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Is government collusion with BIG IP hurting tech business innovation?

January 29, 2013 0 Comments

Intellectual PropertyAs an IP attorney, it is my job is to enforce my clients’ copyrights to protect their property. As a private citizen, tech junky, and video game fanatic, I am disturbed by the current legislative trends regarding intellectual property and what I see as bullying and anti-competitive practices by Big IP.

Big IP

In the last few weeks we’ve seen a slew of cases where large corporations seem to be bringing the weight of the US government down on those who threaten their property; see prosecution and suicide of Reddit founder Aaron Swartz, the Copyright Office’s decision to make jailbreaking of smartphones illegal, and of course the criminal prosecution of MegaUploads founder Kim Dotcom.

I call the conglomerate of large corporate intellectual property holders, such as the Motion Picture Association of America (MPAA), the major academic publishers (e.g., Pearson, John Wiley & Sons, etc.) and major telecommunications companies “Big IP.” They create and own quite a bit of intellectual property, ranging from copyrights to patents, and they invest large sums of money into enforcing their huge IP portfolios against potential newcomers to the various industries.

IP: A Double-Edged Sword

As intangible assets, IP makes up a large chunk of the value of the film, academic and of course tech industries. So it is perfectly valid for private companies to enforce their IP rights against other companies and individuals whose infringement who would seek to devalue those assets by infringing on them. But more and more we see large IP holders using their IP portfolios to maintain a monopolistic hold on their industry — so much so that antitrust counterclaims have become par for the course in nearly all patent infringement cases.

But while it may even be valid, to an extent, for private companies to wield their IP portfolios as a means of fending off would-be competitors, the now prevalent use of Federal agencies such as the FBI and the Federal Trade Commission as an enforcement arm by Big IP detrimental to the free market and, by extension, to innovation in the tech industry.

Big IP Wielding the IP Sword

More and more it seems that IP laws passed by Congress, and enforcement actions made by Federal agencies, come at the behest of lobbying efforts of Big IP.

The prosecution of Aaron Swartz, for example, seems like a fairly transparent attempt by Big IP in the publishing industries to hang on to their antiquated business models in the face of growing information freedom made possible by internet technology. The kind of raw data that make up the core of academic articles cannot be protected under the Copyright Act and can, therefore, only be protected with firewalls and passwords.

Enter the Computer Fraud and Abuse Act which, traditionally, had only been used to prosecute hackers of financial information, but is now being used as a sword against information freedom activists like Aaron Swartz.

Or, look at the reason, or apparent lack thereof, behind the Copyright Office’s decision to make smartphone jailbreaking illegal. The Digital Millennium Copyright Act provides, in part, that it is illegal to circumvent (“hack”) security mechanisms meant to protect underlying copyrighted work.

The original goal of this provision was to prevent hackers from circumventing copy protection systems, such as DVD anti-copy mechanisms, to infringe on the underlying copyrighted works (in this case the movies on the DVD). The DMCA expressly requires the Copyright Office to provide exemptions to the anti-circumvention provisions in cases where people are known to make non-infringing uses of the copyrighted works.

Traditionally, the Copyright Office has provided this exemption to smartphones because the act of circumventing the phone’s protection mechanisms (known as “jailbreaking”) was not done to infringe on any underlying copyrights, but merely so that phone users could run independently created application which would allow one carrier’s “signature” phone to work on the network of another carrier.

Sure, carriers could have contract deals with phone hardware manufacturers, like Apple, to be the exclusive carrier for that particular phone — such as how AT&T was initially the exclusive carrier for the iPhone. But carriers could not legally enforce these agreements on “innocent” third-parties, namely their customers. So they created programs which would prevent their signature phones from working on competing carriers. Tech-savvy users got hip to this and started to write their own programs to nullify the carriers’ programs — there was nothing illegal about this.

So carriers decided to utilize the DMCA’s anti-circumvention measures by throwing copy protection mechanisms over the carrier exclusivity code so that users could not access, and thereby crack, the code without circumventing the protection mechanisms in violation of the DMCA. For a long time the Copyright Office provided an exemption to this sort of thing probably because it recognized that the carrier’s copy protection mechanisms were not actually there to protect against copyright infringement, but suddenly, and inexplicably, the Copyright Office decided this year to end its exemptions.

There’s Something Rotten in the State of IP

All of the above smells like the results of heavy lobbying efforts by Big IP. In no other industry is it quite so easy to spot the results of corporate-government collusion as it is in the IP industry due to the arbitrary nature of copyright laws: One need simply ask, “What possible economic benefit does Legislation X carry over Legislation Y?”

If a valid economic benefit cannot be rationally deduced, then one need simply examine which association of large, IP-holding private organizations are going to benefit from Legislation X to the detriment of their industry at large. This is not good for competition in the industry, and therefore it is not good for innovation and, most importantly, it is not good for the current weak state of economic affairs.

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