Human Property

Patents protect inventions, while copyrights protect creative works.   As India rushes onto the world stage, it seems clear that we are only a few years away from a real explosion in activity in India related to both.

The success of a movie like Slumdog Millionaire and its musical impresario A.R. Rahman hints at a growing interest in Indian music and culture in the West, that Indian companies will no doubt want to monetize.

In fact, they will probably care more about copyright protections in Western markets than in India itself — the Slumdog Millionaire soundtrack retails for a lot more in New York than in the Mumbai slum itself.

I would expect Indian cultural companies to start to really invest in copyright protections in the next five years as a way of capitalizing on growing interest in Indian music and movies in the US and Europe.

The same is true with patents.  With Indian companies like the Tata Group purchasing once powerful Western brands like Land Rover, it seems clear that Indian companies are now finally finding the confidence and capital to generate wealth alongside Western and Chinese competitors.  And to stay competitive, Indian companies will want robust patent portfolios.  A big patent book is a peacock feather —  a way of showing your intelligence and know-how in a globalized world.

India’s prospective growth rate for 2010 hovers at around 8 percent.  With Western markets continuing to look tepid, it’s just a matter of time before Indian companies make the leap and being monetizing their intellectual property in Western markets.  Expect for this to happen sooner rather than later.

Jack Dorsey, the founder of Twitter, plans to change the focus of his tech revolution from communication to something just as fundamental:  money.

The Los Angeles Times writes that Dorsey intends on developing a small plastic device called a “Square” that any cell phone user can add to his or her headphone jack.  The Square converts the telephone into a device that can read and scan credit cards.

From the Times:

Dorsey envisions the service replacing virtually every cash transaction. Let’s say a friend owes you $30 for dinner last week, but there’s no ATM in sight. Grab the Square device from your key chain, plug it into your phone and tell him to pay up.

If Dorsey’s Square is convenient and as easy as it sounds, then there may be significant changes up ahead with how we deal with our money.  Dorsey’s focus is on small transactions that currently go under the radar of most banks or other institutions, like buying something off of Craigslist:

Then there’s the untapped market on Craigslist. The free and ubiquitous classified ad website “is doing more transactions than EBay today and has no inherent payment mechanism,” Dorsey said. “It’s a huge market for us.”

But the Square’s potential effects are fundamental to the way modern economies work.  The Square would change the speed and convenience by which money exchanges hands — what economists call the “velocity” of money.  Money could change hands in seconds, not in hours.  What we would have is a true “peer-to-peer” model for monetary transactions, without any type of middle-man or intermediary.

The Square would affect the anonymity of money.  A big advantage of paper money is that it is anonymous.  You can pull out $20 from an ATM and spend it on anything you’d like, without any real trace of what you purchased.  This has benefits for people who would prefer their purchases to remain private — for legal and illegal reasons.

A world where every dollar transaction is recorded would contain a wealth of information, both good and bad.  Do we really want our purchases logged like that?

Consider another twist:  The Square would open interesting questions related to currency arbitrage.  Let’s say I had a friend with a bank account in Euros.  Given the fluctuation in exchange rates, could I simply transmit to him money on Wednesday, wait for the rate to increase, then make a profit by my friend simply sending the money back to me over the internet?  This seems like it would open a highly dangerous market for currency speculation, with people reacting in real-time to shifts in the market.  Do we want a world where currency speculation could happen in seconds?

Money, at heart, is simply an agreed upon medium of exchange.  Part of our attachment to money is no doubt sensory:  we see it, we touch it, we give it to other people.  Would “the dollar” mean as much to us, as opposed to some other currency, if it were simply an electronic number and not the comforting images of dour Washington, bold Hamilton, and confident Franklin?

Very little would prevent someone from opening a bank account in Euros or Pounds and hooking up the Square to that account, and simply using that currency in everyday life.  Suddenly, you see a world where consumers would be able to pick and choose their currencies as well.  People could choose Euros because it has a higher exchange rate, the Rupee because they want to support the Indian government, or the Pound because they just adore the Queen.  Much of the control exercised by governments through their use of currency would evaporate overnight.  This is truly radical, and it is likely that we would see governments pass laws to restrict the use of the Square to prevent this.

But, these days, anything can be hacked.  And here is where we come full circle in the use of money, and the devleopment of technologies.  For centuries, governments used gold and silver because everyone valued them.  Then, in the 20th century, governments used fiat currencies (without any backing of any metal) because they had more control over the money supply.  Now we potentially have a device that may let people pick and choose which fiat currency they wish to use as their preferred medium of exchange, thereby stripping governments of whatever power they obtained through the use of fiat money.  How will governments react?

Of course, maybe the Square won’t find an investor.  But with Dorsey’s name and Twitter under his belt, we may be looking at a truly revolutionary idea.

Copyright law, both in the United States and around the world, may be set to change drastically in the next few years — at least if there is any truth to the rumors related to a new international treaty known as the Anti-Counterfeiting Trade Agreement (or “ACTA”).

The treaty is being negotiated between the United States, Canada and the European Union (among other countries).  It aims to put in place a single set of copyright rules and regulations binding on all signatories.

Little is known about the actual contents of ACTA, as all negotiations and documents have been veiled behind unusual levels of secrecy.

In fact, the negotiations are so secret, they have been declared “properly classified national security secrets” by the Obama Administration.   The Administration has used this classification to deny any requests for information or documents under the Freedom of Information Act.

The high levels of secrecy have led to rampant speculation about the contents of the treaty and how it would change current copyright laws.  In September 2008, leaked documents led to speculation that ACTA would:

Require Internet Service Providers to monitor all consumers’ Internet communications, terminate their customers’ Internet connections based on rights holders’ repeat allegation of copyright infringement, and divulge the identity of alleged copyright infringers possibly without judicial process, threatening Internet users’ due process and privacy rights; and potentially make ISPs liable for their end users’ alleged infringing activity.

Interfere with fair use of copyrighted materials.

Criminalize peer-to-peer file sharing.

Interfere with legitimate parallel trade in goods, including the resale of brand-name pharmaceutical products.

Impose liability on manufacturers of active pharmaceutical ingredients (APIs), if those APIs are used to make counterfeits — a liability system that may make API manufacturers reluctant to sell to legal generic drug makers, and thereby significantly damage the functioning of the legal generic pharmaceutical industry.

Improperly criminalize acts not done for commercial purpose and with no public health consequences; and Improperly divert public resources into enforcement of private rights.

A clearer picture of ACTA’s provisions came a few weeks back, when a second document (a European Commission summary paper) was again leaked.  Here are some key quotes and analysis:

Safe-harbours for liability regarding ISPs, based on Section 512 of the Digital Millennium Copyright Act (DMCA)2, including a preamble about the balance between the interests of internet service providers (ISPs) and right-holders. See also KORUS Chapter 18.10.30. According to US, the language proposed is somewhere in the “middle” between the WIPO internet treaties, KORUS and the DMCA, which probably means that it is more detailed than the first but not as specific as the latter

This confirms that ACTA is probably looking to impose a “notice-and-takedown” regime (similar to one contained in the Digital Millennium Copyright Act) on other countries that currently do not have one in place.  Under this type of system, an internet content provider is required to “take down” any allegedly infringing material after receiving “notice” from the copyright holder.

On the limitations from 3rd party liability: to benefit from safe-harbours, ISPs need to put in place policies to deter unauthorised storage and transmission of IP infringing content (ex: clauses in customers’ contracts allowing, inter alia, a graduated response). From what we understood, the US will not propose that authorities need to create such systems. Instead they require some self-regulation by ISPs.

Under current American law, ISPs are only required to put in place a sufficient notice-and-takedown system and in “appropriate circumstances,” terminate users who repeatedly or blatantly infringe copyright.  Perfect 10, Inc. v. CCBill LLC, 488 F.3d 1102, 1109-1110 (9th Cir. 2007).

The important change appears to be the need for a “graduated response” to copyright infringement, as well as “self-regulation” by ISPs.  Will this require ISPs to monitor their networks?  Can your internet access be revoked based on mere allegations (but no proof) of copyright infringement?  These are key questions.

Here’s a section that relates to DVD copying (Blueray copying?) software:

Section 4: Will focus on technical protection measures (TPMs). Language inspired by US-Jordan Free-Trade Agreement (article 4.13)4, as well as by the WIPO Internet Treaties (articles 11 WCT and 18 WPPT):
- Parties to provide adequate civil and criminal remedies that are specific to
TPM infringements, i.e. treat these as separate offenses form “general”
copyright infringements.
- TPM infringements would be: (i) prohibition of circumvention of access
controls and; (ii) prohibition of manufacture and trafficking of circumventing
DRM devices.
- There will be exceptions to these prohibitions available to ACTA members.
- “Fair use” will not be circumscribed.
- There will be no obligation for hardware manufacturers to ensure
interoperability of TPMs.

The gist of all that legal-ese is that countries will be required to enact laws preventing the cracking of any technical measures designed to prevent infringement.  In the US, the Digital Millennium Copyright Act makes it illegal for anyone to crack anti-copy restrictions on DVDs, for example.  This has provided a schizophrenic legal regime where it remains technically legal to copy a DVD for some purposes (a personal copy of a DVD you already own) but illegal to crack any technical measures which prevent that DVD from being copied in the first place.  It looks like ACTA seeks to expand these restrictions to other countries.

In sum, what can be expected from ACTA?  At a high level, it appears that the proposed changes will have greater impacts in countries overseas, especially in countries that may not have the strict copyright laws of the United States.  In the United States itself, ACTA may impose greater surveillance obligations on ISPs to monitor their networks — the “graduated response” language.

At the end of the day, however, the devil will be in the details.  We should know more as more items get released…or leaked.

Is access to the internet a civil right?  Are we entitled to the internet merely on account of citizenship?

In the United States this might be akin to asking whether cable TV is a civil right.  It just seems like an odd question to ask.

But other countries have taken this question seriously, and in many instances have concluded that access to the internet is a basic right.

This past October, Finland became the first country to declare high speed internet access a legal right.  The Finnish law requires that by 2015, every Finn must have internet access equivalent to 100 mb per second.

In June, a top French court declared access to the internet a basic human right guaranteed by the Declaration of Human Rights.  As such, the French court held that it was impermissible for France to deny internet access to individuals who were merely accused (but not convicted) of online piracy.

Estonia, a small Baltic country that borders Russia, passed legislation close to 10 years ago declaring internet access as a fundamental human right.

Will the United States follow suit with these other countries?  Congress seems unlikely to pass any type of law law guaranteeing internet access; there just didn’t seem to be any pressure or reason to do so.  As in France, the issue would probably come up before a court.  Here are a few hypotheticals that might lead a court to consider this question:

• Illinois is currently pondering a law that would ban registered sex offenders from accessing “social-networking Web sites“.  Would such a ban be constitutional?  Can a state prohibit people from accessing information and websites online?  Would this be an illegal restraint on the First Amendment’s guarantees of freedom of expression, or freedom of association?  The First Amendment guarantees people the right to say what they want in public forums subject only to time, place and manner restrictions.  Is the internet a public forum?  Or is it akin to a private mall which can kick you out at any time?  Answering this question may require a technical analysis as to who “controls” the internet — is it a private or government function?

• In addition to First Amendment issues, are there potential legal issues on account of the Equal Protection Clause?  The Equal Protection Clause of the 14th Amendment (passed after the Civil War) provides that all Americans are entitled to equal protection of the law:  no single group can be unfairly singled out for exclusion from constitutional rights.  Would the Illinois law present a case of an unfair restriction of a group of people without any rational basis?  It may seem unlikely that the Supreme Court would protect sex offenders from exclusion, but just a few years ago the Supreme Court held that a Colorado law which deprived gay people of legal rights was grossly unconstitutional as it unfairly targeted a group of people from protection of the law (Romer v. Evans, 517 U.S. 620 (1996)).

• Let’s assume that the Illinois law passed constitutional muster.  Could Illinois take the next step and ban all internet access for registered sex offenders?  The same First Amendment and Equal Protection Clause issues would appear to present themselves once again, but with greater force.  Let’s further assume that a court would OK restrictions on sex offenders to access the internet — can a state then restrict internet access for other groups?  Could a state pass a law barring convicted terrorists from accessing the internet?  How about alleged terrorists?  Many states already restrict convicted felons from voting and possessing hand guns — deeply fundamental rights in America.  Even if internet access were a fundamental right, it would seem internet restrictions caused by convictions might pass constitutional muster.  Is this right?

• Here’s another hypothetical that may be a reality before long.  Suppose the RIAA is able to successfully lobby Congress to pass a “three-strikes” bill that requires internet providers to restrict internet access to individuals who have been caught pirating materials at least three times.  Would it be constitutional to restrict internet access across the board to convicted online pirates?  This was the issue before the French court in June, and it found that that the law as written was too broad because it deprived people of judicial review.  If a jury finds you guilty three times of online piracy, can you be banned from accessing the internet for good?