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MotleyFool on IP Law (take 2)



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Fool.com:  Intellectual Property Online[Rule Maker]
May 5, 2000

 (http://www.fool.com/portfolios/rulemaker/rulemaker.htm)
Intellectual Property Online


By Rob Landley (TMF Oak)
May 5, 2000

All intellectual property laws in the United States are based on Article
2, Section 8 of the Constitution, which allows Congress to pass laws "To
promote the progress of science and useful arts, by securing for limited
times to authors and inventors the exclusive right to their respective
writings and discoveries."

Simply stated, the constitutional purpose of intellectual property is NOT
to make anyone rich, but to promote the growth of science and industry.
Right there in black and sort-of-yellowish-brown, the constitution states
its intention of promoting progress, which benefits consumers, in a way
that incidentally benefits producers as well.

Trademarks are there so consumers can know which products they're buying,
and make a vaguely informed decision. Copyrights are there to encourage
authors to write, musicians to compose, painters to paint, and the really
important thing about copyrights is that they expire into the public
domain, increasing the generally available body of works like "Alice in
Wonderland" (the book is public domain now, the animated movie by Disney
isn't yet).

Patents are all about documentation and disclosure. The limited monopoly
is bait to get authors to disclose and document their inventions. To get
the monopoly they have to describe their invention in enough detail that
others can study it, duplicate it, and improve on it once the patent
expires.

Of course the constitutional purpose of intellectual property is at odds
with the profit motive of corporations, which never want to give up any
intellectual property (IP) rights. They're constantly lobbying Congress
for stronger protections, to close "fair use" exceptions, and to extend
the durations of patents and copyrights. Patents once lasted 7 years, then
17 years, now they last 20 years. Copyright has gone from expiring within
the author's lifetime to life plus almost a century.

The ironic thing is that this is a short-sighted attitude to take. Disney
could do its Alice in Wonderland movie because the book had fallen into
the public domain. Corporations benefit from the level playing field
provided by intellectual property entering the public domain, but at the
same time they would much rather rest on their laurels and continue to
milk existing intellectual property rather than have to compete on a level
playing field.

In the last couple decades, the rise of digital technology has also
profoundly affected intellectual property. From determining whether
"contract-o-matic" programs that ask you to mouse click on a digital
button to agree to their terms actually make a legally binding contract,
to arguing before the Supreme Court whether or not software is patentable,
a lot of new boundaries have had to be determined. But the biggest
stresses have been to copyright law.

To a computer, everything is a number, and all numbers are the same. A
computer can't tell a copyrighted number from a non-copyrighted number,
and the complete works of William Shakespeare (public domain) look the
same to a computer as this column (copyright 2000 The Motley Fool). Text,
music, video, programs, they're all just big numbers to a computer. A
computer understands copyright about as well as a ballpoint pen
understands it.

Prosecuting copyright infringement was easy when copying required bulky
and expensive equipment (such as a printing press or an industrial CD
press) that was only owned by a few people, and when it took days to
physically distribute. But now, with computers and the Internet, copyright
infringement is often accidental. Press a few keys, attach an MP3 file to
your e-mail, and it's on the other side of the country in seconds.

Commercial interests have responded to the steady erosion of the
enforceability of IP rights with increasingly draconian measures such as
UTICA and the Digital Millennium Copyright Act, granting themselves more
rights and more weapons with which to enforce them. Consumers have
responded with disgust, disdain, grassroots protests, and widespread civil
disobedience.

The problem with the corporate approach is that laws work because people
obey them. Enforcement must be the exception, not the rule, or the system
breaks down into a police state. There's a big difference between trying
to dam a river and trying to channel the flow, and building the dam higher
is not usually a sane response to flood conditions. IP rights are also a
bit like tariffs in trade; sometimes they cause real problems, and when
they do strengthening them just makes the problems worse.

The recording industry is terrified of MP3 music, but then they fought
against "burn your own CD" kiosks back in the 1980s that let people
unbundle music from albums and choose to buy only the songs they actually
wanted. The movie industry is terrified that digitally recorded movies
might someday be transmitted over the Internet (thus the flap over deCSS
and DVDs), yet they initially fought against the introduction of
videotapes 20 years ago (and the resulting video rental industry) because,
horror of horrors, people can record stuff onto videotapes.

Digital video distributed online has already subverted the independent
film market, including the Sundance film festival. Internet radio stations
are springing up all over without needing expensive equipment or an FCC
license, and garage bands can put MP3 files up on their Web pages and
acquire a fan base and organize performances without signing a deal with a
record label.

The thing about the Internet is it drastically lowers barriers to entry,
and the dominant players in these markets almost instinctively respond
with intellectual property laws to try to defend their comfortable perch.
Thus, they're being attacked on two sides, first that digital technology
has made breaking intellectual property laws as easy as speeding or
jaywalking, so respecting their copyrights is now largely a matter of
choice on the part of the consumer. Secondly, their competitors are
embracing the same new technology that's causing them so much trouble, and
making it central to their emerging business models!

The moral of all that is that intellectual property laws cannot
effectively defend an obsolete business model. IP is a tool, not a
strategy. At best, relying on intellectual property by itself to fend of
competitors is a holding action (as it was meant to be by the founding
fathers), and lobbying for stronger IP protections is, in my opinion, a
sign of weakness bordering on desperation.

That said, I'd like to quickly clear up an issue from Wednesday's column
on patents, which got edited for space after it left my hands and wound up
being a bit harsher on the U.S. Patent and Trademark Office (USPTO) than I
had intended. I think the USPTO is underfunded, victim of a tight labor
market, and trying to enforce laws that really need to be updated, but
none of that is actually their fault.

Here's an article about how the USPTO is at least trying to take positive
steps to deal with the situation. This by itself isn't likely to satisfy
the League for Programming Freedom at MIT or the people behind the
grassroots "Stop Bad Patents" website, but it's a start.

Finally, here's a recent series of open letters between Amazon's CEO Jeff
Bezos and book publisher Tim O'Reily, discussing how patent law should be
reformed:

Tim's February 29 "Ask Tim" column
Tim's initial "Open Letter to Jeff"
Tim's description of their first conversation
Jeff's response to Tim (on Amazon.com's website)
Tim's response to Jeff

Have a great weekend,

- Oak


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