Government has discovered the wonders of entrepreneurship. The good part is that we can hardly have a conversation about job creation or economic growth in this country without repeated governmental paeans to entrepreneurs and their importance; the bad part is that government often forgets how fragile the entire entrepreneurial ecosystem can be, and how easily it is undermined.
Consider the PROTECT IP legislation wending its way through Congress. Short for "Preventing Real Online Threats to Economic Creativity and Theft of Intellectual Property Act of 2011," PROTECT IP was introduced in May by Patrick Leahy of Vermont. It purports to protect intellectual property owners -- read: the entertainment industry -- from websites outside the U.S. that are illegally hosting their content.
There are many problems with PROTECT IP, and they start with its simplicity. If a site contains a page with illegal content -- say, a link to a pirated movie -- the copyright owner can petition a U.S. court to make that site invisible to people inside the U.S. The way they do that is by forcing domain name servers (DNS), the directories used by U.S. residents, to no longer list the site, thus making it invisible to search engines and no longer reachable without typing in an actual numerical Internet address. Further, the site would no longer appear in existing search results.
This has been the goal of IP owners for as long as there has been an Internet. Instant blacklisting of infringing sites, disappearing them off the face of the web world.
The problems, however, are myriad. For starters, there is no due process: A site could be blacklisted the day a U.S. judge receives the complaint. Bang, you no longer exist to American web users. There is, in other words, no presumption of innocence, and no notification requirement.
It is also over-broad. If your site is "enabling or facilitating" infringing actions, you fall under PROTECT IP's sway. You don't actually have to be infringing, just facilitating it in some way -- perhaps a message board post, perhaps something else -- and copyright owners have the right to ask you be ripped from DNS directories in the U.S. An ideologically diverse cross-section of 100 law professors in a recent letter agree that this is an over-broad attack on free speech.
Law academics and free speech aside, PROTECT IP is certain to cause problems for entrepreneurs. Many new technologies and new services challenge and change the boundaries of intellectual property. Look at the recent introduction of the highly popular service Turntable.fm, a sort of private DJ-ing offering over the web. As quickly as it was launched and began growing, it had to be closed off to non-U.S. users due to copyright complications, thus limiting the growth of a compelling, popular and non-infringing service. The problem of services like Turntable.fm, Spotify and others will only get worse under the ham-handed protections of PROTECT IP, with commensurate consequences for entrepreneurs around the world. This legislation is an entrepreneur-harming error.
The situation is the same in other areas of changing law. In patents, we continue to try to make some change -- the move from first-to-invent to first-to-file is overdue in harmonizing the U.S. with the rest of the world -- while ignoring most of the real anti-entrepreneurial problems with the current system.
What problems? The rise and increasingly stifling consequences of patent trolls, these litigious shell companies, often located in favorable jurisdictions like East Texas, that attack deeper-pocketed companies with lawsuits over nonsensical patents that they aren't using, and that shouldn't have been granted in the first place.
Many venture capitalists will tell you that a significant fraction of their portfolio companies are currently tangling with these patent trolls, running up their legal costs, while doing nothing to innovate, hire and otherwise contribute meaningfully to the U.S. economy. Cracking down on patent trolls by making software patents more difficult to obtain, or even by making such patents shorter, would do wonders for entrepreneurs.
This list is growing. To intellectual property, and patents, we could add the current mess about sales taxes in the U.S., an issue that has caused online retailer Amazon to end its affiliate relationships in California, to the detriment of many thousands of in-state entrepreneurs.
These are manifestations of the government's mixed messages about entrepreneurs, with plenty of high-minded rhetoric, but then lots of grubby and dangerous policy. It is long past time that government words and actions meshed when it comes to entrepreneurs.
Let's just make this problem more clear: The biggest Patent Trolls are companies like IBM, Texas Instruments, and Microsoft.
Our biggest corporations file thousands of patents a year. They then use these patents to force other companies to "license" their technology. Yes they produce products, but these "license" fees that other companies are forced to pay are nothing other than a Tax paid to private companies through government interference in the market.
Let's make this clear. Microsoft makes more money from License fees on Android phones shipped by other companies than they do on their own Phone OS. This makes them a troll.
RxRights is a national coalition of individuals and organizations dedicated to promoting and protecting American consumer access to sources of safe, affordable prescription drugs. The Coalition is encouraging consumers to send letters to Congress and the President urging them to protect our access to safe and affordable medication. For more information or to voice your concern, visit www.RxRights.org.
Lee Graczyk
To begin, the bill does not apply to sites with “a page of illegal content” as the author suggests. It addresses only sites that are dedicated to infringement.
Second, the bill does not allow copyright owners to “petition the court to make sites invisible to people in the U.S.” or the “right to rip sites from DNS.” It only allows the Attorney General to seek an order from a court that would allow the AG to ask search engines to use commercially reasonable means to make sites that the court has determined are “dedicated to infringement” inaccessible to U.S consumers.
Likewise, the bill does not lack due process, establish any new procedural rules for adjudicating a case, or tamper with any applicable burdens of proof. The judicial proceeding is conducted according to the Federal Rules of Civil Procedure, the same process used to conduct every other civil proceeding in the Federal courts.
Perhaps most disturbing, however, is the author’s suggestion that the legislation “is certain to cause problems for entrepreneurs.” The legislation targets foreign websites that are dedicated to infringement and profiting from the work of America’s small businesses and entrepreneurs. That sort of activity does not fall under any definition of entrepreneurship.
Does any of that strike you as a little, I don't know, disingenuous?
So, what organizations like the Copyright Alliance are saying is that taking down foreign websites that are dedicated to infringement is more important than and should be done that the expense of protecting American Innovation. The author is an entrepreneur, he should know. The Copyright Alliance are a bunch of yes men to big business, not so much experience in real entrepreneur there. More like political entrepreneurship, encouraging the passing laws to benefits the few rich middlemen they represent, NOT the artists. If they really cared about artists they would encourage real entrepreneurship, to do use innovative business models that do not relay solely on copyright, and to break away from the big content racket.
See: http://www.channelweb.co.uk/crn-uk/news/2083693/tech-leaders-implore-cameron-overhaul-ip-laws#ixzz1S6592lVh
... summed up by Prof. Ian Hargreaves:
"the UK's intellectual property framework, especially with regard to copyright, is falling behind what is needed," ... "The UK cannot afford to let a legal framework designed around artists impede vigorous participation in... emerging business sectors."
I discuss patent trolls in a chapter of my book, The Smart Entrepreneur, as well as a case study on software patents. Although largely a US phenomenon, patent trolls go after lots of European companies too and add even more uncertainty and risk to the IP regime around start-ups.
Re software patents, although harder to get in Europe than US, I recently heard an argument in favor of them from a European IP lawyer. He thinks copyright isn't adequate for software code, not for legal reasons but social ones, particularly the advancement of society's knowledge, because a patent filing not only describes the product but all the technical research and discoveries behind it. The usual trade-off of a patent: a temporary monopoly right in exchange for disclosure.
Never heard an argument like that with respect to software, and it seemed a little murky to me given my case study research. Does anyone have any thoughts or counterarguments on this?
@sabkiefer
As such software patents arguably patent ideas rather than inventions. If I write software that uses an entirely new and novel way of encoding an MP3 file, I none the less infringe on a range of patents. Nor do these patents provide disclosure of the actual algorithms required to produce or interpret MP3 files.
Had we allowed software patents at the beginning of the rise of personal computers, we would have massively delayed the development of computer systems.
In fact, there should be only a double-handful of sites that you should be "allowed" to go to, and those would basically be "TV Channels 3, 9, and 12... pick one." These are the companies that pay millions of dollars a month for the privilege of being "on the air," and their content is strictly controlled by the Morality Police.
Now, this legislation really needs to pass. In fact, I've got $250,000,000.00 in personal "corporate freedom of speech" just waiting to be "spoken" to each and every Senator and Congressman who votes for it. So, hurry up, willya?