Tech Law Prof Blog

Congress Considers Legislation on DPI

Congress considers deep packet inspection and what to do about it.  The House committee on Energy and Commerce held a hearingyesterday.  Because the ISPs have as many deep pockets as deep packets, expect little movement on a bill.  More in PC Magazine.

RealDVD Trial Starts Today

The wheels of justice move slowly.  The trial over the legality of RealDVD, the software that lets consumers back up their DVDs starts today.  More in the New York Times.

Homeland Security Cuts Newspapers

The Department of Homeland Security is giving up newspaper subscriptions because the news is available on the Internet for free.  Well, the President did ask his cabinet to cut a hundred million from the budget.  More here.

The Third Annual Conference on the Law and Economics of Innovation will be held on May 7th of this year at the Hilton Arlington in Arlington, Virgnia.  The conference is sponsored by George Mason University and Microsoft, and features a stellar line-up of speakers.

They include

Bill Kovacic, FTC Commissioner (keynote)
Susan Athey, Harvard Economics (keynote)
Peter Klein, Missouri Economics
Tom Hazlett, GMU Law
Eric Goldman, Santa Clara Law
Peter Swire, OSU Law
Howard Beales, GWU Business
Florenica Marotta-Wurgler, NYU Law
Phil Weiser, DOJ/Colorado Law
Randy Picker, Chicago Law
Scott Kieff, GWU Law
Susan DeSanti, FTC Director of Policy Planning
Christopher Wolfe, Hogan & Hartson

Here is a description of the program from the conference web site:

Online Markets vs. Traditional Markets

This third conference in the Law and Economics of Innovation series will focus on Online Markets vs.Traditional Markets. We will address the economics of online markets and their regulation, in particular by assessing whether and how online markets differ from traditional markets. There are, of course, obvious differences between the local grocery store and eBay, and between Google and the local Yellow Pages. We will explore the nature of these differences and their implications, if any, for how online markets are organized and regulated. We will address these questions first by returning to basics—by looking into the economic forces at work in online and traditional product markets. Next, we will consider the levers of regulation most important to online markets and whether the design of these regulations reflects the underlying economic realities. Finally, we take head-on the question of “online exceptionalism,” asking about the policy implications of non-traditional online business models and non-traditional markets.

Approved 4.0 CLE credit hours by the Virginia Mandatory Continuing Legal Education Board.

Joshua D. Wright, and Geoffrey Manne are this year's conference organizers.  More information is here.

YouTube Turns 4

YouTube is four years old today?  It seems as if the site has been here forever, and that Google has owned it forever.  Even though YouTube is, as Mark Cuban puts it, a lawsuit magnet, it is a site that hardly anyone can do without.  Microsoft must be kicking itself for not buying the high traffic site back in the day instead of scrounging for the remains of Yahoo to build search market share.  YouTube has nothing to do with search you say?  Maybe not, but the number of eyeballs that pass through the site that associate it with Google and Google's most famous product is not insignificant.  More on the birthday in the Chicago Sun-Times.

Fourth Circuit Affirms Fair Use in Plagiarism Service Case

It's widely accepted that some high school students can be too smart for their own good.  One case, A.V., a minor v. iParadigms, LLC demonstrates this.  The case involved the use of an archiving service by schools for student papers.  Schools contracted with iParadigms to compare and issue reports on originality on the part of their students.  Students were required to submit their papers using school issued passwords.  iParadigms created a database of these papers and used their ever growing collection to determine whether submitted papers were plagiarized.  Students at two high schools objected to this procedure, claiming copyright in the paper.  The District Court found that the submission, use, and archiving constituted fair use.  

One student submitted papers using a password that had been issued for use at the University of California San Diego.  iParadigms investigated that use and counterclaimed for the costs as damages under federal and state computer fraud acts.  The District Court denied this claim saying that iParidigms did not suffer economic harm by use of the passwords.

The Court of Appeals for the Fourth Circuit took up the case on appeal and affirmed the finding of fair use.  The opinion examined the several factors of fair use in some detail and concluded that the District Court was correct in its finding.  It reversed the the summary judgment on the damages claim, stating that the cost of investigating the unauthorized use of the college level password was  likely covered by the state statute if not the federal act and remanded the issue to the District Court for further consideration.

The full opinion is here.

UN Digital Library Available

The United Nations World Digital Library went online today.  See this article in the Washington Post for details.

Windows 7 To Be Limited On Netbooks

Microsoft sees the netbook craze as a threat to profits on the Windows side of the business.  The company is forced to offer XP, where it makes $15 a copy, as opposed to Vista, which brings in around $55 a copy.  Vista doesn't work on netbooks as it is requires more power than these machines carry.  Enter Windows 7, which runs fine on netbooks.  The world is saved and another revenue stream is preserved, except that Microsoft wants to sell a deliberately crippled version of Windows 7 that can only run 3 simultaneous applications.  The consumer can upgrade to the full version of Windows 7 for an additional fee. 

I wonder if Microsoft has considered the implication of selling a product that can easily be labeled as artificially limited in a market where price point matters to consumers.  These machines sell at $300 or so for a reason, and it's not purely the convenience of running an unrestricted version of XP that keeps prices low.  People can use them as Internet capable machines and for simpler tasks given the power for the cost.  Perhaps that was what Microsoft is thinking in the pricing for the OS.  Who can use more than three applications at a time without taxing the system.  However, the potential is there for these machines to become more powerful over time.  Look at how inexpensive laptops can match most desktops for power these days.  The premium for portability is slight compared to costs from even five years ago.

Microsoft may be seen as gouging the customer under these circumstances.  It's earlier pricing plans with XP and Vista went to features which some classes of users never needed to pay for.  This is different.  The move may play into the hands of those promoting Linux as a mainstream consumer operating system.  Consumers may care about buying a machine that doesn't charge them a premium after purchase to unlock capability.  More in the Wall Street Journal.

Do Network Costs Justify Tiered Pricing for Internet Access?

The Time Warner Cable back down on tiered Internet pricing has brought out a debate on what this all means and where the industry is going with pricing.  One one side is the New York Times, which argues that the "reaching capacity" position is phony given the little investment it takes to add capacity.  New technologies increase consumer speeds and capacities without significant costs to the networks.  Moreover, quotes from industry seem to validate the Times' position.    

On the other side is TelephonyOnline who suggests that consumers need to be educated as to the problem, given an opportunity to see how caps could affect their bills, and pick a pricing plan that works for them.  Their position is that only the high use customers should rightfully pay more.  Unstated, however, is how a pricing plan would charge more for what consumers are already getting anyway.  It sounds as if conditioning consumers will get them to go along.

I think the New York has the better position on this one given that costs for providers do not rise much, if at all, with increased use of their networks.  It always comes down providers trying to get more money out of the "tubes" that carry the data.  What's holding this back is the threat of congressional or FCC action that might inhibit industry action.  What's really needed here is for laws and regulations to foster even more competition among players as a way of keeping prices low and access open.  When Time Warner Cable tested caps, it did so in markets where it faced little opposition.  Customers could have weighed in on the test with their wallets if they had viable alternatives.  The market for Internet access needs to be opened full throttle to correct this situation.