Would Top Sites Really Opt-Out Of Google Based On A Microsoft Bribe?

from the doubtful dept

Every so often, internet pontificators try to come up with ways to "kill Google." It's a silly game, but in an oddly timed move, three people (who have all put forth "how to kill Google" ideas in the past) all suddenly published similar ideas, yet again. Jason Calacanis, Mark Cuban and Tom Foremski all posted similar ideas about how certain sites (such as the top sites in the top search results) could all choose to opt-out of Google and, say, join another search engine like Bing. It's one of those ideas that sounds good for about 5 seconds. And then you actually think about it. First, the numbers being tossed around concerning how much it would cost, say, Microsoft, to convince most of these sites to opt-out of their number one driver of traffic is significantly higher than what's being mentioned in these articles. Many of these sites rely on Google traffic to make a ton of money, and they're not going to throw that away easily. At least in Calacanis' plan he suggests Microsoft offer "50% more than they make in Google referrals" which certainly beats Cuban's idea that many sites would opt-out of Google for $1,000.

Here's the thing, though. Most of those sites worked hard to get to the top of Google for a very good reason: they understand the value of being easily findable. As such, they also recognize that it makes little sense to make themselves less findable at almost any price. Getting anyone to opt-out first (other than suicidal sites like Rupert Murdoch's News Corp.) is going to be nearly impossible. Who would want to risk that? Because the instant they opt-out, someone else would take their place. Quickly. And decisively.

There's value in being found these days, and to be found you need to be easily findable from anywhere if someone's looking for you. Not only would traffic decrease, but so would basic reputation. Even if Microsoft pays you a ton to drop out of Google, people are going to search for your business in Google and when they can't find it, they're not going to care how much Microsoft paid, they're going to think you're a small-time nobody. The best strategy these days, as most web site operators know, is to be as widely available as possible. Opt-ing out of Google because someone pays you some money is a lot more costly than just the lack of traffic.

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China Says Microsoft Violates IP With Windows, Bars Sales

from the well,-look-at-that dept

For years, Microsoft has been among the loudest complainers concerning "piracy" in China, so it's a bit of a surprise to see things switched around a bit. Mesanna was the first of a few to alert us that a Chinese court has found Microsoft guilty of violating the intellectual property of a local firm, Zhongyi Electronics, and demanded that the company cease selling Windows XP throughout China. The issue is the Chinese character fonts. According to Zhongyi, Microsoft licensed them for Windows 95, but not other versions. Microsoft, of course, insists that it is not infringing, and says it will appeal the ruling.

Still, with this ruling, as well as the recent attack on Google for violating copyright in China, it makes you wonder if China is doing this in an attempt to show American firms what might happen if they actually get what they "want" in terms of stronger copyright enforcement in China.

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UK Again Says That Mod Chipping Isn't Legal

from the you-bought-it,-but-you-don't-own-it dept

The war against actually being able to own the products you (thought you) bought continues. An appeal by a guy convicted for installing mod chips in video game consoles in the UK has been rejected. Even though the guy himself might not have been violating copyright law, apparently the fact that such mod chips could be used by others to potentially violate copyright law is enough to get him convicted. So, basically, modifying the hardware that you legally purchased? Not legal.

And... in somewhat related news, a bunch of folks have sent in the story of Microsoft cutting off what may be hundreds of thousands of players from Xbox Live for using modded consoles. Microsoft, obviously, is trying to stop players from cheating (one use of a modded console), which is understandable, and certainly within Microsoft's right. Still, the action does come across as a bit heavy handed. There are perfectly good reasons to mod a gaming console, such as to play unofficial games -- and as much as I understand the desire to stop people from cheating or playing pirated games, it still seems like you should be able to modify hardware that you legally purchased.

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Microsoft Patents Changing User Privileges Temporarily On The Fly

from the sudo? dept

Someone who prefers to remain anonymous points out that the USPTO, in its infinite wisdom, has granted Microsoft a patent (7,617,530) on a method for "elevating" a user's rights temporarily. Basically, it's for a non-admin user who wants to do something (e.g., install a program) that requires admin access, without having to logout and re-login as the admin. As the submitter notes, this sounds like "sudo" or any number of other tools that have been around for ages. Can we submit the following xkcd comic as prior art/evidence of obviousness?

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Microsoft's COFEE Computer Forensic Tools Leaked

from the that-can't-be-good dept

Last year, we wrote about Microsoft's COFEE tools, which are a set of computer forensic and auditing tools that Microsoft puts on a USB key and gives to law enforcement to use in trying to extract info from a computer. There was some fear that it was a "back door," but people insisted it was no such thing, but just a collection of basic tools. Still, the fact that the system was promoted as being useful for decrypting passwords and analyzing a computer's data and internet activity seemed troubling. We noted that if Microsoft was giving it out to law enforcement, it seemed likely that others would have access to it as well.

Well, late last week, reports started showing up noting that COFEE itself had been leaked to various file sharing sites. Apparently, the program had been quite sought after at private tracker What.cd -- though, after it was leaked there, the admins actually removed the torrent.

Still, you have to imagine that the software is very much out there. So, the question still remains, is this a big deal or not? When we did our original post, many people insisted that there was no big deal in Microsoft COFEE and it was just basic everyday auditing software. Yet, when even What.cd is removing the torrent, claiming they "didn't like" what they saw when they examined the software, in terms of "the potential impact on the site and security of our users and staff," it does raise certain questions that are similar to those we originally raised.

So, once again, let's get some feedback from the folks reading here. Is this really a big deal? Or is it just your ordinary tools?

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Microsoft Pulls Out Of Family Guy Sponsorship... Gets Half The Benefit For None Of The Money?

from the did-they-just-pull-one-over-on-Seth-Macfarlane? dept

In the past couple weeks a few folks had sent in various versions of the plan by Microsoft to sponsor an entire episode of the show Family Guy that would involve somehow weaving Microsoft Windows 7 into the story. While some found the whole concept to be "the end of the world," that was pure nonsense. It was a perfect example of how advertising is content, and content is advertising. If the fear was that the episode would suck, well, then it wouldn't act as a very good commercial for Microsoft, then, would it? If the fear was that the episode would be good, then what was the problem?

Either way... it appears that the whole thing is now dead. Reports are coming out that Microsoft has bailed out on the project, claiming that "the content was not a fit with the Windows brand." My first reaction to this was that whoever approved the deal in the first place must not watch Family Guy very much, because the whole show is based on "not being a fit" with pretty much anything.

But the more I thought about it, the more I wonder if Microsoft just pulled a fast one on Fox and everyone else. It's now received a ton of attention for the whole project... and doesn't have to pay Fox any money. Perhaps Microsoft just out-Foxed Fox.

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Lawyers Discussing Business Models

from the dancing-about-architecture dept

Doug Lichtman's latest "IP Colloquium" podcast is on the question of whether or not "content can survive online." Specifically, it's a discussion about "online content business models." Oddly, though, rather than having business model experts, it's a conversation with four lawyers, starting with Doug, and including Brad Smith, General Counsel, Microsoft; Scott Martin, Executive Vice President, Intellectual Property, Paramount Pictures; and Dan Cooper, Vice President, Legal & Business Affairs, MySpace. Lichtman starts it off, oddly, by stating -- as if fact -- that talking about business models online is depressing because there's just not much in the way of business models online for content. I think that's damning things a bit early in the process -- something that comes up again later.

While I realize that the podcast is a legal podcast, it still strikes me as odd to bring together four lawyers to have them discuss business models, when their expertise is not in business at all, but in the law.

The podcast starts out with a discussion on the Google Book search and settlement, but oddly no one even seems to give any credit to the fair use question. But, again, since these are lawyers we're talking about, there really isn't much of a discussion on business models around Google Book Search, but on legal questions -- including a hope that Congress steps in to solve it. Amusingly, Microsoft's Smith early on suggests that it's a question Congress could solve "if the industry got behind it; if copyright holders got behind it." Striking, huh? He basically admits how copyright law works in this country. It's not about what's best for the overall society or economy. It's not about the politicians fixing things where they see a problem. It's not about consumers. It'll happen if the industry gets behind it. Welcome to the way things work in DC. The rest of this part of the discussion is interesting -- and it's one (rare) case where I mostly agree with Lichtman, that as a resource, Google's Book search is incredibly useful, and we should figure out some way for it to happen.

From there, the discussion moves on to other business models, and quickly seems to head off in directions that I don't think are accurate from a business model standpoint. It starts off with two premises set forth by Lichtman, each of which I think is suspect. First, he claims that piracy is a problem because "you can't compete with free." Frankly, I'm sick of this argument because it makes no sense economically or from a business standpoint. Economically, saying that you "can't compete with free" is the same thing as saying you can't compete -- period. It assumes, falsely, that the only way to compete is on price, but the history of the economy shows that's not true. You compete on price or you compete on benefits, and competing on price is often a losing battle anyway. Saying "you can't compete with free" just means you only know how to compete on price. If that's the case, you shouldn't be in business.

And, to make that point clear, tons of companies compete on benefits, and allow other companies to offer lower priced offerings. The popular example, of course, is "water," whereby it's free (or near free) to drink out of the tap, but the bottled water business is a multi-billion dollar business. Why? It tries to compete on other factors -- such as convenience, quality or safety (though, there are arguments that many of these benefits are perceived rather than real). But it's true in just about any other business as well. In the automobile business, a BMW costs more than an entry level Ford, and that's because BMW is seen to have a lot more scarce value. Ford could "copy" BMW, but BMW has its reputation and some amount of prestige that Ford simply can't copy.

Anyone who's in business recognizes that you don't just compete on price. So why is it that so many seem to assume that the only way to compete in the content market is on price?

Lichtman's second premise is that online business models don't work. He says that Hulu hasn't been a success because it doesn't make as much as TV, and that if Hulu displaces TV we "won't have the money to pay for" expensive TV show production. He claims that even if Hulu is really successful, it'll never make enough money to pay for the production of a show like Battlestar Galactica. First off, huh? How does he know that? If Hulu is successful, it absolutely could pay for such production. Already, we're seeing that some of the online ad rates are higher than TV ad rates. Hulu's barely been around for two years at this point. I'd be willing to bet that Hulu's revenue today greatly exceeds the revenue of television two years after it was invented. Give it time, Doug!

He then jumps on Redbox -- sarcastically saying "we're renting movies at a dollar per day?" Suggesting that this will never sustain the development of movies. Really? I always find it amusing when people insist that problems in the DVD market will mean the death of Hollywood. It really was just 25 years ago that Hollywood insisted that the VCR would kill the industry (Boston Strangler, anyone?). Now they finally get their "original" wish, and find that putting movies on recordable media is going away, and it's the worst thing in the world?

Either way, the economic fallacy that Doug seems to be relying on here is twofold. First, he assumes that early business model experiments are set in place and no further innovation will occur that allows them to flourish. He assumes that the markets won't grow, and some of these experiments won't click and get much bigger. Second, he seems to assume that the old revenue numbers for these industries need to be sustained. He doesn't consider that the old revenue numbers may have been a result of monopoly rents, limited competition or technological limits. Markets change all the time, and usually what comes out in the end is much better (subjective, I know, but I'm a believer that the world is a better place today than it was 25 years ago -- and that it will be even better 25 years from now).

But, of course, no one challenges him on this. Scott Martin at Paramount, of course, worries quite a bit about piracy of movies. While he admits (finally!) that he's just the lawyer, rather than the business guy, he discusses it in the terms of adding more windows to movie releases, rather than any discussion of adding more value to the product, or giving people reasons to buy beyond just the content. Then Martin repeats the myth that you can't compete with free, but leads in with a different myth -- claiming that the "copyleft" people say that piracy would go away if they just priced their movies better. That's a strawman argument. Perhaps someone out there made that argument, but it's hardly common. Then he says that "the idea that if we charged $2 a download instead of $10 a download, we'd get rid of piracy is a myth." Sure, it's a myth, but no one said that. You can't get rid of piracy. No one thinks you can get rid of piracy. No one suggested anything you do would "get rid of piracy." What many of us are suggesting is that you can build business models where that piracy isn't a problem. Even the people suggesting you just charge $2 instead of $10 aren't saying it would "get rid of piracy," but that at $2, enough people would pay for it that it would increase profits beyond what the $10 DRM'd version gets you.

Anyway, the discussion goes on from there, including a discussion of the DMCA that again doesn't make much sense to me, but the business/economic analysis throughout doesn't strike me as accurate at all. It's still an interesting discussion, but frustrating because I wish there were at least someone on the panel who would challenge a lot of the "accepted wisdom," put forth by everyone, that doesn't seem to be accurate. Brad Smith, at one point, does point out that this is all a "revenue" problem, and does a pretty good job describing the revenue problem... but then falls into the trap of saying the law needs to "fix the piracy problem" because without that, business models can't be built up.

The last analysis I'll talk about that is again faulty from an economics standpoint again comes from Scott Martin at Paramount, where he tries to defend the importance of DRM, noting that if he flies into JFK he has various price options on transportation: he can buy a car, rent a car, take a cab or take a train. So there are price differentials. He says that without DRM, content is like saying his only option is to buy a car. That is, if he had DRM, they could offer different "rental options" for content, with "one day pricing or one week pricing." But that's totally wrong again. There's a reason for the differential pricing in the transportation options: it's related to the marginal cost of each option and the competitiveness of the market. That's what sets the prices. But with content, the marginal costs are zero, so what he's doing is trying to set up an artificial barrier to pretend the markets are the same.

While I like listening to these discussions, I just find the economic fallacies frustrating.

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Microsoft Wants To Block Out 3rd Party Storage

from the freedom-to-tinker? dept

faceless writes "Xbox Live's Major Nelson (aka Microsoft's Larry Hyrb, Director of Programming for Xbox Live) announced on his blog that the newest Xbox 360 Dashboard update will block unauthorized 3rd party memory devices. These 3rd party items are big sellers because Microsoft charges $30 for a 512MB Memory card and $130 for a 120GB HDD. A 3rd Party 2GB Memory Card is $40 and is also expandable as it supports Micro SDHC cards. A 3rd party HDD is $70, and the Microsoft HDD's are just 2.5" drives in a proprietary enclosure.

Consumers having larger memory devices is good for Microsoft, since more space means people can buy more Xbox Live Arcade games and more Downloadable Content such as new map packs, levels and expansions for retail disk based games, as well as buying and renting Movies and TV Shows via the Xbox 360's online marketplace. Another important factor is these devices have been sold for years. In the case of the hard drives, the Microsoft and 3rd party devices look identical, so many consumers may not even know that they have purchased an unauthorized device.

People on various videogame forums, such as NeoGAF are worried about the content they bought not working and not even being able to get online on their Xbox 360 console if their memory device is locked out by the update."

Once again, this seems incredibly short-sighted by Microsoft. The idea of breaking legitimately purchased hardware that makes the core of Microsoft's profit center (the games) more valuable, this only serves to piss off Microsoft customers and drive them away from Microsoft. Blocking out third party hardware -- especially without a detailed explanation for why -- goes against the basic right to do what you want with your own, legally purchased, hardware.

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How Did Danger Not Backup Its Servers? How Did Microsoft Allow Such A Failure?

from the one-of-those-times-where-epic-fail-applies dept

I bought the very first Danger smartphone the day it came out (rare for me -- I'm not so much of an early adopter on mobile phones). One of the features I liked the best was the fact that all of the data on the phone was immediately and automatically backed up to Danger's servers. Since then, I've always been amazed that other providers didn't make similar features standard. Danger never fully lived up to its hype, and eventually sold out to Microsoft. It was never entirely clear why Microsoft would want Danger, but at the very least you would think that it would make sure that the servers were pretty safe and redundant. Or so you would think. Apparently Danger had a massive server failure and is warning people that their data may be completely lost. The company is telling people not to turn off their devices, as the only way to keep the data alive is to keep the phone going.

It's difficult to think of a system failure that makes a company look quite this bad. Tons of people have Sidekick phones and rely on server backup to keep their data. Not having a working redundant backup is a stunning sort of failure for Microsoft, and should remind people of the inherent dangers in relying on a cloud based service. While there are lots of cloud-based solutions that are quite useful, people are definitely going to need to be able to have alternative local and remote backups to make sure that, in this kind of situation, they're not totally relying on a company who should do things right, but perhaps did not.

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Steve Ballmer Declares 'Free Is Not A Business Model' -- Apparently Unfamiliar With Microsoft's Free Products

from the check-'em-out,-steve dept

Josh W points us to an article about Microsoft new mobile phone software that contains an odd quote from Steve Ballmer, responding to a question concerning Microsoft's plans to compete with Google's free Android mobile operating system:

"Free is not a business model," he said. "We are a commercial company, we will look to gain revenue and profit from our activities. You'll have to ask our competitors if they'll make money on free things."

Internet explorer. Bing. Microsoft's new security software. All free. All offered by Microsoft. Is Steve Ballmer admitting that he doesn't know about any of these things... or is he just expecting that the reporter and the readers of the article are flat-out stupid? Clearly, Microsoft seems to recognize that free is a part of lots of smart business models, so why is its CEO apparently acting clueless on this front? As clearly anyone who thought this through knows, free by itself is not a business model, but free, in combination with a larger business model often makes a lot of sense. That's what Google is doing, and it's what Microsoft is doing as well. So why is Steve Ballmer pretending otherwise?

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Eolas Is Baaaaaaaaack; And It's Suing Everyone Over Embeddable Web Widgets

from the because-otherwise... dept

Well, here we go again. As you may recall, Eolas is a company that claimed to hold a patent (5,838,906) on browser plugins. The company sued Microsoft, and a long drawn-out battle ensued. Even though web inventor Tim Berners-Lee presented prior art and asked the USPTO to invalidate Eolas' ridiculously broad and obvious patent, the USPTO eventually upheld the patent (after initially rejecting claims). Even as Microsoft began presenting evidence that it actually had made use of the technology in question before Eolas applied for its patent, losses in the courts and the Supreme Court's refusal to hear the case eventually resulted in Microsoft agreeing to settle rather than continue to fight.

Since then (two years ago), plenty of people have been waiting for the other shoe to drop, concerning Eolas' plans to sue others. Now we know why it waited. It's now received a new patent -- a continuation patent, which is often used to abuse the patent system by putting forth a broad patent, then filing for continuations to make changes that let an earlier "invention" cover technologies that later become popular. In this case, the new patent (7,599,985), which basically just extends the earlier patent on browser plugins, and extends it to javascript widgets. Yes, those embeddable widgets used all over the web? It appears that Eolas thinks that those are infringing and everyone should pay up.

The new lawsuit has been filed against Adobe, Amazon, Apple, Blockbuster, Citigroup, eBay, Frito-Lay, Go Daddy, Google, J.C. Penney, JPMorgan Chase, Office Depot, Perot Systems, Playboy Enterprises, Staples, Sun, Texas Instruments, Yahoo, and YouTube. Apparently, starting small isn't part of the plan. Not surprisingly, Eolas filed in Eastern Texas using McKool Smith -- one of the most popular law firms representing patent holding firms in East Texas.

I am honestly curious how patent system defenders, who are also programmers, can defend this. I'm sure non-programmers will claim that the patent is valid, but I can't imagine how anyone who has any knowledge of basic programming principles can claim that such a patent is valid. In the meantime, tons of companies doing an incredibly basic thing on the web will now have to waste millions of dollars fighting a ridiculous patent lawsuit. How is this promoting innovation in any way shape or form?

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Yet Another Ridiculous Jury Patent Award Tossed Out

from the stop-letting-juries-do-this dept

Just weeks after we questioned why juries got to set patent awards, since those awards are often ridiculously high and are increasingly being tossed out by higher courts, it's happened again. A jury ruling from earlier this year that would have had Microsoft paying $388 million for patent infringement has been tossed out on appeal. It's become quite clear that juries don't understand most of the actual issues on patent law. At a conference on patent law last week hosted by the Santa Clara University law school, it was pointed out how little information is given to the jury on patent information. For example, professor John Duffy pointed out that jurors were only given 12 pages of information on how patent "obviousness" is determined, which he says is significantly less than any textbook he's ever used -- and yet, they're supposed to make a legal determination on it. So, once again, why does it make sense to let juries make these kinds of decisions?

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Canadian Law Professors Insist Banning The Sale Of Word Is Good For Society & Innovation

from the really,-now? dept

Rob Hyndman points us to two Canadian law professors, Michael Trebilcock and Edward Iacobucci, insisting that patents are "the mother of invention" in an article that mostly spends its time trying to defend the silly injunction (already put on hold) barring Microsoft from selling Word or Office, because it supposedly violates a patent, 5,787,449, on XML editing of a word processed document. There are all sorts of problems with the column, kicking off with Hyndman's question as to how law professors should be considered experts on innovation...

But, let's dig further into the details.

Patents are essential to the modern system of innovation. Once produced, information can be transmitted at zero cost. In the absence of patent protection, would-be inventors become vulnerable to competition that would drive the value of their discovery to zero, leaving them with no compensation for the costs of producing that information in the first place.

This is the usual story. And it sounds good. But there's no factual evidence to support it. That's because it ignores reality. Yes, information can be transmitted at zero cost, but that does not mean that implementation is assured, or that the market stands still. Besides, I'm curious as to the claim "vulnerable to competition," as if competition is a bad thing. Most people recognize that competition drives innovation -- and yet, these law professors are suggesting the exact opposite. That you need less competition to drive innovation.

Furthermore, they are wrong in claiming that in the absence of patent protection "the value of their discovery" is driven to "zero, leaving them with no compensation." They say this as if the compensation is for the idea, rather than the implementation. That is simply wrong. No one compensates you directly for an idea. If you have a good idea, you need to bring a product to market and sell it. If someone else copies that idea, you still have a large first mover advantage and you understand the market better. On top of that, you should be ahead of the curve in terms of improving on the concept for the next iteration. That's competition. It doesn't mean the value of the idea is zero or that there's no compensation. Claiming such makes no sense.

Again, beyond common sense, the historical evidence suggests that these law professors are simply wrong. Countries with no or weak patent protection have seen tremendous innovation over time. And it's because it's competition that's the mother of innovation, not a lack of competition. For well over two hundred years, economists have recognized that monopolies that remove competition are bad for innovation. These lawyers are insisting that the opposite is true, and present no proof.

Microsoft objects that the injunction ordered by the trial judge goes too far. (It has been put on hold until after the appeal, which is to begin Wednesday.) But injunctions are almost always ordered to prevent continuing infringement, and for good reason. To simply order money damages for future infringement would be to force i4i to license out its technology at a court-imposed price.

This is misleading. While it is true that in the past injunctions were the norm, since the US Supreme Court's MercExchange ruling more than three years ago, courts recognize that injunctions often do not make sense. The reason they don't make sense is because they require stopping the sale of an entire product (or lines of products) due to a single infringing feature. That makes no sense, and the courts have recognized this. I'm not sure why these law professors do not.

Just as there are good reasons not to compel citizens to sell or rent out their homes at prices set by judges, there are very good reasons in general to avoid compulsory licensing of intellectual property. Court determinations of the value of intellectual property are necessarily somewhat conjectural, yet damages awards require courts to act, in effect, as price regulators. By contrast, injunctions do not prevent a licensing deal from being done, but rather cede to the owner of the property the authority to set a price. Just as giving homeowners the right to decide whether to sell or rent out their houses does not destroy the housing market, in terrorem arguments about the death of Word under this injunction are without merit.

Again, this is quite misleading. It implies that an injunction leads to the natural market setting the price for licensing, but nothing could be further from the truth. If someone is pointing a gun at your head and negotiating over how much you have to pay to stay alive, that's not exactly a fair and open economic transaction that both parties enter into under their own free will. Claiming that this is somehow a more accurate market is pure folly.

Meanwhile, Microsoft has vociferously argued that despite the trial judge's careful vetting of the evidence, i4i did not establish at trial a firm basis for its damages claim for past infringement. This claim about the speculative nature of past damages sits uncomfortably with Microsoft's opposition to injunctions. Given the complexity of measuring supply and demand for a unique product, it must be true that there is some empirical uncertainty about the precise level of past damages. But if patents are to have value, this uncertainty is unavoidable: A damages award is the only available remedy for infringement that has already taken place.

Again, I have to admit confusion over these claims, which seem to have no basis in reality. It is not "the patent" that has value. It is the product. For sale in the market. And it's the consumer who values it. The fact is that many more people seemed to value a complete package of Microsoft Word. They were not buying it because of i4i's silly and questionable patent. They were buying it because Microsoft Word is a useful product. The difference in sales for Microsoft Word if it had not included XML editing would likely be negligible at best. There is no evidence of damages. If i4i and these lawyers are claiming that the "damages" are i4i's inability to sell its own product, again, that is difficult to square with reality. Competition happens all the time, and it's as good thing. i4i's inability to come up with a product or marketing plan that people wanted is its problem, not Microsoft's.

Also, the lawyers, in claiming that there was "careful vetting of the evidence," conveniently leave out that this was done in East Texas, which has a long history of vetting in favor of patent holders. Don't ask me, ask the bull that TiVo bought.

Protecting i4i's patent protects incentives to invent and the competitive process. In this case, the trial judge wisely offered such protection, while recognizing the court's own institutional limitations, by ordering damages for past infringement and injunctions going forward. While the decision was not a good one for Microsoft, it was clearly in the best interests of society.

Really? So, completely banning the sale of an entire office suite offering because one tiny, rarely used, feature might infringe on some random other company's products is "in the best interests of society"? That seems wholly without support. That would mean making every user of Microsoft's office suite suffer, for the benefit of a small 30 person company that developed a rather obvious concept. How is that possibly in the best interests of society?

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Why Do We Let Juries Set Patent Award Damages? Appeals Court Throws Out Another Jury Award

from the dumped dept

There is a mythology in the US about the value and importance of patents -- and because of that, it's not surprising that patent trials involving juries quite often end with the patent holder being declared victor, and a huge amount being awarded by the jury. Microsoft and Alcatel-Lucent have been involved in a whole series of patent battles recently. Two years ago, a jury found for Alcatel-Lucent on a patent related to MP3 technology, and it awarded Alcatel-Lucent a stunning $1.5 billion. It didn't take long for a judge to toss out that award. More recently, in another patent dispute involving the same parties (but a totally different patent), a jury awarded Alcatel-Lucent $358 million because Microsoft included a "date-picker" calendar tool in Microsoft Outlook. Yet, once again, an appeals court has now tossed out the jury's award amount, noting how ridiculous it is that such a tiny, minor feature should get such a huge dollar value:

The portion of the profit that can be credited to the infringing use of the date-picker tool is exceedingly small.... In short, Outlook is an enormously complex software program comprising hundreds, if not thousands or even more, features. We find it inconceivable to conclude, based on the present record, that the use of one small feature, the date-picker, constitutes a substantial portion of the value of Outlook.

So why do we (as a matter of policy, not law) allow juries to make such decisions when they seem to have trouble picking reasonable amounts, given the nature of the patents and the lawsuits?

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Israeli Claims Patent Over Adding .com To The End Of The Address Bar

from the yup,-that-patent-system-functions-just-great dept

TechCrunch points us to a story about an Israeli company by the name of Netex who is claiming a patent over "www.addressing." What's that? Well, apparently it's the process of simply adding a ".com" to the end of a word you put in a browser address bar. There are all sorts of questions raised by this, and the reporting at the Israeli site Ynetnews leaves a lot to be desired. First, neither Ynetnews nor TechCrunch point to the actual patent. I've been searching on both the supposed inventor's name (Aviv Refuah) and his company's name and I can't find it. If anyone out there can find the actual patent, please post a link in the comments.

The next problem with the article is the claim that this patent is "worth millions" and that Google, Microsoft and Yahoo "will have to pay royalties." It remains to be seen if that's true (and given what's stated, it seems quite doubtful).

Next problem? The article claims that this patent is about the address bar in the browser -- not a search engine box -- though, the reporter doesn't seem to understand the difference between the two. Admittedly, Google now offers a browser in Chrome, but the article keeps referring to the patent as a "search option." Yahoo doesn't offer a browser.

Then there's the issue of claiming that Google and Yahoo "use" this technology:

Refuah says various internet giants such as Google, Microsoft, and Yahoo have been using the program for years, and now they will have to pay royalties to Netex.

That implies -- falsely -- that Google, Microsoft and Yahoo have somehow been using some technology that they got from Netex. It's a common trick used in reporting about patents, but its highly misleading. Much, much, much more likely is that Google, Microsoft and Yahoo simply added a useful and obvious feature, that Netex is now showing up and claiming ownership years later.

Finally, it's tough to say much about the actual patent claims in question -- seeing as we haven't seen them -- but from the Ynetnews description, it's difficult to see how such a thing could possibly be considered patentable (and one would think that Netscape would have some prior art, though I can't remember exactly when Netscape added the ability to add .com to the end of something put in the browser bar). But, honestly, can anyone with a straight face explain why such a thing should be patentable?

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Microsoft's Ad Agency Sued For Violating Product Placement Patent With Bing Ad

from the product-placement-patent?!?! dept

With the rise of the DVR and the death of the captive audience, it's no surprise that product placement has become more and more popular. But would you believe that ad agencies are trying to patent forms of product placement? Apparently, big ad firm WPP is being sued by a company for violating its patent in an ad campaign run for Microsoft's Bing search engine. The patent in question (6,859,936) is for "a method and system for producing program-integrated commercials." Basically, the idea is to use the actors and sets from a TV show to film a regular commercial spot, and then run that during the show itself. Yes, someone got a patent on that. Why? Who the hell knows. This is a perfect example, by the way, of how just because something's "new" it doesn't mean it's not obvious. It's just that it's so obvious most people wouldn't even bother thinking about patenting it.

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Judge Bars Sale Of Microsoft Word For Patent Infringement (Though It Won't Stick)

from the nice-work dept

Just last week, plenty of tech publications were up in arms over the news that Microsoft had apparently secured a patent on XML word processing documents (patent 7,571,169). Of course, when you live by software patents, expect to die by software patents... as a judge (in East Texas of course) has now issued an injunction against Microsoft, barring the sale of Microsoft Word because it infringes on a patent that involves (you guessed it) XML word processing documents.

The judgment against Microsoft in this case actually isn't new. We wrote about it and the $200 million judgment back in May, noting how insane it was that the company holding the patent, i4i, felt that it deserved $98 for every copy of Microsoft Word ever sold. For what? Its patent, 5,787,449, is about XML editing of a word processed document. How that could be worth $98 per copy of Word is beyond me. Actually, how it's patentable at all is beyond me... but that's another story.

Of course, there's about 0% probability that this will actually stop the sales of Word, but it's ridiculous for Judge Leonard Davis to issue this injunction in the first place. As he well knows, the Supreme Court ruled in the MercExchange case that injunctions often don't make sense in patent infringement cases. In that case, the Supreme Court says that a judge should weigh a variety of factors in determining if an injunction is reasonable. From the actual injunction, there's no evidence at all that the judge weighed anything at all. However, he gave Microsoft 60 days to comply, which is ample time for Microsoft to appeal the injunction, and in such cases it's quite common for the appeals court to stay the injunction.

But, honestly, the whole thing shows (yet again) how screwed up the patent system has become. The fact that a judge would ban all sales of Microsoft Word because it can edit an XML document? And that's on top of a $200 million award for infringing on this patent? How can anyone think that's a sane outcome?

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The Next Battle: Enabling Information To Find You -- Or Why Yahoo/Microsoft Is A Distraction

from the helping-information-find-you dept

I have to admit, I wasn't going to write anything at all about the Yahoo/Microsoft search deal. It honestly seemed pretty pointless -- much bluster about nothing at all of importance. After talking it over with an editor at Forbes, however, I agreed to write up an op-ed for them about why the deal is misguided, and I wanted to expand on one part of that here. I just don't think there's very much interesting in fighting the last battle over "search" rather than looking at where things are headed. And, on that front, I noted:

People are discovering that information finds them, rather than them going in search of information. Search already works. The next interesting challenge is in improving the way information finds you, rather than the way you find information.

That is the key point that innovators in the internet space are starting to figure out. Information is much more powerful when it finds you (for example, when it's passed along by someone you trust). But that information doesn't just find you by itself. The internet helps, in making it easy to pass along a link or some text -- or to share/embed/etc. some content. But the tools for sharing information need to improve drastically, and that's where the next excitement will come from. It's in enabling relevant information to find you rather than the other way around. And, Yahoo/Microsoft has nothing to do with that at all.

Separately, this is also why I think sites that are trying to lock up content behind paywalls or limited access are making things worse. They're doing the opposite of where the internet is moving. They're making it harder for their information to find you, and they'll discover that this will lock them out of much of the opportunity.

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Looking Back At The Microsoft Antitrust Suit: Did It Matter?

from the probably-not... dept

We've argued before that the antitrust lawsuit against Microsoft was misguided (though, I'll admit that I was in the camp that thought it made sense at the time, before realizing that was a mistake). The fact that the EU continues to go after Microsoft on antitrust issues seems even more silly. Farhad Manjoo has an article in Slate, officially about why it doesn't make sense to go after Google on antitrust charges, but with most of it detailing why Microsoft wasn't really an antitrust problem:

Many of Microsoft's assets turned out not to matter, because upstarts like Google and old foes like Apple found ways to innovate around them.

Indeed, in many ways Microsoft's size was a liability, not an asset. This is the classic innovator's dilemma; the company was so intent on protecting its cash cows--it derives most of its revenue from two products, Windows and Office--that it was blind to opportunities in new markets. Microsoft couldn't make a Web e-mail system like Gmail, because that would have threatened Outlook. And why should Microsoft bother with free online word processing apps when Office was doing so well? When journalist Steven Levy showed Bill Gates the first iPod, Gates' first reaction was, "It's only for Macintosh?" Gates saw the iPod through the lens of desktop computers; if the iPod connected only to Macs, it didn't pose a threat to Microsoft. What he didn't figure out was that the iPod would herald the iTunes Store, allowing Apple to become not only the most influential entertainment company in the world, but also the dominant software maker for mobile devices. Yes, the first iPod didn't work on Windows. In time, it would help render Windows irrelevant.

Indeed. This is a point that we've raised often before. Underdogs beat out big companies all the time, by changing the rules completely. When we talk patents, we hear people insisting that small inventors can't succeed because big companies will just "steal" their idea, but the simple fact is: if that big company recognizes the value in your idea, then you probably weren't going to succeed in the first place. The real innovators get responses like Gates' above to the iPhone. They come from so far out of left-field that the "big companies" don't see them coming (at all), even when they're right beneath their noses.

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What If Microsoft Had To Approve Every App On Windows?

from the playing-the-what-if-game dept

I've been pointing out why an open platform beats a closed platform over the long haul with regards to the iPhone, and linking to various stories concerning the arbitrary nature of being allowed (or not) on the iPhone. But, Harry McCracken, over at Technologizer, does a great job illustrating the point by playing the "what if" game, and thinking about how Windows would have developed had Microsoft similarly controlled every app. It doesn't take long to realize how much slower innovation would likely have been on the PC platform (though, it might have opened up more of an opportunity for other platforms):

Would Microsoft have distributed Microsoft Office rivals such as SmartSuite or WordPerfect Office via its app store?

Well, maybe, in theory at least-after all, it doesn't sell Microsoft Office as part of Windows, so it couldn't use the "it duplicates functionality that's already in the product" excuse. Call me a cynic, though, but I suspect that competitive office suites would have run into trouble if Microsoft had controlled all Windows software distribution. And hey, didn't WordPerfect duplicate features in Notepad?

How about Netscape Navigator?

When Netscape first appeared in 1994, the current version of Windows (3.11) didn't have a browser. Even Windows 95 didn't have one at first--Internet Explorer was part of the extra-cost Plus Pack. Then again, Windows 95 did ship with the dreadful client for the original version of MSN, a proprietary online service which definitely did compete with the Web. That might have been reason enough for Microsoft to nix Navigator for duplicating Windows functionality. And once IE was part of Windows, Microsoft could have given Navigator the boot retroactively.

Safari? Firefox? Chrome?

They all appeared long after Windows got a browser as standard equipment. No, no, and no.

And it goes on from there. Fun thought experiment if you're one of the believers that Apple's closed iPhone system is somehow "good" for innovation.

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