Tag Archives: intellectual property

Will Congress Break the Internet? A look at SOPA and PIPA.

There has been a lot of writing, and action, by people for and against the two bills being considered by Congress for protecting intellectual property owners from having their rights infringed online. The PROTECT-IP Act (PIPA) is the version of the bill being considered by the Senate. The Stop Online Piracy ACT (SOPA) is its counterpart being considered by the House of Representatives. The law firm of LaRiviere, Grubman & Payne, LLP does a good job of summarizing the two laws here. The two bills are different and, if passed, will have to be rolled into a single bill, but their essence is to enable U.S. law enforcement or a private party to shut down websites that are “dedicated to infringing activities.” Such a website is defined in the bills one whose primary purpose is infringement. The accuser must show that the website has “no significant use” other than engaging in, facilitating, or enabling any of the following:

  1. Copyright infringement; or
  2. Infringement or violation of any of the protections contained in the DMCA (Digital Millennium Copyright Act) including its anti-circumvention provisions; or
  3. The sale or promotion of counterfeit goods.

The shutdown of the website is effected by disabling DNS translation. When a user types in a URL such as www.ZeidmanConsulting.com, the network devices that implement the Domain Name System (DNS) throughout the Internet, called “DNS servers,” translate the characters into an Internet Protocol (IP) address consisting of numbers such as 205.134.253.65.

Recently the web domain registrar GoDaddy announced that it supported the bills. Shortly thereafter, angry Internet users at blog site reddit called for a boycott of GoDaddy and, not surprisingly, GoDaddy competitors immediately jumped in by offering users discounts to jump ship. To date, over 40 Internet companies have come out against the bills (see here)*. The House issued a paper listing over 140 companies that have come out in favor of the bills (see here). GoDaddy gave in to the pressure and reversed its position on the bills.

Renowned attorney Mark Lemley and colleagues David S. Levine and David G. Post wrote a recent article for the Stanford Law Review entitled Don’t Break the Internet. You can tell from the title where they stand, but I’d like to address each of their main points.

The Bills Will Not Harm Internet Infrastructure

These authors claim that “the bills represent an unprecedented, legally sanctioned assault on the Internet’s critical technical infrastructure.” The authors go on to say that implementing such filtering “threatens the fundamental principle of interconnectivity” and “will also have potentially catastrophic consequences.” I’ll give them the benefit of the doubt that they’re not trying to simply use exaggerated scare tactics, but rather they just don’t understand the technical issues.

Every time you register a new domain, the DNS servers throughout the Internet are updated with the translation. This is part of the normal course of events. Every time a domain name expires, the DNS servers are again updated to remove the translation. According to a report by VeriSign, there were 4.9 million new domain name registrations in the third quarter of 2011. That’s about 37 DNS changes per minute on average, not counting changes due to expired domains. From a technical point of view, the bills do nothing different than what happens many times each day on the Internet and has no technical challenges or risks whatsoever.

The Bills Do Not Violate Basic Principles of Due Process

These authors go on to state that these acts “violate basic principles of due process… by depriving persons of property without a fair hearing and a reasonable opportunity to be heard.” I’ll assume that these attorneys have never watched the TV show Law and Order, or any other cop show, or taken part in a criminal investigation where a court orders a warrant, based on evidence, that otherwise violates a person’s constitutional rights because there is evidence of illegal activity. These bills, as with all similar bills, require a court to make a decision to take action or not. I’ll assume that the authors of the paper have also not spent much time in a courtroom, because as an expert witness I can tell you that no judge takes such a decision lightly and that there are high thresholds of proof. Without this kind of ability to shut down illegal activity, accused criminals would simply avoid showing up for court in order to evade punishment.

The Bills Do Not Violate Free Speech Rights

These authors claims that each bill is an “unconstitutional abridgement of the freedom of speech protected by the First Amendment.” I’ll assume that the law professors are a little rusty on constitutional law particularly with respect to the First Amendment. Many types of speech are not protected such as hate speech, child pornography, and speech that infringes on copyrights.

The authors go on to claim that “[t]he Constitution requires a court ‘to make a final determination’ that the material in question is unlawful ‘after an adversary hearing before the material is completely removed from circulation.'” In other words, you cannot take down a website until you allow the accused to appear in court to defend himself. This quote is taken from the decision in the case of Center for Democracy & Technology v. Pappert. Again I’ll give the authors the benefit of the doubt that they were just too busy to actually read the court’s decision, but you can do so by clicking on the link. The full decision reads a “publication may not be taken out of circulation completely until there has been a determination  of obscenity after an adversary hearing” (emphasis added).This case is about the conflict between free speech rights and an accusation of child pornography, not about free speech rights and copyrights. But a case about free speech and copyrights on the web already has a precedent. Years ago the Digital Millennium Copyright Act (DMCA) was similarly challenged in federal court and survived. The decision in U.S. v. Elcomsoft confirmed that restrictions in the DMCA were not a violation of due process and did not conflict with the First Amendment.

In fact, copyrights have been enforced in this country as long as the constitution has been around, and longer than the Bill of Rights because their protection is given in Article I, section 8:Congress shall have power… To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.

The formal codification of copyright law took the form of the Copyright Act of 1790, before the adoption of the Bill of Rights in 1791. So the First Amendment’s protection of speech and the Copyright Act’s provisions for injunctive relief, seizure, and forfeiture coexisted easily for over 200 years without conflict. Terry Hart explains the history of the relationship between copyright and free speech in his extensive article here and in several other well-researched articles on his Copyhype blog.

The Bills Would Not Turn the U.S. Into a Repressive Regime

The authors’ final point is made with this statement:

It would be not just ironic, but tragic, were the United States to join the ranks of… repressive and restrictive regimes, erecting our own “virtual walls” to prevent people from accessing portions of the world’s networks.

Repressive regimes are actually those that do not protect individual property rights, but rather allow the government to determine who owns what, or conversely allows property theft to go unpunished. Repressive regimes do not allow individuals to protect their own property but require the government to do so on their behalf. Repressive regimes do not have the court system and the legal system of the United States that strict procedures and requirements to be met. Repressive regimes do not have the checks and balances in their government systems to allow one organization, corporation, government branch, or individual to challenge any law and any action taken by any other organization, corporation, government branch, or individual. Repressive regimes concentrate power in a few elite, not in individuals. There is no realistic concern that this law will turn the U.S. into a repressive regime.

Copyright and Trademark Infringement on the Internet is a Very
Real Problem

In their conclusion I find surprising agreement with the authors. They state:

Copyright and trademark infringement on the Internet is a very real problem, and reasonable proposals to augment the ample array of enforcement powers already at the disposal of IP rights holders and law enforcement officials may serve the public interest. But the power to break the Internet shouldn’t be among them.

They are absolutely correct. We must find reasonable ways to stop infringement of intellectual property on the Internet. Such a solution must be fair to the victim of the infringement. It must uphold the principles of the Constitution of the United States. And it must not break the Internet. SOPA and PIPA may not be perfect implementations of such protection, but they meet all of these requirements. There may be better strategies that can be reached through measured and thoughtful debate, but not through excessive hyperbole and fear.


*It doesn’t surprise my to see Scribd on this list. I play a regular game of whack-a-mole trying to remove illegal, free copies of my articles and books on this site that just pop up again within a few weeks after I send them a DMCA takedown notice.

World Intellectual Property Report 2011

Want to invest in the next big thing? It might be intellectual  property. According to the World Intellectual Property Report 2011, published by the United Nations, royalties and license fees for intellectual property outpaced economic growth in recent years. In fact, IP revenues reached… are you ready? $180 billion. That’s 667% growth since 1990 when it was $27 billion, and 6,428% growth since 1970 when it reached only $2.8 billion, although that comes out to a modest, but decent, rate of about 10% annually.

There are some other heartening things in the report. In the foreword to the report, WIPO Director General Francis Gurry makes four critical points:

  1. Firms are investing historically unprecedented amounts in the creation of intangible assets – new ideas, technologies, designs, brands, organizational know-how and business models.
  2. Innovation-driven growth is no longer the prerogative of high-income countries alone; the technological gap between richer and poorer countries is narrowing. Incremental and more local forms of innovation contribute to economic and social development, on a par with world-class technological inventions.
  3. The act of inventing new products or processes is increasingly international in nature and seen as more collaborative and open.
  4. Knowledge markets are central within this more fluid innovation process. Policymakers increasingly seek to ensure that knowledge is transferred from science to firms, thereby reinforcing the impact of public research. Moreover, ideas are being co-developed, exchanged and traded via new platforms and intermediaries.

This large growth has resulted in new, emerging markets dealing with IP such as brokerages for purchasing, selling, trading, and auctioning IP, consulting companies for managing IP, valuing IP, and supporting IP litigation, and software for analyzing, valuing, and comparing IP.

Patent reform: the big guys won, the little guys lost

On June 23, 2011 the US House of Representatives passed H.R. 1249, The Leahy-Smith America Invents Act,  to reform the US patent system. On September 8, 2011, the US Senate approved S.  23, The America Invents Act of 2011. On September 16, 2011, President Obama signed patent reform into law.

One of the key, and most controversial changes, is a shift in the patent priority rules from the “first-to-invent” system that has been in effect in the US since the beginning of patent law to the “first-to-file” system that is used in every other patent system in the world. A first-to-invent system means that the first person to invent something gets the patent. This seems fair. A first-to-file system grants a patent to the first person, or company, to pay the fees and file the patent. This, to me, seems un-American in that it rewards paperwork over innovation.

To those who believe there is no such thing as American exceptionalism—those who believe that there is no more innovation in the US than anywhere else—this change “harmonizes” our patent system with the rest of the world, making patent law fairly consistent from country to country.

If you’ve read my blog you know that I believe that there is more innovation in the United States than anywhere else on earth. Do we really need proof of this? But let’s take another look at this issue. Proponents claim that this change will have an insignificant effect, if any. Yet has anyone rigorously studied how this change will affect individual inventors and entrepreneurs in America? Until recently, the answer was no. But professors of law at the University of Pennsylvania, David S. Abrams and R . Polk Wagner, recently performed a detailed study.

You might wonder how they could perform such a study when the act does not require the “first-to-file” system to go into effect until March 2013? These professors already had a model. Canada switched from first-to-invent to first-to-file in 1985, giving them a significant amount of historical data. The results are interesting, and unfortunately not hopeful.

The chart below illustrates one of many interesting statistics in their study. The number of patents per year before the system changed was fairly constant at around 1,700 per month. A significant drop of over 40% occurred around the time that the system changed, to less than 1,000 per month and remained low.

Perhaps even more disconcerting is that Abrams and Wagner find that the fraction of patents going to individual inventors also decreased at the time of this change in Canadian patent law. So the number of patents decreased and the percentage of patents issued to individual inventors also decreased.

Abrams and Wagner summarize their findings in very blunt terms:

In the end, how much do individual inventors matter? That,
we think, is the critical question suggested by our study. To
date, most observers seem to have assumed that a shift to the
first-to-file rule, though a substantial change in US patent
law practice, would have little impact on who seeks and receives
patents. This is wrong. A change to the first-to-file rule in
the US should be expected to result in the reduction of individual
inventors’ share of patents. Thus, the cost savings yielded
by the change away from first-to-invent will not, we suggest,
be free.

Like any law, this patent reform act can be undone. However, it seems that many members of both parties support this change, probably because they do not fully understand the implications and because of pressure from large corporations that stand to gain from it. Perhaps a grass roots movement can rise up to pressure Congress to un-reform US patent law. Grass roots movements seem to be all the rage these days. So I still hold out some hope.

Inventions must be novel and nonobvious, not complex

In August I debated the impact of software patents at the Computer History Museum (you can watch the debate here). I asked members of the audience how many were programmers or had  written software. A large number of hands went up. I then asked  those people to put their hands down if they thought what they did wasn’t creative and that anyone could do it. I was really surprised when a large percentage of hands went down.

I’ve been thinking about that, and I’ve come to three conclusions.  First, many programmers just aren’t very good at what they do. Many  of them have simply learned to copy others’ code (see  Is Googling Replacing Programming?) or maintain someone else’s code. Second, many programmers underestimate their abilities. Programmers tend to be introverted and not ones to brag about their skills. Of course there are exceptions, but programming is generally a solitary endeavor.

Third, many programmers believe that to be patentable, something must be very complicated. But that’s not true. Section 102 of the U.S. Patent Act states that an invention must be novel, and Section 103 states that it must be nonobvious. There is no requirement that it be complex.

Many inventions are very useful and yet also very simple. Searching Google, I found almost 4,000 patents involving paper clips. I found 27,000 patents with the word “needle” in the title and over 9,000 patents for kinds of spoons. There are nearly 600 patents involving rubber bands. Some recent patents include a water sprinkler for dogs (USPTO # 7,997,229) and a waterproof cover for a camera (USPTO # 7,991,274). My point is that some inventions are simple and some are complex, but they all are novel and no one else thought of them. If you tend to dismiss software patents, remember that what makes an invention patentable is not whether you could have done that, but whether you actually did.

Grocery trolls and civil liberties

People have been asking me lately what I think about those organizations that buy up patents and license them or sue infringers. Kindly known as non-practicing entities (NPEs), patent licensors, or patent aggregators, they are disparagingly called “patent trolls.” However, there is a much more troubling entity out there that I want to bring to your attention-the grocery trolls.

Grocery trolls produce no fruits, vegetables, or produce of any kind. They do not own farm land, they do not raise livestock. They do not harvest grains. Instead, they buy up the food items produced by small, independent farmers, and sometime large farm corporations, and force hungry consumers to buy them at higher prices. These greedy grocery trolls, going by benign names like Safeway, Lucky’s, Rainbow Grocery Cooperative, and Trader Joe’s have no farming skills whatsoever. And the consequences of not buying food from them? Starvation!

Patent licensors perform the same kind of service by buying up inventions from inventors and offering them for sale. The strength of their size, their sales force, their marketing budget, and their distribution channels ensures that they will be able to buy from small entities and sell to large and small entities and make a profit by charging for their services. Groceries buy from small farmers who could not otherwise reach large markets. Patent licensors buy from small inventors who cannot afford to license their inventions to other companies.

The analogy isn’t perfect, but it’s pretty darned good. Free commerce in a free society means that you or I can sell anything we like to anyone we please; there are no restrictions on having created the good in the first place. If that were the case, most transactions would be illegal. You wouldn’t be able to sell your house or buy a used car. You wouldn’t be able to trade baseball cards or collect antiques. The list is very long. That’s why restrictions on the sale of patents must never be allowed in any free market economy. Restricting the sale of any goods would be a curtailing of civil rights-an extremely dangerous precedent-and anyone who believes in civil liberties should be absolutely against such restrictions.

Guidelines for lawyers dealing with experts

Most lawyers know the importance of treating experts with respect. Even if we turn out to be ignorant, arrogant, immature idiots, we hold the keys to presenting the facts and the analysis that will win your client’s case or at least put it in the best light possible given all of the facts. If we’re going to testify, you want us feeling good about it, about the client, about you, and about ourselves. Most attorneys know this but some, in the emotion of the “battle,” forget this. Here’s a checklist to serve as a reminder.

  • Have us give input into schedules. We know best how much work an analysis is going to take. And some of us have lives outside of work (not me, but I’ve heard that others do). Don’t give us a schedule without our input and expect us to meet it.
  • Don’t hire us just to keep us off the other side. I’ve had this happen. It’s flattering, but it’s also unethical. I need to make a living. Also I will never work for you again, and I will warn my colleagues about you.
  • Involve us with crafting the strategy. Don’t let us work in the dark and then complain, for example, that our invalidity argument hurts the non-infringement argument or vice-versa. And by the way, a great argument for one will always make the other much more difficult to show.
  • Involve us with claim construction. We have the appropriate experience to figure out a decent claim construction. Too often I’m called into a case where the claim construction makes little sense to me. I need to be educated about how the claims are construed and then I need to see if I can work with them. Sometimes adding or removing a word from the claim construction would make things significantly easier for me to understand and explain to the judge and jury.
  • Give us enough time to do our jobs. Maybe this is a pipe dream. Lately, cases have been more and more compressed and I’m brought in later, probably to save costs. But it hurts the case and stresses us out.
  • Don’t antagonize us. We’re they guys who are going to help your client by clarifying their position and explaining difficult concepts to the judge and/or jury. You don’t want us ticked off, even if we really are stupid jerks. You want us in a good frame of mind and happy about what we’re doing. At least until we’re done testifying.
  • Explain your positions to us patiently. If you can’t get us to understand it and adopt it, how can you get a judge or jury?
  • Don’t tell us we have to adopt your positions or we’ll lose the case. We’re independent and unbiased. The threat of losing the case is not a reason for us to support your position, and stating this can come back to haunt both of us eventually.
  • If things aren’t going well, meet face-to-face. It’s easier to communicate about difficult subjects. It’s easier to wave hands, draw diagrams, point to things. And it’s more likely for both to see each other as humans, not someone being difficult.
  • Don’t expect us to understand all the legal issues. I’ve met lawyers who didn’t understand all the legal issues. I actually do understand legal issues more than most experts because of my experience and my writing on the topic. Yet there are still gaps. And the lawyers can disagree. I’ve been in many long sessions where lawyers argued about legal issues.
  • Don’t believe you understand all the technical issues. Some of the lawyers I’ve met were once great engineers. Others have no engineering experience whatsoever. Some will take my word completely and others will fight me. I don’t mind reasoned debate—in fact I enjoy it. But remember that my understanding of the technical issues is ultimately what I will present in my reports and my testimony.
  • Be clear in your instructions. We know you’re in a hurry, but this is critical to getting good information. I’ve had cases where I got a quick call to do some analysis and then spent the weekend setting up equipment, getting results, and writing a report, only to find there had been a miscommunication about what was needed. Sure I get paid per hour, but I’d still like to know I’m doing something useful. I’m sure you and your client prefer that too.
  • Have us sit in on depositions. We can add a lot of knowledge and we can help craft the direction of the questioning. I was in one deposition where, searching the Internet, I found an expert’s presentation slides promoting a software method while she was testifying she would never ever use such an “unreliable” method. I’ve also had lawyers call me after a “very successful” deposition where they thought they’d uncovered some really useful facts but were asking questions about the wrong technology.
  • Don’t write the reports and expect us to just sign it. Our reputations and careers are on the line, not yours. Unfortunately, some experts do this and collect their checks. I won’t and neither will any expert worth his or her hourly rate.
  • Expect us to sleep some time. OK, the lawyers themselves get little sleep during a case. Me too. I just prefer that you act as though you care about my getting rest even though we both know I won’t. So don’t tell me to be available at midnight, ask me if I can please make myself available at midnight even though you know it’s a burden. It just sounds nicer.
  • Pay us on time or be honest about any problems. Sometimes clients run into financial trouble. I prefer to work for a client who is honest about financial trouble than one who constantly tells me “the check is in the mail.” Usually this is an issue with the client not the lawyer, but I’ve had lawyers misplace my final invoice, simply because they had moved onto other more pressing matters. My payment is a pressing matter, and a late or missing payment means I’m unlikely to be available the next time you need my expertise.
  • Don’t negotiate our fees after the case is over. This is just poor business practice and makes me not want to work with you again. The time for negotiation is before hiring me, not after I’ve put in time on the case.
  • Remember that our job is to be honest and unbiased. Expect us to point out the bad along with the good. If we find your client’s case doesn’t have merit, at least be happy we discovered that before the other party’s expert informed you at trial. You can settle early or limit the damages or just know that you did the right thing.

The Software IP Detective’s Handbook

My book on software intellectual property, a labor of love (and hate) for the last two years, has just been published by Prentice-Hall. The book is intended for several different audiences including computer scientists, computer programmers, business managers, lawyers, engineering consultants, expert witnesses, and high-tech entrepreneurs. Some chapters give easy-to-understand explanations of intellectual property concepts including copyrights, patents, and trade secrets. Other chapters are highly mathematical treatments describing quantitative ways of comparing and measuring software and software IP. The first chapter of the book outlines which chapters are most important for the different audiences.

Overall the book covers the following topics:

  • Key concepts of software intellectual property
  • Comparing and correlating source code for signs of theft or infringement
  • Uncovering signs of copying in object code when source code is inaccessible
  • Tracking malware and third-party code in applications
  • Using software clean rooms to avoid IP infringement
  • Understanding IP issues associated with patents, open source, and DMCA

You can purchase your copy from Amazon.com here.

Do patents really kill innovation?

In a recent editorial in the Wall Street Journal entitled Digital Innovators vs. the Patent Trolls, Peter Huber, a senior fellow at the Manhattan Institute, argues that software patents are the shotguns that kill innovation (my analogy) and that non-practicing entities (NPEs derisively referred to as “patent trolls”) are pulling the trigger (again, my analogy). I disagree.

Peter Huber makes some contradictory and misleading arguments where he claims that non-practicing entities are ruining innovation in America. On the one hand, he acknowledges that only a small percentage of patents, roughly 2% by his own estimate, end up court. Yet he also believes that “[o]ur patent laws have drifted way off course.” He states that “[t]he patent office now grants more than 4,000 patents a week” but neglects to mention that the total number of patent applications and the number of patent rejections have both similarly risen. And one major goal of USPTO director David Kappos, appointed in 2009 by President Obama, is to reduce the backlog of 1.2 million patents around the time he took office. Many more patents are being submitted and examined than ever before-—a sign of the vigorous spirit of innovation in America.

Dr. Huber’s logic is equally baffling when he claims that companies rarely sue each other but that companies spend lots of money collecting patents. Why would a company spend so much on worthless patents? Patents are used to protect their investments in technology, and the vast majority of patent lawsuits are between large corporations like the recent ones between Oracle and Google, Apple and Samsung, Dish Network and Tivo, and many, many others.

Dr. Huber claims that the Supreme Court’s decision in Bilski v. Kappos somehow agrees with his view that patentability must be restricted. In fact, this decision did just the opposite. While business method patents were rejected by the court, as expected, the patentability of software was expanded.

Dr. Huber claims that plaintiffs in the Eastern District of Texas almost blindly reward plaintiffs in patent cases, but a recent study by the Stanford
Intellectual Property Clearinghouse
showed that plaintiffs in that jurisdiction win only 40.3% of the time.

Finally Dr. Huber gets to his point. Patent examiners and juries just aren’t smart enough to figure out which patents are good and which are “sketchy.” So instead, he wants the patent system changed to restrict inventors from owning the fruits of their intellectual labor. As an individual inventor I object to his condescension and to his attempt to limit this constitutionally protected driver of American innovation.

IP theft is becoming the new target for cyberthieves

Antivirus company McAfee and R&D company SAIC recently published a report entitled Underground Economies, a study of corporate IP theft. According to the study, many cyberthieves now see stealing IP as more profitable than credit card theft and identity theft. According to the study:

In the past, cybercriminals targeted personal information such as credit cards and social security numbers, which were then sold on the black market. Now, these criminals understand that there is much greater value in selling a company’s proprietary information to competitors and foreign governments. For example, a company’s legal documents can fetch far more money than a list of customer credit cards.

The cyber underground economy has shifted its focus to the theft of corporate intellectual capital–the new currency of  cybercrime. Intellectual capital encompasses all the value that a company derives from its intellectual property including trade  secrets, marketing plans, research and development findings and even source code. For example, Operation Aurora, a targeted attack on Google and at least 30 other companies, represented a sophisticated attack designed to steal intellectual capital.

Some of the more interesting findings are:

  • Theft of corporate intellectual property is “the new currency of cybercrime.”
  • Some governments support or even conduct theft of trade secrets. Forrester Research estimates that corporate IP is twice as valuable as custodial data such as credit card information and customer and medical data.
  • Cloud-based services are not only a new target for cyber criminals, but also but extensive but inexpensive resources into their hands
    for carrying out cybercrimes.
  • Data breaches, or the credible threat of a data breach, stopped or slowed a merger, acquisition, or new product rollout at one
    fourth of organizations surveyed.
  • Yet only a quarter of organizations conduct forensic analysis after a breach or attempted breach.
  • Organizations reported that IP was most often leaked or stolen by their own employees.

Read the entire study here.

As an ironic side note, the day that this report was released, security researchers announced that McAfee’s own website has serious vulnerabilities. Read that article here.