise to an easier argument : that the search engine giant is presenting users what others want them to see and this is inherently a problem. Google emphasizes that it won't remove content unless a valid copyright removal request is received. However, copyright is certainly not a black and white affair. Do you create an algorithm that detects fair use? Or public domain? No, it's not possible. So what about the notices that target content that falls in these categories? And those could still be good-faith mistakes. What about all the bad-faith / reckless notices that MPAA / RIAA have had no hesitation in sending out (including to dead people and a homeless man!)? Also, Google states that they would be taking down sites with high number of removal notices. What about the following (hypothetical) situation: A small site 'swarajshare' which gives out only pirated media but only stores 500 movies -- vs -- vimeo or veoh or viddler or youtube even! They are all massive and certainly store more than 500 movies. But they probably receive 1000s of valid takedown notices. Does n't this now mean that youtube or vimeo would be lower in their search results than swarajshare even when users are not looking for pirated material? And does changing their algorithm the first step onto a slippery slope? Do other search engines now also give in? Does Google start contemplating more such steps to 'stop piracy'? These are all questions that we will probably see answers to in the near future and can only hope that access to knowledge and creativity aren't killed in the guise of protecting content. (On that note, slightly tangential but a here is a thought provoking study on one of the effects of No copyright - though to be clear I am not an advocate of 'no copyright' but rather of more limited copyright protection)

Rohan George puts it aptly when he says "More than anything else, this signals the end of an era when Google's main interest was delivering information and not 'content'". 

Some sources speculate that Google could be conceding this change because it needs media companies to keep them in their good books in order for them to successfully build an eco-system around their all-in-one Google Play store. And of course, this certainly seems legal and above-board... but I'm not so sure that restricting access to knowledge unnecessarily is really 'doing no evil'. 

IP as an innovation system

(For the meat of the post, you can scroll down to the 4th paragraph)

While there are many justifications and theories of intellectual property, I'll be approaching IPR from the perspective that regardless of the theories/justifications of IP, it is the primary method of incentivising innovation in our world today. (Having said that, this approach does more or less fall under the 'utilitarian theory'). I'll also be ignoring the politics of IP and the developed-developing country issues - the picture below pretty much sums that bit up. I've actually already done a bit of both of those approaches over here. I'm not even looking at the fallout effect of a badly managed but well intentioned patent regime such as excess litigation and overburdened patent offices. For the textual part of my post today, I'm simply looking at the basic concept of patents and copyrights today and explaining what I think their problems are. 

Personalized blog-art credit to Madiha Tallat 

Do feel free to stop and admire the cartoon above.

Ok, So moving on.
What are innovations? Simply put, they are gains in current information or knowledge which optimally can be implemented in products/processes and allow for the further production/discovery of more information or knowledge. Defined as such, innovations are naturally very valued in society and any reasonable society would try to formulate systems for improving the rate of innovative activity. Our society, reasonable or not, has also formulated some systems towards this goal and these are largely encompassed under the heading of 'Intellectual Property Rights'. 

It is obvious that the spread of information and knowledge is fundamental for society's growth and development, therefore any restriction placed on this spread should necessarily be a justified one. Conceptually, this is what patents and copyrights are. Temporary restrictions on the spread of information/knowledge present so as to provide the innovator a time period within which s/he can capture rents for the production of that information, thus serving as an incentive for innovators.

So on the one hand, these temporary restrictions price out one sector of consumers and restrict the flow of information while on the other hand, these restrictions may be the incentives required to quickly bring these innovations to light. The emphasised portions are the key trade-offs in this equation. It's clear what the negative is but on the benefit side, it may not be so clear as to why I'm emphasizing how 'quickly' the innovations are brought to light. The reason for this is that given a certain amount of information and knowledge, it is only a matter of time before an innovation is made from that information. There is no practical way of measuring how long/short this duration may be. Which means there is no practical way of knowing how much incentive is required to bring about an innovation earlier than it would have otherwise taken.

And this is what is causing many of the problems in the patent as well as copyright world today.

Even without actually examining why 20 years was eventually chosen as the standard patent term, it is clear that in the best case scenario it was a best-guess as to what the term ought to be. To add to that uncertainty, the advent of the internet has certainly made a tremendous impact on the spread and accessibility of knowledge and information. With the amount of information available to anyone who has access to a computer and internet connection, the spread of ideas is happening at a much quicker rate in nearly all fields, thus rendering the 'best-guess' of 20 years even more moot.

Unfortunately, discussion and debate in the actual policy setting has been far from transparent in the IP world, with normative solutions for society going lower and lower on the priority list.

Admittedly, patents and copyrights are two very different beasts and as such, I'll discuss them separately.
Copyrights tend to have a 'moral' edge to them, in that, they are more often the result of creative application of someone's mind. The idea remains free for others to use, while the person expressing the idea gets 'ownership' over his particular form of expressing that idea, so it's easy to see why people find it inherently easy to believe that copyrights are justified. This 'inherent justification' also partly explains how copyright terms have been pushed senselessly from 14 years to a currently possible 100+ years. Copyright mostly applies to 'culture' heavy sectors, so it's not very easy to even vaguely estimate if there has been any net benefit or loss due to copyright. However, the fact remains that copyrights can and have been exploited continuously. It's been a long while since our education has been through the means of stories passed on to us. The written word is how we learn and how we are taught now.  If knowledge is valued, then there must be more than a 'less than vague' estimate of net benefit to society by restricting it. Copious copyright term extensions also apply to academic publications. Recently the Spiegal wrote about a study by economic historian Eckhard Höffner, which says that Germany's current industrial might is a spillover effect of the proliferation of academic papers allowed by the absence of copyrights for about 130 years after the superpower of the time (Great Britain) instituted them. In pertinent part from the study:

"Publishers in England exploited their monopoly shamelessly. New discoveries were generally published in limited editions of at most 750 copies and sold at a price that often exceeded the weekly salary of an educated worker. London's most prominent publishers made very good money with this system, some driving around the city in gilt carriages. Their customers were the wealthy and the nobility, and their books regarded as pure luxury goods. In the few libraries that did exist, the valuable volumes were chained to the shelves to protect them from potential thieves.

In Germany during the same period, publishers had plagiarizers -- who could reprint each new publication and sell it cheaply without fear of punishment -- breathing down their necks. Successful publishers were the ones who took a sophisticated approach in reaction to these copycats and devised a form of publication still common today, issuing fancy editions for their wealthy customers and low-priced paperbacks for the masses."

"This created a book market very different from the one found in England. Bestsellers and academic works were introduced to the German public in large numbers and at extremely low prices. "So many thousands of people in the most hidden corners of Germany, who could not have thought of buying books due to the expensive prices, have put together, little by little, a small library of reprints," the historian Heinrich Bensen wrote enthusiastically at the time.

The prospect of a wide readership motivated scientists in particular to publish the results of their research. In Höffner's analysis, "a completely new form of imparting knowledge established itself."" 

Hoffner's is the first study to look at the effects of copyright over a long time and the fact the Britain and Germany existed with and without copyright respectively made it much easier to compare. This period free of copyright laid the foundation for Germany's rapid industrial expansion soon after. Certainly other factors were involved in their continued expansion but the industrial foundation as well as approach to scholarly literature was already set.

So coming back to my point - restricting the spread of knowledge certainly requires strong justifications and strengthening a system with weak foundations seems incongruent with that. I'm not quite advocating no copyright, but it does stand to reason that copyright restrictions should be as minimal as possible.


Products/processes which receive patents on the other hand are generally considered more 'hard' drivers of innovation. This is because they have more tangible benefits to society. Modern IP policy however, has curiously landed on 20 years as the duration of a patent for any and all sectors of technology. This implies that all sectors of technology require the same amount of incentives for innovation. This, however, is simply not true.

Common business sense and wanting first mover advantage is often a huge driver in innovation. Simply put, no one wants to be left behind. Sufficient competition will nearly always lead to innovation. The only normative reasons to give exclusion rights over products/processes are when (a) first mover advantage is likely or is viewed as likely to be insufficient to regain capital expenses and/or (b) when innovation is unlikely without extra incentive due to non-capital related reasons such as market stagnation or contradictory interests.

Pharmaceuticals are the best example of the first scenario where first mover advantage is insufficient to regain capital expenses due to the quick and cheaper reverse engineering that can be done to produce generic drugs. However, pharmaceutical patents come with a host of other problems, which require much explanation on their own and which I'm likely to be highlighting in future posts.
Battery technology is probably the best example of the sector specific innovation stagnation and this is probably due to the fact that improvement of battery capability leads to selling less batteries... But I really don't see how the patent system is helping this problem? If anything, it is part of the problem here. If the incentives to innovate it were tied to the social value of the better batteries rather than to it's sales revenues, there would likely be very quick development in the field.

Let's leave this reasoning aside and look at yet another problem. That of lack of contextualization. Different countries have different domestic strengths. International trade is based on comparative advantage, yet when it comes to patent rights, countries are not allowed to choose sectors for which they feel stronger or weaker patent protection is required.

In other words, despite different incentives required for innovation in different sectors, and despite different countries having different priorities and levels of development, patent policy is broadly the same world over.

The IP system can and will be argued over and teased and pulled in different directions by clashing interest groups... However in my eyes at least, it seems this is not a battle that can be won. Stakeholder interests by default will continue to clash with one another and often unfairly so, in each of their eyes. One way or another though, thanks to the WTO TRIPS Agreement, IP is here to stay. If alternative innovation systems do come up, they will have to somehow bypass the IP system and carve out their own niche.

Plebnorance

A very well written article entitled "Why Elites Fail" by Christopher Hayes was recently published in The Nation. You don't need to have read it for the purposes of this post, but it is definitely worth the read when you have time. It spoke very strongly and persuasively about 2 points (which I completely agree with):

1. The "Iron Law of Meritocracy". This essentially dictates that in societies centered around the appreciation of merit, the 'meritorious' start protecting and defending their elite turf so as to keep it within their own circles if not their own progeny. This naturally results not only in growing inequality but more importantly in reducing social mobility. Very clear examples of this are all around us all the time. Take a look at our education system - it is common place now for a range of tuition services to exist for getting into the top universities. So, once a poor student manages to finish his basic education despite whatever odds he has to face, he also has to then compete with much richer, tuition-ed, well connected kids for a spot on the same 'competitive' admission exam. Now expand that to a pool of 100 rich kids versus a pool of 100 poor kids. Doesn't take a professional gambler to know which to lay bets on. And that's just one particular level of the chain. 

2. How are we 'meriting' anything in the first place? Intelligence. We like to think our society places a huge amount of importance on ability and intelligence. And ability is usually measured by intelligence (outside of sports, etc of course). He puts it best:

"While smartness is necessary for competent elites, it is far from sufficient: wisdom, judgment, empathy and ethical rigor are all as important, even if those traits are far less valued. Indeed, extreme intelligence without these qualities can be extremely destructive. But empathy does not impress the same way smartness does. Smartness dazzles and mesmerizes. More important, it intimidates. When a group of powerful people get together to make a group decision, conflict and argumentation ensue, and more often than not the decision that emerges is that which is articulated most forcefully by those parties perceived to be the “smartest.” " 

Indeed why aren't ethical rigour and empathy valued as much?! In our world obsessed with success, money, power.. why are we not as jubilant of our humane triumphs? Why do they go mostly unnoticed or unreported even they do occur? (And they certainly do: here is at least one forum which aims to bring focus to such activities) 

Indeed, if empathy and compassion were equal factors of being meritorious along with intelligence, the so called "Iron law of Meritocracy" would no longer hold true. (Can you imagine Mother Teresa pulling up the ladder after herself?). The problem of reducing social mobility would not occur. 

But instead, success and merit have become defining factors of themselves. Roles in society have become warped by our lack of understanding of what success should mean. What Lawrence Lessig terms as 'institutional corruption and improper dependence' (relationships that are legal, even currently ethical, but that weaken public trust in institutions) have become rampant. Do you know anyone who would be confident of at least 50% of his country's leaders passing an empathy exam? 

I've coined the term Plebnorance to describe the most common result of this warped path we are walking on. The ignorance and/or apathy of issues relating to common people - by those who are not supposed to ignore them - most often by governmental leaders and policy makers and of course, by people themselves. 

In this blog, given my educational background of law and intellectual property policy in particular, I'm likely to focus on issues of Information and Access, as requirements for our freedoms, as well as Innovation and Technology, as drivers of our civilizational progress. Having said that, I'll still consider any topic open game. If nothing else, I hope this process of writing and analysing such issues helps me attain some clarity in my own head regarding changes that can be pushed for and issues that can be raised more widely. To end, I'll leave you with Lessig's talk on institutional corruption - a longish 17 minute watch but a highly recommended one.