June 30, 2006
SCO Severely Sanctioned in IBM Infringement Case
While we're on the subject of lawsuits, baseless or otherwise, SCO had part of its claims against IBM knocked out by a federal magistrate. What's worse for SCO is that the action came through sanctions for failing to give IBM, with some specificity, the evidence it had indicating IBM had violated its copyright in Unix with code in IBM's AIX and Linux-based operating systems. SCO has been notorious in not providing detailed evidence over the length of the suit. The judge had been very explicit about the need for disclosure, and called some of the failure willful on the part of SCO.
A good chunk of the opinion goes on about SCO's public relations blitz demonstrating code violations at conferences, through interviews and other publicity events. The next section details IBM's motion to compel and notes the definition of specificity SCO required from IBM in its discovery requests. This is followed by a lengthy history of the discovery procedure in this case including who was supposed to provide what and to what detail. The problem the Court has here is that SCO never pulled their case together by complying with court orders to disclose exactly what code they claimed existed in IBM products which infringed on their intellectual property rights. Moreover, it seems as if SCO wanted to get IBM to produce as much detail as possible so they could point to parts of it for their claims. The Court did not think highly of this tactic.
From the opinion:
Thus according to SCO, IBM should be able to determine what was misappropriated without being given substantial detail. Further, SCO argues that it was IBM’s own roadblocks that hindered SCO in identifying particular misused material so IBM cannot now claim that they were somehow prejudiced.
The court finds SCO’s arguments unpersuasive. SCO’s arguments are akin to SCO telling IBM sorry we are not going to tell you what you did wrong because you already know. SCO received substantial code from IBM pursuant to the court’s orders as mentioned supra. Further, SCO brought this action against IBM and under the Federal Rules, and the court’s orders, SCO was required to disclose in detail what it feels IBM misappropriated.
Given the amount of code that SCO has received in discovery the court finds it inexcusable that SCO is in essence still not placing all the details on the table. Certainly if an individual was stopped and accused of shoplifting after walking out of Neiman Marcus they would expect to be eventually told what they allegedly stole. It would be absurd for an officer to tell the accused that “you know what you stole I’m not telling.” Or, to simply hand the accused individual a catalog of Neiman Marcus’ entire inventory and say “its in there somewhere, you figure it out.”
Microsoft Sued Over WGA Tool
Well, it was bound to happen. Microsoft finally got sued over the Windows Genuine Advantage Tool. Brian Johnson of California filed suit in U.S. District Court in Seattle claiming the tool and the nature in which it was given to consumers violated spyware laws of California and Washington State. Microsoft claims the suit is baseless but that's what a lot of defendants say. Maybe it is, maybe it isn't. The report of the suit in Ars Technica does point out that the term "spyware" is not exactly legally defined or defined very well. The lawyer who represented the Sony rootkit plaintiffs is representing Johnson.
Read the details in Ars Technica.
June 29, 2006
Office 2007 Delayed Again
Vista Beta Downloads to Stop At Midnight Tonight
Microsoft has indicated that it will stop distributing the the Vista Beta 2 download to the world as of Friday. Moreover, those with copies and product keys should activate them. Those that do might get other stuff for free later on. The alternative is to find a friend with one. MS is giving two product keys with each download and they are good for 10 installs each.
Details are here.
New Spam Uses FDIC Insurance Denial to Defraud
The Internet Crime Complaint Center has issued a new spam alert about email concerning denial of FDIC insurance to a target's bank account.
From the IC3 Press Release:
FRAUDULENT E-MAIL PURPORTEDLY FROM THE FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC)
The IC3 has received complaints concerning a spam e-mail purportedly from the Federal Deposit Insurance Corporation (FDIC). This scheme was originally unleashed in 2004, but is currently resurfacing. The e-mail claims:
- In cooperation from the Department of Homeland Security and Federal, State, and Local Governments, your account has been denied insurance from the FDIC due to suspected violations of the Patriot Act.
- Recipients are requested to click the link provided, http://www.fdic.gov/idverify/cgi-bin/index.htm, to verify their identity.
- Once your identity is validated, all suspensions of insurance on your account will be lifted.
- Failure to complete the identity verification will result in termination of insurance on your account and all records of your account will be sent to the Federal Bureau of Investigation in Washington D.C., for analysis and verification.
- Failure to provide proper identity may also result in a visit from Local, State, or Federal Government or Homeland Security Officials.
Be cautious of e-mails requesting personal and/or financial information. Information related to federal deposit insurance or consumer issues should be submitted to the FDIC using an online form accessed at http://www2.fdic.gov/starsmail/index.asp.
If you have received this, or a similar hoax, please file a complaint at www.ic3.gov.
June 28, 2006
Net Neutrality Loses in Senate Vote Today
The net neutrality vote finally took place in the Senate Commerce Committee. The amendment that would have mandated net neutrality failed on an 11 to 11 tie vote. A second net neutrality bill failed 12 to 10. The Committee then voted the larger telecommunications overhaul bill to the full Senate on a 15-7 vote. According to the Washington Post, Senate Commerce Committee chair Ted Stevens (R-AK) said he does not have the 60 votes to cut off debate. Senator Ron Wyden (D-OR) has indicated he will push net neutrality on the Senate floor, or otherwise obstruct the bill without neutrality provisions.
June 27, 2006
Not Coming to a Windows Operating System Soon (or at all): WinFS
The highly touted file system that was supposed to be a breakthrough in organizing data on a hard drive has been quietly withdrawn from general Windows use as a future product. Microsoft is folding features into SQL Server and other products. Bill Gates has called the development of WinFS the "holy grail" of OS features.
ipod Sweatshop Rumors 2.0
Rumors are rife on the web about allegations of sweatshop conditions in factories churning out Apple's iPod. The latest rumors are that the contract manufacturer, Foxconn, had admitted violating Chinese law by having workers put in 80 hours of overtime, 44 more than the 36 hours allowed. Apple sent a team to investigate conditions after initial reports appeared. Rumors again say that Apple signed off on the factory conditions.
Bloggers and other tech publications are going nuts over this. The stories seem to emanate from a single report on China CSR. No real word as to whether any of this is true. Apple has not released any statements one way or the other.
Update: Please note the comment from China CSR that there were other numerous Chinese-language stories that indicated the same information.
June 26, 2006
New Technology Papers From The Berkeley Electronic Press
Announcing the Law and Technology Scholarship (Selected by the Berkeley Center for Law & Technology), part of the bepress Legal Repository found at
PUBLISHER: The Berkeley Electronic Press
Peter S. Menell - Professor of Law, UC Berkeley Boalt Hall School of Law and Director, BCLT
Robert P. Merges - Wilson Sonsini Professor of Law, UC Berkeley Boalt Hall School of Law and Director, BCLT
Pamela Samuelson - Professor of Information Management & Law, UC Berkeley SIMS & Boalt Hall School of Law and Director, BCLT
Howard A. Shelanski - Professor of Law, UC Berkeley Boalt Hall School of Law and Director, BCLT
TABLE OF CONTENTS:
Kenneth Himma "The Justification of Intellectual Property: Contemporary Philosophical Disputes".
Larissa Katz "A Powers-Based Approach to the Protection of Ideas".
Shahar Dilbary "Famous Trademarks and the Rational Basis for Protecting 'Irrational Beliefs'".
Chris Sprigman and K Raustiala "The Piracy Paradox: Innovation and Intellectual Property in Fashion Design".
Robert G. Bone "Hunting Goodwill: A History of the Concept of Goodwill in Trademark Law".
Douglas Lichtman, Mark A. Lemley, and Bhaven Sampat "What to Do about Bad Patents".
Thomas F. Cotter "The Procompetitive Interest in Intellectual Property Law".
Tambiama Madiega "Innovation and Market Definition under the EU Regulatory Framework for Electronic Communications".
Detailed Abstracts in the Continuation of this post.
Kenneth Himma, "The Justification of Intellectual Property: Contemporary Philosophical Disputes" (June 12, 2006). Berkeley Center for Law and Technology. Law and Technology Scholarship (Selected by the Berkeley Center for Law & Technology). Working Paper 21.
The issue of whether the state is morally justified in affording content-creators a legal right to exclude others from the content of their creations is a sharply contested issue in information ethics. Once taken for granted as morally legitimate, intellectual property rights have come under fire in the last thirty years as evolving digital information technologies have severed the link between expression of ideas and such traditional material-based media as books and magazines. These advances in digital technology have called attention to unique features of intellectual content that seemingly problematize intellectual property protection; any piece of intellectual content, for example, can be simultaneously appropriated by everyone in the world without thereby diminishing the supply of that content available to others. This essay provides an overview and assessment of the issues, arguments, and counterarguments on intellectual property.
At the outset, it is important to distinguish the general issue of whether intellectual property is justified from the more specific issue of whether a particular body of intellectual property law (e.g., copyright law in the U.S.) is justified. Obviously, a particular body of law protecting intellectual property will not be justified if intellectual property protection is, as a general matter, unjustified, but the converse is not true. One can coherently (and reasonably) believe that content-creators have intellectual property rights that should be protected by law but believe also that many elements of existing copyright and patent law in Western nations are unjustified. The arguments in this essay are concerned primarily with the general issue and not with the more specific issue of whether the law of intellectual property (hereinafter IP) in Western industrialized nations is morally legitimate - though some of the more problematic features of existing law will be discussed briefly at the end of this essay.
Larissa Katz, "A Powers-Based Approach to the Protection of Ideas" (May 24, 2006). Berkeley Center for Law and Technology. Law and Technology Scholarship (Selected by the Berkeley Center for Law & Technology). Working Paper 20.
This paper explains a narrow area of U.S. law in which someone who uses or discloses a novel, original and confidential idea without the permission of its originator is said to have committed a wrong. The case law does not offer a coherent and consistent account of the nature of the originator's interest in her novel, unpublished ideas nor why the unauthorized use or disclosure of such an idea is a wrong. Some courts have cited for the source of the obligation the proprietary right originators have to their ideas, while others imply contracts or fiduciary relationships or frame the case in unjust enrichment. None of these conventional theories satisfactorily explains idea-disclosure law. Thus, although there is judicial consensus in these jurisdictions that the originator has a protected interest, theoretical foundations for this protection are uncertain.
This paper provides an account of idea-submission law that makes sense of the criteria explicit in the positive law while enabling rigorous analysis of idea-submission cases. Further, it contributes to our understanding of how the law treats confidences and the relationship people have to their ideas, a topic that has been considered mainly in other legal contexts such as the law of privacy (rights of publicity), trade secrets, and confidential relationships as well as in more remote contexts like the law of insider trading.
More generally, my account illuminates two features of private law that are deserving of greater scrutiny. First, my account of this area of law draws attention to an under-theorized category of general powers. These are legal powers that we all have in virtue of being human beings and members of a legal order. The power I argue is at work in the context of idea-submission law--the power that an originator of an idea has to control disclosure--is in this category, as are more familiar powers such as the power to acquire property, the power to contract and the power to consent to sex. While an originator's power may appear novel and perhaps even obscure, this and other general powers are in fact fundamentally constitutive of our legal personality.
Secondly, my argument that a defendant must have voluntarily received the idea to be liable to the originator's power is an instance of a more general argument about the grounds for imposing obligations in private law. Where duties are imposed only on some individuals rather than on everyone, there must be some basis for imposing obligation on one individual rather than another. In the context of positional duties (duties that attach to the occupier of a position), the duty-ower must at the very least have voluntarily assumed that position.
Shahar Dilbary, "Famous Trademarks and the Rational Basis for Protecting 'Irrational Beliefs'" (March 21, 2006). Berkeley Center for Law and Technology. Law and Technology Scholarship (Selected by the Berkeley Center for Law & Technology). Working Paper 19.
This Article challenges the common wisdom about the desirability of celebrated trademarks. Contrary to the traditional view, it argues that mega-brands are neither economic evils nor is their function limited to imparting information regarding the physical product they flaunt. The Article also rejects the view that famous marks persuade consumers (often referred to as "Snobs") to "irrationally" pay more for the same physical product they could have purchased for less. Rather, it argues that in purchasing a branded good the consumer is actually purchasing three tied products in one package: a physical product, information about the physical product, and an intangible product such as fame, prestige, peace of mind or a pleasant feeling. Contrary to prior literature, this Article argues that the intangible product benefits both producers and consumers. It explores the demand for the intangible product, its impact on pricing, welfare and consumers' and producers' strategies. It argues that under certain conditions one may witness the anomaly of an increase in both price and output, but that such observation does not mandate the conclusion that consumers are facing an up-sloping demand curve as discussed in the literature of conspicuous goods. Instead, the Article proposes that this phenomenon may occur in the traditional down-sloping demand curves and that it is not limited to goods with conspicuous properties. The Article has normative and descriptive implications with regard to three distinct bodies of law: price discrimination, trademark anti-dilution and trade-name law. A direct result is that mega-brands neither confer a monopoly nor foster price discrimination. On the contrary, they enhance competition in both the physical and intangible spheres. The Article also offers a new rational basis for one of the most nebulous doctrines in trademark law: anti-dilution. Anti-dilution law provides special protection to famous marks which is not available to regular ones, and has been unanimously enthroned as one which protects only producers but is injurious to consumers. Conversely, this Article argues that anti-dilution law inures to the benefit of both consumers and producers. It attempts to clear the constitutional concerns that have been raised with regard to the doctrine and explains the fame requirement. The article concludes that Snobs are rational and that there are sound economic justifications for the law's unique protection of famous marks.
Chris Sprigman and K Raustiala, "The Piracy Paradox: Innovation and Intellectual Property in Fashion Design" (February 1, 2006). Berkeley Center for Law and Technology. Law and Technology Scholarship (Selected by the Berkeley Center for Law & Technology). Working Paper 18.
The orthodox justification for intellectual property is utilitarian. Advocates for strong IP rights argue that absent such rights copyists will free-ride on the efforts of creators and stifle innovation. This orthodox justification is logically straightforward and well reflected in the law. Yet a significant empirical anomaly exists: the global fashion industry, which produces a huge variety of creative goods without strong IP protection. Copying is rampant as the orthodox account would predict. Yet innovation and investment remain vibrant. Few commentators have considered the status of fashion design in IP law. Those who have almost uniformly criticize the current legal regime for failing to protect apparel designs. But the fashion industry itself is surprisingly quiescent about copying. Firms take steps to protect the value of trademarks, but appear to accept appropriation of designs as a fact of life. This diffidence about copying stands in striking contrast to the heated condemnation of piracy and associated legislative and litigation campaigns in other creative industries. Why, when other major content industries have obtained increasingly powerful IP protections for their products, does fashion design remain mostly unprotected--and economically successful? The fashion industry is a puzzle for the orthodox justification for IP rights. This paper explores this puzzle. We argue that the fashion industry counter-intuitively operates within a low-IP equilibrium in which copying does not deter innovation and may actually promote it. We call this the "piracy paradox." This paper offers a model explaining how the fashion industry's piracy paradox works, and how copying functions as an important element of and perhaps even a necessary predicate to the industry's swift cycle of innovation. In so doing, we aim to shed light on the creative dynamics of the apparel industry. But we also hope to spark further exploration of a fundamental question of IP policy: to what degree are IP rights necessary to induce innovation? Are stable low-IP equilibria imaginable in other industries as well? Part I describes the fashion industry and its dynamics and illustrates the prevalence of copying in the industry. Part II advances an explanation for the piracy paradox that rests on two features: induced obsolescence and anchoring. Both phenomena reflect the status-conferring power of fashion, and both suggest that copying, rather than impeding innovation and investment, promotes them. Part II also considers, and rejects, alternative explanations of the endurance of the low-IP status quo. Part III considers extensions of our arguments to other fields. By examining copyright's negative space--those creative endeavors that copyright does not address--we argue can we can better understand the relationship between copyright and innovation.
Robert G. Bone, "Hunting Goodwill: A History of the Concept of Goodwill in Trademark Law" (January 27, 2006). Berkeley Center for Law and Technology. Law and Technology Scholarship (Selected by the Berkeley Center for Law & Technology). Working Paper 17.
A deep tension lies at the heart of trademark law. On the one hand, the law's core mission is to facilitate the transmission of accurate information to the market. Hence the touchstone of liability has always been the likelihood of consumer confusion. On the other hand, it is also customary to refer to trademark law as protecting goodwill in a mark. The problems arise because these two ways of formulating the goal push in different normative directions and create a policy tension that frustrates attempts to formulate a coherent body of doctrine.
This Article examines how the goodwill concept originally entered trademark law and traces its intellectual and social history and its impact on trademark doctrine. Ever since the 1920s, and with greater frequency during the past two decades, courts have relied on the idea that trademark law protects against appropriation of goodwill to justify some rather broad, and ultimately ill-advised, doctrinal expansions. These expansions seem sensible extensions of trademark principles from the point of view of goodwill appropriation because of the elasticity of the goodwill concept, which can extend to include brand, firm, and in its broadest form, inherent goodwill. In the end, understanding this history gives a useful perspective from which to evaluate the role of goodwill in trademark law today and to propose reforms that would eliminate its pernicious effects.
Douglas Lichtman, Mark A. Lemley, and Bhaven Sampat , "What to Do about Bad Patents" (January 27, 2006). Berkeley Center for Law and Technology. Law and Technology Scholarship (Selected by the Berkeley Center for Law & Technology). Working Paper 16.
At the time patent applications are reviewed, the Patent and Trademark Office has no way of identifying the small number of applications that are likely to end up having real economic significance. Thus patent applications are for the most part treated alike, with every application getting the same--and by necessity sparse--review. In this short magazine piece, we urge in response three basic reforms. First, we would weaken the presumption of validity that today attaches to all issued patents. The modern strong presumption simply does not reflect the reality of patent review; presumptions, in short, should be earned. Second, because legitimate inventors need as much certainty as the law can provide, we would give applicants the option of earning a presumption of validity by paying for a thorough examination of their inventions. Put differently, applicants should be allowed to "gold-plate" their patents by paying for the kind of searching review that would merit a strong presumption of validity. Third and finally, because competitors also have useful information about which patents worry them and which do not, we support instituting a post-grant opposition system, a process by which parties other than the applicant would have the opportunity to request and fund a thorough examination of a recently issued patent. As we explain in the piece, these reforms would together allow the Patent Office to focus its resources on patents that might actually matter, and it would also both reduce the incentive to file patents of questionable validity and reduce the harm caused by such patents in any event.
Thomas F. Cotter, "The Procompetitive Interest in Intellectual Property Law" (January 27, 2006). Berkeley Center for Law and Technology. Law and Technology Scholarship (Selected by the Berkeley Center for Law & Technology). Working Paper 15.
When government recognizes intellectual property (IP) rights, it is often viewed as sanctioning the existence of private "monopolies," in contrast to the general antimonopoly policy manifested in the antitrust laws. And yet, on occasion IP law itself condemns conduct on the part of IP owners--or excuses otherwise infringing activity on the part of IP defendants--expressly for the purpose of promoting competition, even though antitrust law (if one were to apply it at all under analogous circumstances) would not find anticompetitive harm absent a more thorough analysis of whether the antitrust defendant possesses power over a well-defined market. Salient examples include the misuse doctrines in patent and copyright law; some applications of merger and fair use in copyright; and trademark law's functionality doctrine. In this paper, I develop a theoretical explanation for this divergence between antitrust and IP. Specifically, I argue that in some limited contexts the expected social costs (including error costs) of ruling for IP defendants may be low in comparison with the expected anticompetitive harm from ruling for IP plaintiffs. As a result, it sometimes may be welfare-enhancing for IP courts to be less concerned than antitrust courts about the expected costs of "false positives," that is, cases wrongly decided against the party defending the allegedly anticompetitive conduct. I further contend, however, that such cases probably are more common in the copyright than in the patent law context, and that even in copyright contexts courts should be cautious about casually inferring anticompetitive harm; but that the analysis provides a rationale for a relatively expansive definition of trademark functionality.
Tambiama Madiega, "Innovation and Market Definition under the EU Regulatory Framework for Electronic Communications" (December 13, 2005). Berkeley Center for Law and Technology. Law and Technology Scholarship (Selected by the Berkeley Center for Law & Technology). Working Paper 14.
This article provides with a thorough analysis of market definition under the EU regulatory framework for electronic communications. It is stressed that, under a forward-looking approach to market definition, demand-side substitution must address the competitive constraints imposed by the emerging services and that, in assessing supply substitution, regulators should take into account the likelihood of potential competitors to enter the market within a reasonable time frame. Accordingly, potential competition must be addressed in defining market (and not subsequently when assessing market power) whenever the financial ability and the profitability for potential competitors to enter the market is established. Assessing the constraints imposed by the emerging Voice over Internet Protocol (VoIP) services that are substitutable for traditional telephony is necessary to conduct a consistent market analysis and accurately apply ex ante regulation, especially given the development of bundling strategies.
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