INFORMATION
TECHNOLOGY IN
BUSINESS AND
SOCIETY
SESSIONS 2/3 – INTELLECTUAL PROPERTY
SEAN J. TAYLOR
AMINISTRATIVIA
• Office hours today: 3:30-5:30 in KMC 8-191
• Varun’s office hours: 3-5pm on Monday in 8th
Floor tutoring area
• Pick up any missed handouts outside my office:
8-186
• We will form groups in a few weeks. Don’t
worry about that now.
• I will be posting lecture notes on the website.
• Thanks for the emails!
WHAT’S THIS
CLASS ABOUT?
OUTLINE
Why do we have IP laws?
A brief history of Copyright law in the US
Fair Use
Analog vs. Digital
What has IT changed?
Piracy Theory
DRM and DMCA
SOPA
New Business Models?
WHAT IS
(INTELLECTUAL)
PROPERTY?
WHY DO WE
HAVE IP LAW?
GOOD ARTISTS COPY.
GREAT ARTISTS STEAL.
ORIGINAL WORKS OF AUTHORSHIP THAT ARE FIXED IN TANGIBLE
FORM OF EXPRESSION.
The primary objective of copyright is not to
reward the labour of authors, but “[t]o
promote the Progress of Science and useful
Arts.” To this end, copyright assures authors
the right to their original expression, but
encourages others to build freely upon the
ideas and information conveyed by a work.
This result is neither unfair nor unfortunate.
It is the means by which copyright advances
the progress of science and art.
–Justice Sandra Day O’Connor (1991)
Before: protection only for published works with ©
attached, otherwise public domain
After: protection for original works which are fixed in
a tangible medium of expression
1.
2.
3.
4.
5.
REPRODUCE
CREATE DERIVATIVE WORKS
SELL, LEASE, OR RENT
PERFORM PUBLICLY
DISPLAY PUBLICLY
BUT NO RIGHT TO UNDERLYING IDEA IS GRANTED.
IT’S IN THE PUBLIC DOMAIN.
OWNER
BUYER
Cannot copy the work without
permission…
LICENSE
SALE
FAIR USE
ANY COPYING OF COPYRIGHTED MATERIAL
DONE FOR A LIMITED AND “TRANSFORMATIVE”
PURPOSE SUCH AS TO COMMENT UPON,
CRITICIZE OR PARODY A COPYRIGHTED WORK.
SUCH USES CAN BE DONE WITHOUT
PERMISSION FROM THE COPYRIGHT OWNER.
1. WHAT IS THE NATURE OF THE USE?
• Personal, Nonprofit,
Educational
OK!
• Criticisim, Commentary
• Parody
• Transformative/Remix
• Commercial
INFRINGMENT
2. WHAT IS THE NATURE OF THE WORK?
• Fact, published
OK!
• Imaginative
• Unpublished
INFRINGMENT
3. HOW MUCH OF THE WORK IS USED?
• Four notes
OK!
• Sample the whole song
INFRINGMENT
4. EFFECT OF THE USE ON THE MARKET
FOR THE ORIGINAL WORK
• Complementary work
OK!
• Perfect substitute
INFRINGMENT
RIGHT OR
DEFENSE?
analog
digital
SAMPLING: FROM ANALOG TO DIGITAL
AN ANALOG COMPUTER
ANALOG COPYING
EFFECT OF IT?
1. DIGITIZATION
2. MODULARITY
3. COMPUTING POWER
4. CONNECTIVITY
A model of piracy
Value of
product
buyers
price
non-buyers
Cost of
pirating
A model of piracy
Value of
product
pirate
non-consumers
Cost of
pirating
A model of piracy
Value of
product
pirate
buyers
price
pirate
non-consumers
non-consumers
Cost of
pirating
A model of piracy: easier to pirate
Value of
product
pirate
buyers
price
pirate
non-consumers
non-consumers
Cost of
pirating
A model of piracy:
adding DRM or enforcement
Value of
product
pirate new buyers
old buyers
price pirate
non-consumers
non-consumers
Cost of
pirating
A model of piracy: lower the price!
Value of
product
pirate
new buyers
old buyers
price
new buyers
pirate
non-consumers
Cost of
pirating
AMINISTRATIVIA
• Pick up any missed handouts outside my office:
8-186
• Posting to the course blog
• Participate in social media experiment!
• http://apps.facebook.com/shopperquiz
• Assignment 1 is pushed back one week.
• Handed out in 1 week (2/7)
• Due 2/14, will cover IP and IT Strategy
THIS CLASS
1. DRM and DMCA
2. SOPA
3. Software Patents
DRM
Technology to limit the use of digital content
after sale.
Methods:
• Encrypt content and allow access with
decryption hardware or software.
• Embed digital fingerprints on content so
that source of piracy can be detected.
Usually a substantial investment for
producers, and a hassle for users!
THE ANALOG HOLE
CRACKED
DMCA:
CRACKING DRM IS ILLEGAL
Passed in 1998, signed into law by President Clinton
Implements treaties signed in 1996 at the World Intellectual Property
Organization (WIPO)
Supported by software and entertainment industries
vs
“We hold that one who distributes a device with the
object of promoting its use to infringe copyright, as
shown by clear expression or other affirmative steps
taken to foster infringement, is liable for the
resulting acts of infringement by third parties.”
DMCA’S ANTI-CIRCUMVENTION
UNINTENDED CONSEQUENCES?
A threat to research / security?
• SDMI and Professor Edward Felten’s research group
• Researchers can’t inform consumers about security flaws.
A threat to fair use?
• Fair use tools banned: DVD playing/copying software
• Time/space/format-shifting impossible without circumvention
A threat to innovation and competition?
vs
• Real develops “Harmony” technology
• Allows iPod owners to buy songs from Real’s
Music Store and play them on their iPods
• Costly reverse engineering effort
• How does the DMCA apply?
DRM IN THE
FUTURE?
DMCA TITLE II: OCILLA
Online Copyright Infringement Liability Limitation
Act
Creates conditional “safe harbor” for online
service providers (OSPs)
• Can make temporary copies to transmit them
• Not liable for infringement of your users!
vs
• Complaint: over 150,000 unauthorized clips
viewed 1.5B times
• YouTube deliberately built up a library of
infringing works in order to increase site traffic
HOW TAKE DOWN WORKS
1.
Jack puts content under Jill’s copyright on YouTube
2.
Jill notices this.
3.
Jill’s lawyer sends a letter to YouTube’s designated agent detailing
the infringement.
4.
YouTube MUST take the video down and tell Jack.
5.
Jack can send a counter-notice to YouTube to have the content
“Put Back”
6.
If Jill doesn’t file a lawsuit within 14 days, YouTube must put the
material back up.
SOPA GOALS
1. Protect IP of content creators
2. Protect against counterfeit drugs
(what?!)
Key Definition:
Site dedicated to theft of US Property
“Engages in, enables or facilitates…”
SOPA: ENFORCEMENT
SOPA: ENFORCEMENT II
Enables US Gov’t to block access to entire sites if they meet the
criteria.
1.
Rights holders notify ISPs and say “this site is a site dedicated to the
theft of US property”
2.
ISPs immediately block access to the site.
3.
Site can provide counter-notification explaining how it is not in
violation.
4.
Rights-holder can sue infringing sites AND ISPs who refuse to
comply.
• The end of “safe harbor”
• Guilty until proven innocent.
SOPA POTENTIAL EFFECTS
Upstream/Downstream?
OBSOLETE BUSINESS MODELS?
PATENTS
The right to exclude others from making, selling, or
using an invention.
• Most comprehensive form of IP protection
• Even using independent discovery of same invention is excludable.
Criteria
1.
Useful
2.
Novel
3.
Nonobvious
FAMOUS/CONTROVERSIAL
IT PATENTS
1. Amazon: 1-Click
2. Priceline.com: Reverse auctions over a
communications network
3. OpenMarket: Electronic Shopping Carts
4. McAfee: Software as a web service
5. Netcentive: Online incentive and loyalty
programs
vs
• BN.com’s use of the 1-click feature was
challenged by Amazon.com
• Injunction: BN prevented from using 1-click from
1999-2001
• Settled under confidential terms
vs
• Priceline claims Expedia’s “name your own price”
feature infringes on “Internet-based reverse
auctions” patent.
• Expedia now pays royalties to Priceline.
PATENTS: STILL RELEVANT?
• Mutually assured destruction?
• Defensive only.
• Startups say that they are not important for competitive
advantage.
• The right incentives?
How would you change the system?
If you had a startup, would you seek patents?
PATENT TROLLS
LARRY LESSIG’S
“THE FUTURE OF IDEAS”
NEXT CLASS:
IT FIRM STRATEGY
• Review Porter’s Framework
• Read first chapter of “The
Innovator’s Dilemma”