The Intellectual Property Bubble – The Next Danger To The World Economy?

Do companies no longer compete on price and features? Is it all about competing with competitors in the courtroom rather than the marketplace? Is this an economic model economists understand? Do patent trolls contribute anything to the well being of anyone but themselves? Does Paul Allen suffer if someone copies one of ‘his’ ideas?

I am not an economist. From my naive perspective it works like this. I make more of something than I need but there are things I need that I do not have so I am quite happy to swap some butter for some honey. Sooner or later the swapping got a bit cumbersome as there were more and more articles that needed to be traded to get what you wanted. Hence money was invented. A brilliant labor saving invention (I believe the patent may have run out but don’t quote me).

Now people want money not for producing things but by thinking about a way to produce things. In other words, through the sweat of my brow, I make stuff that other people are prepared to pay me for and then part of my income has to go to people who provide me with nothing apart from ‘we thought of that also’. That last sentence didn’t come out right. I’m not personally paying patent trolls, we all are and what do we get in exchange? Nothing. They don’t actually make anything that we want!

Grrrr!

Every Time You Buy Something

Manufacturers include legal fees as part of their costs, so whenever you go to buy something, say the USB stick at your corner store, the cost of legal fees is included. I personally believe that if the USPTO was shut down, and all patents invalidated, that this would jump start the United States economy, and help get a lot of people back to work. In addition to the ‘Housing Bubble’, and the ‘Sub Prime Mortgage Bubble’, and the ‘Internet Bubble’ we are currently facing an ‘Intellectual Property Bubble’, and when it blows up, the United States is going to be hurt – badly.

The Intellectual Property Bubble

Sorry folks, but it’s definition time. A ‘Bubble’ happens when trade in an item exceeds it’s intrinsic value. A good basic indication that a bubble is occurring is when the words ‘market prices will continue to rise’ are heard. There are certain cases when this may not be an indication of a bubble. But generally when a majority think that prices will not come down, and there are no structural reasons for the price rise, a bubble is occurring.

Bubbles are destructive, i.e. they destroy wealth. If, at the height of the United States housing bubble you paid $500,000.00 for a house, and the house is now worth $300,000.00, the bubble would have destroyed $200,000.00 of your personal wealth. Destruction of wealth  on this sort of a scale is damaging not only to the person involved, it is also devastating to the economy as a whole, as the money you have lost would have most likely been used for other goods and/or services.

While I’ve said that Bubbles destroy wealth, this is not accurate. What Bubbles do is transfer wealth, but unlike in a normal transaction, the transfer is effected without the buyer gaining any value in return. In effect a Bubble is a legalized form of theft.

Let’s consider another example, the Dot Com Boom. During the Dot Com Boom, there was a huge run up in share prices for technology companies. In many cases the companies in question had no product or business plan. So why did anyone buy shares in them?

Simple – there was a huge push by investment banks, who earned fees for taking companies public. It didn’t matter to the investment bank if the investment was good or not, just as long as they earned their fees.

And of course there is an immense amount of money worldwide which is looking for a place to be invested. This money flowed into these companies, pushing up share prices, which attracted other investors, who bought from the initial investors. When the prices crashed as reality sank in, the later investors suffered catastrophic losses.

This also poisoned the market for new Initial Public Offerings, so the money flowed elsewhere. The 20th century suffered a series of bubbles, which culminated in real estate bubble.

So Where Is The Money Now?

That’s a damned good question, and one that I can’t answer for sure, however I can make some guesses. Let’s look at Intellectual Ventures. Intellectual Ventures is a patent holding company. From their website:

Intellectual Ventures is the global leader in the business of invention. We collaborate with leading inventors, partner with pioneering companies, and invest both expertise and capital in the development and monetization of inventions and patent portfolios. Our mission is to energize and streamline an invention economy that will drive innovation around the world.

Intellectual Ventures is one of many companies that is investing in Innovation according their their press releases. Another is Acacia Technologies. These companies are buying up patents, and attempting to license them.

If you check the business news pages, there have been a series of articles about patents, and their value to the economy. Articles that seem more like cheer leading, than rational thought.

But patents aren’t the only issue. There have been enormous pushes to strengthen copyright laws worldwide. There have also been attempts to push Trademark law into places where it has never been used before.

I believe that what we are seeing is money looking for a place to go, and finding it. And I think that when the immediate profits are made, the money will go somewhere else, and the move will once again pull value out of the system for everyone else.

Now I could be totally wrong. In effect this article is me thinking out loud, and looking for feedback. It’s based on things that I’ve been seeing over the last four or five years, which disturb me.

So if you have any comments, please leave them.

Regards

Wayne Borean

Tuesday January 18, 2011

Microsoft Death Watch – Libre Office Drives Another Nail Into The Coffin

In the earlier articles in this series, Microsoft Death Watch and Microsoft Death Watch – Confirmation From Dave, one of the main points that I mentioned is that most of Microsoft’s profits come from what they call their ‘Microsoft Business Division.’ Microsoft Business Division includes several products, the most important of which is Microsoft Office.

I usually use Canadian dollars, but for this article I’m going to be using American dollars. Microsoft offers three versions of Office, and they’ve very nicely produced a graph to compare them.

Currently the cheapest version of Office, the Home and Student version retails between $104.99 and $149.99. The middle version, Home and Business, retails between $213.99 and $279.99. The premium ‘Professional’ version retails for between $408.99 and $499.99.

In my opinion Office is Microsoft’s best product, far better than Windows. Oh, it has it’s kinks. Formatting a large Word document can be an exercise in frustration. But Office overall is a damned good product.

Microsoft’s big problem is basic economics. Their competition may not be able to match Office in all of the details, but each has it’s own specialties, and none of them are anywhere near as expensive. Let’s look at some of the major competitors.

Google Docs, while it has some limitations is free, and it’s collaboration features are far better than what Microsoft offers. One major problem is that you have to be online to use it, but it also is Operating System independent. As long as you have a modern web browser, you could use Google Docs on any computer, or for that matter, on your smart phone.

Word Perfect Office has formatting capabilities in it’s word processor that Microsoft has never been able to match. Many law offices use it, because it has formatting that is designed specifically for the legal profession. It is also less expensive than Microsoft Office. Word Perfect Office is Windows only, so in effect Corel has tied their future to that of their main competitor. Is this wise?

OpenOfficeOrg is free! Not only is Microsoft incapable of matching the price, OOO has a plug in system that allows programmers to customize it, something that Microsoft Office lacks. Oh, and versions of it are available for most operating systems. You could be using a Windows PC at work, and a Mac at home, but have the same office suite installed on both. Professional writers often use OOO. In many ways it’s the most reliable office suite on the market.

KOffice is another freebie. While it does offer Windows and Mac versions, they often lag behind the Linux version, which is the important one, and it offers a wide list of features that Office doesn’t have.

IWork is Apple’s Office Suite. As with OS X, the Apple operating system, there’s only one version of IWork. Apple has apparently decided that rather than attempt to offer several versions of it’s two main software packages with artificial distinctions, it would offer one, and give it all of the features of competitor’s ‘Professional’ versions. As a result IWork matches Microsoft Office on features. Oh, and it’s far less expensive.

Basic economic theory indicates that the price of a product should:

  1. Be competitive.
  2. Be based on the materials used.

Microsoft’s price isn’t competitive. While Microsoft tries to claim Office is far superior to all of the competition, it isn’t. It has some abilities that it’s competitors don’t have, but they have abilities it doesn’t have either. Admittedly Microsoft has a bigger advertising budget, which does give it some advantages, but competitive pressures are going to force Microsoft to reduce the price of Office, sooner rather than later.

Also Microsoft’s price isn’t based on the materials used. The other night I bought a copy of ‘The Rocky Horror Picture Show‘ on DVD for $20.00. If you were to buy a copy yourself, and compare it to the materials in a boxed set of Microsoft Office, there would be very little difference, definitely not enough difference in packaging to make up an $80.00 dollar difference (to the most basic version of Office).

So economic pressures should force Microsoft to reduce the price of Office. One option, and one that they should seriously consider, is killing the ‘Student’ version, making the ‘Home’ version the new ‘Student’ version, and making the ‘Professional’ version into a ‘Home-Professional Ultimate’ version. If they priced the new ‘Student’ version for the same price as the old ‘Student’ version, and the new ‘Home-Professional Ultimate’ at the same price as the old ‘Home’ version, they would probably be able to sell more copies, in the short run.

But in the long run, they have serious problems. According to Steve Jobs in Apple’s last quarterly report, Apple has now gained 20% market share on new computers in North America. While Microsoft does make a version of Office for the Mac, it’s limited compared to Office for Windows, and it faces competition from IWork, which is a fifth of the price.

And the OpenOfficeOrg project has forked. OpenOfficeOrg has always been a corporate project, and while Sun did a decent job with it, it was a sideline. When Oracle purchased Sun, Oracle didn’t seem to know what to do with OpenOffice and several of the other projects that it now controlled. This caused a lot of frustration among the contributors. A group of them decided to fork the project, so that they could control their own destiny, and The Document Foundation was born. The Document Foundation fork will be known as Libre Office, and if the Foundation is able to follow through on their initial plans, it appears that Libre Office could be a game changer. In fact if they can do half of what they want to do, they will end up with a product that will cause a huge upset in the market. Open Office’s target was always Microsoft Office, and the features that Sun needed for their own internal use. Libre Office’s target isn’t Microsoft Office. Libre Office’s target is the Libre Office of a hundred years in the future. This change in focus should allow the Libre Office team to leapfrog the competing Office Suites. It’s going to be interesting to watch where it goes over the next two years.

Any change in sales of Microsoft Office will have a huge effect on Microsoft’s profitability, and the corporation’s ability to develop new products. Remember my prediction that Microsoft would be in Chapter 11 Bankruptcy Protection within five years? A large part of that prediction was based on the growth in market share of IWork, OpenOfficeOrg, and Google Docs, and the economic pressures on end users of the recession.

What does a company with a thousand seats (installations) of Microsoft Office do when money runs low, and it’s not possible to renew the licenses? At this point OpenOfficeOrg looks like a great deal. Sure, it’s not completely compatible with Microsoft Office, but the cost factor can’t be ignored.

Or for that matter what do you do personally, if you’ve been laid off, and your new job doesn’t pay as well? Yes, you could keep using that old copy of Microsoft Office, assuming that the installation CD/DVD still works. Or you could go for something free, and use the money you’ve saved for gorceries.

And that’s Microsoft’s problem. Office has always been overpriced. The company used it’s monopoly position to damage competitors, and for a while, with little or no competition, they could charge what they wanted. Now they have competition, and the competition is charging less, in several cases giving the product away. So the margins that the company has depended upon for years are no longer sustainable, and if they don’t react soon, there will be a full scale stampede to the competition. But if they do react, they still take a hit on their margins. They are in a lose, lose situation. It should be interesting seeing what their response is.

Regards

Wayne Borean

Sunday October 31, 2010

Microsoft Death Watch – The Mainstream Media Notices the Problem

Last year when I predicted that Microsoft had five years until they’d have to apply for Chapter 11 Bankruptcy Protection, there was a lot of laughter. I was told that I was crazy – a point that I won’t argue. Being crazy means that you see things in a different light.

And then we have Information Week running an article titled Microsoft Looking Like An End-Stage Company. In it Information Week calls out many of the same points I’ve been making. They also suggest that Steve Ballmer, the President and CEO needs to go. Soon.

Then we have CNN with an article titled Microsoft is a dying consumer brand. One of the people they quote is Ray Ozzie, who has just left Microsoft, and posted a comment in his blog.

Microsoft looks like a classic case of The Innovator’s Dilemma. When was the last time that Microsoft introduced a successful new project? I can tell you exactly. It was August 24th, 2001. The launch of Windows XP, which merged the 9x and NT versions of Windows, is the last successful new product, and it wasn’t even new. It was a merger of two pre-existing products.

The last ‘NEW’ product that was a success for Microsoft was Microsoft Exchange, the original version being released in 1996. How many companies could exist for over 14 years without releasing a successful new product? None, unless they were living off an illegal monopoly.

Oh, I agree. Microsoft has introduced a lot of other products. The problem is that none of them have been all that successful. The original X-Box wasn’t bad, but it wasn’t a hot seller. The X-Box 360 was a hot seller, but it also suffered severe warranty issues, forcing Microsoft to take a One Billion Dollar write down. Office for Windows is a good seller, but it’s hardly a new product, it was initially released in 1990. The Zune hasn’t sold well. The KIN phone died within weeks. Windows CE has been used on a lot of devices, but it was never as popular as the Palm OS on personal digital assistants. Windows Mobile is sitting at 5% market share. Internet Explorer is loosing share. And so on…

My original prediction was based on Microsoft taking no action to avoid bankruptcy. Obviously Microsoft would take action, but I didn’t have any idea as to what sort of action they would attempt to take. Oh, we know that Microsoft has been selling off and closing divisions, my thanks to Dr. Roy for hosting a listing.

The problem is that selling and closing divisions doesn’t address the main problem, a lack of productive innovation. If you can’t or won’t bring new products to market, you might as well just close the company.

And Microsoft has shown a complete inability to do this. One product that Microsoft has been pushing for a long time is the Tablet PC concept. The company invested a lot time, effort, and money on Tablet PCs, however the product line never sold well. There are a huge number of Tablet PC evaluations available on the net. One of the common complaints about the Tablet PC concept was price, and price was the driver behind Michael Arrington’s Crunchpad project. Michael wanted an inexpensive tablet. The project failed (and there is currently some fascinating litigation going on). But Apple’s project didn’t.

That Apple, a newcomer to the tablet market, could do what Microsoft was unable to, is a huge indictment of Microsoft. Yes, the IPad is in effect an oversized IPhone. But it works, works well, and from it’s release it was priced at a level that people were willing to pay. I’ve seen estimates that more than 15% of IPad buyers, used it to replace a Windows Notebook. Since Apple products tend first to be sold to Apple fans, and only later gain traction among general users, if the IPad continues to sell at the current rate, it will soon start eating deeply into the Windows laptop market. Melinda Gates may have an Apple Ban at her house, but millions of others don’t. George Bush likes his IPad.

So where is Microsoft going? Based on published articles, they’ve decided to take a page from the Tony Soprano system of making money. If you can’t win with a superior product, threaten your customers. Exactly how this would make their customers want to keep dealing with them I’ll leave you to decide. You can probably already guess my opinion.

The big question is, can they save the company? For that matter have they even started to try?

Their latest SEC filing should contain some information, with luck I’ll have time to read it later today.

Regards

Wayne Borean

Sunday October 31, 2010

Response to Janis Nixon re the Hamilton Spectator interview

This is a copy of a Discussion Board post from Facebook, you can view the original here.

*****

I will be echoing this on my site as well.

First we need to handle the stipulations. In a court of law a stipulation is the facts that are not in contention between the parties in the case.

1) I’m a cranky old bastard who says what he likes.

2) I’m arrogant.

I know everyone will agree on the above two. The next one you many not agree with, but it is true. I haven’t done everything, but

3) I have a lot of experience in a wide range of areas.

The problem needs to be defined

1) Recording Industry sales are dropping.

Now I didn’t actually go to the SEC website to look up the numbers, and I really should, but I don’t have time right now. If you are interested you can goto http://www.sec.gov/ where all of the corporate filings for companies that have operating divisions in the United States are freely available.

Janis said:

“The opportunities presented by what was once a thriving industry have been battered by bitter rains of piracy. In the music business alone, I have witnessed retail chains close, friends lose their jobs, and talented musicians take on ‘day jobs’ to pay the rent…. I have seen albums leaked before their release, devastating the artists, and destroying marketing and promotion plans.”

Let’s address those issues one at a time. Janis says that piracy is to blame. Technically piracy is an act committed on the high seas which involves capturing another ship, often involving the death of the crew. What Janis is actually complaining about is copyright infringement, which is a totally different thing. Copyright infringement is the copying of a work by someone who hasn’t a legal right to copy it, according to the law of the nation that the act takes place in. So piracy isn’t an issue, except that the term is sometimes used incorrectly to mean copyright infringement. If you don’t believe me, ask a lawyer.

And since Janis is mostly interested in the music business, I’ll restrict most of my comments to music, however many of them are also applicable to books and film (video).

Retail Chains Closing – Yes, this happened. The Recording Industry caused this by selling in volume to Walmart and the other big box stores at prices that the corner record shop couldn’t get. The big box stores than proceeded to under price the record stores, and guess what? They died. I had friends working in record stores, and they were pretty damned bitter about this.

Friends lose their jobs – Yes, this happened. Sam the Record Man’s was an institution, until it went bankrupt. I used to love browsing the aisles there, they had a selection that was second only to ITunes. Of course when the record stores went, the sales staff at the record companies were let go. After all, you don’t need sales staff to call on stores that no longer exist. But the blame doesn’t lie with the consumer, it lies with the record companies who thought they could make more money from the big box retailers. In part they were right, in that costs to call on the headquarters of a large national chain were lower than costs to call on 50 independents, or even 10 small chains. To bad that they killed the rest of the industry doing it.

Musicians and Day Jobs – Guess what? Musicians have always had day jobs. Musicians all know the jokes:

Do you know how to streamline a musician’s car? Take the Pizza Pizza sign off the roof.

How do you get the guitarist off your porch? Pay for the pizza.

What do you call a guitarist who breaks up with his girlfriend ? Homeless.

Two guys were walking down the street, one was destitute, the other was a guitar player as well.

What do call a successful musician? A guy whose wife/girlfriend has 2 jobs.

What does an accordianist say when he gets to work? “Would you like fries with that, sir?”

What do you call a drummer in a three-piece suit? “The Defendant”

I heard most of those jokes when we used to drive down to Hamilton on Sunday nights. Creative Arts Hamilton used to run open mike nights. Heard some great music, and as you can see from above, a ton of bad jokes.

Tom was a bank loans officer for years. Thanks to the internet he was able to make enough connections to become a full time musician, and thus missed out on the housing bubble in the United States. Out of the twenty years I’ve known Tom, he had a day job for fifteen of them. This is nothing unusual. Most musicians (and writers for that matter) have to have an alternative method of making a living. There is only a limited number of spots open to play live. Of course anyone can now record (I charge $200.00 per day) and release their own album, so as far as most musicians are concerned, things have improved.

Albums leaked before release – Yes, this happens. Just how do those terrible P2P people get their hands on copies? Through record industry insiders. Seriously. Oh, there are some leaks from the stores too, but all too often the leak happens well before the stores receive the compact discs. To switch to video, when the new Doctor Who was in production, the pilot episode titled ‘Rose’ was leaked a month before it aired on TV. The leak was traced back to an industry insider, who used his/her own personal account to upload it. Pretty stupid of him/her. Word is that the person was fired, however since no names were ever mentioned, there’s no proof. Rumor on the street at the time was that the leak was deliberate, and was part of the marketing and promotion plan.

One thing that Janis doesn’t address is that the recording industry is currently producing shit. There are a few older artists who are still doing great stuff (I love Neil Young). But Justin Bieber? Pardon me while I puke. Which isn’t to say that the kid doesn’t have talent, it’s just that he’s wasting it singing drivel.

OK, so copyright infringement is causing problems for the recording industry. Assuming that we think that the recording industry is worth saving (were the buggy whip manufacturers worth saving?) we have to look at exactly why they are having problems, and the answer is simple. The cost of copying has dropped to nothing. How can they sell copies, when copies cost nothing to make?

This is a serious problem for the industry. Even worse from their point of view is that it is impossible to go back to the good old days of phonographs. Futurist and author Larry Niven was predicting that this would happen in the 1960s. To bad nobody listened too him. Well, you can’t say nobody, because I did. But even those of us who did listen were taken by surprise at how fast things changed.

The entire problem can be defined as the Intel 4004 microprocessor. This was the first inexpensive microprocessor, and was cheap enough that it could be used in pocket calculators. By today’s standards it is a crippled antique, but it is the ancestor either directly or indirectly of every microprocessor in use today.

Microprocessors make copying easy, cheap, and fast. Did you notice how I haven’t talked about computers at all? This is because even if you were to totally destroy every personal computer in Canada, it wouldn’t do you any good. Within days there would be new ones, and they be running on the microprocessors that control your microwave oven, your DVD player, your CD player, your cell phone, your MP3 player, your television, your automobile (which may have up to 40 different processors), your motorcycle, your watch, your game console (there’s one super computer made of PS3 game consoles), your dishwasher, your clothes washer, your clothes dryer, your sewing machine, your guitar amplifier, your digital camera, your digital video recorder, your digital picture frame, your clock radio, your, well, you get the picture. The average house has over a hundred microprocessors, each of which could be used to build a General Purpose Computer. And I know of people who have done this. Anyone with a college education in electronics, or for that matter with a book from the library and a bit of stubbornness can take apart a Microwave oven and make a computer out of the guts.

Ah, but only if we could get rid of the internet, we could stop them from passing around the copies you say. Or we could have computers watch every file that is transmitted! Fine idea. Just fine. But who are you going to trust to do the programming for you? Microsoft? They can’t even keep their own operating system safe from hackers. And most Free Software types have an ethical aversion to this sort of work. Problem is, they are the best programmers…

But even if you could cut off the internet, there are work arounds. Back in the late 1970s a series of networks were developed that used the phone lines. Most of these networks were eventually merged into the internet, but the technology still exists, and if the internet was cut off, they’d be back up and running in no time. Sure, speed was an issue. Back then I was giving talks on software piracy, and why it was impossible to stop it. While doing this I meet some interesting people. Ever hear of Sneakernet? Sneakernet is any network that involves physically moving copies. There were groups running hard drives from city to city, often riding free in the cab of a commercial inter-city truck. There were groups running hard drives via Canada Post and UPS from city to city. Cut off the internet, and all this comes back.

Monitor the internet, and you create another nightmare. Four Microsoft employees sat down to brainstorm about ways around monitoring, and came up with the DarkNet concept. To borrow from Wikipedia:

The idea of the darknet is based upon three assumptions:

  1. Any widely distributed object will be available to a fraction of users in a form that permits copying.
  2. Users will copy objects if it is possible and interesting to do so.
  3. Users are connected by high-bandwidth channels.

The darknet is the distribution network that emerges from the injection of objects according to assumption 1 and the distribution of those objects according to assumptions 2 and 3.

The Microsoft researchers argued that the presence of the darknet was the primary hindrance to the development of workable DRM technologies. The term has since been widely adopted and seen usage in major media sources, including Rolling Stone and Wired, and is also the title of a book by J.D. Lasica.

I’ve run Darknet software. The best widely use Darknet is Freenet – the software is available here.

It works, and works well. But you don’t even need to run a Darknet. Did you know that the CIA tried to get France to dump the Hadopi law? They did. The CIA was concerned that Hadopi would drive the adoption of stong encryption, making it harder for the CIA to spy on everyone. The French pressed forward with Hadopi anyway, and already there are newer and better encryption systems being developed in France. Hadopi made the need abundantly clear. Correction – I was going by memory, when I looked it up, I found out that it was the National Security Agency.

But I haven’t addressed DRM/TPM/whatever. Well, actually, I have. Many times. It doesn’t work. It never has worked, unless you consider pissing off a legitimate customer working. No DRM system has ever been acceptable to the consumer. Ever. This is why Apple doesn’t use DRM on music. And Apple sells a ton of music. I should possibly rephrase this. Consumers will migrate to the product with the least DRM. This is why the Windows Media DRM scheme was a failure, and Apple’s Fairplay system took all of the customers. Windows Media DRM was too restrictive. But Apple’s music sales didn’t really take off until they started selling music without DRM. Then their sales went through the roof.

And DRM is breakable. Often trivially. Any programmer will tell you this. I’m a programmer, I started working with mainframes in high school in 1973. Believe me, DRM not only can, but will be broken. The more popular the content is, the faster it will be broken. Make breaking DRM illegal, and all you do is teach people to disrespect the law, because the law is an ass.

The United States has a law which makes breaking DRM illegal since 1998, and most of the media which has had DRM removed comes form the United States. The problem is that you are making something illegal which can’t be seen, and which there is no evidence of. If I walk into a bank with a gun, and walk out with money, you’ve got evidence. You have witnesses, you have the money, you have the gun, you may have surveillance video. If someone uses Videolan to play a DVD on their home computer, or Handbrake to rip a DVD, there are no witnesses, no evidence, and no surveillance video. You can’t stop it. Hell, even if you took the Videolan and Handbrake sites down, you couldn’t stop it. There are copies of the source code for both of them all over the world.

Because breaking DRM is that trivial. All you need is a general purpose computer.

And you can’t get rid of computers. If you do so, you’ll destroy the economy of the country. Oh, you could try and do a Soviet, license every computer. Remember the Billions of dollars wasted on the Long Gun Registry? There are a hell of a lot more computers than there are Long Guns. A Computer Registry would be a nightmare above and beyond anything you could ever imagine to implement. Many people keep guns for decades (when my father died in 2006, he still had his first gun, a 22 caliber single shot Sears catalog special that he’d bought in 1934). Windows computers are often replaced before they are three years old, and there are a lot of Windows computers out there (and I pity the poor bastards that own them).

Another thing you’d have to do is get rid off all the Digital Audio Workstations. That means that you’d put independent recording engineers like me out of business.

But you are still saying but… There’s got to be a way.

Sorry. There isn’t. If you had Doc Brown’s Delorean, you could go back in time, and kill Bill Gates, Steve Jobs, Steve Wozniak, Andy Grove, etc., etc., etc. The only problem is that you’d need fifty Deloreans to haul back the amount of ammunition that you would need to kill everyone who was involved historically. And even then it wouldn’t work, because someone else would have come up with the idea. So you’d have to do it again, and again, and again…

Everyone who is screaming that copyright is broken, is right. It is. Everyone who is screaming for the government to do something about the problem, has a problem. The government can’t do anything about copyright. The only things that might work, would totally destroy the economy. Are you sure you want to destroy the economy, and therefore the country? If you do, you still won’t sell anything, because everyone will be broke!

Copyright law was designed to protect Printers from other Printers. It still has a place, but it’s place now is to protect artists from Printers – or recording labels. The real problem that the Record Labels now face is that the artists don’t need them anymore. This is why the Record Labels, who claim they work for the artists, are fighting in the United States to keep artists from reclaiming their copyrights. Because the artists don’t need them. Now the artists can do it all themselves, and are doing it all themselves. As Amanda Palmer put it, ‘I earned $19,000.00 in two weeks on the internet. During the same time I earned nothing from CD sales.’ That’s why Amanda doesn’t have a label any more. That’s why four writers are releasing an Ebook for $2.99 through Amazon. The can make as much money per copy at $2.99 as they would have if they’d have gone print, and the bookstores were selling it for $40.00!

And of course the Labels don’t understand what’s going on. They don’t understand the technology. The problem is, that like the buggy whip manufacturers they just aren’t needed any more.

What is happening, is similar to what happened when that wonderful mobile bedroom, the automobile, became widespread. Freed from Miss Grundie’s watchful eye by the automobile, sexual mores changed. Dramatically. Odds are that almost everyone here has had sex in a car at one point or another. Some of you were no doubt conceived in the back seat of an old jalopy. Some of your children were probably conceived in a car. The automobile made finding privacy to have sex easy, just like the computer has made copying things easy.

Regards

Wayne Borean

Sunday October 17, 2010

Note: This version has been linkified, and had links added. The only other change was the correction about the French Hadopi law being opposed by the NSA, not the CIA.

Intellectual Property Primer – Part One – Trademarks

This is the first of a series of posts on what ‘Intellectual Property’ or ‘IP’ is, and what purpose the concept serves. The series was inspired by the realization that the vast majority of the people currently discussing Intellectual Property Issues on the internet have very little knowledge of the subjects they are discussing, or have specialized knowledge of a particular sub-section, and are trying to generalize their specialized knowledge in ways that are inappropriate.

By attempting to educate everyone, hopefully we will be able to raise the level of discourse, and address some of the common misconceptions. In many ways I’m one of the better able to undertake this task, While I’m not technically an expert, over my years in industry I’ve worked with all three of the concepts that make up ‘Intellectual Property’. The term Intellectual Property in itself is a misnomer. There isn’t anything ‘Intellectual’ about a Trademark, even though Trademarks are the most important type of IP, which is why I prefer the term ‘Intangible Property’.

There are three different types of Intangible Property – Trademarks, Patents, and Copyrights. These are vastly different concepts used in different ways. A large part of the confusion on the internet is caused by a misunderstanding of the three terms, even though the terms themselves are very simple. The laws covering the concepts are far more complex. If you have legal issues which involve Trademarks, Patents, or Copyrights, I strongly suggest that you hire a legal professional. This may sound strange coming from someone who has been very critical of legal professionals many times in the past, however my criticisms have never been of the profession itself. All of my criticisms have been of specific statements and actions by the professionals involved, which I disagreed with.

This is a simplified explanation, meant for the layman. For an in depth explanation, you need to see an expert.

Trademarks

In many ways Trademarks are the oddity of the Intangible Property group. While both Patents and Copyrights cover creative acts by artisans, artists, or authors, a Trademark is actually a form of consumer protection. Trademarks are an ancient concept, which can be traced back to the Roman Empire, where weapons manufacturers marked their production. Each manufacturer used a unique mark, which allowed the Roman Legionnaire to know who’s weapon he was using.

Because each of the different manufacturers used different materials and methods to manufacture the weapons that the legionnaire was using, a sword from one manufacturer might be more suitable for use in one situation than a sword from another manufacturer (for example the cold in Northern Britain could mean that one make of sword would be more susceptible to cracking in wintertime use). Obviously being able to pick the correct weapon for the situation was important to the man on the spot. It was also important to the Empire as a whole. Being able to identify and remove from service weapons that had proven not suitable for use contributed to the stability of the Empire.

Criminals immediately recognized the importance of Trademarks. The use of the mark of a highly reputable weapon manufacturer meant that a cheaply made sword could be sold for a higher price. Of course if the real manufacturer found out, the criminal could end up dead. Since there were (as far as we know) no trademark laws at the time, the only answer to trademark abuse was to take action yourself. Or hire the historical equivalent of Tony Soprano to take action for you.

And of course when the concept of a trademark was invented, the vast majority of the population was illiterate. The word ‘Apple’ spelled out would have meant nothing to most people, but the symbol of an apple with a bite missing would have been easily understood. This is why many trademarks today are symbols, though words and phrases are used as well.

Today, unlike in Roman times most countries have laws regulating trademarks. The laws vary from country to country, but one point that is common is that you aren’t allowed to trademark someone else’s concept. This is supposed to protect both the consumer, and the trademark owner.

In other words, if you set up a business, I’m not allowed to trademark your business name, even if you haven’t filed for a trademark. Trademark Trolls, who trademark a business name, and then threaten to sue the business owner, are a rising problem in part because of the costs of fighting an improper trademark suit, and also because there is no effective punishment for filing an improper trademark. And calling in Tony Soprano isn’t legal, even if it might be effective.

Trademarks are extremely valuable to consumers. If you hate Apple products, it’s of value to you to see their trademarked logo, so you can avoid buying. If you love Apple, their trademarked logo is also of value to you, as you know the product is by a manufacturer you like. Both ways, you the consumer, win. Even if you don’t care about the company right now, the easy identification allows you to buy the product, evaluate it, decide if you like it, and then avoid or search it out in future.

Trademarks are often confused with Branding. Branding is an attempt to give a product or company an image. Everyone has seen the Mac-PC commercials. Mac is this cool dude, while PC is a stodgy goof. The idea being, that if you buy a Mac you are cool. Oh, the commercials also cover the other advantages of buying a Mac, such as their superior security model, but the main aim is to make you think that buying a Mac will make you cool. It won’t make you cool of course. But they try to make you think it will.

A memorable trademark is often simple. Everyone in North America knows what the Golden Arches stand for, whether they like eating at McDonald’s or not. The Apple with the bite out of it. The Three Pointed Star which represents Mercedes Benz (Daimler Benz outside of North America).

Trademarks, a consumer protection measure, shouldn’t be considered similar to Copyrights. Copyright is a limited term monopoly given to the author or artist who produces a work. Trademarks, a consumer protection measure, shouldn’t be considered similar to Patents. Patent is a limited term monopoly given to an inventor for an invention.

Trademarks on the other hand, are forever. As long as the mark is in use, it remains the property of the holder (it can also remain their property if it’s not in use for periods of time, check the law in your jurisdiction). The Disney Company holds a trademark on Mickey Mouse. It will still be valid, even if the copyright on a work that features Mickey Mouse expires. Never mind the patent on the camera that was used to shoot the film.

Remember – Trademarks are the oddball of Intangible Property. Unlike Copyrights and Patents, a trademark doesn’t represent a creation, even though creativity was involved in choosing the mark, and designing the logo.

Regards

Wayne Borean

Sunday October 17, 2010

I Promise To Vote In The Ontario 2010 Municipal Election

Yesterday I started a Facebook Group called I Promise to vote in the Ontario 2010 Municipal Election. Since I’ve reached voting age, I’ve missed only one election (I had the flu). But all too often when I go to vote municipally, I see empty voting booths, and poll workers who are bored stiff, because the public they are trying to serve just isn’t showing up. In the last Municipal election, my father (who was suffering from advanced prostate cancer at the time) was proud to show up to vote with his eldest grandson helping him to walk. His eldest grandson had just turned eighteen the summer before, and was going to vote for the first time.

It’s time to change this. We, the citizens of this province, need to not only go out to vote ourselves, we need to encourage our friends, relatives, and yes even our enemies to get out and VOTE!

How can we do this? Lots of ways. The Facebook Group is a start. Blog posts is another. Talk to people at work, at the bowling alley (or curling rink, or whatever you do in your free time), or in Timmies when you go in for your morning fix. The important thing is to do it, and keep doing it until election day.

For years the level of participation in Ontario Municipal elections has been dropping. We have two weeks until voting day. Can we change this?

Sure we can. We just have to do it, and we won’t do it by sitting back quietly moaning that no one is voting. If we all pull together, we can reverse the trend, and have more voters participate than in the last election.

Remember, voting day is Monday October 25, 2010!

Regards

Wayne Borean

Monday October 11, 2010