Thursday, August 21, 2008

Digital Designers Rediscover Their Hands (NYT)

Digital Designers Rediscover Their Hands

GEVER TULLEY has only one qualification for training software designers how to become more creative. He teaches children how to build objects like gravity-powered wooden roller coasters with their hands, at his Tinkering School in Montara, Calif., south of San Francisco.

Now Mr. Tulley does the same thing for dozens of adults who are in the front ranks of software design at Adobe, the big software supplier based in San Jose, Calif. In daylong workshops, about 100 Adobe designers wrestle with plastic beads, small electronic displays, Ikea water glasses and tiny sensors to create wacky motion games. Usually, about the only thing these folks touch on the job is a computer mouse.

“Some people thought we were crazy to do this,” says Michael Gough, a vice president for design at Adobe. “But for others, the experience has started to inform how they work,” giving them a better appreciation of how customers experience Adobe’s programs.

“So we’re going to keep pushing it,” Mr. Gough says.

Mr. Tulley’s transformation highlights a little-noticed movement in the world of professional design and engineering: a renewed appreciation for manual labor, or innovating with the aid of human hands.

“A lot of people get lost in the world of computer simulation,” says Bill Burnett, executive director of the product design program at Stanford. “You can’t simulate everything.”

Using computers to model the physical world has become increasingly common; products as diverse as cars and planes, pharmaceuticals and cellphones are almost entirely conceived, specified and designed on a computer screen. Typically, only when these creations are nearly ready for mass manufacturing are prototypes made — and often not by the people who designed them.

Creative designers and engineers are rebelling against their alienation from the physical world. “The hands-on part is for me a critical aspect of understanding how to design,” said Michael Kuniavsky , a consultant in San Francisco who for three years has convened a summer gathering of leading designers, called “Sketching in Hardware.”

At last month’s session, at the Rhode Island School of Design, attendees broke into small groups, wielding soldering irons and materials their grandfathers probably knew more about.

Such experiences hone instinct and intuition as opposed to logic and cognition, advocates say, and bring the designer closer to art than science.

“I’m not sure employers are recognizing the importance of hands-on,” Mr. Kuniavsky says.

Mr. Gough began to appreciate the possibilities of Mr. Tulley’s “learn by making” idea for Adobe only after his own children attended the Tinkering School.

Part of corporate resistance to experimenting with hands-on activities comes from the difficulty of measuring the value of paying employees to, say, build a go-cart or a radio set while in the office. Yet educators say the benefits, even if intangible, are clear. “All your intelligence isn’t in your brain,” Mr. Burnett says. “You learn through your hands.”

At Stanford, the rediscovery of human hands arose partly from the frustration of engineering, architecture and design professors who realized that their best students had never taken apart a bicycle or built a model airplane. For much the same reason, the Massachusetts Institute of Technology offers a class, “How to Make (Almost) Anything,” which emphasizes learning to use physical tools effectively.

“Students are desperate for hands-on experience,” says Neil Gershenfeld, who teaches the course.

Paradoxically, yearnings to pick up a hammer — or an oscilloscope — may deepen even as young people immerse themselves in simulated worlds. “People spend so much time in digital worlds that it creates an appetite for the physical world,” says Dale Dougherty, an executive at O’Reilly Media, which is based in Sebastopol, Calif., He manages a magazine, Make, that is devoted to building digital-era gear.

Fifty years ago, tinkering with gadgets was routine for people drawn to engineering and invention. When personal computers became widespread starting in the 1980s, “we tended to forget the importance of physical senses,” says Richard Sennett, a sociologist at the London School of Economics.

Making refinements with your own hands — rather than automatically, as often happens with a computer — means “you have to be extremely self-critical,” says Mr. Sennett, whose book “The Craftsman” (Yale University Press, 2008), examines the importance of “skilled manual labor,” which he believes includes computer programming.

EVEN in highly abstract fields, like the design of next-generation electronic circuits, some people believe that hands-on experiences can enhance creativity. “You need your hands to verify experimentally a technology that doesn’t exist,” says Mario Paniccia, director of Intel’s photonics technology lab in Santa Clara, Calif. Building optical switches in silicon materials, for example, requires engineers to test the experimental switches themselves, and to build test equipment, too.

Bringing human hands back into the world of digital designers may have profound long-term consequences. Designs could become safer, more user-friendly and even more durable.

At the very least, the process of creating things could become a happier one. While working in simulated computer worlds has undeniable appeal, Mr. Tulley says, “the physical act of making things helps the whole person.”

G. Pascal Zachary writes about technology and economic development. E-mail: gzach@nytimes.com.

Friday, August 15, 2008

3 Secrets to a Site that Sells (Entrepreneur.com)

3 Secrets to a Site that Sells

Put these tips in place to turn browsers into buyers.


URL: http://www.entrepreneur.com/ebusiness/ebusinesscolumnist/article196480.html

So, you've got your site up. Now what? You need to drive traffic, grow your opt-in list, make sales and work on your SEO. The list seems endless.

Step back for a minute and realize it's not possible to do everything at once. Once you've built your website, the first thing you should do is make your sales process watertight.

There's no point spending a ton of cash on pay-per-click ads to drive targeted traffic to your site if none of those visitors buy anything.

Follow this three-point sales action plan before you spend a bundle on attracting visitors.

1. Get your sales copy in top shape
You've got less than five seconds to convince people to stay on your website, so your headline has to grab them and compel them to read on. The best headlines tell visitors they've found exactly what they're searching for and make them curious enough to keep reading.

But don't let your readers slip through your fingers once you've grabbed their attention with a hot headline.

Sales copy is what turns visitors into customers. So make sure it guides people through a streamlined process that:

  • Identifies with their problem and builds your credibility
  • Engages them--and explains why you can help
  • Tells them how they'll benefit from your product
  • Overcomes any objections they may have
  • Compels them to take action--and tells them exactly what to do

Good sales copy funnels your readers through a tight sales process and doesn't give them a reason to click away. Take a look at your own and see if all the elements are in place, and if not, give it more of the attention it deserves. (Here's a more detailed article on sales copy.)

2. Collect testimonials
What's more trustworthy than a personal recommendation? A good testimonial can persuade even the most skeptical potential customer to buy from you.

Testimonials prove that your product really works--that it does exactly what you promise. And if you run a small business and haven't built your reputation, testimonials are indispensable.

Here's how to gather quality testimonials and benefit from them immediately:

  • If you don't have any customers yet, give your product away to a group of people in your target market in exchange for their feedback.
  • If you have some positive feedback from customers, contact them and ask permission to use their comments on your site.
  • Don't be afraid to ask for testimonials. Invite customers to give you their vote of confidence with an e-mail link that says, "Click here to tell us what you think!"
  • E-mail your buyers after they've purchased your product to ask them how they're enjoying it.

Try to get testimonials that are full of concrete benefits. How much money did someone save? How much time would they have spent without your product? How much better did they perform than before?

Let your visitors know these are real people. A first name, last name and location will prove it. A photo's great. And don't forget video.

You'll find dozens of opportunities to use testimonials throughout your site: on your homepage, within your sales copy, on a special testimonial page, on relevant product pages or in relevant product listings, so don't hesitate to use them where you can.

3. Make it easy to buy
I'm always amazed how many sites make it difficult for you to buy from them. According to market research from the Gartner Group, more than 50 percent of web sales are lost because visitors can't find what they're looking for. Don't make that mistake.

  • Name your navigation buttons clearly so it's obvious what people will find when they click on them.
  • Keep your navigation simple and consistent throughout your site, so people don't have to click any more than necessary. Ideally, someone should be able to buy from you in two clicks at most.
  • Use "Buy Now" buttons that link to your shopping cart or order page every time a product is shown--especially if you have a catalog site.
    And when people click to your sales page, make things easy for them.
  • Provide a range of payment options. Accepting credit cards is an absolute must, but PayPal, Google Checkout or even a downloadable mail-in form make it possible for anyone to complete a transaction.
  • On your order form, ask only for the information you need. For example, if you sell an e-book, it's unlikely you'll need a home address. The less information people have to give you, the better they like it.
  • Don't underestimate the power of including a phone number people can call if they have any questions.

Sales copy, testimonials, shopping cart. Once you've got these three crucial elements of your sales process shipshape you can confidently drive targeted traffic to your site--and know it'll convert!

Derek Gehl is Entrepreneur.com's e-business columnistand the CEO of the Internet Marketing Center. He has just released the completely updated 2008 edition of his comprehensive internet marketing guide,The Insider Secrets to Marketing Your Business on the Internet.

First phase of $100 million Guanajibo high-tech industrial park all set (CBW)

First phase of $100 million Guanajibo high-tech industrial park all set

By : LAWSON D. THURSTON
Edition: August 14, 2008 | Volume: 36 | No: 32

TechnoEconomic Corridor facilitating development of ‘knowledge economy’ in western region; total $360 million investment over 10 years projected

The first phase of the $100 million redevelopment of the Guanajibo Research & Innovation Park (GRIP) in Mayagüez is all set to be inaugurated next month. The facility, a conversion of an existing industrial park which now includes a brand-new bioprocessing development & training complex, will become the first high-tech industrial park to be inaugurated in Puerto Rico. Its aim is to attract local technology entrepreneurs and small to midsize international projects in aerospace and life sciences.

“GRIP is in the first of a three-phase development process that up until now has seen an investment of $20 million. The second phase will involve an investment of $50 million, and the third phase should be approximately $30 million, rounding out the total investment projected for GRIP at $100 million. This is a 10-year project in which the park’s transformation should be completed sometime in 2017 or 2018,” said Nelson Perea, Puerto Rico TechnoEconomic Corridor (PRTEC) executive director.

Meanwhile, development is under way for Las Américas Technology Park in Moca which, unlike GRIP, isn’t a conversion of an existing park, but a brand-new, world-class technology park geared toward international projects in computers & information technology (C&IT) and aerospace.

Las Américas is a first-of-its-kind joint, public/private collaboration between the Puerto Rico Industrial Development Co. (Pridco) and Hewlett-Packard (HP), which involves a custom-made concept, or constructing buildings to clients’ specifications. “So far, $30 million have been invested and/or committed to the project. Las Américas Technology Park will be for larger projects (clients), and the first phase of this park should be completed sometime in 2012 or 2013.”

PRTEC, is a nonprofit organization geared to the economic development of Puerto Rico’s western region, with a focus on innovation and high-tech industries through collaboration among private companies, government entities and academia.

According to Perea, his organization is focused on three main areas: the development of infrastructure initiatives and the business environment; innovation and entrepreneurship; and talent and development of the work force.

In addition, PRTEC oversaw the administration of two incubators in the region (ViTEC and ViTEC2), which have proven to be quite successful, recently promoting two technology startups (Crawlability Inc. and renewable Solutions Engineering) through the incubation program.

Established in 1999, ViTEC is the only high-tech business incubator in Puerto Rico. ViTEC2 focuses on helping tenants commercialize their products and/or technologies as well as providing a network of specialized resources, including access to seed funding. Near the University of Puerto Rico (UPR) Mayagüez campus, the incubators will move to the GRIP location within one year to 18 months.

“Total investment and economic impact on the western region once the projects are completed is estimated at $360 million, which consists of $100 million in infrastructure development—including the two technology parks (GRIP and Las Americas) and improvements to the Aguadilla airport; $110 million in Research & Development (R&D), more than 90% of which is by the University of Puerto Rico (UPR); and $150 million in private-sector investment and net payroll of new companies that recently established in the region or expanded operations,” concluded Perea.

Court says copyrights apply even for free software (AP)

Court says copyrights apply even for free software


SAN FRANCISCO (AP) -- In a crucial win for the free software movement, a federal appeals court has ruled that even software developers who give away the programming code for their works can sue for copyright infringement if someone misappropriates that material.

The decision by the U.S. Court of Appeals for the Federal Circuit in Washington, D.C., helps clarify a murky area of the law concerning how much control programmers can exert over their intellectual property once it's been released for free into the so-called "open source" software community.

People are free to use that material in their own products, but they must credit the original authors of the programming code and release their modifications into the wild as well, a cycle that's critical for free software to continue improving.

Because the code was given away for free, thorny questions emerge when a violation has been discovered and someone is found to have shoved the code into their own for-profit products without giving anything back, in the form of attribution and disclosure of the alterations they made.

In the latest case, which involved a computer application that model-train enthusiasts use to program the chips that control their trains, the U.S. District Court in San Francisco ruled that the plaintiff could sue for breach of contract but not copyright infringement.

The distinction is important because it's easier to recover monetary damages in a copyright-infringement case.

Robert Jacobsen, who manages an open source software group that created an application he claims was infringed, sought an injunction against KAM Industries, which makes a competing product. The lower court denied Jacobsen's motion. The appeals court vacated that ruling Wednesday and returned the case to the district court.

"Traditionally, copyright owners sold their copyrighted material in exchange for money," the court said. "The lack of money changing hands in open source licensing should not be presumed to mean that there is no economic consideration, however."

Monday, August 11, 2008

It's Time to Rethink the Business Plan Outline (Entrepreneur.com)

It's Time to Rethink the Business Plan Outline

Use these tips as a guide to help you make the most of your time when creating a business plan.


URL: http://www.entrepreneur.com/startingabusiness/businessplans/businessplancoachtimberry/article196334.html

Last week I answered an e-mail from a woman who wanted to know what to include as a "fulfillment and delivery" category in a business plan for a gym. Her problem was that she didn't see how that general topic--fulfillment and delivery--applied to a gym business.

I gave her two specific answers to that question:

  1. Don't include it. It doesn't apply to your business. Delete that topic from the outline you're working on and go from there.
  2. Fulfillment of a service in a gym business is about: hours that it's open; equipment; services like massage, physical therapy and personal training; locker rooms; laundry and other facilities.

I like the first answer better, frankly, because it helps debunk the myth of a standard business plan outline. That's particularly sensitive to me because of my involvement with Palo Alto Software, which I founded, and Business Plan Pro, which I actively support. I've said before that the most common mistake made by business plan software users is accepting the standard outline and its content as a rigid checklist.

Whatever business plan outline, tool or format you start with--Business Plan Pro, Microsoft Office, a book, magazine article, website recommendation or whatever--is going to be more useful to you if it's recognized as a tool, a guideline and a set of recommendations rather than a checklist.

Every business and every step in its history is unique, so a good business plan should also be unique. It matches what your business needs, not what the standard says.

For example, take the management summary that's almost always included in the standard business plan outline and business plan contents. It describes your management team including key members, their functions, their professional backgrounds and their accomplishments.

However standard as that piece of the plan might seem, it's often completely irrelevant. While every company should manage itself and steer its growth with planning, not every company needs a formal business plan document with a carefully prescribed outline and a complete list of standard contents. If you're running a business that doesn't need to find investors or borrow money from a bank, then you probably don't need to describe yourself (that is, your management team) to yourself, so that chapter is a waste of time. And if it's a waste of time, don't include it.

I could cite a lot of other examples, but I'll settle for two more. First, although most standard outlines include a company summary with history and ownership and such, that's silly when the plan is for your internal management and growth, not for outside readers. Second, although most standard outlines don't include the exit strategy, a business plan for investors needs to have an exit strategy because without it investors aren't interested.

I've dealt with this myth a lot in my 20-plus years involved in the business plan software industry. People think that business plan software imposes a standard outline or standard content--because a lot of bad business plan software does. But it shouldn't. Good business plan software suggests an outline and some standard contents, then fades into the background and lets you decide.

In fact, if there's one most common error in the use of business plan software, it's using the standard default outline without considering what does and doesn't apply to your business.

Tim Berry is the "Business Plans" coach at Entrepreneur.com and is president of Palo Alto Software Inc., which produces the industry's leading business planning software, Business Plan Pro, as well as other popular planning applications for businesses. He is the author ofThe Plan-As-You-Go Business Plan published by Entrepreneur Press.

How Patent Law Changes Could Hurt Small Inventors (Entrepreneur.com)

How Patent Law Changes Could Hurt Small Inventors

A new bill currently being considered in the House brings changes that no longer look out for the little guy.


URL: http://www.entrepreneur.com/startingabusiness/inventing/inventionscolumnisttamaramonosoff/article196328.html

Regular readers of this column know I encourage new inventors to spend less time focusing on patents and more time concentrating on the business aspects of their inventions. Most of the time, this advice rings true. But because there's a debate currently raging on Capitol Hill about amending the existing patent law--changes that could potentially negatively impact smaller, independent inventors--I felt it important to put this issue front and center in this month's column.

Over the past several months, Congress has been discussing numerous changes to existing patent law. While certain elements of the legislation will bring the U.S. patent system in line with much of the rest of the world by potentially simplifying the process of filing, granting and disputing patents, my concern is that the direction and consequences of this new legislative effort will unfairly impact smaller inventors, who may face increased financial and administrative burdens throughout the patenting process.

The best information I found on the proposed changes was shared with me and best summed up by Stuart West, the founder and a principal attorney with West & Associates. Here's what you need to know:

Proposed Major Changes
There are two very similar bills currently in process--one in the House (H.R. 1908) and one in the Senate Bill (S. 1145). In May, the Senate removed their bill from consideration from this session (although it could easily reemerge). The bill in the House was passed--with a fairly close vote of 222 to 175--on September 7, 2007, and while it has several more hurdles to clear, including passage by the Senate, it's the furthest along, so let's focus on this one.

There are six major changes proposed by the House bill that could negatively impact the small inventor:

  1. A switch from a first-to-invent system to a first-to-file system
  2. Substantial changes to patent infringement damages
  3. Introduction of a post-grant review/objection period
  4. Permission granted to third parties to submit art directly to examiners, providing them the ability to impact patent prosecution
  5. Substantial limitations on the selection of courts for patent litigation
  6. Early appeals in litigation matters

Let me review these one by one.

1. Switching to a first-to-file system. Under current patent law, when two patent applications are filed for the same invention by different inventors, the inventor who can prove he or she was the first person to invent it is legally entitled to the resulting patent. Presently, these conflicts are resolved within the U.S. Patent and Trademark Office (USPTO) through interference proceedings. Under the proposed Patent Reform Act, however, our current "first to invent" system would be replaced with a "first to file" system, which would award patents to the party that was "first off the blocks" to file the patent.

While this new process would bring our system into synch with the rest of the world, it also gives the advantage to the person with the largest wallet and existing infrastructure. For instance, let's say Inventor A has an idea and has begun working on it but lacks the resources to file for a patent. Along comes Large Company B, which independently developed the same idea and is able to file for a patent right away because they have the resources available. In this example, it doesn't matter who had the idea first; it only matters who could afford to file for the patent. Score: Large Company B = 1. Small Inventor A = 0.

2. Extensively changing the law that affects patent infringement damages. Current U.S. patent law says that a patent holder is entitled to damages adequate to compensate for the patent infringement, but in no event can the damages be less than a "reasonable royalty." That means if the patent holder has actually manufactured the product that's been infringed upon by someone, then the patent holder is entitled to lost profits. Additionally under current law, if the patented item is only a component of a sold product, the patent holder is entitled to damages based on the value of the complete item.

Under the new rule, the amount of the "reasonable royalty" would be based solely on the value added to the item by the inclusion of the patented component. This would limit an individual inventor's clout, as the payment for damages would most likely decrease under the new law.

The bill also limits the potential situations where the court could determine a willful infringement (and thereby enhanced/treble damages) to situations where the patent owner establishes, by clear and convincing evidence, that 1) the infringer continued to infringe after receiving a specific written notice from the patentee; 2) the infringer intentionally copied the patented invention with knowledge that it was patented; or 3) after having been found by a court to have infringed on a patent, the infringer infringed the same patent again.

More damaging to small inventors, though, is that the new bill creates a "good faith belief" defense, which can be raised by showing that the defendant had an "informed good faith belief that the patent in question was invalid or unenforceable, or would not be infringed by the conduct later shown to constitute infringement of the patent." While the U.S. Supreme Court recently established a similar exception, this codification increases the burden on the original patent holder, who would need to show that the infringement was intentional and that the infringer had a "good faith belief" that he wasn't actually infringing. In my judgment, this once again plays to the benefit of those with greater legal resources. Score: Large Company B = 2. Small Inventor A = 0.

3. Introducing a post-grant review. Presently, once a patent is granted by the USPTO, it is presumed valid and cannot, for the most part, be challenged except through legal proceedings. Under the proposed bill, however, the USPTO would now allow petitions to be filed for the administrative cancellation of an issued patent within 12 months of the patent's issue ("first window"). During this first window of review, there would be no presumption of the validity of the patent in question.

During the review window, the burden to establish invalidity is by "a preponderance of the evidence," a lesser burden of proof than the "clear and convincing" standard currently in use (which would remain the standard required to invalidate a patent in court). What would all this mean for patent holders? That for the first 12 months after its issue, a patent may not be as secure as it is today. Score: Large Company B = 3. Small Inventor A = 0.

4. Third-party interference in patent prosecution. Under existing U.S. patent law, third parties are essentially excluded from the patent prosecution process; the process involves just the filer and the patent examiner. As currently proposed in the House bill, however, third parties would now be permitted to submit patents, published applications or other printed publications to the patent examiner, thus potentially interfering with, complicating or preventing issuance of the inventor's patent. Score: Large Company B = 4. Small Inventor A = 0.

5. Limiting patent litigation locations. Patent infringement suits may currently be brought to court in any district where the defendant is subject to personal jurisdiction. In practice, this has allowed for a patent suit to be brought wherever the product accused of infringement is sold.

Under the proposed law, however, plaintiffs could only bring suit 1) where a defendant has its principal place of business or is incorporated; 2) where the defendant has committed substantial acts of infringement and has a regular and established physical facility that constitutes a substantial portion of its operations; and, 3) under certain limited circumstances, where the plaintiff resides.

When an inventor can file a claim in his or her home town, they are much more likely to be able to afford to defend their patent than if they have to file in the home state of the offender. Again, this proposed change clearly falls to the advantage of those entities with greater resources. Score: Large Company B = 5. Small Inventor A = 0.

6. Early litigation appeals. Under current U.S. law, appeals are only permitted from a final judgment--a ruling that ends the litigation. The new laws, however, permit a party to appeal a district court's claim construction order before a final judgment has been made on the merits.

This option could create substantial delays in the determination of a patent litigation. Right now, you basically have to win or lose before you can appeal. Under the new system, you can begin the appeal process (and therefore stall the underlying base litigation) at several points throughout the base litigation. In other words, the case can conceivably be passed back and forth several times between the District Court and the Federal Circuit Court of Appeals before a first judgment is even rendered. Then, after all these interlocutory appeals, the case could still be appealed to the Federal Circuit Court of Appeals. Again, this is a costly process that plays to the advantage of large companies. Final Score: Large Company B = 6. Small Inventor A = 0.

It's Your Move
If these potential legislative changes concern you, contact your own members of Congress (www.house.gov, www.senate.gov) and ask them to look out for the interests of independent inventors.

Tamara Monosoff is Entrepreneur.com's "Inventions" columnist and the founder and CEO of Mom Inventors Inc., a product development and manufacturing company. She's also the author of The Mom Inventors Handbook: How to Turn Your Great Idea Into the Next Big Thing and Secrets of Millionaire Moms.

Thursday, August 7, 2008

The Permission Problem (New Yorker)

In the second decade of the twentieth century, it was almost impossible to build an airplane in the United States. That was the result of a chaotic legal battle among the dozens of companies—including one owned by Orville Wright—that held patents on the various components that made a plane go. No one could manufacture aircraft without fear of being hauled into court. The First World War got the industry started again, because Congress realized that something needed to be done to get planes in the air. It created a “patent pool,” putting all the aircraft patents under the control of a new association and letting manufacturers license them for a fee. Had Congress not stepped in, we might still be flying around in blimps.

The situation that grounded the U.S. aircraft industry is an example of what the Columbia law professor Michael Heller, in his new book, “The Gridlock Economy,” calls the “anticommons.” We hear a lot about the “tragedy of the commons”: if a valuable asset (a grazing field, say) is held in common, each individual will try to exploit as much of it as possible. Villagers will send all their cows out to graze at the same time, and soon the field will be useless. When there’s no ownership, the pursuit of individual self-interest can make everyone worse off. But Heller shows that having too much ownership creates its own problems. If too many people own individual parts of a valuable asset, it’s easy to end up with gridlock, since any one person can simply veto the use of the asset.

The commons leads to overuse and destruction; the anticommons leads to underuse and waste. In the cultural sphere, ever tighter restrictions on copyright and fair use limit artists’ abilities to sample and build on older works of art. In biotechnology, the explosion of patenting over the past twenty-five years—particularly efforts to patent things like gene fragments—may be retarding drug development, by making it hard to create a new drug without licensing myriad previous patents. Even divided land ownership can have unforeseen consequences. Wind power, for instance, could reliably supply up to twenty per cent of America’s energy needs—but only if new transmission lines were built, allowing the efficient movement of power from the places where it’s generated to the places where it’s consumed. Don’t count on that happening anytime soon. Most of the land that the grid would pass through is owned by individuals, and nobody wants power lines running through his back yard.

The point isn’t that private property is a bad thing, or that the state should be able to run roughshod over the rights of individual owners. Property rights (including patents) are essential to economic growth, providing incentives to innovate and invest. But property rights need to be limited to be effective. The more we divide common resources like science and culture into small, fenced-off lots, Heller shows, the more difficult we make it for people to do business and to build something new. Innovation, investment, and growth end up being stifled.

Opportunities forgone aren’t always easy to see. The effects of overuse are generally unmistakable—you can’t miss the empty nets of fishing boats working overfished oceans, or the scrub that covers an overgrazed field. But the effects of underuse created by too much ownership are often invisible. They’re mainly things that don’t happen: inventions that don’t get made, useful drugs that never get to market.

In theory, one should be able to break a gridlock by striking a deal that would leave all sides better off. Sometimes that happens. Just the other week, for instance, Nokia and Qualcomm settled a three-year-long patent battle, which could accelerate the spread of third-generation cell-phone technology here and in Europe. In a less contentious fashion, products like the DVD player quickly became mainstream and affordable because many companies worked together to form patent pools. Even the fact that there’s music on the radio is the result of songwriters’ collectively allowing two main groups, ASCAP and BMI, to handle the licensing of their songs to radio stations.

One reason deals founder is that there are simply too many interested parties. If, in order to create a new drug, you have to strike bargains with thirty or forty other companies, it’s easy to decide that the price is too high. But often things go awry because owners won’t make a deal at a reasonable price, as with America’s nascent aircraft industry. Or take a problem that bedevils the oil-and-gas industry. When different companies own adjacent patches of an oil field, each will be tempted not only to drill its own patch but also to try to suck out the resources of its neighbor’s patch. For geological reasons, overdrilling actually reduces the total amount of oil you can get out of the field—all sides end up worse off. An obvious solution is to have one company do the drilling and share the revenues with the other players. But, as the economics professor Gary Libecap has shown in a historical analysis, such agreements are often reached only belatedly, if ever.

Recent experimental work by the psychologist Sven Vanneste and the legal scholar Ben Depoorter helps explain why. When something you own is necessary to the success of a venture, even if its contribution is small, you’ll tend to ask for an amount close to the full value of the venture. And since everyone in your position also thinks he deserves a huge sum, the venture quickly becomes unviable. So the next time we start handing out new ownership rights—whether via patents or copyright or privatization schemes—we’d better try to weigh all the good things that won’t happen as a result. Otherwise, we won’t know what we’ve been missing.

Monday, August 4, 2008

The Patent Office Can’t Do It All Alone: Public Participation Is Key to Ensuring Patent Quality (EFF)

The Patent Office Can’t Do It All Alone: Public Participation Is Key to Ensuring Patent Quality

Posted by Emily Berger

It’s not news that there are patents out there that never should have been granted. Whether it’s the “invention” of entertaining a cat with a laser pointer, combining two well-known car features in a manner that offers no unexpected new outcome, or selling CDs of a live concert immediately after the show, the patent office allows some bad patents.

Our Patent Busting Project takes this problem on by asking the patent office to “reexamine” patents – that is, to consider again whether those patents should have been issued in the first place in light of prior art (ideas that existed before the patents) that we’ve located and brought to the patent office’s attention.

And in March, while the Patent Reform Act was still on the Senate’s schedule, we commented on the value of one form of reexamination known as an “ex parte” reexam (the only form of reexamination available for older patents) and provided some statistics. Dennis Crouch, who maintains a blog on patent law read by much of the patent law community, also recently evaluated ex parte reexaminations and provided some nice demonstrative graphs.

The data shows that in over three-fourths of ex parte reexaminations, the patent examiners narrow or cancel the patent claims in question, meaning that the prior art introduced during reexam usually has a dramatic effect on the scope of the patent. On inter partes reexamination (a newer type of reexamination in which the party seeking reexamination is allowed to play a greater role), many of the patents end up completely obliterated -- 64% of all such reexamination requests resulted in canceling the claims altogether. When patent claims that aren’t actually novel are canceled, the patent owner can no longer exclude others from making, using, or selling something that he never invented. And when patents do teach novel ideas but were written with too broad of a scope, narrowing those claims can prevent meritless claims of patent infringement.

EFF is releasing a report finding that there are at least three ways to work toward improving patent quality, including through reexamination:

1. Encourage Organized Efforts to Have a More Thorough Review of Patent Applications

  • Increase third party efforts to improve prior art searches and to facilitate a stronger understanding of the world of prior art.

2. Support Organized Efforts After Patents Have Been Issued

  • Reexaminations should be limitless in time and with no financial harm limitations (in many countries, public interest organizations like EFF are only allowed to challenge issued patents for a short period of time after they have issued, even though often a patent’s threat to innovations may not be immediately obvious).
  • Don't Streamline. Maintain a variety of options for reexamination requesters.

3. Increase Access to Information in the Patent Office

  • Update information in the patent office’s online databases regularly.
  • Conduct and publish regular evaluations of effectiveness and performance within the Patent Office.

In addition to providing an organized effort through the Patent Busting Project in furtherance of the second goal, EFF is working in conjunction with Mozilla, Yahoo, and the Internet Archive to create a database that will work to achieve the first goal. This Prior Art project is still under development.

You Bought It, But You Don't Own It (EFF)

You Bought It, But You Don't Own It

Posted by Corynne McSherry

In a devastating blow to user rights, an Arizona federal court has ruled that consumers can be guilty of copyright infringement if they violate the end user license agreement ("EULA") that comes with the software--even where the so-called "violation" is specifically excluded from copyright liability. Why? Because those protections only apply if you own the software you buy--not if you license it. Stunningly, this means that "cheating" while playing a computer game can expose you to potentially huge statutory damages for copyright infringement.

As we noted back in May, Blizzard Entertainment, the company that makes the hugely popular massively multi-player online role-playing game World of Warcraft, sued Michael Donnelly, the developer of Glider, a program that helps WoW users raise their character level to 70 by "playing" for the user. Blizzard said that because the license agreement forbids using Glider with WoW, Glider users are committing copyright infringement when they load copies of WoW into RAM in order to play the game, and Donnelly is illegally contributing to that infringement.

As Public Knowledge explained in its brief, Blizzard's theory confuses a copyright holder's intellectual property rights in the software it develops with a buyer's rights in the actual copy of the software. An owner of software has a right to copy it if that copy is essential to the customer's use of the software. (See Section 117 of the Copyright Act.) This rule helps balance the rights of the copyright holder to manage and benefit from its expressive work, and the rights of the public to use and build on that work.

Blizzard argued that players aren't owners but merely software licensees, so Section 117 doesn't apply. But the question of whether a user is an owner for purposes of Section 117 depends the substance of the transaction, not just how one party wants to describe it. For example, if you buy the software, keep it on your own computer and don't have to return it when you are done, you probably own it.

Sadly, the court in this case found otherwise. It held that because Blizzard says the software is licensed, and because it imposes restrictions on use (including such standard restrictions as a requirement that a user who transfers her copy of the software to another must delete all copies from her computer). And that means that users who violate the EULA could be on the hook for copyright damages--including statutory damages, which start at $750 and rise to as high as $150,000 per infringed work. Most disappointing, the court gave short shrift to the absurd policy consequences of treating users who violate a contract as copyright infringers. The logical implication of the holding is that any time you buy software, be it film editing software, accounting software, iTunes, Skype, etc., software owners can always use license agreements to prevent you from ever having full control over your software and taking advantage of standard copyright limitations (such as the right to sell your copy [Section 109 of the Copyright Act] or the right to make copies necessary for use of the software [Section 117]). You can buy it, but you can’t own it.

But this decision is not the whole story: this is the third holding on the issue by district courts in the Ninth Circuit in the past three months. Given that the recent decisions vary considerably, it’s likely the appellate court will address the issue in the near term.

There's one bright light on the horizon: the court found that WoW Glider does not violate the DMCA anticircumvention provisions by allowing users to evade "Warden," which scans games players' computers for unauthorized software. The DMCA prohibits the manufacture and sale of technology that allows the circumvention of technological measures that control access to a work. The court correctly held that Warden doesn't "control access" to the WoW software already loaded on a user's computer, and, therefore, WoWGlider doesn't circumvent that access. (Though the court did leave some aspects of the claim open for exploration at trial).

When the Reese's Peanut Butter Cups Principle Doesn't Apply (EFF)

When the Reese's Peanut Butter Cups Principle Doesn't Apply

Posted by Michael Kwun

When I was a kid, it seemed that every third commercial I saw was for Reese's Peanut Butter Cups. In these commercials, a chocoholic would collide with a peanut butter lover, quickly followed by the memorable exchange of "you got peanut butter in my chocolate" and "you got chocolate in my peanut butter." But then something amazing happened. Each of them sampled the combined treats, and their faces lit up with delight as they unexpectedly discovered "two great tastes that taste great together."

The converse is also true: When you combine previously known concepts and the result is utterly mundane, that's not a new invention. Moving peanut butter from glass jars to plastic tubs, for instance; it may be a new combination (peanut butter and plastic, hooray!) but it’s not a novel end product. A year ago, in the case KSR International Co. v. Teleflex Inc., the Supreme Court reminded everyone of just this fact. As the Court explained, "The combination of familiar elements according to known methods is likely to be obvious [and thus unpatentable] when it does no more than yield predictable results." At the time, a lot of people wondered whether this spelled the end for many lame patents that did little more than claim well-known business models recast as novel inventions by requiring that they be done on the Internet.

Less than two weeks after the KSR decision, the Federal Circuit picked up on the Supreme Court's hint in Leapfrog Enterprises, Inc. v. Fisher-Price, Inc. [PDF], invalidating as obvious a patent that simply applied modern electronics to old fashioned devices.

Earlier this month, the Federal Circuit directly applied this principle to the Internet. In Muniauction, Inc. v. Thompson Corporation [PDF], the court invalidated as obvious several claims of a patent describing a particular method of auctioning certain financial instruments on the Internet. These patent claims added nothing new to the prior art except that the patent claims required the use of a web browser, while an earlier system had used a proprietary computer network with specially designed client software.

The Federal Circuit noted that web browsers long predated the patent application's filing in 1998, and indeed that using web browsers in online auctions was well-known at the time. Recalling its prior reasoning in the Leapfrog case, the court concluded that "adapting existing electronic processes to incorporate modern internet and web browser technology" has been obvious for a long time.

The notion that one can obtain a patent on simply doing on the Internet what many did before without the Internet has seemed silly to many for a long time. Thankfully, the Federal Circuit agrees. Anyone want to celebrate with a Reeses?

Paper Catalog + Computer Database = Patent? Um, No. (EFF)

Paper Catalog + Computer Database = Patent? Um, No.


Posted by Michael Kwun

Last week, the patent office agreed to reexamine a patent it granted in 1994 on a "Computer-assisted parts sales method." Orion IP (later renamed Clear with Computers) has filed many, many lawsuits asserting infringement of this and related patents by many, many defendants. Although EFF didn't file this request for reexamination, at one time the patent was owned by Firepond, just like one of the patents on our Patent Busting Project's Ten Most Wanted list.

So just what is this wonderful sales method? In a nutshell, the patent claims ownership over the idea of finding out what a customer wants, electronically finding out what you have that matches that customer's needs, electronically collecting information about the stuff you have to offer the customer, and putting that information into a pitch to the customer.

If you're thinking to yourself, "why that's no different than just looking things up in a catalog," you're not alone; while seeking a closely related patent, the very same applicant told the patent office, "The system essentially computerizes a parts book, with the exception that the system adds the unique element of customer benefits." (I tried, and failed, to figure out what the "unique element of customer benefits" refers to.)

Indeed, if you remove the word "electronically," the patent covers exactly what sales people have been doing for customers for ages. Unfortunately for the patent owner (and fortunately for the rest of us), saying "do it with a computer" does not an invention make.

(For those who want to look into this further, the patent being reexamined is Patent No. 5,367,627 and the control number for the reexamination is 90/010,185. And if you're curious what happens next in the reeexamination, take a look at the handy chart that appears as Appendix A to our white paper on improving patent quality via reexaminations.)

Senators Announce New Intellectual Property Enforcement Bill (EFF)

Senators Announce New Intellectual Property Enforcement Bill


Posted by Richard Esguerra

Last week, members of the Senate Judiciary Committee introduced S. 3325, the "Enforcement of Intellectual Property Rights Act of 2008," a bill that proposes a number of alarming changes to copyright law. The bill is the Senate's gift to big content owners, creating new and powerful tools -- many of which will be paid for by your tax dollars -- for the entertainment industry to go after infringers. But it doesn’t offer a lick of protection for legitimate innovators and technology users that may be buried by the copyright juggernaut.

One of the bill's most disturbing changes would give the Attorney General new powers to sue individuals on behalf of rightsholders like the MPAA and the RIAA. Bill proponents claim that these new powers, which would allow the AG to bring "milder" civil as well as criminal actions, are necessary because some offenses don’t rise to the level of criminal conduct. This justification just doesn’t make sense. If it’s a low-level offense, why should our top cops pursue it? Traditionally, those types of offenses can and will be pursued by the parties who believe they have actually been harmed, namely the copyright owners. The real "problem" may be that some so-called "offenses" can’t be proven beyond a reasonable doubt, the standard for any crime. This new provision would allow the AG to sidestep that high burden of proof -- a burden that gives the average citizen an important measure of protection from the overwhelming power of the government.

The Attorney General of the United States surely has better things to do than serving as muscle for the entertainment industry, especially when that industry is clearly well-capable of enforcing its copyrights on its own.

The bill also seeks to create an Intellectual Property Enforcement Coordinator position in the Executive Office, with an advisory committee consisting of members from various government departments and agencies. Given the extraordinary budget pressures lawmakers now face, it is shocking that they would consider funding a new layer of federal bureaucracy. In fact, the DoJ itself has spoken out against similar Congressional efforts to rearrange its priorities with bureaucratic meddling.

There's more: another provision creates new categories of infringement at the border, suggesting that individuals need the permission of copyright holders to bring copies of music or movies with them overseas or even through the United States. If the bill is passed, something as simple as taking your iPod to Mexico could be considered an infringement of the copyright owners’ distribution right. The bill also proposes to lengthen the list of items that can be impounded as part of a civil copyright infringement suit, while broadening the list of articles that can be seized and destroyed by the government. (Meanwhile, the Anti-Counterfeiting Trade Agreement (ACTA) is being negotiated in secret by a number of countries, pairing this unprecedented public threat with a potentially catastrophic secret one.)

Whether or not you believe the entertainment industry’s claims about the extent of the piracy problem, there is no reason the American taxpayer should be picking up Hollywood’s legal costs while movie studios are celebrating record box office returns and record-breaking single-title revenues.