IP Matters

One argument against the FCC’s recently announced “AllVid” plan to regulate and “open up” the video set-top box is that set-top boxes are NOT a natural monopolistic platform that must be regulated by government in order to allow competition – in fact, set-top boxes are on the verge of being phased out and replaced by a variety of innovative new options. Apple TV, for instance, is an example of innovative new hardware for video access. But even a look at Apple TV lets you quickly see the real future of video access – apps. Put simply, in the normal course of innovation responding to consumer demands, set-top boxes are being replaced by apps on smart TVs, mobile and streaming devices. There may never be a better example of government regulation being behind the pace of innovation.

And today, Comcast announced its Xfinity Partners Program, which will allow Comcast customers to access their Xfinity content through a variety of devices and platforms using an Xfinity TV Partner app. Samsung and Roku have already joined the program, which means Comcast customers simply won’t need a set-top box if they own one of the new Samsung or Roku devices featuring the Xfinity TV app.

Seeing Comcast join the impressive number of over-the-top video providers who allow access to their content through apps demonstrates that the FCC’s AllVid rulemaking is not a response to a problem in the marketplace. The FCC has also done no economic analysis whatsoever to justify its scheme. Nevertheless, the FCC is pushing the Allvid scheme very aggressively with shortened timeframes for comments and public input.  One has to wonder what, exactly, is the FCC trying to accomplish? And why the rush?

Meanwhile, industry continues at the speed of innovation while the FCC regulates looking backward.

Die-hard opponents of free trade and intellectual property have plainly stated their intention to wage a smear campaign against the largest trade agreement in history, the Trans-Pacific Partnership (TPP). Their transparent and tone-deaf tactics have been lampooned as one-sided and overly simple, but still they strain to create fear and anxiety among consumers and users at every opportunity. This, despite mounting fatigue and annoyance from their own supporters. For example, Redittor “binarybandit” posted:

I've seen EFF doing this lately with the TPP bill. They've been using fear mongering to make people believe that they're seriously gonna go to prison for making a free mod for a game, or that it's gonna destroy the internet somehow. People are eating it up though.

Right on cue, the latest effort to invent controversy centers on a breathless EFF conspiracy theory – government lawyers have secretly expanded the scope of penalties for copyright infringement during a technical review of the TPP text by changing the word “paragraph” to the word “subparagraph” in a footnote. 

To be fair, it is true that this change means the footnote only applies to one part of the paragraph, and that does actually make a difference.  The paragraph at issue sets out rules for calculating and applying remedies for criminal theft of intellectual property, and the footnote allows countries to ignore those rules, except for more significant cases.  The change means only the last part can be ignored (except for more significant cases), not the whole paragraph.  Sensing an opportunity, the EFF pounces insisting there is “no rational basis” for the change.  Let’s examine that.

The very first obligation in the paragraph — where the footnote no longer applies — is that the punishment should fit the crime.  In the precise terms of the agreement, countries must provide “Penalties that include sentences of imprisonment as well as monetary fines sufficiently high to provide a deterrent to future acts of infringement, consistent with the level of penalties applied for crimes of a corresponding gravity.”  Now, if the footnote applied to this requirement, it would be saying that in lesser cases, the punishment doesn’t have to fit the crime and doesn’t have to provide a deterrent.  Would that make any sense to you? 

I’ve just discovered the International Authors Forum (IAF), and I’m in love.

For one thing, IAF features prominently on their website and in their materials the critical text of Article 27 of the Universal Declaration of Human rights, which states:

Everyone has the right to the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he is the author.

It drives the CopyLeft and Access to Knowledge folks crazy that the key international human rights document includes intellectual property rights as a basic human right. Yes it does. They try to reconstruct the sentence sometimes to make it sound like it means the opposite of how it is written, but they’re wrong.

I’ve tried to make some hay over the years with this fact, not only writing about it, but also getting physically accosted by activists at a WIPO meeting where I dared to read out the text of Article 27 during an IPI intervention (more here). Ah, memories.

Anyway, the International Authors Forum has a great document [PDF] on their website where authors from around the world including developing countries explain how expanding copyright exceptions and limitations would be harmful to their attempts to produce cultural products in their own markets. It’s worth your time.

We’ve often argued that a combination of government enforcement and private voluntary agreements is necessary to reduce illegal online theft of copyright materials [ex here and here]. Everyone in the online world has an interest in ensuring that a complete array of rich content is easily accessible online, but that requires a healthy Internet environment, which means the rule of law predictably applies in the online world as well as it does in the analog world. That the online community resists the idea that piracy is a “killer app,” either for Internet adoption or for selling advertising.

And it’s entirely consistent with America’s long tradition of civil society and free association for voluntary agreements among Internet players to be a big part in creating this healthy internet ecosystem. That’s why it’s been cheering to see several recent examples of voluntary agreements designed to reduce online piracy.

Last week Donuts—the world’s largest Internet domain name registry and the registrar of the new .MOVIE domain extension, announced that it has entered into an agreement with the Motion Picture Association of America (MPAA).

Essentially, infringement notices from MPAA to Donuts will be treated with high priority, and MPAA’s notices will have a presumption of credibility, so long as MPAA provides sufficient information to Donuts. That information includes:

• A statement that the MPAA is authorized by its members to submit the referral;
• Detailed description of the clear and pervasive copyright infringement occurring on the domain (e.g., sample URLs, screen shots);
• Non-exhaustive identification of the law(s) being violated and a description of why the copyright infringement violates the specified law(s);
• Statement that, prior to sending the referral, the MPAA alerted or attempted to alert the registrar of record and hosting provider, including a description of the response received, if any, from registrar and hosting provider and an explanation of why such responses failed to mitigate the infringement;
• Statement that the referral is submitted with a good faith belief that the information contained therein is true and accurate; and
• Confirmation that the referral was subject to careful human review and not submitted solely based on automated Internet scanning or scraping services.

This is more than enough information to guard against the concerns of copyright critics that such takedown notices are sometimes used nefariously to suppress legitimate content.

IPI commends Donuts for its willingness to work cooperatively with content owners to reduce online piracy. We’ve not simply reproduced the entire agreement in this blog entry, but the agreement is a robust model for other registrars and operators to follow, and we hope further such voluntary agreements are in the offing.

On February 10^th the Global Intellectual Property Center (GIPC), a project of the U.S. Chamber of Commerce, released the fourth edition of its International IP Index. The Index is a mapping and ranking of the climate for IP-based innovation in the 38 economies around the world that account for nearly 85 percent of global GDP.

There is a ranking, of course, because people (and governments) like lists. And while the rankings easily lent themselves to highlighting on social media, the great value is the nation-specific discussion of changes in country policies that have improved their IP climate, and nation-specific discussion of gaps and areas for improvement. For instance:

• Malaysia is noted for improvements in its IP climate, and its participation in the Trans-Pacific Partnership (TPP) will result in further improvement in its IP policies.
• Israel’s 2014 patent reforms, including data protection for pharma-related clinical data and patent restoration for biopharma.
• But several European countries, including Switzerland, Sweden, Poland and Italy, are noted for lax efforts at combatting online piracy.
• The BRICs (Brazil, Russia, India, China) are noted for continuing to tie IP protection to concessions on market-access and for an overall policy of using weak IP protection as a means of trying to favor their own domestic interests.
• Even the U.S. is faulted for weak enforcement against trade secrets theft.

Curious how PTAB's going?

PTAB is the Patent Trial and Appeal Board, which was created in the America Invents Act (AIA) patent reform bill in 2012. The idea was to find a quicker way to find and invalidate patents that should not have been issued.

Of course, PTAB has turned into many things, including a means for hedge fund short sellers to make a quick profit by shorting a stock and then challenging patents held by that company. I'm guessing creating a new way to manipulate the stock market for profit isn't quite what the patent reformers had in mind.

But apparently it's worse than that. Here's Gene Quinn's view from his IP Watchdog blog:

The Redline case, like so many others, shows just how much of a wild west inter partes review is at the Patent Office. PTAB judges do not implement the rules and laws uniformly, and joke is being made out of due process. Why? Because these proceedings need to be completed within 12 months, so the PTAB cuts corners and simply doesn’t believe they can offer the process that patent owners, and increasingly petitioners, deserve. This is making post grant proceedings seem more like a kangaroo court or some hang ’em high court right out of a Clint Eastwood western.

Lovely.

Derek Scissors of AEI published a paper back in December containing his analysis of the Trans-Pacific Partnership (TPP) agreement, which at some point one assumes will be submitted to Congress by President Obama.

Scissors is a free-trader who recognizes the need for such agreements in the absence of an effective WTO trade liberalization process. Based on several of his written pieces, Scissors 1) thinks the TPP as negotiated is distinctly better than no TPP, 2) is disappointed that the U.S. didn’t work harder to get a better deal, 3) thinks we should still try to fix the TPP within the framework of the existing parties to the agreement and, if that doesn’t succeed 4) we should fix the TPP at the cost of dropping countries that refuse to go along with the proposed fixes.

Earlier in November of 2015 Scissors wrote:

If this cannot work, free traders should not abandon the TPP. The next step would be to shrink the number of participants in the first round. 

Scissors recognizes that the business community is pretty solidly behind the TPP as an improvement the status quo.

Here at IPI, we’ll be writing a lot more on the TPP as the debate begins in earnest. But for now I wanted to highlight the fact that Scissors’ disappointment with the TPP do not stem from the most popularly criticized and controversial sections of the agreement, the intellectual property and agriculture sections. His chief criticisms are with the sections having to do with state-owned enterprises (SOE) and with the excessive number of exceptions that were granted to countries to simply not conform to the agreement in particular areas. It would have been far better to allow those countries longer phase-out times for those domestic considerations rather than simply granting them a carve-out from trade liberalization.

The strength of Scissors’ paper is how handily he rebuts the most commonly voiced arguments against the TPP. In particularly, as you might guess, I’m interested in his comments on the intellectual property section, which he grades at a B+.

“An abundance of ideas” is the stated organizing principle of the Copia Institute, a new think tank “from Mike Masnick and the team behind Techdirt.” But their latest paper, “The Carrot or the Stick?: Innovation vs. Anti-Piracy Enforcement,” offers no new ideas. The paper purports to demonstrate that anti-piracy policies are ineffective and, alternatively, that introduction of legal online content distribution platforms correlates with a reduction in theft. As such, enforcement regimes should be abandoned in lieu of “innovation.”

Per Masnick:

What if the answer to Hollywood’s concerns about piracy actually come from Silicon Valley?  What if the best way to reduce piracy is to let innovation flow, and to provide better services that reasonably respond to consumers and their entertainment needs?

But as Masnick surely knows content creators already make their works available on an abundance of legal online distribution services. Indeed, there are over 400 licensed video services and 98 licensed music services worldwide, and digital books, magazines, newspapers, photos and other works are ubiquitous.

Instead, Masnick offers a straw man argument, as no one is arguing that enforcement is the only solution to online theft. Indeed, in the real world, rights holders are pursuing voluntary, market based solutions amongst good faith stakeholders to combat piracy. For instance, the five largest ISPs and the content community created the Copyright Alert System to educate users about infringing activity and help guide them to legal alternatives. And the advertising industry recently announced the formation of the Trustworthy Accountability Group, which will help advertisers ensure their valuable brands don’t appear on websites dedicated to theft, thereby helping to take the profit out of piracy while at the same time protecting their good names. Further, recognizing that rights holders should ask of themselves what they ask of others, the MPAA launched wheretowatch.com, a search tool that helps connect consumers with particular movies or shows of interest to them among so many options.

Last year I was invited by Bill Watson of the CATO Institute to make the case as to why it is critically necessary for U.S. negotiators to insist on strong IP provision in our trade agreements.  Intellectual property-intensive industries account for about two-thirds of U.S. exports – it would be malpractice for our negotiators NOT to work to prevent foreign theft of American innovation.

(I think I got the better of my fellow panelists at that event—you can watch it and judge for yourself.)

The TPP negotiators are in Atlanta this week trying hard to work through the last few, toughest issues, and Bill is back at it again, this time arguing that the United States should not only allow, but in fact demand broad exceptions to copyright in the laws of our TPP trading partners.  This again proves what I said last year – that the TPP debate is not really about trade, it’s about people who want weaker intellectual property rights.  (Bill was kind enough to reference this piece of mine in his, which is always nice.) Ok, so let’s have that debate.

Public Citizen is highlighting a cancer victim who is protesting at the Trans-Pacific Partnership (TPP) meeting in Atlanta.  

Public Citizen quotes the protester as saying: "When you have breast cancer today, you can’t wait 8 years or 7 years or 6 years for a treatment to become available or affordable. When you have cancer, even a one-year delay in affordable medicine can be a death sentence. That is why we call this proposed provision of the TPP a ‘death sentence clause.’  If it passes, thousands of women like me will die waiting.” 

We previously blogged about the new Trustworthy Accountability Group (TAG), a voluntary agreement among advertising agencies and bureaus to address the problem of brand advertising on rogue websites that promote illegal and harmful content such as copyright piracy and malware. These rogue websites exist largely because they have been able to profit by attracting advertising dollars because of their high traffic volumes. The question has always been: Why would a company with a valuable brand want to associate their brand with such disreputable activities? The Trustworthy Accountability Group is set up to address this problem.

Last week, a major global advertising company, GroupM, announced that they will require all of their media partners (places where they place advertising) to receive certification from the Trustworthy Accountability Group. So this is a huge first step toward achieving the goals of the TAG.

Right now, literally as I type this, Australian trade negotiators are reportedly resisting U.S. demands for increased protection of pharmaceutical and biotech innovation in the Trans-Pacific Partnership (TPP) agreement. They are no doubt motivated by the warnings of Australian academics and researchers that Australia’s Pharmaceutical Benefits Scheme (PBS), which the Australian government uses to control drug prices, will be weakened or undone altogether by extending the period of data protection for biologics, among other provisions.

The sky-is-falling warning from these academic critics of the pharmaceutical industry is that protecting the products of innovation will necessarily result in dramatic price increases, which Australia (and Australians) will no longer be able to afford.

Interestingly, Australian academics made this exact same argument in 2003, warning Australia about the treaty that was then being negotiated, the Australia-U.S. Free Trade Agreement (FTA).  

I have before me a copy of a paper published by The Australia Institute, entitled “A Backdoor to Higher Medicine Prices? Intellectual Property and the Australia-US Free Trade Agreement,” by Dr. Buddhima Lokuge, Dr. Thomas Alured Faunce, and Richard Denniss.

The paper predicted that the Australia-U.S. FTA would result in dramatic increases in the cost of prescription drugs in Australia.

“This paper examines five leading medicines near the end of their patent lives in Australia. Based on PBS expenditures for these drugs in 2003, we estimated the potential cost of likely changes to IP provisions under the FTA to the PBS and Australian taxpayers. The costs accrue over a four-year period from 2006 to 2009. . . . The ‘central case’ estimate is that the additional cost of these five drugs alone, as a result of IP provisions in the FTA, will be more than $1.12 billion with a lower estimate of $850 million and an upper estimate of $1.56 billion.”

But they were wrong then, and they’re likely wrong now.

A piece in today’s Dominion Post (New Zealand) finds that warnings about higher drug prices as a result of free trade agreements are baseless, as least as far as facts are concerned:

“We can't assume medicine costs will increase if some patents or Intellectual Property protections are extended. Speculation about rising medicine prices under the TPPA mirror concerns Australians voiced over the U.S-Australia FTA. However, since signing the FTA in 2005, Australia's spend on pharmaceuticals has remained stable and the rate of expenditure has decreased. In 2006 Canada's pharmaceutical spend decreased after implementing an eight year data protection period. Similarly, after Japan increased data protection in 2007 to eight years, pharmaceutical spend decreased and health care spend increased by the year 2010.”