Quotulatiousness

June 18, 2013

Console game industry model is broken – must be patched with huge wads of customer money

Filed under: Business, Gaming, Technology — Tags: , , , — Nicholas @ 10:23

At Techdirt, Tim Cushing explains why the console gaming industry’s problems should not be “fixed” by taking away the customer’s rights:

If the current business model is unsustainable, why is that the consumer’s fault? More specifically, why are customers being pushed into giving up their “first sale” rights, along with being asked to plug the holes in the leaky business model with wads of hard-earned cash?

On top of this imposition is the assumption the current model is the only model [$200m movie, anyone?] and that mankind greatly benefits from “thousands of developers” crafting AAA titles. This is completely backward. The industry exists because of its customers, not despite them. AAA studios are not benevolent deities. They’re companies that exist because there’s a market for their products. If this market dies, so do they. If the prices are too high, customers buy elsewhere. Or not at all.

[. . .]

It’s beginning to look like a few members of the industry have been cribbing pages from the disastrous playbook of the recording industry. Raise prices. Blame customers. Bend the world to your business model. Is it only a matter of time before the gaming industry begins lobbying Congress to shut down secondhand sales?

Oh, and if the above twitrant weren’t galling enough, Cliff B. throws in a little something for those who find the online requirements of the Crossbone to be dealbreaker.

    “If you can afford high speed internet and you can’t get it where you live direct your rage at who is responsible for pipe blocking you,” he said.

Really? Maybe I’ll direct my rage at the entitled jackass who’s supporting a company’s decision to effectively limit its own market simply because it can’t live without some sort of DRM infection. And what if you can’t afford high speed internet? Well, you must be one of those people who live in the area marked “Whogivesashitland” in Cliffy’s mental map. And trust me, plenty of rage has been directed at the “pipe blockers,” but they care even less about their customer base than the area of the gaming industry Bleszinski represents.

Those interested in gutting the resale market to protect their margins are turning potential customers into enemies. If you can’t adapt, you can’t succeed. These moves being made by Microsoft (and supported by industry mouthpieces) are nothing more than attempts to subsidize an unsustainable business model by forcibly extracting the maximum toll from as many transactions as possible. The industry is not a necessity or a public good. If it’s going to make the changes it needs to survive, it needs to give up this delusion.

June 17, 2013

Top this – wine corks meet screw-tops

Filed under: Business, Europe, Wine — Tags: , — Nicholas @ 10:14

BBC News looks at the latest attempt to blend the tradition of the wine bottle’s cork closure with the convenience of the twist-off screw top:

Helix wine bottle closure

The unveiling this week of a new style of cork raises the question of why the traditional kind continues to dominate much of the wine world.

The Helix is opened with just a twist of the hand. No corkscrew is necessary as the top of the bottle has a thread inside.

The glass bottle and cork combination for wine is thought to have started in the 17th Century. But newer materials exist today that some argue are better suited for sealing a bottle than cork.

Screw caps and plastic corks have been embraced by producers fed up with wine becoming “corked” — the unpleasant musty taste, likened to wet dog, which is caused by tainted cork.

Influential US wine critic Robert Parker reckons that during the mid 1990s 7-10% of the wine he tasted was corked. In 2004 he predicted that by 2015 screw caps would dominate the wine industry.

The screw cap — generic name “Stelvin” after its biggest brand — advanced spectacularly in “New World” wine nations. By 2011, 90% of New Zealand wine was sealed this way.

But in Europe and the US the cork remains king.

It’s a little puzzling to some. Wine has become democratic and modern. There are prices and drinking styles to suit everyone. So why hasn’t the closure method evolved?

Portugal, where most of the world’s corks are harvested, has fought back against the chemical compound trichloroanisole (TCA), one of the most common causes of tainted corks.

But the screw cap not only avoids the problem of tainted cork, it forms a tighter seal. Most critics say that this guarantees a better flavour for all but the more expensive wines (which may age better with more oxygen).

“We prefer seals that ensure the wine is not going to be faulty,” says Ewan Murray, spokesman for the Wine Society. “Wines that are ready to drink young are always going to be fresher under a screw cap.”

June 16, 2013

Latest installment of the corporate tax crusade

Filed under: Britain, Business — Tags: , — Nicholas @ 10:16

In Forbes, Tim Worstall explains why a company that has paid full corporate taxes on its income has no further legal or moral obligation to pay more:

Read that through again: they’re saying that the company has already paid full corporation tax on that money. And we don’t tax dividends going to people in foreign countries. Whatever the tax rate is there, we simply don’t tax them. Because of course that’s up to the country where the money goes to to tax: it’s not actually something that is taxable in the UK. For, obviously, they’ve already paid the full corporation tax due.

But it does actually get better. Those dividends, paid out of post tax (and do please note, post tax) profits wouldn’t be subject to further corporation tax in the UK either:

    The general rule is that dividends paid by a UK company to another UK company out of post-tax profits are exempt from further taxation.

That the recipient corporation is in the British Virgin Islands thus makes not one whit or iota of difference to the amount of corporation tax payable. So this is all really a rather strange complaint. Perhaps the newspaper has just got caught up in the frenzied atmosphere over the subject.

[. . .]

As to why this story is being blown up allow me to offer some speculation. There’s a group of people who are quite vociferous in their demands that the corporate tax system must be radically changed. Richard Murphy (who just for complete disclosure, used to write here at Forbes) is one of the leading lights of that group. Various members of the loose knit group have been behind all sorts of claims about Vodafone, Boots, Starbucks, Google, Apple and a number of other companies. The problem with the claims is that none of them have really stuck. There’s been absolutely no finding of illegality anywhere.

The claim has thus moved onto, well, OK, so it’s not illegal: all of these companies are indeed obeying the law. But we still don’t think they’re paying enough tax. Therefore the law must be changed simply because we think they should be paying more tax. Which is, when you think about it, a fairly extreme claim. Companies should pay more tax because a group of 20 or so people demand that they should be doing so?

June 14, 2013

QotD: Tax avoidance

Filed under: Business, Law, Quotations — Tags: , — Nicholas @ 09:08

The claim that tax avoidance is immoral is an attack on the very notion of private property. It is, as it were, to say that all money belongs to society collectively, and “we” have an intention as to how much you get to use yourself and how much goes to the state, and if you avoid tax you end up using more of society’s collective money than it intended for you to use. Tax avoidance then becomes a kind of theft. But if my property is fundamentally mine, a tax is an impost, a legal requirement for me to surrender some of my property. Provided I do that, I have behaved perfectly properly. If the overall consequence is that I do not pay what would be regarded as a fair tax contribution, either tax law should be modified, or I could be persuaded that I had a moral duty to make an additional free-will tax contribution.

Andrew Lilico, “Companies have a moral duty to pay no more tax than legally required”, The Telegraph, 2013-06-14

June 12, 2013

New disclosure rules for Canadian oil, gas, and mining companies

Filed under: Business, Cancon — Tags: , , , , — Nicholas @ 08:19

David Akin in the Toronto Sun:

The Canadian government announced new measures Tuesday that will force oil, gas, and mining companies to publicly disclose every penny they pay to any government at home or around the world.

The move is seen as an anti-corruption measure and one that many activists groups that work in the developing world, such as Oxfam, have been demanding for years, particularly since Canada is home to a majority of the world’s mining companies.

The European Union and the United States have already moved towards mandatory reporting requirements for their mining companies.

There have been cases in some developing countries where multinationals pay a host government substantial sums for the rights to oil, gas or minerals, but the local population complains that they do not know how much their governments are getting and, as a result, cannot demand their governments spend some of that wealth on them.

It’s not just in developing countries, either, as some First Nations activists have complained that they can’t get information on what their band councils receive in various resource development deals here in Canada. Of course, some (many?) deals get done with a bit of bribery to sweeten the attraction, but not every country will have (or enforce) rules like this.

June 8, 2013

Don’t put too much faith in denials from Verizon and other companies…

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

As Mic Wright points out, the companies named in the Prism leaks may not be acting as free agents:

Pastor Niemoller’s “First they came…” poem is over-quoted but with good reason. It is far too easy to be complacent. Addicted and reliant as many of us are on free web services, it’s more convenient to just accept the companies outright denials that they have been complicit with the NSA’s programme. But look closely at those statements and things become rather less clear, as Michael Arrington pointed out.

The tech industry’s denials have been carefully drafted and similarly worded. It is not unfeasible to imagine that those companies have turned over users’ personal information to the NSA in another fashion. Facebook founder and CEO Mark Zuckerberg’s statement was one of the strongest: “Facebook is not and has never been part of any program to give the US or any other government direct access to our servers. We have never received a blanket request or court order from any government agency asking for information…”

Zuckerberg’s words are reassuring until you consider that any company that receives an order under the Foreign Intelligence Surveillance Act Amendments Act — the legislation the Obama administration is using to justify the broad surveillance — is forbidden from disclosing they have received it or disclosing any information about it. It’s not surprising that no mea culpas have emerged from major tech firms or that Palantir — the big data surveillance company with the $5 billion valuation and CIA funding — denies any connection with the project. The NSA has been a Palantir client and one of the company’s co-founders, billionaire investor Peter Thiel, also sits on Facebook’s board.

Charles Stross talks about writing The Jennifer Morgue

Filed under: Books, Britain, Business, Media — Tags: , , , — Nicholas @ 09:07

If you haven’t yet read any of the “Laundry” books by Charles Stross, you really are missing out on a treat. The Jennifer Morgue was the second in the series and Charles has a blog post up about how the book came to be written:

All stories have several seeds. In the case of “The Jennifer Morgue”, the first seed was the surprising success of “The Atrocity Archives”. The novel my agent initially thought was unsaleable sold to Golden Gryphon, a small but respectable Lovecraftian publisher in the United States. It went gold, going into reprint and becoming their second-best selling title at the time. Then, to everyone’s surprise, the additional novella I wrote for the book (“The Concrete Jungle”) made the shortlist for the Hugo award in 2005. This was a stunning surprise. GG had only sold around 3000 copies of the book; the other novellas on the shortlist had all appeared in magazines or anthologies with four to ten times the number of copies sold! After some hurried email consultation, Gary and Marty at GG agreed to let me put the whole novella on the web, to make it more readily available to the Hugo voters. I don’t know if that’s what did the trick, or if there were additional home-mover effects from the Worldcon in 2005 being held in Glasgow (thus bringing more British voters in than normal) but at the end of August that year I became the dazed and surprised owner of a very shiny trophy.

(And the performance anxiety that had been haunting me for years—”I’m not a real writer, I’m just winging this”—went away for a while.)

But anyway. This success coincided with a French publisher making an offer for translation rights to “The Atrocity Archives”, which in turn got my agent’s attention. She proposed a sequel, and James Bond was so obvious that I don’t think I even considered any alternatives. It would have to be the Movie Bond franchise, for most people these days don’t grow up on the original Ian Fleming novels (the way I did); the humour would come from the incongruity of Bob Howard in James Bond’s shoes. We decided to auction the new book, along with paperback rights to “The Atrocity Archives”, and ended up cutting a deal whereby Golden Gryphon would publish “The Jennifer Morgue” in hardcover while Ace rolled “The Atrocity Archives” in trade paperback, and eventually in mass market. Which then left me pondering what to write … because every Bond movie (or novel) needs a Bond-sized plot device, doesn’t it?

By this time we were into late October 2005. One evening, we were eating a Chinese take-away in front of the TV, watching a documentary on the Discovery Channel about one of the most bizarre CIA projects to happen during the Cold War — Project Azorian (better, but mistakenly, known to the public as “Operation Jennifer”). Seriously, if you don’t know about it, go follow that link right now; it’s about how the CIA enlisted Howard Hughes to help them build a 63,000 ton fake deep-see mining ship, the Glomar Challenger, as cover for a deep-sea grapple that would descend 4,900 metres and raise the hull of a shipwrecked Soviet nuclear missile submarine, the K-129. (Project Azorian was so James Bond that the engineering crew working on the ship were cracking jokes about the bald guy stroking the white cat in his seat on the bridge. How post-modern can you go?)

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 6, 2013

Rail technology changes on a slower timescale than other transportation systems

Filed under: Business, Railways, Technology — Tags: , , , , — Nicholas @ 09:50

The Economist looks at innovation in the railway business:

Compared with other modes of transport, train technology might seem to be progressing as slowly as a suburban commuter service rattling its way from one station to another. Automotive technology, by contrast, changes constantly: in the past decade satellite-navigation systems, hybrid power trains, proximity sensors and other innovations have proliferated. Each time you buy a new car, you will notice a host of new features. Progress is apparent in aircraft, too, with advances in in-flight entertainment and communication, fancy seats that turn into beds, and quieter and more efficient engines. Trains, meanwhile, appear to have changed a lot less.

Actually, the perception of change is much greater for cars and airplanes, but there are few changes in those areas that are not merely evolutionary rather than revolutionary. Incremental changes are the rule of the day, as neither cars nor planes travel significantly faster than they did thirty years ago … but they do it safer and more comfortably now.

This comparison is not entirely fair. For one thing, people buy their own cars, so they pay more attention to automotive innovation. Carmakers are engaged in a constant arms race, trumpeting new features as a way to differentiate their products. Nobody buys their own trains. Similarly, air passengers have a choice of competing airlines and are far more likely to be aware of the merits of rival fleets than they are of different types of train. In addition, notes Paul Priestman of Priestmangoode, a design consultancy that specialises in transport, trains have longer lives, so technology takes longer to become widespread. The planning horizon for one rail project he is working on extends to 2050. “You have to think about longevity, whereas the car industry wants you to buy a new car in two years,” he says.

Another big difference is that the way railways operate — with a small number of powered units (locomotives) and a very large number of unpowered units (freight cars and passenger cars) that have to be reliably connected to one another and operate successfully. A car can go on any kind of road (or even none, in many places) and a plane can fly in any part of the sky, but a train needs an engineered right-of-way that falls within established standards of curvature, elevation change, and overhead and side clearance. Because of this, any piece of railway equipment that does not run on its own isolated track (like monorails or the various flavours of high speed railways) must always meet the existing standards … which have been slowly evolving since the mid-nineteenth century. With so much capital invested in existing right-of-way and rolling stock, the costs for introducing significant changes can be astronomical.

There’s also the fact that unlike other forms of transportation, passenger and freight trains operate in different and sometimes conflicting ways. Passenger trains need to operate on a known schedule between high population centres at relatively high speed. With higher speed goes a need for better braking systems and more capable signalling methods. Unlike a train full of new cars or iron ore, you can’t just park a train full of living human beings on a siding for a few hours to allow slower trains to clear the way (unless you’re Amtrak or VIA). Passenger trains have to have top priority, which often means the railways have to delay freight traffic to ensure that the passengers are not unduly delayed.

One solution to the problem is to provide separate tracks for the passenger trains, but this can be very expensive, as the places where the extra tracks would be most effective is also where the land is at peak cost: in and around major cities. Most passenger trains are now run by government agencies or corporations acting as agents for local, regional, or state governments, so they sometimes use the power of eminent domain to gain access to the land. This is a politically fraught area, as the more land they need to take, the tougher the process will get.

Brakes are also getting an upgrade. Stopping a train can take so long that locomotive-operators, also known as engineers, often have time to contemplate their fate before an impact. “Your life races before you,” says a former operator who, years ago in Alabama, helplessly watched as his freight train, its emergency brakes screeching, headed towards a stalled truck that ultimately managed to pull off the tracks in time. Stopping a train pulling a hundred cars at 80kph can require 2km of track. Road accidents take far more lives, but 1,239 people were killed in more than 2,300 railway accidents in 2011 in the European Union alone.

Much of the problem is that the faster a train’s wheels are spinning, the hotter its brake shoes get when engaged. This reduces friction and hence braking power, a predicament known as “heat fade”. Moreover, nearly all trains power their brakes with compressed air. When switched on, air brakes activate car by car, from the locomotive to the back of the train. It can take more than two minutes for the signal to travel via air tubes to the last car.

Again, it’s not physically or financially possible to switch over all existing cars to newer technology in one fell swoop, so any updated brake technology must be 100% compatible with what is already in use, or you risk creating more dangerous situations because some brakes may operate out of sequence which will increase the chances of accidents.

Norfolk Southern, an American rail operator, now pulls roughly one-sixth of its freight using locomotives equipped with “route optimisation” software. By crunching numbers on a train’s weight distribution and a route’s curves, grades and speed limits, the software, called Leader, can instruct operators on optimum accelerating and braking to minimise fuel costs. Installing the software and linking it wirelessly to back-office computers is expensive, says Coleman Lawrence, head of the company’s 4,000-strong locomotive fleet. But the software cuts costs dramatically, reducing fuel consumption by about 5%. That is a big deal for a firm that spent $1.6 billion on diesel in 2012. Mr Lawrence reckons that by 2016 Norfolk Southern may be pulling half its freight with Leader-upgraded locomotives. A competing system sold by GE, Trip Optimizer, goes further and operates the throttle and brakes automatically.

This is a good use of computer technology: you add the software on top of the existing infrastructure and use it to detect operational gains without needing to make system-wide changes to all freight cars.

QotD: The CBC is “nothing but a zombie, slowly sucking up a dwindling fund of goodwill and nostalgia”

Filed under: Business, Cancon, Media, Quotations — Tags: , , , — Nicholas @ 08:22

As Postmedia and other newspaper empires pull paywalls down over their digital incarnations, CBC minions on Twitter have been caught crowing about their “no paywall” status, purchased by the taxpayer at the sensational bargain price of $1.2 billion a year.

It may be hard for readers to feel bad for the cartelizing Paywall Gang, but it is surely a tactical error for the CBC to call attention to its incredibly expensive “free” nature. The Broadcasting Act says the Corporation shall operate “radio and television” services; it doesn’t say anything about a website, much less a website that functions as a telegraphic gazette. Of course, times change and new media paradigms develop and blah blah blah, but the distinction here is crucial: The original pretext for the creation of the CBC was the limited, theoretically public nature of broadcast spectrum. To the degree that the CBC is now just one digital content provider among many, with a hypothetized mandate that puts it in a position to compete with newspapers, it can rightly be privatized, or destroyed, or handed over to its own employees, in order to unburden the public treasury.

Polls always demonstrate high levels of purported political support for the CBC. The public subsidy to the CBC is a forced transfer of wealth from people who don’t like it to people who do, and the “dos,” unsurprisingly, like the set-up just fine. In the U.S., donor-funded, non-profit “public” radio is equally adored by fans; the only difference is that they’re asked to chip in for their preferred electronic smarm or go without. No social or economic arguments against privatization of the CBC are possible. It’s nothing but a zombie, slowly sucking up a dwindling fund of goodwill and nostalgia. Mr. Dressup is dead, folks.

Colby Cosh, “Why the CBC has outlived its usefulness”, Maclean’s, 2013-06-06

June 4, 2013

LCBO intransigence triggers constitutional challenge

Filed under: Bureaucracy, Business, Cancon, Law, Liberty — Tags: , , , , , — Nicholas @ 11:02

This is kinda fascinating:

What started out as a simple privacy commissioner complaint has turned into a constitutional challenge of the validity of the Liquor Control Board of Ontario (LCBO) — and this time the Board has only itself to blame for the brouhaha, proving once again that Ontario’s LCBO is so far out of touch with the realities of today’s world, it’s downright scary. At a time when they should be thinking about transitioning out of the alcohol business, the Ontario provincial government and the LCBO seem to be clinging to its very existence with even more tenacity and verve than before. They’re like the old boxer clinging to past glories who just has to show you the right hook he can still throw — yet only ends up throwing out his shoulder. In the LCBO’s case, the word “Control” won’t be pried away from its “cold dead hands” anytime soon… or will it? In its most recent fight, the LCBO is proving it is a government entity most in need of being on the chopping block — if not the auction block — of government institutions that should be moved over to the private sector.

[. . .]

Why the LCBO has chosen to play hardball over such a trivial matter is incomprehensible; according to reports, the LCBO has decided to appeal the order and has asked that the records be sealed in the process. This seems to contravene common sense. “A government entity has chosen to spend hundreds of thousands of taxpayers’ dollars to fight an order by the Privacy Commissioner whose sole purpose is to make these decisions,” Porter says.

Now fed up with the collection of information, Porter and his team have decided to question the entire existence of the LCBO as it contravenes the Constitution Act of 1867 by challenging the Importation of Intoxicating Liquors Act (IILA) itself — which bans the free flow of goods (including alcohol, wine and beer) between the provinces. The argument hinges on Section 121: “All articles of Growth, Produce or Manufacture of any one of the Provinces shall, from and after the Union, be admitted free into each of the other Provinces.” This challenge could, and would if successful, lead to the downfall of the LCBO. Social networks were abuzz with the news about the challenge. Alfred Wirth, president and director at HNW Management Inc., applauded the news on Facebook: “Any progress towards competition among merchandisers is to be appreciated – even if it’s for domestically-produced products. Several years ago, when I questioned why Ontario couldn’t privatize the LCBO, the then Minister of Health said that alcoholic beverages were a crucial health matter which the province had to control. Despite the risk of people (including underage youth) freezing to death during our cold Ontario winters, he did not explain why the sale of crucial winter coats could be entrusted to Sears, the Bay, etc…” While Porter himself posted an analogy to cigarettes: “How about this one. Cigarettes are so dangerous that you cannot advertise them on TV, print, billboards or even display them behind a counter… but they can be sold at any store. Alcohol is so dangerous that it has to be sold at a government store with specially-trained people… but the government itself floods the market with advertising and even publishes a free magazine where 50 per cent of the content is about consuming the product.”

Energy lawyer Ian Blue has joined the Vin de Garde team for the action. I interviewed Blue in 2010 about the IILA, which is now under fire. Here’s what Blue had to say: “The law that gives provincial liquor commissions a monopoly and the power they have, is federal law, the Importation of Intoxicating Liquors Act; it’s highly arguable that the law is unconstitutional. It’s also pretty apparent to government constitutional lawyers, who are knowledgeable in these matters… [If the Supreme Court of Canada] takes a hard look at the IILA, and if they do an intellectually honest interpretation, the IILA probably cannot stand up to constitutional scrutiny.”

In 2009, lawyer Schwisberg commented to me when speaking about the IILA: “The very underpinning of Canada’s liquor regulatory system is unconstitutional. Isn’t that a mind blower?” Blue said: “There is nothing natural or logical about the existing system. It bullies, fleeces and frustrates wine producers and the public… If the IILA were to fall… wine producers could probably make quantum leaps of progress towards a fairer and more rational system of liquor and wine distribution in Canada.”

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…

June 3, 2013

CRTC rule changes may finally signal the end of the three-year phone contract

Filed under: Business, Cancon, Technology — Tags: , , — Nicholas @ 10:54

In Maclean’s, Steve Rennie outlines the new cell phone rules to come into effect later this year:

Wireless customers will be able to cancel their cellphone contracts after two years without any penalties — even if they’ve signed up for longer terms — under a new set of rules unveiled Monday by the federal telecom regulator.

However, the Canadian Radio-television and Telecommunications Commission didn’t go as far as an outright ban on the three-year contracts that Canadians vented so much about earlier this year as the national code for wireless services was being drafted.

“We didn’t focus on the length of the contract, we focused on the economic relation,” CRTC chairman Jean-Pierre Blais said in an interview.

“So, in effect, it’s equivalent to those asking for a ban of three-year contract without us actually banning three-year contracts, because what we’re saying is the contract’s amortization period can only be for a maximum period of 24 months.”

There’s also good news for those who travel with their cell phones (that’d be pretty much every Canadian traveller these days):

The CRTC is also capping extra data charges at $50 per month and international data roaming charges at $100 per month to avoid huge, surprise bills.

The regulator will require providers to allow customers to unlock their devices after 90 days, or immediately if they pay the full amount of the device.

May 29, 2013

Lessons learned in the post-Napster era

Filed under: Business, Law, Media — Tags: , , , — Nicholas @ 16:25

At TechDirt, Mike Masnick discusses the things we learned from Napster:

Last fall, law professor Michael Carrier came out with a really wonderful paper, called Copyright and Innovation: The Untold Story. He interviewed dozens of people involved in the internet world and the music world, to look at what the impact was of the legal case against Napster, leading to the shutdown of the original service (the name and a few related assets were later sold off to another company). The stories (again, coming from a variety of different perspectives) helps fill in a key part of the story that many of us have heard, but which has never really been written about: what an astounding chill that episode cast over the innovation space when it came to music. Entrepreneurs and investors realized that they, too, were likely to get sued, and focused their efforts elsewhere. The record labels, on the other hand, got the wrong idea, and became totally convinced that a legal strategy was the way to stem the tide of innovation.

The Wisconsin Law Review, which published Carrier’s paper, asked a few people to write responses to Carrier’s paper, and they recently published the different responses, including one from a lawyer at the RIAA, one from another law professor… and one from me. This post will be about my paper — and I’ll talk about the other papers in a later post. My piece is entitled When You Let Incumbents Veto Innovation, You Get Less Innovation. It builds on Carrier’s piece, to note that the stories he heard fit quite well with a number of other stories that we’ve seen over the past fifteen years, and the way in which the industry has repeatedly fought innovation via lawsuits.

You can read the whole paper at the link above (or, if you prefer there’s a pdf version). I talk about the nature of innovation — and how it involves an awful lot of trial and error to get it right. The more trials, the faster what works becomes clear, and the faster improvement you get. But the industry’s early success against Napster made that nearly impossible, and massively slowed down innovation in the sector. Yes, a few players kept trying, but it developed much more slowly than other internet-related industries. And you can see why directly in the Carrier paper, where entrepreneurs point out that it’s just not worth doing something in the music space, because if you want to actually do what the technology enables, the kinds of things that are cool and useful and which consumers would really like… you’ll get sued.

May 25, 2013

Ireland’s corporate tax rate

Filed under: Business, Economics, Europe — Tags: , , — Nicholas @ 08:01

At the Adam Smith Institute, Tim Worstall explains why Ireland has — and should continue to have — a low rate of corporate tax:

Companies don’t pay corporation tax: it’s some combination of the shareholders and the workers who do. This is not a point in argument: the only argument is about what the portions are, not the fact that the burden falls upon these two groups. We also know what it is that influences which group: it’s how large the economy is in relation to the world economy and how open it is to capital movement. The smaller and more mobile, the more the workers get it in the neck.

The mechanism is simple enough. It’s pretty much straight from Adam Smith in fact. There’s an average rate of return to capital: a jurisdiction that taxes that return to capital will have a return lower than that global average. So, some domestic capital will flow out seeking the higher foreign returns, some foreign capital will not flow in for the lower domestic ones. There’s thus less capital employed in the economy. Adding capital to labour is what drives up the productivity of labour: the average wages in a country are determined by the average productivity in that economy. So, tax companies, get less capital employed, wages are lower than they otherwise would be. The workers are bearing part of the burden.

As I say, the smaller the economy and the more open it is then the more of that burden is upon the workers. And in a wonderful result back in 1980 Joe Stiglitz showed that the burden upon the workers can actually be more than 100%. That is, the workers lose more in wages than the government gets in tax.

Ireland’s a small economy, 3.5 million people or so and as it’s in the EU has about as close to perfect capital mobility as it is possible to get. Thus it ought to have a lower corporation tax rate than larger economies. And it does, so that’s just fine then. Attempts to push it up (as various EU types are currently muttering) would simply lower wages in that country.

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