IP Law Versus Moore's Law
Transforming Banks for a Digital Future: The Winners, The Losers, and the Strategies to Beat the Odds
I have been struck recently by the dramatic escalation in the battle between information owners and information userswhat I referred to as the "other information revolution". In February, a jury ordered Microsoft to pay Alcatel-Lucent $1.5 billion in a patent dispute involving the MP3 compression algorithm. Then, Viacom sued YouTube for copyright infringement involving video postings by YouTube users of television programs owned by Viacom, claiming $1 billion in damages.
The scale of these lawsuits should make us all nervous. And it's going to get worse before it gets better.
The problem underlying these and many other recent disputes involving information technology is that the very idea of intellectual property, which covers the laws of patents, trademarks, copyrights and trade secrets, is a fiction. Intellectual creationsideas, techniques, characters, stories, methodsare not tangibles like parcels of land or barrels of oil. But these products of the mind are very valuable, and to encourage us to spend our time creating them, the law pretends they are a form of property, with the same kinds of rights, responsibilities and protections as physical property.
This fiction worked well at the dawn of capitalism, but only because "stealing" information was difficult. Before Gutenberg invented movable type, the cost of copying a manuscript was incredibly high. Since the industrial revolution, however, technology has made the spread of information faster and cheaper, leading to sometimes vicious struggles over who gets to benefit financially from the new value technology makes possible.
From the player piano to the photocopier to the VCR to the iPod, every major improvement in the price and performance of information sharing has been met with resistance, each time leaving the fiction of information as property a little less believable and a little less useful. The cause of nearly all of today's intellectual property conflicts is information technologyit's IP law vs. Moore's Law.
Consider Cablevision's current struggle for approval to replace the set-top digital video recorders installed in customers' homes with network DVRs to be managed centrally. The functionality would be exactly the same, letting viewers record programs during broadcast for later viewing. The appeal to users and cable operators alike is obvious, as obvious as it is to any IT professionalmove the data storage and data management issues from potentially millions of user locations to a few server farms staffed 24/7.
But a federal court in New York ruled in April that reallocating data management from client to server in this case would mean the difference between legal copying by consumers ("fair use" under the U.S. Supreme Court's beleaguered 1984 Betamax decision) and unauthorized "public performance" by the cable operator when the user later pushed the play button. Moving the box transforms a legal activity into a copyright violation. As Mark Twain said, "truth is stranger than fiction."
We need no further evidence that the concept of intellectual property has lost its meaning in the digital age. As technology advances and the law stays rooted firmly in the past, expect more billion dollar lawsuits. And guess who gets caught in the middle.
Larry Downes is a Fellow with the Stanford Law School Center for Internet and Society.
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