Possibly pertinent links: gray day, a satire on grey day, and its NTK cousin.

Intellectual Property

It has an immense impact on my craft, so I try to express what sense I can make of the status quo, of changes which might plausibly improve the situation and of the opinions of the forces ranged in conflict over the future of IP. Albeit IP strictly includes trade-marks and other things, most of my references to it are concerned with patents and copyrights. Two major areas of contention are software patents and shrink-wrapped agreements.

Here's some stuff I've written on the topic:

I would contend that intellectual property laws are the last bastion of mediaeval protectionism: it is time we replaced them with something better suited to a world of free trade. If some on the side of repeal are, at times, rashly glib about the consequences, it is perhaps worth bearing in mind the grandest piece of hyperbole in the entire history of the copyright industry's opposition to technological innovation: The VCR, said Jack Valenti, then (in 1984) as now the chairman of the Motion Picture Association of America, is to the American film producer and the American public as the Boston strangler is to a woman home alone. Home video on VHS and DVD now accounts for about a third of Hollywood's revenues.

See also

and, to slightly modify Jeremy Herrick's turn of phrase from his wipout article, one might (more) fairly describe Intellectual Property Rights as Creative Incentive Privileges.

Help keep it from getting worse

Moves are afoot, and in the air, involving Euro-law extending patents to allow software patents (whence spring all manner of fascinating variations, via the skill of lawyers, including but not limited to process method patents, like the delightful one-click shopping patent - as if cookies hadn't been included in the HTTP spec precisely so as to enable a broad variety of even-before-it-all-got-going obvious ideas like having them carry around enough information to let one's visits to a page contain, for zero observed overhead, information about one's entire (at least) recent interactions with the site).

As the observant reader will have noticed while I descended into a rant (albeit parenthetically), I am not in favour of this idea. Not one bit. I would honestly like to see the software industry become a free market, with all the struggle that implies (and honest humans to deal with, without gratuitously complex motives to entangle their intentions; such being the best guarantee - of security of reward for effort - I can hope for; I'm willing to gamble on this being what folk become, when unencumbered by injustice, save those wholly devoid of virtue - who are, in my experience, rare). In response to various calls for public involvement in the decision-making process, both in Britain and in Europe, I have written what came to mind when I thought about the matter. Mayhap others could have said it better, or I could have done so if I gave it more time, but that's what I wrote, then.

The cauldron of my thinking upon the subject bubbles on, I need somewhere to set down my thoughts; so, on this page, I shall scrawl them, until I get organised and work my gabblings into some coherentish form.

It was never the object of patent laws to grant a monopoly for every trifling device, every shadow of a shade of an idea, which would naturally and spontaneously occur to any skilled mechanic or operator in the ordinary progress of manufactures. Such an indiscriminate creation of exclusive privileges tends rather to obstruct than to stimulate invention. It creates a class of speculative schemers who make it their business to watch the advancing wave of improvement, and gather its foam in the form of patented monopolies, which enable them to lay a heavy tax on the industry of the country, without contributing anything to the real advancement of the arts. It embarrasses the honest pursuit of business with fears and apprehensions of unknown liability lawsuits and vexatious accounting for profits made in good faith.

U.S. Supreme Court, Atlantic Works vs. Brady, 1882 [quoted in Software Patents Tangle the Web]

Presumption

If you own a painting and place it in plain view of a front window which faces onto a public thoroughfare, remember that folk are at liberty to photograph what we see in and from public places (though there may be constraints on our liberty to distribute such photographs). Putting a notice up in your front window asserting conditions by which we must abide, if we photograph your painting, has no effect on our liberty to take a photograph of what you chose to place on public display. If you don't want us to enjoy that liberty, move the picture or put up curtains; if you do want, none the less, to allow folk to take pictures subject to your constraints, make your arrangements with them any way you like - but a notice posted in public view has no power to deprive me of my general liberty, unless it be posted by the proper authorities. Else, I shall respond by placing a notice on public display asserting that if you chose to keep your picture somewhere the public can see it, by doing so you agree to allow the general public to take photographs of your picture to their hearts' content: either nobody is bound by either piece of paper posted in a public place, or you shall be bound by mine, thereby freeing the rest of us from yours.

I guess that is the answer really. Netizens ! the time has come to send e-mails to content providers (or, perhaps, PUT messages to their HTTP ports) on the net along the following lines:

I notice that you are publishing content on the web. Tomorrow, I shall request that content of your HTTP server. By honouring that request, you will cede all intellectual property rights (in such data as you send in reply) to the common weal. If you do not agree to the terms of this letter, you must arrange for your HTTP server to refuse this data.

I'm sure the net's wealth of satirists (e.g. Need To Know) can improve on that. It should have the same tone and feel as a click on Agree if you agree to these conditions notice, but my inspiration is flagging.

Imagine

OK, so there is a case for patents which looks like this: if someone comes up with an ingenious way of doing something economically valuable - to a large enough slice of the people in some sense, insofaras and lots of other careful choices of but we need better words for this caveats - it's entirely possible that they'll be able to make more money or achieve more of their goals, whatever those may be, by keeping their idea secret. As soon as anyone else knows how it's done, they'll be able to compete with the innovator far more effectively; by delaying that moment, the innovator gains many strategic advantages in their market. Now it is hard to deny that it'd be a very bad thing indeed if our innovator died leaving no-one able to carry on delivering, so taking with him to the grave, the benefits of the new idea. So, we'd better give our innovator a decisive incentive to tell everyone the idea, and wouldn't it just make sense to have that incentive be a grant of a monopoly - of control, at least - over exploitation of that idea; which amounts to the ability to either tax the uses of that innovation arbitrarily, or simply hold a monopoly.

Well, I may as well deal with the argument as it stands and ask what tests one should apply to an idea before granting a patent for it, ignoring the whole tale of whether a protectionist carte blanche is the right reward to offer for coming forward with an idea. Before granting any special privilege to someone as an incentive to tell other folk about a good idea, be sure you know what price the public must pay and how realistic it is that someone could (quite apart from being so mean-spirited as the hypothesis almost presumes) make any money at all out of their idea without, for instance, first giving some investors concrete guarantees that, in the unfortunate event of the inventor's death, some mutually trusted third party would be beholden to provide (at least) the investors, with the means to recover some reward for their investment.

Fragments

I began an e-mail to Brad Templeton and poured forth fragments of this difficult subject until I realised I was writing far too much for an e-mail, if only because of the linear structure of e-mail as contrasted with that great blessing of HTML - when I realise I'm digressing, I can move the digression off to the far end of an HREF and leave the original topic un-interrupted. So first off, I'm going to move all those fragments here: then I'll try to organise them, in the course of which I'm probably going to add to them. Eventually, they might be tidy enough that I replace this pre-amble.

My disquiet with existing IP law centres on two horns:

The former is a primary concern, which I would sooner change; the latter I would not wish to change, but only to have it ever in mind when framing the law. In particular, the first plays badly on the second.

In the music industry, until the blessed advent of home-publishing on CD, musicians were perenially up against a simple obstacle: to make more than pub gig fees out of their work, they needed to be selling records; the capital outlay in record-making is large, so (except in the rare cases where the musician could afford it) this meant doing a deal with an existing record producer - who is, unsurprisingly, negotiating from a position of such strength as to be able to demand strong conditions in the contract. It is no surprise that the industry is full of tales of recording companies making large sums of money off works whose authors recieved little out of the bargain. This defeats the purpose for which we first sanctioned IP rights.

An author owns IP rights in a work: but their worth to the author without the means to publish is almost speculative - it puts no bread on the table, though keeping anyone else from owning that right may at least leave the author at liberty to earn money by the use of the work. Those same IP rights may be very valuable to a publisher. The miracle of trade enables the author and the publisher, in such a case, to engage in trade beneficial to each. To appeal to the publisher, the trade should give the author less than the rights' worth to the publisher; to appeal to the author, it should give more than the effective nothing which the author has without a publisher's aid. To appear just in the eyes of we who granted the IP rights in question, the author should gain some intermediate amount, ideally roughly splitting the difference between these two extremes.

In practice, however, the publisher holds all the power when the author comes seeking a deal, so can take whatever they ask for in exchange for a pittance. Because IP rights are transferable, authors can thus be put under economic pressure to surrender them. Because IP law is so generous to the holder of the rights (at the expense of other folk wishing to exercise the IP's value), the author may be forced (thereafter) to pay for the privilege of performing their own work in public; may even be forced to give up their stage name.

In the software industry, standard employment practices mean that by default any software IP I create belongs to my employer (even, under British law, stuff I do at home out of hours). Consequently, the author had better be happy with a salary, and no look-in on the software IP. This can fit in with our original goals but, again, is wide open to abuse.

... nothing prohibits the author making it free. I have done so with some of my own software.

Nothing prohibits the IP owner from making it free. The author may not be in such a handy position. Even the author's ability to produce a fresh version and make it free may be compromised.

If a business publishes an excellent and instantly popular piece of software, but is bought out by a competitor who promptly abandons the product, users of that software are left in the lurch. They had every reason to hope for bug-fixed and enhanced versions of the software. The new owner wants to sell them their competing product, so will not make the retired product's source available, nor allow anyone to go decompiling the code and producing a derivative product - even for free distribution, or for distribution exclusively to folk with valid licences for the original.

This does happen. It deprives the world of valuable IP.

the only question is which type of law does better in the end.

Indeed.

What I'd like to understand better is what kind of law would do better than what we have. I firmly believe we need to lessen the strength or scope of the IP holder's control - but I am not saying to nothing. I think we might free-wheel quite well for a decade or two if we did cut down to nothing, especially if this was part of a planned transition to some more balanced replacement: but I would hope some more sensible transition plan could be formed.

For the sake of a reference point, with which I have much sympathy, let me quote an extreme position, which I encountered attributed to Thomas Jefferson: [see patents page - Ed.]

None the less, we wish to encourage folk to publish their work: among the means by which we might hope to achieve this are various schemes for granting authors authority over the publication of their work, at least sufficient to ensure that some reasonable economic incentives are achievable by the use of that authority. Such authority has much in common with the authority we acknowledge folk as having over the material goods folk own: but it has marked differences, to some of which Thomas Jefferson has pointed. In chosing a form of authority to bestow on authors, the similarity suggests our laws on (material) property as a model to start from in building laws for IP; but the differences caution us against following the model too slavishly.

My material property, say my bicycle, is of direct value to me, in so far as I retain it in my possession and the roads remain public, as a means of transport. It would be so regardless of the laws which bless my possession of it with the security of property. Even the ability to sell (or barter) it is present without those laws. Yet those laws do improve my enjoyment of the value of my bike: the trouble I need to take to retain it in my possession is greatly reduced, if nothing else.

Where the laws of material property really come into their own, though, is the overlapping worlds of trade and industry. Where I have some goods which are of at least as much value to you as to me, and vice versa, we may, by an exchange of goods, improve our lot: the miracle of trade. Where I have future expectation of being in a position to trade, I have an incentive to produce more of the things you want, even though they may be of no direct value to me: goods acquire, thereby, indirect value. At the same time, hoarding becomes a strategy with several advantages: and is far from always evil, as Joseph and his Egyptian grain silos proved. As with direct value, property laws provide a firm foundation for trade and industry: the underlying framework of our economy.

Within that framework, we have a process of free trade: we constrain it as lightly as we know how, leaving it to arrive at sensible evaluations of goods. Let me examine that question of sensible evaluations: to do so I appeal to the nominal model of the miracle of trade. This presumed that each of us has something which the other values at least as highly. We have money as goods which we, at least nominally, value equally: so let us suppose you come to the bargaining table with goods which we do value equally, while I come with goods worth more to you than the loss I endure by parting with those goods. If I can put a money price on my loss and you can put a money price on your gain, pretty much any price in between is a sane price at which to trade - but too close to either end will make the overhead of coming to market too great for one of us.

In the real world, I may need to sell (to keep body and soul together) and so be unable to afford to refuse you trade even though you offer too little to cover my loss; in effect, the loss to me of not selling has the effect of reducing my lower bound. Likewise, you may need the goods I am offering badly enough that I can dictate a higher price - absent any other supply, my goods go up in value to you (or will, we both anticipate, before long, so you know I can afford to sit tight and wait for you to accept my price). The former case may arise if I have over-valued what I brought to market; the latter when you have under-valued it; and either case may arise from one of us being greedy. Our responses in these cases are part and parcel of how the free market works.

Ideally, there is enough of a gulf between my loss and your gain that, by inhabiting the middle territory, we avoid having to apply such dire take it or leave it pressure to one another: but it is open to us. Our laws on trade support the party refusing to trade; while such refusal may be used to demand unreasonably much for something, the processes of free trade enable the stymied party to find someone else to deal with. Monopolies make a mess of this, though.

Now, when we come to intellectual goods, we may also have direct value: indeed, the Open Source movement grew out of the fact that many folk had done work to produce tools of direct value to themselves. Collectively, those tools are of immense direct value to those who use them (myself included).

... [to be continued - Ed.]

Consider any industry in which competing providers of some goods or service come up with (at least moderately) novel and (a.l.m.) non-obvious improvements on their competitors' offerings. Each incorporates their own improvements: once they have inspected their competition, they may well know how to make the other improvements; but patents may restrain them from doing so. This, at least in the first instance, leads to customers being unable to obtain a version of the relevant goods or service in which all the improvements are incorporated.

The competing businesses can cross-licence one another's patents to overcome this. At least in an ideal world, each business would see how well its improvements worked with each of the others and seek to ally itself with the holders of relevant patents; and, at least stochastically, this should lead to the better improvements dominating the market. However, businesses holding stronger positions in the market enjoy a competitive advantage due to various inertial effects (e.g. any overhead a customer must endure to switch from one supplier to another, any exclusivity deals they get their allies to agree to); in the extreme, these effects have been know to be juggled so as to ensure that the benefit they bring out-weighs the advantages a better product enjoys.

In such a case, if the bigger business adopts the better improvements the consumer gets a good product: but, otherwise, the consumer loses out, albeit a business winning this way may well suffer some damage, in the process, which may impair its ability to repeat this stunt. Still and all, once the dust has settled, the players in the market hold relevant patents and are parties to cross-licensing deals with one another, regardless of who won and whether the better inventions pulled through or got stomped.

Meanwhile, the barrier to entry into the market has been raised. A new business, seeking to compete in such a climate, not only must raise the capital to set up its premises and equipment, hire suitable staff and so on (I'll call these the fundamental costs of entering the market), but it must also license the patents of the existing players. The existing players can see that the newcomer's sales are going to cost them market share; so will naturally want to license their patents to the newcomer for fees that will at least cover their estimates of these losses; and, having no good cause to do their competitors unnecessary favours, will likely charge more than this. No matter how cheap the fundamental costs, the licensing costs will be on the scale of the profits the existing players are making from being in the market; no matter how cheaply the new business would have been able to sell its goods or service had there been no licensing costs, it will be obliged to sell at a price comparable to that charged by the entrenched competitors simply to break even; but can only make profit on the scale of the variation in price among its competitors, while they (thanks to their cross-licensing) take the whole difference between primary cost and the market price.

Now, it is the intent of the patent system to enable those who take out patents to be able to make money out of their inventions, and this amply shows that it succeeds: but, in the process, the dead hand of the free market has been disempowered. The way the free market is supposed to arrive at prices for goods and services is based on a balancing act between the price customers will pay and the price businesses charge; if customers will not pay enough for a business to survive, businesses will leave the market, enabling the remaining businesses to charge enough to survive, safe in the knowledge that customers must either pay up or make do without; if businesses charge unreasonably much, customers will flock to (and potentially be willing to invest in) new businesses entering the market to undercut the unreasonable charges.

One half of this process remains intact, but the other has been disarmed; and, though one might accuse the relevant industry of being a cartel (it clearly needn't have become a monopoly), the businesses in it can honestly enough assert that they are competing. Indeed, when calculating the fair price an anti-trust suit would have to claim they far exceed, each business can claim the license fees their peers charge the new-comer as part of the cost (to them) of producing the product, so that their price will only exceed the fair price by a modest portion (if at all). They will naturally argue that these costs (in the provision of goods or services) are incurred in a separate line of business from (and so be considered separately from the income they make by) licensing their patents, even though the latter, in reality, pays for the former.

Now suppose someone else comes up with a further improvement: they have the usual choice of either letting the existing businesses use it (whether via a patent and licensing, by publishing it or otherwise) or entering the market as a competitor. The patent system is intended to reward inventors, and let us suppose the new improvement is patentable; let us now see whether an inventor can reap those rewards in a market with entrenched cross-licensing.

If the inventor choses to start up her own business, she will need to license at least some of the entrenched patents that cover features that all customers expect the goods or service to have. This is the same barrier to entry endured by any new competitor; but the newcomer with an invention can at least hope to overcome this by cross-licensing. Thus, however the inventor tries to make money out of her invention, she will need to license her improvement to at least some of the businesses already in the market; so let us (regardless of whether she also enters the market) see whether she will be rewarded for her invention.

Each business already in the market, once it hears about the new improvement, will want to be selling a version of the product including it: but will want to do so on terms which allow that business to take as large as possible a share of the increased revenue thus generated. In this matter, it is competing with the inventor and with anyone else to whom she licenses her patent. Each entrenched business will prefer to license the patent on terms which cut out their existing customers; their ideal would be an exclusive license, giving them an effective monopoly in the new improvement and, thus, the means to make significant gains in market share - hence lots of money, so they can afford to make the inventor a significantly larger offer for such a deal than for a non-exclusive license.

possibly of vastly greater value to the consumer than all the first wave put together

Some more ramblings

The deal is this: intellectual property rights are granted by governments; in truth, at least substantially because governments have agreed to treaties drafted by lawyers who might not have been entirely disinterested; but at least officially in order to create an (economic) incentive for authors and inventors to make their works public. So let's not get bogged down in controversial stuff like vested interests and just concentrate on the official line. Does intellectual property law serve the purpose the official line uses to justify granting the rights in question ?

On the face of the justification is an intent to create an incentive for authors to publish. Behind this lies a desire to see useful material available to all; the deal places some constraints on that availability for a specified time, after which the constraints are lifted. The need for such a deal arose from the fact that an author's or inventor's work could not reach a broad public without a substantial investment - the author needed a publisher, the inventor a manufacturer. The publisher or manufacturer sorts out the editing, typesetting, proofreading or testing, refining, productizing business of delivering the author's or inventor's work to the public.

What they eventually put in the hands of the public tells a potential producer (publisher or manufacturer) of the same work all they need to know to short-cut nearly all of the investment needed by the original producer. Part of the first producers' investment goes to help their first competitors: which can enable these competitors to out-compete (on both price and quality of production) the first producer in the free market; in any case, the smart money would be backing businesses which did the low-investment, high-yield side of the industry. So the free market would, without some restraint, discourage anyone capable of production from being the first to work with the author or inventor: wait for some other fool to productize it, then copy the result.

You can fight this conclusion by presuming that first-publishers charge high prices for their books, and re-publishers wait until a book's been seen to be popular (i.e. lots of it have sold) before jumping in and under-cutting its market; the first-publisher can make plenty of profit in the interval, especially when making some profit on the books that never make it popular enough to take off. The first-publishers could even be ready for their competitors and offer, at a modest fee, to work with each re-publisher to get them up to speed. Likewise, the first-manufacturer has come to market earlier (which can be a major competitive advantage in its own right) and can sell consultancy on getting plant up to speed at manufacturing the product. One would at least hope that the author or inventor would be able to find honest (and enjoyable) employment in helping each producer to bring their work to the world.

None the less, the economic reality of a few centuries ago wasn't so sophisticated about consultancy contracts and folk came up with something that worked at the time (without making first-publication book prices prohibitively high in the early stages, which even the best-meaning supporter of the alternative must recognise would have been a problem): rights were granted to authors and publishers, enabling them to constrain (for moderate periods of time) the economic exploitation of their work (oh *0 - and, at the same time, some moral rights, to which I'm kind of attached). This, at least in theory, gave the author or inventor the means to do a deal with the first-producer, exploiting their exclusive right as a bargaining tool in getting a fair deal.

So, regardless of the long and contorted history of producers somehow always being in such commanding positions as to leave the author or inventor at the thin end of the bargain, the case for what we have rests on the need for first-producers to be able to make an honest profit (which might not be as much as they presently make) out of being first-producers.

We do have a much more sophisticated economy now; and one can publish an idea for almost nothing. I write what I write in web pages as a means of setting down, at one time, my thoughts on some topic: I do so mainly so as to enable me to make better sense of them; yet it so happens that the (cheapest, most reliable and) easiest means available to me for making what I've written accessible (to me) wherever I go happens to be to put my thoughts onto web pages and publish them. So just consider how easy it must be for someone who wants the rest of the world to hear them (as opposed to just not minding if they do, and being interested in what they think).

If some of what I've published looks interesting to someone, they might even make constructive use of it. If that's going to involve a business venture it seems to me like they, or some of their competitors (once they've shown there's a market, so got some), are likely to see some advantage in recruiting me or engaging me as a consultant. If I think the market will take a while to mature, I can see a case for engaging in a modest-period exclusivity deal with them (i.e. I'd be their employee, with a notice-period, rather than a consultant openly seeking, and engaging in, business with their competitors); we'll haggle about the duration, which is entirely reasonable. If the market looks apt to explode as more folk catch on, I'll go for encouraging all comers and seeing how many consultancy deals I can get ;^>

Well, anyhow, that's roughly what folk would generally do, that inhabit the model world presumed by free market models; and I respect it, though I might deviate from it for singular reasons in a non-ideal reality; and such ideal folk would deviate from either extreme in the inverval between, where the take-up time will be slow enough to make how long an exclusivity deal worth engaging in, for how much ?

So, in a world where publishing is cheap, in what sense does the public benefit from being forbidden to copy what we like, when we like ?

More quotes, etc.

At the helpless attempt of the author to explain to a befriended computer scientist, why programmes would not be patentable as such, though programme-related theories with an additional technical effect would be, he reacted bluntly: "You are completely nuts!" This clear pronounciation caused the author to think quite a bit.

Dr. Swen Kiesewetter-Kbinger, patent examiner and ex-programmer.

... everything made by people can therefore be understood as "technical" depending on the spirit of the time. It would only need to be distinguished from the divine creation. About any other delimitation of the term technique is disputable, since by this a painter will understand something else than a physicist, a musician something else than a craftsman, a writer something else than an engineer and a computer scientist finally something else than a lawyer.

Dr. Swen Kiesewetter-Kbinger, patent examiner and ex-programmer.

In the USA, more than six million patents have been issued. Even allowing that a fair proportion of these have expired, how can it be realistic to expect anyone to be able to determine whether their seemingly new invention is, in fact, covered by one of them ? In the year 2000, the U.S.issued 254,329 patents: at that rate, they issue a million every four years.

Written by Eddy.
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