Tag Archives: copyright

U of Chicago-Booth Business School article is ‘junk’ IP science

An ill-founded attack on U.S. IP rights appearing yesterday in the University of Chicago, Booth School of Business publication, “Pro-Market,” is a sobering reminder that there those who believe that IP rights should be eliminated and are willing to resort to propaganda to make it happen. 

The article, “Intellectual Property Laws: Wolves in Sheep’s Clothing,” is a wakeup call to millions of Americans who believe in innovation, authorship and free-enterprise. It must be read to be believed.

Intellectual Property Laws: Wolves in Sheep’s Clothing by ink Lindsey and Steven M. Teles of the libertarian Niskanen Center, is a bold challenge to prove that IP has meaning in a digital world, and whether most rights can simply be ignored.

Authors Lindsey and Teles cite the much-debunked 2012 Bessen-Meurer research that claims $29 billion in costs to companies as a result of patent litigation.

“In other words,” state the authors, “outside the chemical and pharmaceutical industries, American public companies would apparently be better off if the patent system didn’t exist.”

The authors conclude: “The copyright and patent laws we have today therefore look more like intellectual monopoly than intellectual property. They do not simply give people their rightful due; on the contrary, they lavish special privileges on copyright and patent holders to the detriment of everyone else. Therefore, it is entirely appropriate to strip IP protection of its sheep’s clothing and to see it for the wolf it is, a major source of economic stagnation and a tool for unjust enrichment.”

The Niskanen Center, which Lindsey and Teles are associated, generated almost $2 million in 2015 revenues. The organization’s website does not indicate the sources nor does there their 990 annual statement.

Pro-Market is the blog of the Stigler Center at the University of Chicago Booth School of Business. The article is adapted from their upcoming book “The Captured Economy: How the Powerful Enrich Themselves, Slow Down Growth, and Increase Inequality” (Oxford University Press).

The article, “Intellectual Property Laws: Wolves in Sheep’s Clothing,” can be read here.

Image source: promarket.org

97% of Europeans regard IP rights favorably; 41% ages 15-24 believe it is sometimes OK to buy counterfeits

When it comes to intellectual property rights Europeans are highly respectful, except among the young, where buying counterfeits has gown.

That is the primary take-away of an extensive European Community survey of attitudes toward IP rights delivered recently. The findings show that 97% of Europeans believe that IP should be respected, and that inventors, creators, and performing artists need to be paid for their work.

In contrast to the overall positive regard for IP rights, however, 41 per cent of young Europeans, ages 15 to 24, said they believed it was acceptable to buy counterfeits if the original product was too expensive. 15% of those surveyed in that age group said that they had intentionally purchased a counterfeit product in the past 12 months, 9% higher than in a similar 2013 study conducted by the European Union Intellectual Property Office (EUIPO).

“European Citizens and Intellectual Property: Perception, Awareness and Behavior,” a 205-page research report, updates the first EUIPO provides further evidence of how IP rights are regarded by EU citizens at a time when encouraging innovation and creativity is increasingly the focus of economic policy.

“In line with the 2013 results, people do not always act in line with their stated position,” said EUIPO Executive Director, Antonio Campinos, in summarizing the findings. “The key 15-24 age group seems to have become less convinced that fake goods are damaging and is buying more counterfeit goods, mainly for price reasons.”

Significant Sample

“European Citizens and Intellectual Property” surveyed people across all 28 EU Member States about their perceptions of intellectual property survey. It consolidates results of more than 26,000 interviews and confirms the global picture assessed in the EUIPO’s 2013 research.

“Even during a period of economic crisis when household budgets have come under pressure,” the report concluded, “the vast majority of respondents agree that it is important that inventors, creators, and performing artists can protect their rights and be paid for their work.”

Eighty-three percent said they prefer to access digital content through legal or authorized services whenever there is an affordable option available, and 71 percent of those admitting to using illegal sources say they would stop, if they could access affordable alternative options.

Confusion is growing about what constitutes a legal source. In 2016, 24 percent of respondents, five percentage points more than in 2013, wondered if an online source was legal, rising to 41 percent among young people.

Half of the Europeans queried believe that strict protection of IP rights may, in fact, curb innovation, and more than half feel that IP principles are not adapted to the Internet.

Neither the 2017 survey and previous study focused on counterfeits and copyrighted content, or examine attitudes towards patents or trade secrets.

An executive summary for “European Citizens and Intellectual Property” can be found here.

For the full 2017 EUIPO IP perception study, go here.

Image source: euipo.europa.eu

EU copyright reform – A leap forward or step back?

Reforms to copyright law proposed last week by the European Commission would put the burden on Internet companies like Google, Facebook and YouTube to prevent online piracy and compensate content providers, like music companies and news providers. 

In a shift in policy the proposals issued by the European Commission would require websites that host video and stream music to shoulder more responsibility for rooting out copyright infringements.

Under the current rules, reports the Financial Times, YouTube, Facebook and other video platforms remove material on a case-by-case basis only after being notified by rights-holders. If adopted, the proposals would require them to run proactive software checks to determine whether content they are hosting contained copyright material.

Preventing Piracy

The European Commission proposal is intended to prevent piracy, which has haunted the music industry and recording artists which has shed more than 60% of its value since 2000, and to prop up content providers like newspapers and magazines, which have seen declines in print circulation.

leaked-copyright-communicationThe reforms aim the foundation of a long-running fight between struggling traditional media companies — from record labels to newspapers — and the technology groups that increasingly dominate online media.

Critics say the EC is seeking to shift the responsibility for identifying copyrighted content by requiring Internet companies that host user uploaded video, such as YouTube and Facebook, to proactively check for copyrighted material, rather than waiting to receive a take down request from a rights holder.

Industry trade publication TechCrunch reports that “The draft directive also includes a proposal for a new right for news publishers covering digital use of their content for 20 years. Unsurprisingly, Google is not a fan of this.”

This extended right is similar to ancillary copyright laws already enacted by governments in Germany and Spain which target search engines displaying snippets of news stories.

Mandatory Fee

The law as enacted in Spain included a mandatory fee for displaying snippets, one line summaries from publishers, and led to Google to pull its Google News service in the country. While many Germany publishers waived their rights in favor of retaining the traffic Google sends their way.

Whether YouTube’s free site is directly competing with paid services such as Apple Inc.’s Apple Music and Spotify AB is a matter of debate, reports the Wall Street Journal. According to a YouTube spokeswoman, “users come to YouTube to watch all kinds of different videos. The average YouTube user spends an average of an hour a month consuming music, far less than music-only platforms.”

The European Commission’s proposals, which come after a three-year review aimed at updating copyright law for the digital age, could take years to ratify. The proposals have been—and are likely to remain—the subject of heavy lobbying from copyright holders like record labels and newspaper publishers on one hand, and technology firms on the other.

Give-Backs?

It will be interesting to to see if the EU will be successful in rolling back what Internet users have come to believe is free content that until now has not been seriously policed.

A draft of the proposed EU reforms can be found here.

Image source:1709blog.com; openforumeurope.org

The bonds that fell to earth – The financial magic of David Bowie

The passing of David Bowie is a reminder that he was an innovator in finance and intellectual property, as well as music and fashion. 

Much has been written about the passing of David Bowie in New York at 69. It’s important to remember that he was a pioneer in music royalty securitization in 1997 with so-called”Bowie Bonds.”

00DavidBowieEsquireRussia1The bonds were a smart move for Bowie, who raised $55 million without giving up ownership of his prized catalog. He had gambled wisely on the future, and while the bonds traded poorly for investors —  a reflection of weakening demand in the music industry at the time — they never defaulted, paying holders in full at ten-year maturity.

First Mover

Bowie was a first mover, parlaying the future cash flow from his copyrighted song catalogue into an early payday just when the music industry was changing. The idea of royalty securitization remains viable today, if somewhat more sobering. As long as the financial modeling is right, and the appetite for risk sufficient, leading artists and innovators will continue to score with royalty deals.

In my 2001 book, From Ideas to Assets, Doug Elliott writes, “What Bowie sold was the present value of his personal intellectual property (song copyrights) – that is, the future expectation of future royalty income, less a discount (p. 462).”

“From 1991 to 1998 nearly $3.5 billion in Bowie-like royalty instruments were sold by other musicians (Rod Stewart), media conglomerates (Disney, Dreamworks, Universal), and branded marketers (Calvin Klein, Borden and GE Capital).”

The cash flows that comprised these securitizations were on a a whole far more reliable than the infamous mortgage-backed issues and CDOs that blew-up en masse and facilitated the 2008 bank melt-down. (See The Big Short, both the book and movie.)

Bowie told The New York Times in 2002 interview that copyright would no longer be viable in ten years and that music was likely to become a commodity “like running water or electricity.” He was not far off.

For a good Bloomberg story about Bowie’s foray into finance, go here. For the Wall Street Journal piece, go here.

Image source: gossipblog.it; vam.ac.uk

“Happy Birthday” is an orphan copyright, not yet public domain

U.S. District Judge George H. King’s ruling earlier this week means that “Happy Birthday to You” is now what’s known as an “orphan work” — a copyrighted work that’s so old that nobody knows who to pay in order to use it legally.

It is not necessarily in the public domain but may be by default.

As expertly reported in Law 360, nobody is sure who, if anyone, owns “Happy Birthday” if Warner Music doesn’t. Did the Hills [original owners] have heirs who could claim ownership? Did they have business partners who could have passed rights along?

“The ruling highlights a current issue that many in the copyright field complain about,” attorney Naomi Jane Gray said. “Copyright now lasts so long that it can be very difficult to find the author in order to even try to ask them for permission to legitimately use their work.”

$2 Million in Annual Royalties

“While it might come as a surprise to most that anybody claimed to ‘own’ the ubiquitous birthday song,” reported Law 360, “Warner/Chappell had for years been quietly doing just that, raking in an estimated $2 million a year in licensing fees from filmmakers and C9E3AA0F864-184002687952B1A0FF62741others.

“Warner/Chappell, the publishing unit of Warner Music Group, long claimed that it had inherited a 1935 copyright for the song from a company it purchased in 1988, but a group of filmmakers and artists who paid those licensing fees challenged that claim in court in 2013. They said they’d found new documentary evidence that cast doubt on Warner’s claim and that they wanted their money back.

“On Tuesday, they won big. A California federal judge ruled that Warner’s predecessor company — Summy Co., which purportedly acquired the rights from the song’s original authors — had only acquired the rights to the song’s melody, which had long since passed into the public domain.”

As for the lyrics? There was no proof that Summy had ever actually acquired them, meaning Warner never owned them either.

For the full analysis go here.

Image source: http://www.ohmygoodness.com

Music Pirate Kim Dotcom Schmitz Launches a (Tired) Second Act

File sharing kingpin hopes to evade authorities by using complex encryption scheme.

A year after being shut down for running Megaupload, an illegal music file sharing website, content pirate Kim Dotcom Schmitz (IP CloseUp, October 5) and IAM 56, “He’s No Robin Hood”) is back going live on Sunday January 20 with, Mega, a new effort to establish a cloud presence for music and movie file sharing, this time with encryption safeguards and “privacy” claims that he believes will allow him to evade authorities.

Mega uses symmetric key encryption in the browser, reports ZDNET. Every file has its own key, and only the uploader knows what it is. Users can share files, but only if they provide downloaders with the key to decrypt the file.

“Personal Use Only”

However, Mega’s terms and conditions implicitly recognize that users will upload copyright material such as back-up copies of their music files for personal use. To reduce storage demands, the system says that it will only store a single copy of files that it recognizes are not unique. How it knows they are not unique is not explained, nor is the system for handling different keys.

mega_silhouettes_small_1Schmitz, larger than life Internet pirate touts himself as a privacy champion. He has been under house arrest in his $30 million mansion in New Zealand awaiting trial for Megaupload. (The incarceration is no doubt a gesture to authorities and supporters alike.) He believes that Mega, launched one year after Megaupload was shutdown, will serve as an alternative.

From the look of Mega’s promotional illustration (right) and press conference, you would think that Schmitz and his crew were an aspiring rock band. They’re not. In fact, they are ripping many of them off, or helping others too.

In an exclusive interview in the Wall Street Journal (yes, WSJ) Schmitz talks about his company’s know-how or trade secrets being violated and his concern about child pornography. He believes that music piracy may be wrong but movies it is not, because through the industry’s business practices “they are forcing people into piracy.” See Schmitz’s Open Letter to Hollywood.

The WSJ interview conducted is worth reading. So is another good recent piece on Forbes.com, “Kim Dotcom’s New MEGA Encrypted Cloud Storage: See No Evil, Store No Evil.”

The copyright infringement case against Schmitz, billed as the largest to date given that Megaupload in its heyday commanded around four percent of global online traffic, could set a precedent for internet liability laws and depending on its outcome, may force entertainment companies to rethink their distribution methods.

Schmitz maintains that he is pro-innovation and the governments’ intrusion into individuals’ privacy and antiquated business models are the real villains. Previously, Schmitz, who is said to have a net worth of $200 million, was jailed in Germany for insider trading.

Schmitz, 38, faces years in jail if convicted of copyright infringement in the US. He is under house arrest in New Zealand awaiting a March hearing on whether to extradite him for trial.

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Don’t be seduced by Schmitz’s bling life-style. He wants Mega subscribers to believe that he is a folk hero giving the people what they need and authorities to think that he is an an entrepreneur. He is neither.

Illustration source: cnet.com; bgr.com


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