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September 2008
Monthly Archive
General30 Sep 2008 09:54 pm
Washington State Sues Company For Fake Error Messages
For years, questionable "software" firms would buy up ads that pretended to look like computer warning messages telling you that your computer was at risk. Then there were scamming companies that would include a web-based "test" of your computer to see if it was at risk -- and, of course, it always found that you were. The scam is just to get you to download (and buy) their software which rarely does anything (and most of the time you don't need it). The FTC had cracked down on these companies a while back, but it appears at least some are still in business. Washington state is now suing a software company that apparently did something similar sending messages to computer users claiming "CRITICAL ERROR!" and demanding that they download the company's product immediately to repair the problem. Of course, there was almost never an actual problem... but the software cost $40.
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General30 Sep 2008 09:54 pm
Washington State Sues Company For Fake Error Messages
For years, questionable "software" firms would buy up ads that pretended to look like computer warning messages telling you that your computer was at risk. Then there were scamming companies that would include a web-based "test" of your computer to see if it was at risk -- and, of course, it always found that you were. The scam is just to get you to download (and buy) their software which rarely does anything (and most of the time you don't need it). The FTC had cracked down on these companies a while back, but it appears at least some are still in business. Washington state is now suing a software company that apparently did something similar sending messages to computer users claiming "CRITICAL ERROR!" and demanding that they download the company's product immediately to repair the problem. Of course, there was almost never an actual problem... but the software cost $40.
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General30 Sep 2008 08:09 pm
Even Light Users Would Look For Alternatives If Their ISP Uses Broadband Caps
Longtime readers know that I'm no fan of metered broadband or it's half-sibling "broadband caps." They're not the worst thing in the world, but they set in place the wrong incentives, making an internet connection a lot less valuable. There are certainly those who disagree, but we've lived in worlds with metered internet access and phone systems before, and it leads to decreased overall usage -- and that's not a good thing. It acts as disincentive to creating the next great internet service that could be a boon to the economy.
Customers recognize this implicitly. They hate the idea of any sort of mental transaction cost associated with "watching" their bandwidth usage -- especially since they have no clue how much bandwidth they really use. A recent study highlights this pretty clearly. 83% had no idea how much bandwidth they use -- with many not even having an idea of how much data one gigabyte represented. 81% of those surveyed stated they were against the caps, and 51% said they'd look for alternative providers if their ISPs implemented such a cap. Interestingly, even light users were against such plans. That seems to go against what ISPs tell everyone, claiming that light users would be able to get cheaper access. Yet, those light users recognize that it would more likely end up with them keeping the same price, but with more limits.
Now, some will be quick to respond that of course people surveyed will hate broadband caps. It's like asking people if they want to get less for the same price. But the key point here is how many people would look for alternative providers, combined with the fact that, for most users, there really aren't many choices. Once again, this highlights the key problem with US broadband: there's almost no real competition. You have the duopoly of the telcos and cablecos, and not much else that represents real competition. Most of the biggest providers (Comcast, AT&T, Time Warner Cable) have made it clear that they intend to cap broadband. The only really big holdout is Verizon, who is betting that its FiOS offering won't require similar caps. But FiOS is still limited in its footprint, and it will be worth watching what happens over time. So while there are plenty of skirmishes about things like net neutrality and broadband caps, don't lose site of the real issue: the lack of significant competition for broadband in most markets.
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Customers recognize this implicitly. They hate the idea of any sort of mental transaction cost associated with "watching" their bandwidth usage -- especially since they have no clue how much bandwidth they really use. A recent study highlights this pretty clearly. 83% had no idea how much bandwidth they use -- with many not even having an idea of how much data one gigabyte represented. 81% of those surveyed stated they were against the caps, and 51% said they'd look for alternative providers if their ISPs implemented such a cap. Interestingly, even light users were against such plans. That seems to go against what ISPs tell everyone, claiming that light users would be able to get cheaper access. Yet, those light users recognize that it would more likely end up with them keeping the same price, but with more limits.
Now, some will be quick to respond that of course people surveyed will hate broadband caps. It's like asking people if they want to get less for the same price. But the key point here is how many people would look for alternative providers, combined with the fact that, for most users, there really aren't many choices. Once again, this highlights the key problem with US broadband: there's almost no real competition. You have the duopoly of the telcos and cablecos, and not much else that represents real competition. Most of the biggest providers (Comcast, AT&T, Time Warner Cable) have made it clear that they intend to cap broadband. The only really big holdout is Verizon, who is betting that its FiOS offering won't require similar caps. But FiOS is still limited in its footprint, and it will be worth watching what happens over time. So while there are plenty of skirmishes about things like net neutrality and broadband caps, don't lose site of the real issue: the lack of significant competition for broadband in most markets.
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General30 Sep 2008 06:48 pm
Hollywood And RealNetworks Head To Court Over DVD Ripping
As was widely expected when RealNetworks announced plans to release some DVD ripping software, the lawsuits are now flying. RealNetworks rushed to court to ask for a declaratory judgment, though the MPAA admitted it had its own lawsuit ready to go as well. Real getting to the courthouse faster may mean slightly more favorable jurisdiction for the company. In the meantime, it seems like the MPAA is facing a huge uphill battle here, as Real's software includes its own DRM, so it's hardly a case of allowing widespread copying. Plus, making personal backups is allowed under copyright law. The real issue is where two conflicting parts of the law collide: the right to make personal backups and the DMCA's prohibition on circumventing DRM. Real claims that since it adds its own layer of DRM, the studios' DRM is not circumvented. That may make the most sense from the standpoint of the lawsuit, but it still seems like a strong case could be made by simply focusing on how people have a right to make personal backups. Of course, this lawsuit is something of a marketing stunt. There are better DVD rippers out there that are available for free, so it's difficult to see Real ever getting very far with this product, no matter what happens with the lawsuit.
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General30 Sep 2008 06:48 pm
Hollywood And RealNetworks Head To Court Over DVD Ripping
As was widely expected when RealNetworks announced plans to release some DVD ripping software, the lawsuits are now flying. RealNetworks rushed to court to ask for a declaratory judgment, though the MPAA admitted it had its own lawsuit ready to go as well. Real getting to the courthouse faster may mean slightly more favorable jurisdiction for the company. In the meantime, it seems like the MPAA is facing a huge uphill battle here, as Real's software includes its own DRM, so it's hardly a case of allowing widespread copying. Plus, making personal backups is allowed under copyright law. The real issue is where two conflicting parts of the law collide: the right to make personal backups and the DMCA's prohibition on circumventing DRM. Real claims that since it adds its own layer of DRM, the studios' DRM is not circumvented. That may make the most sense from the standpoint of the lawsuit, but it still seems like a strong case could be made by simply focusing on how people have a right to make personal backups. Of course, this lawsuit is something of a marketing stunt. There are better DVD rippers out there that are available for free, so it's difficult to see Real ever getting very far with this product, no matter what happens with the lawsuit.
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General30 Sep 2008 05:21 pm
Misunderstanding The Problems Of The Patent System
Earlier this year, Alex Iskold wrote up a piece on why the economics of "free" was somehow bad. That didn't make much sense and we tried to explain why. Now he's written another article trying to explain why the patent system is in crisis, and it seems equally as confused. We absolutely agree that the patent system has some serious, serious problems -- but it's not for the reasons Iskold describes. First, he claims that the patent system used to work -- when historical evidence suggests otherwise. Almost every look at the patent system over history has found little to no evidence that it increased innovation. From Fritz Machlup to Eric Schiff to the more recent research of Scherer and Weisburst and others have consistently found little evidence that patents increase innovation.
Iskold, oddly, suggests that the reason why we're seeing open source rise up and an open sharing of ideas proliferate is somehow because of the patent system's failures (despite the fact that both became more prevalent and common long before software was considered patentable), and warns that this is somehow dangerous, because: "What happens when a big company copies a startup? What happens when dozens of startups copy each other?" Of course, that's what most people consider competition, and we tend to think it's a good thing in a capitalist society. It's what actually drives innovation, as pretty much all of economic history has shown. If someone copies you, you continue to innovate and beat them to the market. If you really understand your market better, then you can out-innovate them. And, despite continuous worries about "big companies" copying startups, history shows that it's not quite so easy. If the startup is successful, it's not so easy to just copy, because the startup has built up a reputation, which isn't so easy to copy. Witness how Netflix outran Blockbuster, despite Blockbuster copying Netflix. Witness how Google outran both Yahoo and Microsoft. Witness how Microsoft outran IBM.
It's not so easy to just "copy." And just copying isn't enough to actually gain marketshare.
From here, Iskold's column skids off the rails completely. It claims that the real problem of the patent system is the time between filing the patent and when the patent is granted, because that allows plenty of other companies to copy your patent and beat you to the market. That's so wrong it's difficult to know where to start. First, patents aren't published until 18 months after being filed. So, no matter what, you have an 18 month headstart. And if we're talking about software firms, that seems like a pretty damn big headstart. Furthermore, there's very little evidence of startups or even larger companies in the software space scouring patent applications to "steal ideas" from others. No, they tend to focus on what the market is actually asking for. And, in fact, there's ample evidence that many software firms actively forbid employees from looking at patents, as doing so may open them up to treble damages for "willful infringement."
Iskold seems to think that this patent scanning is what leads to tons of "me too" startups -- but the truth usually has absolutely nothing to do with the patent system. It's because multiple people recognize the same or similar markets, and over time are likely to attack it in similar ways. Again, that's competition -- and it's a good thing.
Oddly, towards the end, Iskold finally admits what he calls "the biggest irony in this patent debacle": it actually benefits consumers. That's not "irony." That's correct. Competition benefits the customer. That's how it's supposed to work. So what's the problem?
Well, according to Iskold, this isn't sustainable: "To not have patents at all means that at the end of the day big companies will always absorb all the best innovation for free." But, again, as we already pointed out, that's simply not true. Sometimes big companies win, but quite often, they do not. Big companies are slow and lumbering. Small companies are faster and more nimble and can often out innovate the slow companies with legacy issues. Competition is a good thing, Alex. Don't fear it.
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Iskold, oddly, suggests that the reason why we're seeing open source rise up and an open sharing of ideas proliferate is somehow because of the patent system's failures (despite the fact that both became more prevalent and common long before software was considered patentable), and warns that this is somehow dangerous, because: "What happens when a big company copies a startup? What happens when dozens of startups copy each other?" Of course, that's what most people consider competition, and we tend to think it's a good thing in a capitalist society. It's what actually drives innovation, as pretty much all of economic history has shown. If someone copies you, you continue to innovate and beat them to the market. If you really understand your market better, then you can out-innovate them. And, despite continuous worries about "big companies" copying startups, history shows that it's not quite so easy. If the startup is successful, it's not so easy to just copy, because the startup has built up a reputation, which isn't so easy to copy. Witness how Netflix outran Blockbuster, despite Blockbuster copying Netflix. Witness how Google outran both Yahoo and Microsoft. Witness how Microsoft outran IBM.
It's not so easy to just "copy." And just copying isn't enough to actually gain marketshare.
From here, Iskold's column skids off the rails completely. It claims that the real problem of the patent system is the time between filing the patent and when the patent is granted, because that allows plenty of other companies to copy your patent and beat you to the market. That's so wrong it's difficult to know where to start. First, patents aren't published until 18 months after being filed. So, no matter what, you have an 18 month headstart. And if we're talking about software firms, that seems like a pretty damn big headstart. Furthermore, there's very little evidence of startups or even larger companies in the software space scouring patent applications to "steal ideas" from others. No, they tend to focus on what the market is actually asking for. And, in fact, there's ample evidence that many software firms actively forbid employees from looking at patents, as doing so may open them up to treble damages for "willful infringement."
Iskold seems to think that this patent scanning is what leads to tons of "me too" startups -- but the truth usually has absolutely nothing to do with the patent system. It's because multiple people recognize the same or similar markets, and over time are likely to attack it in similar ways. Again, that's competition -- and it's a good thing.
Oddly, towards the end, Iskold finally admits what he calls "the biggest irony in this patent debacle": it actually benefits consumers. That's not "irony." That's correct. Competition benefits the customer. That's how it's supposed to work. So what's the problem?
Well, according to Iskold, this isn't sustainable: "To not have patents at all means that at the end of the day big companies will always absorb all the best innovation for free." But, again, as we already pointed out, that's simply not true. Sometimes big companies win, but quite often, they do not. Big companies are slow and lumbering. Small companies are faster and more nimble and can often out innovate the slow companies with legacy issues. Competition is a good thing, Alex. Don't fear it.
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General30 Sep 2008 03:59 pm
Dozier Continues To Go After Ronald Riley
A few weeks ago, we wrote about the bizarre and troubling lawsuit filed by John Dozier against Ronald J. Riley. Riley, of course, is a well-known pro-patent system supporter who has generally made a nuisance of himself in the comments. Whenever he stops by here, it's usually to personally insult me (and, in some cases, my family) and to spew what usually amounts to lies or totally unsubstantiated comments about the patent system. In other words, this is not someone I'm likely to defend. Yet, Dozier's lawsuit is very troublesome. It basically highlights all sorts of questionable things that Riley has done to establish his "reputation" as a patent expert -- but then the actual lawsuit is on trademark issues. The background on Riley, while amusing and interesting to us, has absolutely nothing to do with the lawsuit at hand. Dozier seems to merely be dragging Riley's name through the mud. Why? Well, it appears that Riley insulted Dozier (similar to the way that Riley insults us) and even went so far as to put up some websites making fun of Dozier. Dozier, of course, isn't known for taking criticism well, so apparently, he decided to go after Riley on very questionable trademark claims, while also dragging his name through the mud (which very well might be deserved -- but if it's got nothing to do with the lawsuit...)
Dozier's still at it, with a blog post describing the latest details of what's been happening, where he repeatedly references our original post (which slams Dozier's lawsuit as being highly questionable). Dozier falsely suggests that Techdirt has somehow changed its opinion of his lawsuit. He says that a comment defending Riley on Techdirt was shown by commenters to likely have been Riley himself, but that's not true. I know the IP addresses that Riley uses. And, I know who the person is who "defended" Riley and it is not Riley. It is another regular commenter who knows Riley and supports Riley (and trashes us all the time), but it's not Riley himself. Dozier also suggests that Riley posted an article in a different forum pretending to be someone else, though there's evidence that that's not true either (edited to avoid confusion).
What's much more troubling is Dozier's claims that he's been able to convince various webhosts to take down Riley's websites. As much as we may find Riley to be an insulting pest, we would never suggest he doesn't have the right to speak his mind. Dozier claims that any new webhost that hosts Riley's websites will be accused of "aiding and abetting", "conspiracy", and "contributory trademark infringement" claims. Dozier must realize that such claims are a clear abuse of trademark law. The webhosts are quite clearly protected under section 230 of the CDA and are not responsible for the content hosted on those sites. Dozier, as a self-professed "internet law expert" should know this, suggesting that his claims to various webhosts are misleading. Once again, we're probably the last people on earth to ever want to defend Ronald Riley -- but Dozier's campaign against him is equally as abusive as anything Riley has done.
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Dozier's still at it, with a blog post describing the latest details of what's been happening, where he repeatedly references our original post (which slams Dozier's lawsuit as being highly questionable). Dozier falsely suggests that Techdirt has somehow changed its opinion of his lawsuit. He says that a comment defending Riley on Techdirt was shown by commenters to likely have been Riley himself, but that's not true. I know the IP addresses that Riley uses. And, I know who the person is who "defended" Riley and it is not Riley. It is another regular commenter who knows Riley and supports Riley (and trashes us all the time), but it's not Riley himself. Dozier also suggests that Riley posted an article in a different forum pretending to be someone else, though there's evidence that that's not true either (edited to avoid confusion).
What's much more troubling is Dozier's claims that he's been able to convince various webhosts to take down Riley's websites. As much as we may find Riley to be an insulting pest, we would never suggest he doesn't have the right to speak his mind. Dozier claims that any new webhost that hosts Riley's websites will be accused of "aiding and abetting", "conspiracy", and "contributory trademark infringement" claims. Dozier must realize that such claims are a clear abuse of trademark law. The webhosts are quite clearly protected under section 230 of the CDA and are not responsible for the content hosted on those sites. Dozier, as a self-professed "internet law expert" should know this, suggesting that his claims to various webhosts are misleading. Once again, we're probably the last people on earth to ever want to defend Ronald Riley -- but Dozier's campaign against him is equally as abusive as anything Riley has done.
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General30 Sep 2008 03:59 pm
Dozier Continues To Go After Ronald Riley
A few weeks ago, we wrote about the bizarre and troubling lawsuit filed by John Dozier against Ronald J. Riley. Riley, of course, is a well-known pro-patent system supporter who has generally made a nuisance of himself in the comments. Whenever he stops by here, it's usually to personally insult me (and, in some cases, my family) and to spew what usually amounts to lies or totally unsubstantiated comments about the patent system. In other words, this is not someone I'm likely to defend. Yet, Dozier's lawsuit is very troublesome. It basically highlights all sorts of questionable things that Riley has done to establish his "reputation" as a patent expert -- but then the actual lawsuit is on trademark issues. The background on Riley, while amusing and interesting to us, has absolutely nothing to do with the lawsuit at hand. Dozier seems to merely be dragging Riley's name through the mud. Why? Well, it appears that Riley insulted Dozier (similar to the way that Riley insults us) and even went so far as to put up some websites making fun of Dozier. Dozier, of course, isn't known for taking criticism well, so apparently, he decided to go after Riley on very questionable trademark claims, while also dragging his name through the mud (which very well might be deserved -- but if it's got nothing to do with the lawsuit...)
Dozier's still at it, with a blog post describing the latest details of what's been happening, where he repeatedly references our original post (which slams Dozier's lawsuit as being highly questionable). Dozier falsely suggests that Techdirt has somehow changed its opinion of his lawsuit. He says that a comment defending Riley on Techdirt was shown by commenters to likely have been Riley himself, but that's not true. I know the IP addresses that Riley uses. And, I know who the person is who "defended" Riley and it is not Riley. It is another regular commenter who knows Riley and supports Riley (and trashes us all the time), but it's not Riley himself. Dozier also suggests that Riley posted an article in a different forum pretending to be someone else. The owner of that forum had contacted me privately to relate how Dozier demanded the article be taken down while noting that (contrary to Dozier's claims) it was posted by the forum owner, and not Riley. Dozier eventually apologized to the forum owner, but that hasn't stopped him from repeating the claim that Riley posted the article, when he knows that's untrue.
What's much more troubling is Dozier's claims that he's been able to convince various webhosts to take down Riley's websites. As much as we may find Riley to be an insulting pest, we would never suggest he doesn't have the right to speak his mind. Dozier claims that any new webhost that hosts Riley's websites will be accused of "aiding and abetting", "conspiracy", and "contributory trademark infringement" claims. Dozier must realize that such claims are a clear abuse of trademark law. The webhosts are quite clearly protected under section 230 of the CDA and are not responsible for the content hosted on those sites. Dozier, as a self-professed "internet law expert" should know this, suggesting that his claims to various webhosts are misleading. Once again, we're probably the last people on earth to ever want to defend Ronald Riley -- but Dozier's campaign against him is equally as abusive as anything Riley has done.
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Dozier's still at it, with a blog post describing the latest details of what's been happening, where he repeatedly references our original post (which slams Dozier's lawsuit as being highly questionable). Dozier falsely suggests that Techdirt has somehow changed its opinion of his lawsuit. He says that a comment defending Riley on Techdirt was shown by commenters to likely have been Riley himself, but that's not true. I know the IP addresses that Riley uses. And, I know who the person is who "defended" Riley and it is not Riley. It is another regular commenter who knows Riley and supports Riley (and trashes us all the time), but it's not Riley himself. Dozier also suggests that Riley posted an article in a different forum pretending to be someone else. The owner of that forum had contacted me privately to relate how Dozier demanded the article be taken down while noting that (contrary to Dozier's claims) it was posted by the forum owner, and not Riley. Dozier eventually apologized to the forum owner, but that hasn't stopped him from repeating the claim that Riley posted the article, when he knows that's untrue.
What's much more troubling is Dozier's claims that he's been able to convince various webhosts to take down Riley's websites. As much as we may find Riley to be an insulting pest, we would never suggest he doesn't have the right to speak his mind. Dozier claims that any new webhost that hosts Riley's websites will be accused of "aiding and abetting", "conspiracy", and "contributory trademark infringement" claims. Dozier must realize that such claims are a clear abuse of trademark law. The webhosts are quite clearly protected under section 230 of the CDA and are not responsible for the content hosted on those sites. Dozier, as a self-professed "internet law expert" should know this, suggesting that his claims to various webhosts are misleading. Once again, we're probably the last people on earth to ever want to defend Ronald Riley -- but Dozier's campaign against him is equally as abusive as anything Riley has done.
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General30 Sep 2008 02:43 pm
Video Game Execs Freak Out Over Used Game Sales
You would think that after years and years of evidence that a second-hand, "used" market for products increases the value of the original products that executives who create the original products would know better than to complain about resales or demand a cut of the profits -- but apparently you'd be wrong. Reader Lucretious writes in to let us know that the audio director of Bungie Studios, a Microsoft subsidiary and the makers of Halo among other things, is out complaining about how the second-hand market for video games has a huge detrimental effect on the industry, claiming that the game makers deserve a cut of all of those sales.
Except that's not just wrong, from a common sense standpoint, it's wrong from an economic stand point and a legal standpoint. It's almost impossible to come up with a rationale where it actually does make sense. First, on the legal front, the first sale doctrine is well established. When it comes to copyright products, once you've sold something, you really have sold it, and the buyer has every right to resell it -- just as they do with things like a chair or a house -- without owing the original creator another dime. Second, from an economic standpoint, plenty of studies have shown the importance of an active second-hand market. First, for buyers of the initial product, the fact that they can resell it is part of the value they put in the price. Wipe out (or heavily tax) the second-hand market, and you decrease the amount people are willing to pay for the initial product. Thus, you actually shrink the market for your product. There's also a lot more research in terms of signalling and market adoption that show that a second-hand market is important. Finally, from a common sense standpoint: you sold the game, you no longer have control over what people do with it. That's how transactions work. Would the folks at Bungie like it if we suddenly started telling them how they could spend the money we gave them for games? No? Then they shouldn't complain about what people do with their games.
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Except that's not just wrong, from a common sense standpoint, it's wrong from an economic stand point and a legal standpoint. It's almost impossible to come up with a rationale where it actually does make sense. First, on the legal front, the first sale doctrine is well established. When it comes to copyright products, once you've sold something, you really have sold it, and the buyer has every right to resell it -- just as they do with things like a chair or a house -- without owing the original creator another dime. Second, from an economic standpoint, plenty of studies have shown the importance of an active second-hand market. First, for buyers of the initial product, the fact that they can resell it is part of the value they put in the price. Wipe out (or heavily tax) the second-hand market, and you decrease the amount people are willing to pay for the initial product. Thus, you actually shrink the market for your product. There's also a lot more research in terms of signalling and market adoption that show that a second-hand market is important. Finally, from a common sense standpoint: you sold the game, you no longer have control over what people do with it. That's how transactions work. Would the folks at Bungie like it if we suddenly started telling them how they could spend the money we gave them for games? No? Then they shouldn't complain about what people do with their games.
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General30 Sep 2008 01:22 pm
Senate Wants To Send US Copyright Cops To Foreign Countries
With the ProIP bill moving forward and trade representatives hard at work on an ACTA treaty to force customs agents to search for copyright violations at the border, Against Monopoly points out that Senators Max Baucus and Orrin Hatch have introduced a new bill having to do with intellectual property overseas. The bill would have the US Trade Representative draw up piracy "Priority Watch List," allowing the White House take actions against countries that don't get in line, including placing officials at foreign embassies with the sole purpose of enforcing US IP rights. Yup, that's correct. The US may soon be sending copyright cops to other countries. This actually seems like a repeat of a bill introduced last year, but it still should worry other countries -- especially when the US has a history of creating such priority watch lists of IP offenders in the past -- and that list is usually laughable, in that it accuses countries that have much stricter copyright laws than the US itself.
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