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Before We Educate The Foreigners, Let's Fix Things At Home

My colleague Tish Keefe argued yesterday that she hoped U.S. Commerce Secretary Carlos Gutierrez misspoke when he said that fighting intellectual property theft was a top priority for the Bush administration. She notes that there are plenty of other, more pressing issues that should be higher concern for the federal government, including Iraq, the ballooning deficit, the crisis in healthcare, the crumbling public school system, and hurricane recovery efforts. The Bush administration effort is directed toward educating people in countries where IP theft is commonplace, such as Brazil, China, India, and Russia. Tish points out that the people in these countries just aren't interested in being "educated" on how they can raise costs and lower profits, they're doing fine just as they are. Rather than education, they need economic incentives to abide by U.S. law. Tish is right, but I don't think she goes far enough. Before we educate the foreigners on how to correct their intellectual property practices, we need to correct our own.

The U.S. hasn't had any kind of intelligent intellectual property policy since 1999, when Napster caused a tsunami of music downloading. Since then, intellectual property law has been driven by panic and fear. The recording industry started suing everybody in sight and pushing legislation through Congress expanding copyright and rights of enforcement. Meanwhile, established corporations are expanding patent law and other intellectual property protections in efforts which are stifling innovation. The most prominent example: The SCO Group, which used to be a terrific company that made great software staffed by great people, but which is now attempting to suck the blood out of the creative open source community.

(InformationWeek Editorial Director Bob Evans contrasts the SCO Group's strategy with that of another company that's more interested in developing software. I won't tell you who the other company is, because that's kind of the punchline of Bob's editorial. But I'll give you a hint: there's a joke going around the Linux community that SCO exists so this other company won't be the most hated company in the computer industry.)

Digital Rights Management (DRM) of consumer media is the most visible symptom of the U.S.'s broken intellectual property policy. Media and electronics companies are pouring fortunes into developing DRM technology. DRM doesn't work now and many experts say it never will -- it's just plain theoretically impossible to encrypt a consumer media file in such a way that attackers can't easily break the encryption.

Moreover, DRM is just plain bad business: It's expensive, unreliable, and the best you can hope for is that it won't make your products significantly less attractive to your customers. DRM restricts customers' ability to use media as they want to, the vendor's best hope is that the restrictions won't be too onerous.

TiVo is learning that lesson the hard way. TiVo recently upgraded the software on its users' devices to allow broadcasters to set limits on the amount of time that customers will be able to store recordings on their devices. Viewers became alarmed when their TiVos set limits on the amount of time they could store recordings of the network broadcast "King of the Hill" and "The Simpsons." TiVo said the "King" and "Simpsons" restrictions were just a glitch; the technology is only made for use with pay-per-view and other premium programs.

TiVo customers aren't buying the company's reassurances. Faced with the possibility that they might not be able to save programs as long as they want, they're complaining. This is a potential public-relations disaster for TiVo, and so far, they're handling it terribly; they're telling reporters that it's just plain not an issue.

I'm a TiVo user myself, and I can tell you what my reaction is to TiVo's policy: We were thinking of buying a new one, and now we're not. It sometimes takes a while for us to get around to watching programs we've recorded; we want to know the program will still be there when we're ready to watch it.

Intellectual property is at the core of a recent lawsuit against Google. Google is getting ready to re-launch a program that will search inside copyrighted books the way that Google now searches inside Web pages. The Author's Guild is suing, saying Google should ask permission of the copyright owners prior to indexing their books.

The Google case is interesting because both sides can make good arguments in their favor. Often, in the case of intellectual property law, that's not the case. For example, in music filesharing cases such as Napster and Grokster, we had a bunch of corporate greedheads suing a bunch of thieves. In a just universe, those cases would have been decided by judge delivering a round of spankings to everyone concerned.

However, in the case of the Author's Guild vs. Google, both sides appear to be trying to do the right thing. On the one hand, Google is trying to offer a public service, allowing users to search books while only viewing small snippets of text. You can bet that this will increase book sales; it's the electronic equivalent of leafing through a book in the bookstore. As Google's defenders point out, most books take years to produce, they spend a couple of weeks on bookstore shelves, and then they're forgotten, headed for the landfill. As Tim O'Reilly, founder and CEO of book publishers O'Reilly Media points out: The biggest enemy of book authors and publishers isn't piracy, it's obscurity.

On the other hand, the Author's Guild makes good points too: Google is making copies of entire books without the permission of the copyright owner, and using those copies for business purposes. Under current law, that is the very definition of copyright violation it's no different from selling bootleg copies of the latest "Star Wars" movie off a card table on the Manhattan streets.

In the ideal universe, this case would be decided by a public policy initiative, recognizing that the emergence of electronic media requires a revision of U.S. intellectual property laws in such a way that public benefit and private right of property are balanced fairly. But we don't live in the ideal universe, so instead the case of the Author's Guild vs. Google will likely be decided by the side that has the lawyers with the fanciest suits.

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