The internet chapter of the Anti-Counterfeiting Trade Agreement, a secret copyright treaty whose text Obama’s administration refused to disclose due to “national security” concerns, has leaked. It’s bad.

Secret copyright treaty leaks. Its bad. Very bad. — Boing Boing.

Michael Geist has more:

Despite the efforts to combat leaks, information on the Internet chapter has begun to emerge (just as they did with the other elements of the treaty).

The ACTA Internet Chapter: Putting the Pieces Together.

He adds that the draft text is modeled on the U.S.-South Korea free trade agreement, and focuses on five issues:

1. Baseline obligations inspired by Article 41 of the TRIPs which focuses on the enforcement of intellectual property.
2. A requirement to establish third-party liability for copyright infringement.
3. Restrictions on limitations to 3rd party liability (ie. limited safe harbour rules for ISPs).
4. Anti-circumvention legislation that establishes a WIPO+ model by adopting both the WIPO Internet Treaties and the language currently found in U.S. free trade agreements that go beyond the WIPO treaty requirements.
5. Rights Management provisions, also modeled on U.S. free trade treaty language.

For me, one key problem area is that #4 in Geist’s list apparently eliminates the fair use/fair dealing exception to anti-circumvention provisions (reverse engineering, computer testing, privacy, etc.). Fair use is absolutely key to a proper balance between allowing reuse that encourages new innovation and rewarding existing innovation through temporary monopolies.

Geist points out, too, that the treaty does not stop there. It contains additional provisions “that include statutory damages, search and seizure powers for border guards, anti-camcording rules, and [requirements for] mandatory disclosure of personal information.”

This is not a direction that I support, because I think it actually limits innovation and development, rather than supporting them.

The DMCA has a bad reputation with those who prefer to see greater freedom of information flow. Its anti-circumvention provisions provisions have attracted particular antipathy, and many believe the DMCA takedown provisions are regularly abused.

The point of the DMCA, I believe, was to further the general goal of IP protection in the United States: foster distribution while also encouraging innovation (through granting temporary monopolies). Thus, “providers of online services” (generally thought of as ISPs, but potentially more broadly interpretable to include other online facilitators of content, such as YouTube and similar services) have a “safe harbor” to protect them from charges of direct or indirect infringement, provided they meet certain criteria and take certain legal steps in response to claims of infringement (thus the existence of “takedown notices”).

With the shift away from the more straightforward ISP model to include more modern services like YouTube, content owners are increasingly frustrated with the DMCA. It puts the burden on content owners to “police” sites themselves, instead of required service providers to proactively do it for them. This has led to a “whack-a-mole” problem: take down one, and another appears in its place. Some service providers have voluntarily gone beyond the law to try to assist in proactively helping content owners, with the goal of reducing the overhead of dealing with multiple takedown requests and, more recently, to try to encourage copyright owners to put their content on their sites. (A kind of quid-pro-quo negotiation.)

Thus it does not surprise me to see this article, Copyright Meets a New Foe: The Real-Time Web, in BusinessWeek, essentially pointing out this very problem (and, I should add, presenting it entirely from the perspective of owners and not end-users):

Copyright law wasn’t written with today’s content consumption in mind. The way online video copyright functions is based on a reading of the 10-year-old Digital Millennium Copyright Act that equates video hosting sites with Internet service providers. That law provides a “safe harbor” for hosts who respond to copyright claims by taking down infringing content “expeditiously.”

If you’re a copyright holder and you want to keep up with your pirated content flitting about the Web — well, good luck. The way the DMCA is set up means you’re always chasing, and the real-time Web is racing faster than ever before. Analytics services are only just emerging that will tell you where your views are coming from on a semi-real-time basis.

Generally, I am of the opinion that business models need to change to meet new technology, and that changing the law to protect stale business models is not the right approach. Nevertheless, the DMCA was created in a different era of the Internet — perhaps it truly needs to be revised. If so, I hope lawmakers will consider both the very difficult issues of copyright owners (we do still need to create incentives to generate innovations and new content) facing real-time technology, along with the even more critical (in my opinion) importance of distribution to end users.

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The Uneasy Case for Intellectual Property Rights in Traditional Knowledge by Stephen Munzer, Kal Raustiala:

Should traditional knowledge—the understanding or skill possessed by indigenous peoples pertaining to their culture and folklore and their use of native plants for medicinal purposes—receive protection as intellectual property? This Article examines nine major arguments from the moral, political and legal philosophy of property for intellectual property rights and contends that, as applied to traditional knowledge (TK), they justify at most a modest package of rights under domestic and international law. The arguments involve desert based on labor; firstness; stewardship; stability; moral right of the community; incentives to innovate; incentives to commercialize; unjust enrichment, misappropriation and restitution; and infringement and dilution. These arguments do, however, support “defensive” protection for TK: that is, halting the use of TK by nonindigenous actors in obtaining patents and copyrights. These arguments also support the dissemination of TK on the internet and via other digital media and the selective use of trademarks. The force of these conclusions resides in the importance of a vibrant public domain, and the absence of any plausible limiting principle that would allow more robust rights in TK for indigenous groups without permitting equally robust rights for nonindigenous groups.

I discovered this useful and interesting discussion of the relationship between intellectual property and traditional knowledge thanks to a pointer from Lawrence Solum at the Legal Theory Blog. As he notes there, this has often been a quite confusing area of the law, and this article does a good job of going through the issues in an understandable and useful way. Recommended reading.

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John Pfaff has been writing a series of articles for PrawfsBlawg over the last month or so, focusing on “Empirical Legal Scholarship” (ELS). ELS brings empirical social science research, including especially statistical studies, into the realm of the law. (Law & Economics would be another, related attempt to bring math and the law together.)

One of the problems he points out in his introductory piece is the lack of formal training that many legal academics have in statistics (as contrasted with, say, theoretical economists). Certainly most of the lawyers, law students, and law professors I know (though far from all of them) seem to come from a humanities background (with the exception of those working in the patent field, which tends to attract those from a more technical or scientific background). While this often leads to the ability to deal with a wide range of issues in an effective manner, it does make it challenging for some of us (I include myself in this, since despite my background in software development, academically I come from the humanities) to grapple with statistical data in an effective and sophisticated manner.

In the courtroom, this is supposed to be solved by the adversarial process, which requires each side to present experts capable of explaining their analyses to a (potentially non-mathematically trained) judge and a law jury. Daubert and Frye increasingly put the initial screening burden on judges, and this has increased the benefit (and, I think the need) for judges to grasp sophisticated analyses presented by experts. I have seen this struggle in the employment discrimination context (where courts have grappled with how to deal with data that may or may not demonstrate systemic discrimination) and, perhaps most notably, in the torts context, especially when dealing with pharmaceuticals (how should epidemiological data be treated, for example?)

Professor Pfaff writes:

Empirical evidence has long posed a problem to the adversarial, common law system. As Tal Golan points out in Laws of Men and Laws of Nature, courts have struggled for at least three centuries with how to use complex scientific evidence in the courtroom, and the problem is only going to get worse in the years to come. Lay judges and lay jurors have never had the epistemic competence to understand technical scientific and empirical evidence, and thanks to the technological revolution of the past three decades the volume and sophistication of such evidence is only going to grow.

(Incidentally, Tal Golan is the primary professor I’ll be working with when I begin in the History of Science PhD program at UCSD in the fall.)

Outside the courtroom, in the world of law journals, it can be hard for student editors untrained in statistics and data analysis, to differentiate good empirical studies in legal articles from bad ones. Adding in peer review might arguably help, but only if the “peers” involved themselves have a background in such empirical research. Otherwise, law professors may be no better than young law students in dealing with statistics—and, given that many younger students are more comfortable with technology (having grown up with Excel, for example), may even be worse at it.

Professor Pfaff believes that “[s]ome sort of reform is inevitable, and I think a shift towards courtroom-EBP is the way to go.” This means focusing on an “evidence-based” policy (similar to evidence-based medicine), as he describes in The Path Ahead: Evidence Based Empirical Work. The point is to apply the scientific method and to critically evaluate the quality of evidence, data, and studies.

In addition to looking to evidence and its quality, this path ahead means doing overview (and synthesis) studies to confirm a view of the big picture, instead of extrapolating from individual studies to larger answers without checking alternatives across various studies and approaches.

I recommend reading the series of articles (and the comments) and PrawfsBlawg.

Consider this idea: without copyright protection for digital media, we would have even more Digital Rights Management. Why? Because without it, recouping up-front investment without restricting distribution would be difficult or impossible. Since I often see a confluence of beliefs around those who hate DRM and those who hate copyright laws (I myself fall into this belief system in certain circumstances), I think this is an important point to remember.

I do think that a reasonable argument can be made that in many situations, especially in regards to mechanical devices that take time and resources to reverse engineer and reproduce, that “first-mover” returns (as just one example) are sufficient to recoup initial costs (especially if the business is handled in a savvy way) and that therefore patent protection is not necessary to encourage innovation.

But what about when reproduction costs approach zero, as with software or electronic books, but development costs are potentially high? (Despite open-source success stories, software development costs money, and authors of novels spend real time — and money — writing).

Alternative business models might help if we lacked copyright protection (subscriptions for the latest software patches, selling software support services, or other creative business approaches), but I suspect at least some businesses would decide that DRM would be a good model.

After all, without legal protections, the only way to limit copying would be through private measures. DRM is one such private method. This would lead, I suspect, lead to an “arms race” between hackers/crackers and publishers, but the pay off for publishers in gaining additional monopoly time through technical measures would be large enough for be worthwhile. The user market might push against too much restriction, but again, without any legal prohibitions against copying, publishers would be incentivized to use at least some DRM-based restrictions. The pay off in protection would simply be too large, and business might well decide that customer unhappiness could be managed through various other mechanisms (like reduced prices or marketing), rather than “give in” to those who would copy without paying.

Of course, in reality it is not necessarily a black vs. white kind of proposition. We do not need to elect either full copyright or no copyright. We could choose a more limited form of copyright than we have today.

In truth, I believe limiting current copyright is the right approach to the situation. Unfortunately, it requires complex thinking and analysis, and all the factors are hard to quantify. (I suppose this is another example of why lawyers almost always say “it depends” when asked their opinion.)

This kind of analysis also gives us “fair use,” a doctrine sadly neglected (in my opinion), and one that could use some more clarity and strength.

But for now, just remember you need to consider all the ramifications if you rail against copyright, just as those who favor stronger copyright need to consider the negative impacts of that approach. Remember that a likely outcome of eliminating legal protections would be an increase in private enforcement alternatives like DRM, and pontificate accordingly.

Related articles

• Consumers and Copyright: Thoughts about reforming the Digital Millennium Copyright Act (DMCA) (inpropriapersona.com)
• Electronic texts and rent-seeking publishers (inpropriapersona.com)
• Copyright’s Paradox: a book by Neil Netanel (inpropriapersona.com)
• Fair use of copyrighted material benefits US economy: report (inpropriapersona.com)

• You Think U.S. Copyright Law is Bad? (plagiarismtoday.com)
• Returning Product To Amazon Could Brick Your Kindle (crn.com)
• Piracy Has Become Mainstream, Studies Show (torrentfreak.com)
• 5 Stupid Copyright Questions That Aren’t (plagiarismtoday.com)
• INTELLECTUAL PROPERTY, one of the key factors of sustainable growth in the modern world (violeta.si)
• DVDs and a DRM-free future (macworld.com)

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Patent Baristas » Indian Biogenerics on an Upswing:

Indias pharmaceutical industry caters to about 30% of the world’s generic requirements. Despite its tremendous volume, it has been facing difficult times recently, with the WHO stance on counterfeit drugs, as well as seizure of Indian generic shipments in the EU.

There is some good news now on the turf with the introduction of Bipartisan Biogenerics Consensus Bill: Promoting Innovation and Access to Life-Saving Medicine Act in US which shall open up the US markets to biogenerics. It is proposed by Rep. Henry A. Waxman who is also credited with an existing legislation on pharma generics to his name. (Hatch-Waxman Act) The Bill intends to authorize FDA to approve generic biotech drugs and provide a regulatory set up for the same. This would help Indian companies to launch their biological generics in US by 2010.

The patent protection for blockbuster first-generation biotherapeutics developed in the West has begun to expire, throwing them open for generic exploitation. While continued high demand, high prices, and applicability in previously untreatable conditions are behind the success of branded biologics, the absence of generic competition has meant that the growth has gone unchallenged.

A quite interesting explanation of the potential changes in store for the “generic” pharmaceutical industry, and the importance of generic drug manufacturing to India (which is a leader in this area, partly do to patent laws that have favored generic drug manufacturers).

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Bad Results for Google in Recent 2nd Circuit Ruling Over Keywords — Law Blog — WSJ:

In an opinion penned by Judge Pierre Leval, a three-judge panel ruled that Google must face a trademark infringement lawsuit for selling keywords that trigger ads. Click here for the Recorder story.

An interesting development. Basically, Google was selling the names of companies to competitor companies as keywords for advertising. The 2nd Circuit did not necessarily say that was not acceptable, just that it did not fall into the “internal use” exemption for infringement and sending it back to the district court for further proceedings based on that.

The Patent Lottery: Exploiting Behavioral Economics for the Common Good by Dennis Crouch

Lotteries are immensely popular. Players are willing to give the organizer a large monetary cut of every ticket purchase in return for a chance at a jackpot. In some ways, our current patent system operates as a lottery as well. Most patents are relatively worthless, while a few are highly valuable. Reaching the major payout of a highly valuable patent takes perseverance in the face of tremendous uncertainty. Like lottery players, small entrepreneurial companies and individuals have shows signs of bounded rationality. In particular, what I call the patent lottery effect is associated with the phenomena of potential innovators overweighting the size of a potential payout on innovation while neglecting to fully consider the actual probability of obtaining that payout. The potential bounded rationality of actors in the patent system challenges our traditional notions of the patent incentive.

In many settings, bounded rationality problems are patched-up with education and paternalism such as in the form of consumer protection. In this article, I take a different approach and instead explore ways that the overconfidence of innovators may alter our choice of innovation policy levers in ways that increase innovation but decrease the monopoly cost of patents.

Do Patents Perform Like Property? by Michael Muerer and James Bessen

Do patents provide critical incentives to encourage investment in innovation? Or, instead, do patents impose legal risks and burdens on innovators that discourage innovation, as some critics now claim? This paper reviews empirical economic evidence on how well patents perform as a property system.

The Property Rights Movement’s Embrace of Intellectual Property: True Love or Doomed Relationship? by Peter Menell

The recent Supreme Court battle over the legal standard for permanent injunctions in patents cases (eBay v. MercExchange) marked an important new front in the Property Rights Movement’s campaign to establish a strict and broad interpretation of property rights and their enforcement. This essay explores whether Professor Richard Epstein’s embrace of intellectual property rights is likely to produce a durable marriage of traditional property rights theory and intellectual property protection or merely represents a fling that will not withstand divisive relational pressures. It shows that philosophical, functional, intellectual, and political tensions stand in the way of a stable or enduring relationship between advocates of strong and unyielding property rights and intellectual property owners. The need for dynamism and adaptability within the intellectual property rights field may well weaken the support for absolutism in property jurisprudence and policy, reinforcing the shift away from the Blackstonian conception of property.

A New Balance between IP and Antitrust by Mark Lemley

In this article, I introduce the interaction between intellectual property (IP) and antitrust law. I describe the ways in which these two important areas of government regulation are and are not in tension, and discuss the history of the relationship between these laws. I argue that IP and antitrust have cycled between over– and under-protection, and that we are currently (and mistakenly) conditioned to think of private property and private ordering as efficient in and of themselves, rather than as efficient only in the context of robust market competition. Further, I argue that antitrust can serve the goals of innovation and dynamic efficiency directly in circumstances in which competition, not monopoly, serves as a spur to innovation. The goal of the IP and antitrust laws should be to seek a robust balance between competition and monopoly in the service of dynamic efficiency. When IP laws are strong, antitrust laws should also be strong, and vice versa.

Against Intellectual Monopoly, a book by by Michele Boldrin and David K. Levine, two economists who have proposed abolishing copyrights and patents:

It is common to argue that intellectual property in the form of copyright and patent is necessary for the innovation and creation of ideas and inventions such as machines, drugs, computer software, books, music, literature and movies. In fact intellectual property is a government grant of a costly and dangerous private monopoly over ideas. We show through theory and example that intellectual monopoly is not necessary for innovation and as a practical matter is damaging to growth, prosperity and liberty.

This book seems to come at the issue from a libertarian perspective, which I sometimes have problems with (mostly due to a tendency of some libertarians to 1. act selfishly and without a consideration of other people and 2. want to de-regulate economic behavior while re-regulating social behavior, something that appears inherently contradictory).

Nonetheless, the idea of getting rid of IP (in its current form, anyway) is one worth exploring, at least as a kind of “what if?” experiment that can help us understand the pros and cons of various approaches to IP protection and its impact on economics, development, etc.

The authors contribute to a blog as well. A sample post from a different contributor:

There are some decent arguments out there that argue in favor of a state, welfare rights, war, democracy, drug laws, and so on. They are all flawed, since libertarianism is right, but there are coherent, honest arguments that we libertarians have to grapple with.

But it is striking that there are no decent arguments for IP–as Manuel Lora remarked to me, “You know, I haven’t seen a good pro IP article ever.” This is true.

As I mentioned earlier, this is an interesting perspective I hope to explore further, though not from a libertarian point of view.

Two economists from Washington University have looked at current copyright and patent laws and concluded that they’re not good. The pair see current intellectual property laws as similar to “medieval trade monopolies” which were bad for the economy as a whole, and are calling for the system to be reformed.

An interesting perspective, and one in which I am currently exploring in a “thought-piece” paper for a class on law, technology and development. I expect to have more to say about this later.

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