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Supporting Trade Fairness: Foreign Trading Partners Should Not Profit in the American Marketplace Using Stolen IP

Tuesday, August 23rd, 2011

ACT has been a leading proponent of legislation that helps protect manufacturers from companies who use stolen software to compete unfairly. These are known broadly as unfair competition or unfair trade practices laws. These laws empower manufacturers to seek damages against foreign competitors that use unlicensed, or pirated, products in the creation of exports to the United States.

With such on the books in Louisiana and Washington State and similar bills under consideration in several others, we wanted to put together a quick guide to understanding what the Washington State law does to protect U.S. business, and what safeguards are in place to prevent unintended consequences. It’s important to remember that many countries that are our biggest foreign competitors have very poor records of respecting intellectual property. Most small and medium-sized software companies will not even try to enter those markets for fear that piracy will destroy any chance of making a profit. This problem is compounded when foreign competitors steal our software or other intellectual property used in the production of a wide variety of exports to the United States.

While we believe all IP should be respected, it is particularly egregious for U.S. producers to operate at a competitive disadvantage when they pay for software and IP-protected materials while their competitors do not. In many instances the IP or software in question is integral to production, and illegally using it without a license saves the foreign manufacturers money it can then use to undercut its U.S. competitors.   The U.S. needs to ensure that imported goods are made without use of stolen property, not only to protect the software industry, but to protect the equally important manufacturing jobs that are critical to our economic recovery. Where we are able, we should be provide a level playing field to American businesses so that intellectual property thieves are not rewarded with favorable access to our marketplace.

Washington’s new unfair competition law will help make that a reality.

We hope that the one-page guideline below will help clarify how the law works, and how to work within the rules.

Proper Management of Information Technology Assets
Avoiding Liability under Washington State’s New Unfair Competition Law

As most companies recognize, information technology (IT) is a critical business asset that needs to be managed effectively. Poor IT management can make organizations vulnerable to malware or viruses, create unnecessary spending, drain resources, and expose the organization to legal risks associated with the use of stolen IT. These threats, among others, can result in serious harm to companies’ technology infrastructure, business, and reputation.

One such legal risk is the possibility of liability under a new Washington State law (HB 1495, Chapter 98, 2011 Laws). In April of 2011, the Washington Legislature passed a law making it unlawful to sell products in Washington State that were made by a manufacturer, located anywhere in the world, that uses stolen IT in its business operations, where those products are sold in the State in competition with products made without the use of stolen IT. Stolen IT includes hardware or software acquired or used in violation of applicable law and without the IT owner’s authorization.

A case may be brought under this new Washington law by either the Washington Attorney General or a competing manufacturer who uses legal information technology in its business operations and who has been injured by the unfair competition as defined in the statute. Remedies against a manufacturer using stolen IT may include damages and injunctive relief, including an injunction against the sale of the manufacturer’s products in Washington State. Products offered for sale in Washington also may be subject to attachment if the court does not have personal jurisdiction over the manufacturer.

The new law requires that a written notice must first be sent to the manufacturer by the owner of the information technology before a case may be brought. As described in Section 5 of the law, the recipient of this notice has 90 days to cure the use of stolen IT described in the attached notice or to establish that the IT identified in the notice is in fact being used legally. This initial 90-day period may be extended for an additional 90 days in certain circumstances.

Many organizations have extensive experience helping companies implement software asset management (SAM) processes to ensure that their software use complies with applicable laws. In addition, an effective SAM program can help companies manage security risks and profit from the productivity and financial benefits associated with an efficient and well-managed software environment. As a start, we encourage companies to review the SAM resources available at http://samadvantage.bsa.org/home.aspx for more information on how they can avoid the legal and business risks associated with using stolen IT.

Posted in Innovation and IP, International Trade, Patents | No Comments »

A Good Day for Innovation in Europe

Wednesday, April 13th, 2011

As part of the Single Market Act, the European Commission presented today a package of proposals for unitary patent protection within the EU. Commission figures show that the proposed system will reduce the cost of patents in Europe by up to 80%. These are very significant savings, particularly for small and medium size enterprises. A cheaper and easier EU-wide patent protection system will allow innovative entrepreneurs to fully develop their businesses and spend their money on what they do best, innovating. We hope Spain and Italy join the enhanced cooperation soon so the new patent system covers the entire Union. We have been waiting a long time and simply cannot afford to do so any longer.

It is high time to start eliminating unnecessary internal market barriers. The proposed set of rules presented today sets the right direction to produce an environment conducive to innovation. In a situation of economic recovery, entrepreneurs need all the flexibility and legal certainty they can get to pursue new business opportunities across the EU.

Posted in Entrepreneurship, International Trade, Patents | No Comments »

ACT Applauds Work of IPEC to Protect Small Business Entrepreneurs

Tuesday, March 1st, 2011

The Association for Competitive Technology, representing over 3,000 small business technology entrepreneurs, continues to applaud the work of the Intellectual Property Enforcement Coordinator (IPEC). Marshalling the resources of the administration in defense of our country’s intellectual property, IPEC addresses a big concern for our nation’s innovators: protecting our products from counterfeits and pirates when marketing our business globally.

IPEC’s testimony today before the House Judiciary Subcommittee on Intellectual Property comes at a crucial moment. In this challenging economy, small businesses are looking to markets beyond our shores to meet revenue shortfalls. Our technology entrepreneurs are particularly vulnerable to piracy since the biggest offenders traffic in stolen intellectual property. Small business innovators need every assistance IPEC can provide to protect their innovation and expand legitimate commerce.

Posted in Copyright, Entrepreneurship, Innovation and IP, International Trade | No Comments »

Breaking the deadlock on EU patents

Wednesday, February 23rd, 2011

Editorial published at EUObserver.

Contrary to what one might think, the idea of an EU patent is not the latest fashion. Negotiations started in the glorious 1970s, when we all wore flare jeans and platform shoes; the EU was still called the EEC and agreements were possible with only nine Member States.

Forty years and several EU enlargements later, flared jeans went out and came back into fashion (and went out again). But have we actually moved forward on the patent discussions?Currently, companies operating in the EU can file for national patents alongside a European patent issued by the European Patent Office. However, the system is far from simple and it can cost up to 10 times more than a US patent. A unified EU patent system, with English, French and German as the official languages, would significantly cut red tape, reduce costs and foster R&D in the single market. With a common patent system, Europe could actually stand a chance of challenging the US leadership in innovation.

Arguing that a unified patent regime would amount to cultural and language discrimination, several member states managed to continuously stall progress. And just when we thought all hope was lost, an agreement on the EU patent finally came through last week …

Many small steps that culminated with the European Parliament vote on 15 February on the enhanced co-operation mechanism, which will allow all but two unwilling Member States to set up a common patent system and patent court.

While there are still details to formalize, everything indicates that Europe will have a unified patent system at last. True bliss for small business (SME) innovators across Europe!

Well, nearly … Italy and Spain stand proudly alone in refusing to accept a patent system which does not recognize Italian and Spanish as official languages. Their national pride is hurt, but I really wonder: are patents the best place to defend language and cultural heritage? It could hardly be so, given that patents are highly technical legal documents. We are glad to see that reason has prevailed and language disputes will no longer cloud progress.

There is no doubt that an EU-wide patent system will bring benefits to innovative SMEs in practical terms, it will considerably smooth the patent filing process. We will say goodbye to legal patent definitions that differ between member states, long waiting times of up to 44 months before a patent application is approved or denied, and the high costs of translation requirements. Filing European patents will be simpler and cheaper.

A robust patent protection will place European entrepreneurs in a more secure position to fully develop their capabilities. Patents tend to go unnoticed in the innovation gap debate, but the fact is that many EU companies are choosing to register their products in the States because it is easier and cheaper than cutting through 27 sets of red tape.

The single patent system will put an end to this and will bring investments to Europe. At a time of innovation deficit and economic turmoil, we need all the support we can get to create a business-friendly environment that encourages growth. We hope that Italy and Spain will soon realize that they will have more to gain than to lose by adopting the EU patent and breaking this innovation deadlock.

Posted in International Trade, Patents, Tech Regulation | No Comments »

EC Antitrust Investigation of Google Is No Surprise

Tuesday, November 30th, 2010

It is hardly a surprise that the European Commission has begun an antitrust investigation into Google’s internet search business. Critics have long claimed that the search giant has abused its dominant position to undermine competition. The number of smaller competitors discovering their search rankings have been manipulated continues to rise, particularly in niche areas, like local search, where Google has struggled to compete.

Were there no history of this anticompetitive behavior, some might convince you there was no cause for alarm. Yet, the story of MapQuest reminds small competitors just how quickly they can become Google’s Internet roadkill. When the search giant purchased Where2 Communications, it integrated that company’s map product into its search engine. Google then adjusted its search engine results to direct users away from MapQuest and to its own new map site. In no time, MapQuest went from industry leader to afterthought.

The severity of this anticompetitive behavior is such that the search giant is also the target of antitrust investigations in Italy, Germany and France. Given its unwillingness to explain the methodology for ranking its search results, Google faces a difficult road ahead with European regulators. And while the antitrust issue is at the forefront, the chorus of criticism over its Street View privacy violations provides Google an unwelcome backdrop. If experience is any guide, regulators often expand these investigations to cover the full range of a company’s misconduct, and that could end up being a very long and difficult process for Google.

Posted in Entrepreneurship, International Trade, New Economy Competition, Tech Regulation | No Comments »

ACT Chairman Mike Sax Testifies before Congress on Trade

Thursday, November 18th, 2010

ACT Chairman Mike Sax testified before the Senate Finance Subcommittee on Trade in a hearing on trade in the digital economy. His testimony was so compelling that Chairman Wyden said that Mike should be the test case for small businesses navigating the regulatory challenges to compete in the cloud.

Here’s Mike’s prepared testimony.

Chairman Wyden, Ranking Member Crapo and distinguished Members of the Committee, my name is Mike Sax and I would like to thank you for holding this hearing on international trade in the digital economy.

I am here today wearing two hats. In my “day job” I am an independent software developer who makes his living creating and selling software for multiple platforms. My livelihood depends on my ability to write compelling applications and reach customers in a purely digital marketplace. In addition, I also serve as Board Chairman for the Association for Competitive Technology (ACT), which represents over 3,000 small business software developers.

Through discussions with other ACT members, I can assure the committee that increased access to global markets is vital for American entrepreneurs and small IT companies. Ninety-seven percent of all exporting companies are small and medium-sized enterprises and we account for twenty-nine percent of U.S. exports by value. In order to succeed, our companies need free and fair trade opportunities.

In many ways, the interests of small and large technology companies are aligned on these issues. Most trade issues that harm large firms like SalesForce and Intel have the same effect on our small firms, but are amplified by the fact we do not have the same legions of lawyers and trade experts. Additionally, issues that have a more direct affect large platform companies like Intel, SalesForce, Microsoft, and Apple have trickledown effects for those of us who develop on those platforms. Trade restrictions that limit access to markets for companies like Microsoft or Apple hurts our members too because it limits our potential customer base.

One emerging issue that affects companies both large and small is cloud computing. Cloud computing refers to applications and services accessed remotely over the Internet. Anyone who uses Web-based email, such as hotmail or gmail, has been using cloud computing. Advancements in broadband speed and mobile devices allow developers to provide new services to customers, making the cloud the biggest growth area in our industry. Unfortunately, the legal system has not kept pace with technology. Developers face multiple and conflicting international laws for privacy, data storage and payment methods. To the extent that we can harmonize these three areas of concern, our members will find tremendous opportunities in the cloud to export their software and services to consumers in other countries.

Small developers also face a “protectionism 2.0″ problem, encountering different rules for software sales based exclusively on country of origin. One of the most obvious examples is China’s computer games rules. Today, a Chinese company that develops a video game can directly market and sell their product within China, without extensive government review or involvement. However, games developers from the U.S. must have their product reviewed by two separate agencies under two separate review processes before it can be marketed legally in China. While the American developer incurs administrative costs during a lengthy delay, if the game proves popular in the U.S., pirated copies will be widely available in China months before the dual review process is completed.

The international patent system also presents serious problems for small businesses interested in protecting their innovations. For example, protecting an invention in the European patent system is TEN TIMES more expensive than in the U.S. The problem is that the European Patent Office provides a uniform patent application process for up to 40 European countries, but it does not provide uniform laws for patentability and enforcement. This means, small firms must translate every patent into each European language and be prepared to defend every court challenge in the host country’s language. Consequently, most small firms simply do not get patent protection in Europe. Adoption of a unified European patent, currently under consideration in Europe, would hopefully address some of these concerns.

Finally, many nations use onerous joint venture requirements to make it more difficult for U.S. business to sell products in their countries. Some require companies to have a local partner who owns more than half of their company. Others allow for 100% foreign ownership, but make it difficult to sell products locally, or require significant sums of money to be “banked” before agreeing to allow the sale of software or services. We hope that USTR and others will continue to urge our trade partners to do away with these kinds of barriers.

In this discussion of innovation, my personal story may be instructive to the Committee. Feeling the constraints that stifled entrepreneurs in Europe, I emigrated from Belgium to Oregon in 1994 on an investor visa. I invested my personal savings in Oregon because the U.S. offered a dynamic software market with low barriers to entry for start-ups and a strong intellectual property system.

My story is not unique, but it has become a talking point for leaders in the EU seeking to reclaim Europe’s position as an innovation hub. During the recent European Commission Patent Conference, a Belgian cabinet minister highlighted my decision to move to the U.S. as an example of why Europe must update its patent system to retain innovative and successful entrepreneurs.

Europeans and innovators from other countries long for a business environment like ours which fosters growth and innovation. They erect trade barriers abroad because they cannot compete with our resources and ingenuity. The U.S. must confront to these obstacles to ensure that the global marketplace remains dynamic and competitive.

The future of the digital economy looks bright for American small businesses, and developers will continue to find success, as long as these challenges do not go unanswered.

Thank you for your time and consideration on this important topic and I look forward to any questions you may have.

Posted in Cloud, Copyright, Current Affairs, E-commerce, Entrepreneurship, Innovation and IP, International Trade, Patents, Privacy, Tech Regulation | 1 Comment »

This week in Antitrust

Friday, March 12th, 2010

This Friday’s round up of antitrust-related news highlights current activity in a number of different areas of interest including the rise of niche microchip manufacturers, Intel’s continuing struggle to maintain dominance in the mobile device market, a move by airlines in Europe to placate fears of unfair business practices, and a drug company’s efforts to clear its name from the ranks of dastardly monopolists.

Intel – Semiconductor IP: lntel vs. ARM and Tessera’s Expiring Patent | Sramana Mitra

Intel and ARM are not the only players in the smart device chip game but are certainly among the major providers of System on a Chip (SoC) platforms. For an increasingly important variety of gadgets that require completely integrated functionality and low power consumption on one microchip, the market is currently big enough to support a handful of specialty chip manufacturers who are slowly chipping away at Intel’s (and ARM’s) dominance. Sramana Mitra has some excellent analysis of the current chip state-of-affairs in her topical blog post from late last week. She writes on a niche operator that is capitalizing on camera-based handsets:

Tessera is looking to cash in on the growing market for camera-based handsets. Recently, it announced that Samsung Electronics has integrated Tessera’s OptiML Focus solution in its notebooks. Tessera has been building out its imaging and optics portfolio with the help of five acquisitions since 2005: part of Shellcase, a wafer-level image sensor packaging technology provider; Digital Optics, a micro-optical solutions developer; Eyesquad, a smart optics technology supplier; part of Dblur Technologies, a software lens technology developer; and FotoNation, an embedded imaging solutions provider.

Mitra also points out the significant portion of the 3G market space owned by InterDigital, a company focused on “advanced digital wireless technologies” and holder of a number of key patents for cell phone technologies.

InterDigital, which has a 55% share in the 3G handset license market, reported a 20% increase in fiscal 2009 revenue of $297.4 million and net income of $87.3 million or $1.95 per share, more than triple its 2008 income. During 2009, the company repurchased shares for $25 million under the $100 million share repurchase program authorized in March 2009. It ended the year with $409 million in cash.

For a mostly unheard of company, InterDigital is doing quite well, thank you, while Intel continues to struggle to forge lucrative IP deals in the face of ARM’s smartphone product dominance. “Intel is welcome to the market, but at the moment, ARM rules the mobility market…” is how Mitra sums up the situation and with the numbers to back up her conclusion, she’s right on target. Be sure to check out the entire piece for more stock market figures and a few explanatory graphs to complete a well-crafted look at the mobile microchip business.

British Airlines et. al – BA, American, Iberia offer EU concessions | Yahoo! News UK

A number of international kingpins in the airline business are coming under close European Union scrutiny after rival airline, Virgin Atlantic, cried “Foul!” in reaction to the “U.S./EU ‘Open Skies’ agreement, which liberalizes trans-atlantic aviation” that ”would lead to higher prices for consumers.” Virgin’s superstar CEO, Sir Richard Branson, offers his thoughts on the European Commission’s decision to drop its investigation:

“I continue to question why the Commission is even considering these proposals to try and put right the consumer harm of this monster monopoly when it does not seem to have any evidence of concrete consumer benefits,” Richard Branson, president of Virgin Atlantic, said in a statement.

Branson, who met Competition Commissioner Joaquin Almunia this week to discuss the issue, said Virgin would attempt to show why the alliance should be stopped.

Branson might be barking up the wrong tree, as the airline industry has a long history of creating alliances in order to placate those who cry “Monopoly!” at the thought of increased route-sharing and profitability.

Alliances are seen as a lucrative alternative to mergers and large-scale investments.

The Commission said in a statement that the airlines had offered to give up some landing and take-off slots for routes from London to Dallas, London to Boston, London to Miami and possibly London to New York should competitive conditions change.

The carriers also proposed to allow access to their frequent flyer programs on those routes as well as London-Chicago and Madrid-Miami, and submit data on their cooperation.

The United States Department of Transportation (USDOT) is also in on the gig, with a tentative “All clear” given to the latest partnership but Branson would still have 45 days to lodge his complaint before receiving the final bad news. But not to worry, there will be other opportunites for Sir Richard’s Revenge: “The Commission is also probing proposed alliances between members of Star Alliance, and members of SkyTeam, both rivals of Oneworld.” Maybe they should just all join hands and form one mega-merger and bury the monopoly hatchet, once and for all.

Monsanto – Monsanto’s Seed Patents May Trump Antitrust Claims, Lawyers Say | Bloomberg News

Major food agribusiness leader Monsanto’s legal woes continue to stack up but there may be some relief in sight for the beleaguered seed seller. Jack Kaskey and William McQuillen offer up some excellent reporting on how the US Department of Justice might just be the company’s worst, and best friend, in its bid to continue what some are decrying as unfair, and monopolistic, business practices. They report:

Monsanto Co., facing antitrust probes into its genetically modified seeds, may benefit from previous court rulings in which intellectual property rights trumped competition concerns, antitrust lawyers say.

The Department of Justice and seven state attorneys general are investigating whether the world’s largest seed company is using gene licenses to keep competing technologies off the market. At issue is how the St. Louis-based company sells and licenses its patented trait that allows farmers to kill weeds with Roundup herbicide while leaving crops unharmed. The company’s Roundup Ready gene was in 93 percent of U.S. soybeans last year.

DuPont Chemical, a competing firm in the agribusiness marketplace, is hoping for some relief in their struggle to knock Monsanto off the top of the modified seed sales mountain.

“When you have that sort of monopoly power, it can lead to abuse, which is what we’ve been experiencing over the past several years,” said Thomas L. Sager, DuPont’s general counsel.

Wilmington, Delaware-based DuPont claims Monsanto protects its lead in biotech seeds, including the Roundup Ready seeds sold since 1996, by controlling whether competitors can add their own genetics.

Monsanto also has begun switching seedmakers and growers from Roundup Ready soybeans to the newer Roundup Ready 2 Yield version in advance of the original’s patent expiration in 2014. DuPont says Monsanto is using incentives and penalties to switch the industry to the new product in a way that unlawfully extends the Roundup Ready monopoly.

Whether Monsanto’s cleverly-contrived plans to offer incentive and penalties that unfairly compressed seed sales into their hands is worthy of being called anticompetitive remains to be seen, but one thing is sure, at 93% of all soybean stock showing the presence of Monsanto’s Round Up Ready genetic alterations, a true monopoly is only a few percentage points away.

Google/Microsoft – EC antitrust probe is latest clash in Google-Microsoft war | IT World

Microsoft is redoubling its efforts to make sure Google feels the pain of the antitrust “hurt locker” that is so well known by the Redmond, Washington software giant. Sharon Gaudin has some pertinent bits and pieces on this increasingly acerbic and serious game of IP brinkmanship for the constant reader to consider:

The EC announced late last month that it had initiated an antitrust probe into Google based on complaints from three European companies, two with connections to Microsoft.

Microsoft CEO Steve Ballmer last week acknowledged his company’s role in pushing government regulators to pursue such investigations.

“We’re not being silent; we’re expressing some of the issues and frustrations we see. Certainly, sometimes that is unsolicited, but oftentimes, it’s because we’ve been asked,” Ballmer told an audience at the Search Marketing Expo in Santa Clara, Calif.

Microsoft’s complaints to the EC are just the latest skirmish in an escalating battle between Google and Microsoft on several fronts, including the operating systems and enterprise apps markets, and the online search business in particular.

Indeed, Google is the dominant presence in the global Internet search market but sees a bit of thinly-veiled collusion in Microsoft’s continued assault on its position. Microsoft hasn’t helped matters much with its own attempts at pretending that it is just an innocent witness to the Google imbroglio.

Julia Holtz, Google’s top antitrust lawyer, questioned Microsoft’s motives in seeking an antitrust probe via complaints made to the EC by Ciao GmbH, a Munich-based company acquired by Microsoft in 2008, and Foundem, a Bracknell, England-based price comparison site and a member of the iComp trade group, which is largely funded by Microsoft.”

I wonder if Google used some of its excellent search algorithms to sniff out Microsoft’s relationship to Ciao and Foundem? And yes, Microsoft deflects some of the unwanted attention from its sly purchase with this rejoinder by Dave Heiner, vice president and deputy general counsel at Microsoft: “Ultimately, what’s important is not who is complaining, but whether or not the challenged practices are anticompetitive.”

Pfizer – Pfizer Still Dealing With Antitrust Issues | The Motley Fool

Well-known big pharma company Pfizer has successfully completed its acquisition of rival drug manufacturer Wyeth but continues to strive to placate European Union officials’ concerns of monopolistic practices. Motley Fool Brian Orelli has a some words of insight to help shed light on Pfizer’s sell-off of some less-desirable businesses:

Pfizer’s (NYSE: PFE) acquisition of Wyeth has been done for months, but the pharma giant’s still making moves to satisfy regulators. In order to keep the European Commission happy, today the company sold off some of its animal-health products marketed in the EU to Eli Lilly (NYSE: LLY). The terms of the deal weren’t disclosed, but Eli Lilly did say that the products will come with a manufacturing plant to help make them.

This move should help Pfizer rebuff additional concerns over its ginormous market presence although it could also cost the company dearly with the loss of significant amounts of pet-centered product lines. Here’s Orelli’s take on what potential Pfizer stockholders should keep in mind:

…[I]nvestors shouldn’t ignore animal-health products either. Added together, Pfizer’s animal products contributed over $2.7 billion to its coffers last year and Eli Lilly’s animal health division added $1.2 billion.

Good stuff, people. Have a great weekend, and see you again next week: same ACT time, same ACT place.

Bonus antitrust-related piece o’ the week: Intel – Intel digs in to fight FTC lawsuit over chip competition| USAToday

Posted in Current Affairs, Innovation and IP, International Trade | No Comments »

Six Questions The Senate Should Ask Gary Locke . . . But Won’t

Tuesday, March 17th, 2009

Former Washington State Governor Gary Locke will undoubtedly face some tough questions during his confirmation hearing tomorrow, but the truly important ones will likely not be asked. The unfortunate reality is that the typical confirmation process provides little substance, but lots of political theater.

Tomorrow is unlikely to be any different. The focus will be on political grandstanding over the census, the bailout, and the AIG bonuses. Meanwhile, some of the most important questions for the next Secretary of Commerce will go unasked, sacrificed at the altar of politics.

Defining the Future of the Internet – Al Gore may have invented the Internet, but the next Secretary will have a large role in determining its future. As part of the Joint Project Agreement (JPA), the Department of Commerce is set to sever its agreement to backstop the Internet Corporation for Assigned Names and Numbers (ICANN) at the end of the year. While the Department of Commerce plays no role in the day-to-day management of the Internet, it has played an important role in both holding ICANN accountable for its promises regarding private sector-leadership, and protecting ICANN from institutional capture. Given the importance of the Internet to our economy, this raises serous questions for the next Secretary:

Before the U.S. Government gives up oversight of ICANN, how do you believe the security of the core infrastructure of the Internet can be protected? For example, should NTIA agree to ICANN’s plan to take over all security management for the Internet root zone?
How will ICANN’s accountability be ensured in the absence of Department of Commerce oversight – especially accountability to the private sector stakeholders?
If ICANN is fully privatized, what can be done to protect ICANN from capture by foreign governments or the United Nations, which has asserted its own right to manage "Critical Internet Resources" – not the private sector?

Improving the Environment for Innovation and Entrepreneurship – The future of the American economy lies with our ability to produce the next Google and Microsoft, not simply preserving the fortunes of our existing multinationals. Yet, little has been done to support entrepreneurs in the midst of the credit crisis and economic downturn.

What steps do you plan to take provide support for entrepreneurship and innovation in the current economic climate?
What will the Department of Commerce do to promote the exports of small and mid-size firms?
What can be done to protect the intellectual assets of American entrepreneurs abroad?

Posted in Innovation and IP, International Trade, Internet Governance | 1 Comment »

TADC Conference – ‘Other people’s stuff should be Free, not mine’

Monday, January 12th, 2009

Today at the Carnagie Institution the Trans Atlantic Consumer Dialogue held a conference called “Patents, Copyrights, and Knowledge Governance: The Next Four Years”. Here’s the top blurb about the event:

As a new Administration will take office in Washington, and the European Union renews its institutions, what should the political agenda be for intellectual property?

The globalisation of the challenges faced by consumers and rights holders have made intellectual property policy one of the main features of global trade policy, and stimulated both international and domestic debates about how best to promote innovation and access to knowledge, including "knowledge embedded" goods such as medicine, software, agriculture, inventions that address climate change, scholarly research, databases, films or recorded music.

Both the United States and the European Union are facing demands to modify policies on patents, copyrights and other forms of intellectual property protection, coming from different perspectives. There are high profile right-owner lobbying efforts directed at higher standards and tougher enforcement of intellectual property rights, and growing interest among consumer groups, academics and many innovative businesses to protect the public domain and retain or even expand user rights. There is also much interest in exploring newer approaches to the support of creative and inventive communities, that do not rely on notions of exclusive rights.

With the organisation of this event, the TransAtlantic Consumer Dialogue calls for two days of discussion on the assessment and on the prospective of the American and European political and policy Agenda on intellectual property practices and policies.

The whole event is set up with a very strong anti-IP bent, and I am used to hearing that at NGO sponsored events. But I was dismayed by the comments of Guilherme de Aguiar Patriota, the UN representative for the Government of Brazil. Guilhereme gave a presentation very similar to one he gave back in 2002 where he said:

“The intellectual property rights (IPRs) system, enhanced by the WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), is actually hampering development of research and development (R&D) in developing countries; and industrialized countries, while heavily subsidizing science and technology (S&T) and R&D in their own countries, are placing all sorts of restrictions on attempts of developing countries to cooperate in market-oriented and commercially charged sectors of applied sciences“.

But at today’s event he went so far as to suggest that copyright holders that expect Brazil’s schools to pay for books or software are actually hurting the children of Brazil, because it is taking money away from the kids.

wow.

I guess I just don’t know how to think about that in a rational way. Part of me ”gets“ what Guilherme is saying, but part of me looks at Brazil’s economic standing in a very different way than I might look at Kenya. Moreover, the fact that Brazil has the second most advanced industrial sector in the Americas means that Brazil might have to shoulder their part of the burden for education, including paying full freight for the tools developed outside their borders (if the tools are useful to them).

But really, this issue of who pays and how much is kind of window dressing for the exchange he and I had on the fundamental concept of IP-Value. One little known reality about Brazil is that they are a leader in deep sea oil extraction and green energy. In fact, the State owned company ”Petrobras” is a major player in the field of new energy tech. But don’t trust me, here’s what Petrobras says about their own research and development laboratories:

The technologies that are developed at the Cenpes turn Petrobras into the company that generates the most patents in Brazil and abroad. The number of patent request submissions in 2007 show the Cenpes is one of the world’s biggest applied research centers. In 2007 alone, in Brazil, 22 patents were granted and requests submitted for 59 more. Abroad, 129 requests were submitted and 29 granted.

Given Petrobras’ success, and the vital import of green technology to the entire globe, I asked Gilhereme if, given the spirit of Access to Knowledge, Brazil should freely give up all patent rights and royalties from their energy tech.

He did not seem to think it was a good idea.

However, there was an interesting thread in his answer. He pointed out, with justified pride, that Petrobras was a company built in spite of all of the naysayers in the developed world who said it couldn’t be done. Gilhereme went on to point out ‘that Petrobras had poured millions into R&D to develop the technology and build it all on their own’. (I think he missed the parallelism there).

Brazil is not alone in their call for others to give up what they themselves wouldn’t, but they are in a lead position to recognize and rethink a position that ultimately harms domestic innovation within developing countries.
I’d hope that events like the one today at Carnegie would provide a more diverse and nuanced worldview that respects the fact that there are no simple answers when it comes to judging the value of the products created by others.

Tags: IPR, Patents, TACD, TRIPS
Posted in Innovation and IP, International Trade, Open Source, Patents | 2 Comments »

Credit Crunch Worsened by Junk Lawsuits

Thursday, October 30th, 2008

The Commerce Department released an interesting paper yesterday on competitiveness and legal costs. It’s conclusion: support U.S. competitiveness by reducing legal costs and uncertainty. At a time when small IT firms are finding it harder to access capital from here at home, they need look far, wide, and global. (earlier this year ACT released a report on the importance of foreign direct investment to innovative technology startups).

And it appears that our litigiousness will end up hurting investment from overseas.

The paper, The U.S. Litigation Environment and Foreign Direct Investment: Supporting U.S. Competitiveness by Reducing Legal Costs and Uncertainty, notes that high U.S. tort costs are a competitiveness issue that merits sustained efforts aimed at getting these costs in line with those of other nations. There is also a pressing need for additional economic research on the impact of a litigious society on a country’s ability to attract foreign direct investment (FDI).

Overall the U.S. legal system is the best in the world. But we can and should be better. America’s open investment policy is based on the principle that foreign investors should not be treated differently.

The new Obama or McCain administration needs to be a good promoter of this, even in the face of protectionist forces and a bad domestic economy.

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