Quotulatiousness

August 28, 2014

Digital “ecosystems”, “platforms”, and sunk costs

Filed under: Business, Technology — Tags: , , — Nicholas @ 09:19

The Guardian Technology Blog looks at how digital product vendors attempt to lock you into their own (more profitable) platform or ecosystem:

Depending on your view, the stuff you own is either a boon to business or a tremendous loss of opportunity.

For example, your collection of spice bottles in your pantry means that I could possibly sell you a spice rack. On the other hand, it also means that I can’t design a special spice rack that only admits spice bottles of my own patent-protected design, which would thereby ensure that if you wanted to buy spices in the future you’d either have to buy them from me or throw away that very nice spice rack I sold you.

In the tech world, this question is often framed in terms of “ecosystems” (as in the “Google/Chrome/Android ecosystem”) or platforms (as in the “Facebook platform”) but whatever you call it, the discussion turns on a crucial different concept: sunk cost.

That’s the money, time, mental energy and social friction you’ve already sunk into the stuff you own. Your spice rack’s sunk cost includes the money you spend on the rack, the time you spent buying fixings for it and the time you spent affixing it, the emotional toil of getting your family to agree on a spice rack, and the incredible feeling of dread that arises when you contemplate going through the whole operation again.

If you’ve already got a lot of sunk costs, the canny product strategy is to convince you that you can buy something that will help you organise your spices, rip all your CDs and put them on a mobile device, or keep your clothes organised.

But what a vendor really wants is to get you to sink cost into his platform, ecosystem, or what have you. To convince you to buy his wares, in order to increase the likelihood that you’ll go on doing so — because they match the decor, because you already have the adapters, and so on.

The vendor wants to impose a switching cost on you, to penalise you for disloyalty should you defect to another ecosystem/platform. The higher your switching costs, the worse the vendor can afford to treat you — rather than supplying the best goods at the best price, he can provide the best goods at the best price, plus the switching cost you’d have to pay if you went somewhere else. Or he can offer the best price, but offer goods whose manufacture — and quality — is cheaper by a sum of about the cost you’d have to pay for switching.

May 12, 2014

Amazon gets a patent for a decades-old photographic technique

Filed under: Bureaucracy, Business, Government, Technology — Tags: , , — Nicholas @ 06:42

Stephen Shankland provides another exhibit in the patent-system-is-broken case:

Amazon - Studio Arrangement patent

Photographers are hooting derisively at a patent Amazon won in 2014 for a photography lighting technique that’s been in use for decades, a patent that’s helped undermine the credibility of the patent system.

Amazon’s patent 8,676,045, granted in March and titled “Studio Arrangement,” describes a particular configuration of the photography subject in the foreground and a brightly lit white screen behind, an approach that “blows out” the background to cleanly isolate the subject.

It’s a fine idea, but not a novel invention, argued David Hobby, a professional photographer since 1988 who runs the Strobist site that for years has been a popular source of advice on flash photography. He used the approach himself as a staff photographer on his first job decades ago for a business publication.

January 27, 2014

The not-so-humble torpedo and the genesis of the military-industrial complex

Filed under: History, Military, Technology, USA — Tags: , , , , — Nicholas @ 10:18

In the Boston Globe, Katherine C. Epstein makes a strong case for the origin of the military-industrial complex not being the era that President Eisenhower warned about, but actually in the run-up to the First World War:

The phrase [Eisenhower] popularized to describe the emerging system — the “military-industrial complex” — has since become a watchword, and Eisenhower’s account of its rise has struck most observers as accurate: It was a product of an immense war effort and the new attitudes spawned in the aftermath.

But what if Eisenhower — and others — had the origin story wrong? Although the military-industrial complex unquestionably became far larger and more deeply entrenched as a result of World War II and the Cold War, a closer reading of the history suggests that its essential dynamics were actually decades older. An armaments industry in close collaboration with the military — coping with global and national arms markets, sophisticated technology, intense geopolitical rivalries, and a government prone to expand its power in the name of national security — had its roots in the way geopolitics, industrialization, and globalization collided at the turn of the 20th century. And one key innovation that helped to tip the United States over into the national security regime that we recognize today was, of all things, the torpedo.

The torpedo didn’t just threaten to change naval warfare. It was a sophisticated new weapon so important to the US Navy that it forced the government to form a novel relationship with industry — and to introduce the trump card of national security as a rationale for demanding secrecy from private companies. The policy that developed along with the torpedo set the terms for the efforts to control information in the name of national security that we’re seeing now. To appreciate just how far back that policy runs — back to a time not of war, but of peace — gives us a new lens on our current struggles over the military-industrial complex, and perhaps a different reason to worry.

January 6, 2014

Why patents were invented

Filed under: Law, Technology — Tags: , — Nicholas @ 08:57

In The Register, Tim Worstall explains why the notion of patents was introduced to the law and why we need to fix it now:

Having decided that the patent problem is an attempt to solve a public goods problem, as we did in part 1, let’s have a look at the specific ways that we put our oar into those perfect and competitive free markets.

It’s worth just noting that patents and copyright are not, absolutely not, the product of some fevered free market dreams. Rather, they’re an admission that “all markets all the time” does not solve all problems. That exactly why we create the patents.

Given that people find it very difficult to make money from the production of public goods, we think that we probably get too few of them. Innovation, the invention of new things for us to enjoy, is one of those public goods. It’s a hell of a lot easier to copy something you know can already be done than it is to come up with an invention yourself. So, if new inventions can be copied easily then we think that too few people will invent new things. We’re not OK with this idea. Thus we create a property right in that new invention. The inventor can now make money out of the invention and thus we get more new things.

And if it were only that simple, then of course we’d all be for patenting everything for ever. However it isn’t that simple. For not only do we want people to invent new things, we also want people to be able to adapt, extend, play with, improve those new things. Or apply them to areas the original inventor had no thought about. In the jargon, we want not just new inventions but also derivative ones. So we want to balance the ability of inventors to protect with the ability of others to do the deriving. And that’s probably what is actually wrong with our patent system today.

Have a look at Tabarrok’s curve:

Tabarrok's curve (after Laffer's curve), where economist Alex Tabarrok posits that, beyond a certain value, increased protection for intellectual property causes less innovation.

Tabarrok’s curve (after Laffer’s curve), where economist Alex Tabarrok posits that, beyond a certain value, increased protection for intellectual property causes less innovation.

If we have no protection of originality, then we get too little innovation. But if we have too strong a protection, then we get too little of the derivative stuff. There’s a sweet spot and the argument is that we’re not at it at present and are thus missing out on some goodies as a result. Perhaps some tweaks to the system would help?

November 14, 2013

WikiLeaks strikes again

Filed under: Economics, Government, USA — Tags: , , , , , — Nicholas @ 08:50

This time it’s apparently a recent draft of the Trans-Pacific Partnership agreement. The Register‘s Richard Chirgwin assures us that it’s not as bad as we thought — it’s much worse:

The TPP is a document supposed to harmonise intellectual property protections in participating nations — America, Canada, Australia, New Zealand, Japan, Malaysia, Vietnam, Brunei, Singapore, Chile and Peru. Instead, it looks like a an Australia-US-Japan club force-marching the treaty into America’s favoured position on nearly everything, from criminalisation of copyright infringements through to a blank cheque for pharmaceutical companies.

The document, here, is huge, but some of the key items include:

  • Criminalisation of copyright infringement by all signatories;
  • Stronger DRM and “technological protection measure” regimes;
  • ISPs to be made liable for copyright infringement on their networks;
  • A “take it down first, argue later” DMCA-like process for notifying copyright infringements;
  • Patentable plants and animals;
  • The evergreening of patents — this has become particularly notorious in the pharmaceutical business, where the repackaging of an out-of-patent medication is used to keep common compounds out of the public domain.

America and Japan are opposing consumer protections proposed by the other nations (Australia excepted). These provisions, in Article QQ.A.9, would be designed to prevent the abuse of copyright processes, use of intellectual property rights as a restraint of trade or as the basis of anticompetitive practises.

[...]

America manages to put itself beyond the pale as the sole sponsor of Article QQ.E.1, pretty much a “Monsanto clause” by pushing for patent coverage of plants and animals, including “biological processes for the production of plants and animals.” New Zealand, Canada, Singapore, Chile and Mexico want to specifically exclude these, along with “diagnostic, therapeutic and surgical methods for the treatment of humans or animals”.

August 29, 2013

New Zealand bans (most) software patents

Filed under: Law, Technology — Tags: , , , — Nicholas @ 09:27

Hurrah for New Zealand:

A major new patent bill, passed in a 117-4 vote by New Zealand’s Parliament after five years of debate, has banned software patents.

The relevant clause of the patent bill actually states that a computer program is “not an invention.” Some have suggested that was a way to get around the wording of the TRIPS intellectual property treaty, which requires patents to be “available for any inventions, whether products or processes, in all fields of technology.”

Processes will still be patentable if the computer program is merely a way of implementing a patentable process. But patent claims that cover computer programs “as such” will not be allowed.

It seems there will be some leeway for computer programs directly tied to improved hardware. The bill includes the example of a better washing machine. Even if the improvements are implemented with a computer program, “the actual contribution is a new and improved way of operating a washing machine that gets clothes cleaner and uses less electricity,” so a patent could be awarded.

August 20, 2013

Everything Is A Remix

Filed under: Business, Law, Liberty, Media, Technology — Tags: , , , — Nicholas @ 10:09

Remixing is a folk art but the techniques are the same ones used at any level of creation: copy, transform, and combine. You could even say that everything is a remix.

H/T to American Digest for the link.

July 1, 2013

Positive developments in Canadian government digital policy

Filed under: Cancon, Law, Technology — Tags: , , , , — Nicholas @ 11:59

Micheal Geist rounds up some good news for Canada Day:

As Canadians grapple with news of widespread secret surveillance, trade agreements that could upend intellectual property policy, and the frustrations of a failed wireless policy, there are plenty of digital policy concerns. Yet on Canada Day, my weekly technology law column argues that it is worth celebrating the many positive developments that dot the Canadian digital policy landscape. Eight of the best include:

1. The Supreme Court of Canada’s strong affirmation of user rights and technological neutrality in copyright. [. . .]

2. The Canadian Radio-television and Telecommunications Commission’s policy on network neutrality. [. . .]

3. The defeat of the government’s lawful access legislation. [. . .]

4. Canada’s promotion of user generated content. [. . .]

5. The CRTC’s pro-consumer agenda. [. . .]

6. The Privacy Commissioner of Canada’s aggressive investigations of top Internet companies. [. . .]

7. Canada’s notice-and-notice system for Internet providers. [. . .]

8. Canada’s balanced patent law standards. [. . .]

June 7, 2013

Taking the battle to the patent trolls

Filed under: Business, Law — Tags: , , , — Nicholas @ 08:01

In The New Yorker, Tim Wu suggests some lines of counter-attack to use against patent trolls:

There are good laws in place that could fight trolls, but they sit largely unused. First are the consumer-protection laws, which bar “unfair or deceptive acts and practices.” Some patent trolls, to better coerce settlement, purposely misrepresent matters such as the strength of their patents, the extent of other settlements, and their actual willingness to litigate. Second, there are plenty of remedies available under the unfair-competition laws. Some trolls work by aggregating an enormous number of patents, and then present the threat that one of their thousands of patents might actually be valid. The creation of these portfolios for trolling may be “agreements in restraint of trade” under Section 1 of the Sherman Antitrust Act, or they may “substantially lessen competition” under the Clayton Antitrust Act. More generally, the methods of the trolls are hardly what you would call ordinary methods of competition; they should be considered, rather, what the Federal Trade Commission calls “unfair methods of competition” under Section 5 of the F.T.C. Act. The Commission has the power to define and punish methods of business that are inherently harmful with few or no redeeming benefits, and that’s what trolling is. Finally, it is possible that the criminal laws barring larceny and schemes to defraud may cover the conduct of some trolls.

Unfortunately, other than in Vermont, these laws remain largely unenforced, for reasons that aren’t particularly good. Trolls, to switch metaphors, are like cancer cells: they mimic ordinary activity, namely the assertion of patent rights. A war on trolls could become a war on patent holders in general. Since the line between the two can be fuzzy, the argument is that war might deter some real invention. It might, for example, lump universities in with the extortion artists.

But that justifies caution, not inaction. All law enforcement involves this problem of sorting. There is a narrow line between the legitimate trader who knows the stock market well and the criminal inside trader, yet that doesn’t mean securities laws should be left unenforced.

June 4, 2013

High Noon for patent trolls

Filed under: Business, Law, USA — Tags: , , , , — Nicholas @ 09:17

At Techdirt, Mike Masnick has some very good news:

Back in February, we were a bit surprised during President Obama’s “Fireside Hangout” when he appeared to speak out against patent trolls. Historically, most politicians had always tiptoed around the issue, in part because the pharma industry seems to view any attack on patent trolls as an existential threat — and, frankly, because some small time patent holders can also make a lot of noise. However, it’s become exceptionally clear that there’s political will to take on patent trolls. We’ve noted five different patent law bills introduced in Congress, all targeting patent trolls in one form or another.

And now, it’s been reported that President Obama is going to come out strongly against patent trolling, directing the USPTO and others to fix certain issues, while also asking Congress to pass further laws to deal with patent trolling. The President will flat out note that patent trolls represent a “drain on the American economy.” The announcement will directly say that “patent trolls” (yes, they use the phrase) are a problem, while also talking about the problem of patent thickets like the infamous “smartphone wars.”

The plan is scheduled to be released later today, but we’ve got a preview of the specific plan, and let’s take a look at each of the suggestions quickly. I’m sure we’ll be discussing the concepts in much more detail for the near future. The plan is split into two different parts: legislative actions (i.e., asking Congress to do something) and executive actions (i.e., ordering administration agencies/departments to do things). Let’s start with the executive actions, since those are likely to have the more immediate impact.

This is excellent news, at least for anyone not currently working as a patent lawyer for one of the trolls…

May 19, 2013

IP lawyers whine about patents and 3D printing

Filed under: Law, Media, Technology — Tags: , , , , , — Nicholas @ 08:52

Cory Doctorow appears to have been plagiarized by real life:

Two minor characters from my novel Makers have apparently come to life and written an article for 3D Printing Industry. These two people are patent lawyers for Finnegan IP law firm, Washington, DC, which I don’t recall making up, but this is definitely a pair of Doctorow villains (though, thankfully, I had the good sense not to give them any lines in the book — they’re far too cliched in their anodyne evil for anyone to really believe in).

These patent lawyers are upset because the evil Makers (capital-M and all!) are working with the Electronic Frontier Foundation to examine bad 3D printing patents submitted to the US Patent and Trademark Office. The problem is that 3D printing is 30 years old, so nearly all the stuff that people want to patent and lock up and charge rent on for the next 20 years has already been invented, and the pesky Makers are insisting on pointing out this inconvenient fact to the USPTO.

This breaks the established order, which is much to be preferred: the UPSTO should grant all the bullshit patents that companies apply for. The big companies can pay firms like Finnegan to file patents on every trivial, stale, ancient idea and then cross-license them to each other, but use them to block disruptive new entrants to the marketplace. The old system also has the desirable feature of arming patent trolls with the same kind of bullshit patents so that they can sue giant companies and disruptive startups alike, and Finnegan can be there to soak up the tens of millions of dollars in legal fees generated by all this activity.

May 16, 2013

Tim Harford on the patent system’s failings

Filed under: Business, Law, Technology — Tags: , , , , — Nicholas @ 08:15

The question seems to be is it totally broken or only partially broken?

According to one well-publicised estimate, there are 250,000 patents relevant to a modern smartphone. Even if the number is one-tenth of that, it suggests an impossible thicket of intellectual property through which a company must hack to bring a cool new product to market.

A key issue is something called the hold-up problem. If a $1bn product depends on 1,000 patents, it is clearly impossible to pay the typical patent holder more than $1m. But any patent-holder could try to extort many times that amount by threatening to block the whole project.

Large firms have responded to this problem by buying or developing large collections of patents. This gives them the ability to launch countersuits, and that threat should make rivals reasonable. But although defensive patenting looks like a pragmatic solution, it has costs and limits. The wave of defensive applications swamps patent offices, which means more poor-quality patents and longer delays.

“Patent trolls” — a derisive name for companies that make money purely from their patents — have less to lose in a patent war but although some are legitimate, others are extortionists. And while established players may reach cosy understandings, a young company with a new idea may find it impossible to break into a market that is thick with defensive patents. If only the big boys can play the patent game, innovation will suffer.

April 30, 2013

Barnes & Noble files a great argument for reforming the patent system

Filed under: Business, Law, USA — Tags: , , , — Nicholas @ 15:22

At Techdirt, Mike Masnick has to restrain himself from just quoting the whole B&N submission to the Federal Trade Commission and the Department of Justice:

As Groklaw notes, the B&N filing is clear, concise and highly readable. It outlines the problem directly:

    The patent system is broken. Barnes & Noble alone has been sued by “non practicing entities” — a/k/a patent trolls — well over twenty-five times and received an additional twenty-plus patent claims in the last five years. The claimants do not have products and are not competitors. They assert claims for the sole purpose of extorting money. Companies like Barnes & Noble have to choose between paying extortionate ransoms and settling the claim, or fighting in a judicial system ill equipped to handle baseless patent claims at costs that frequently reach millions of dollars.

As they point out clearly, even when they have a very strong case — either when they don’t infringe and/or when the patent is bogus, a lawsuit is incredibly costly in terms of time, money and effort.

    In the current system, patent trolls overwhelm operating companies with baseless litigation that is extremely costly to defend. Patent cases generally cost at least $2M to take through trial, and frequently much more. Litigating, even to victory, also entails massive business disruption. Companies are forced to disclose their most sensitive and top-secret technical and financial information and must divert key personnel from critical business tasks to provide information and testimony. The process is exceptionally burdensome, especially on technical staff. Document discovery and depositions seem endless.

    Patent trolls know this and as a result, they sue companies in droves and make settlement demands designed to maximize their financial take while making it cheaper and less painful to settle than to devote the resources necessary to defeat their claims. The current system lets them do so even with claims that are unlikely to prevail on the merits. That is because, whether win lose or draw, the rules effectively insulate trolls from negative consequences except perhaps a lower return than expected from any given company in any given case. They can sue on tenuous claims and still come out ahead. And so the broken system with its attendant leverage allows trolls to extract billions in blackmail from U.S. companies and, in the final analysis, consumers.

One of the great things about the filing is that it reminds the FTC and the DOJ of the constitutional underpinnings of patent law — not that patents are required or guaranteed, but that their purpose is to promote the progress of the useful arts. If that is not happening, then the use of patents in such a manner should be seen as unconstitutional.

February 21, 2013

Reason.tv: How Patent Trolls Kill Innovation

Filed under: Business, Law, USA — Tags: , , , — Nicholas @ 00:01

“My statement to someone that is the victim of a patent troll lawsuit is that you are completely screwed,” says Austin Meyer, who is himself the target of a so-called “patent troll” lawsuit.

Meyer is a software developer and aviation enthusiast. His two passions intersected in the ’90s when he created a flight simulator called X-Plane, which quickly grew in popularity, outlasting even the once-popular Microsoft Flight Simulator. As many software developers do, Meyer made his application available on mobile devices like the iPhone and Android. And this is where he first ran into trouble.

A company called Uniloc has sued Meyer for patent infringement over a patent called, “System and Method for Preventing Unauthorized Access to Electronic Data.” When a computer runs a paid application, one way that developers can assure that a customer has actually purchased the application is by coding the application to match a license code with an encrypted database. This is a method that most paid applications on the Android market use. It’s a method that Meyer argues has been in use since at least the late ’80s. This is the idea that Uniloc claims to own.

December 9, 2012

Verizon attempts to patent creepy targeted ad delivery technology

Filed under: Business, Media, Technology — Tags: , , — Nicholas @ 11:02

Verizon wants your TV to carefully observe you so it can deliver ads tailored for whatever activity you might be doing:

The U.S. Patent Office has delivered a “non-final” rejection of a Verizon patent application for a controversial technology that would have served targeted ads to TV viewers based on what they might be doing or saying in front of their sets.

[. . .]

The patent in question has been the subject of intense media scrutiny since FierceCable uncovered it last week. Verizon’s somewhat laboriously titled the patent application “Methods and Systems for Presenting an Advertisement Associated with an Ambient Action of a Use.”

The application says the technology would be capable of triggering different advertisements depending on whether a viewer or viewers might be eating, playing, cuddling, laughing, singing, fighting or gesturing in front of their sets. Specifically, the patent covers technology that can serve ads “…targeted to the user based on what the user is doing, who the user is, the user’s surroundings, and/or any other suitable information associated with the user.”

Privacy? You don’t need that, because we need to sell you shit.

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