We know the familiar story.  New forms of competition arise and the incumbents rebel.  The free market usually permits consumer choice to govern and the marketplace decides which products will prevail.  But incumbents try to use regulation to prevent new products and competition.

The latest example is the almost decade long effort by some parts of the paper industry to prevent the Food and Drug Administration (FDA) from bringing drug notices into the 21st century.  Most are familiar with drug safety disclaimers to consumers, written in incredibly small font (perhaps the font size is promoted by opticians?) that consumers simply discard.  Well, there are similar, much more important notices to healthcare providers which provide even greater detail about safety and drug administration.  This information includes potential warnings and drug interactions, each of which are critical pieces of information for the healthcare provider. Known as “prescribing information,” these notices are incredibly long – they look like old-fashioned road maps and also are printed in incredibly small font.

Since 2007, the FDA has valiantly attempted to take the radical, death-defying step of actually permitting these notices to be made available electronically.  In particular, the FDA has sought to permit “e-labeling” – allowing drug manufacturers to provide information electronically.  This week, the FDA closed public comments on a proposed rule focusing on moving nearly all prescribing information online.

The advantages of e-labeling are obvious to anyone who has entered the 21st century.  E-labeling will reduce costs and is far more likely to be accessible to busy professionals.  E-labeling will be more current than old-fashioned paper notices and can be updated easily.  As the FDA observed:

FDA is taking this action so that the most current prescribing information for distributed prescription drugs will be available and readily accessible to health care professionals at the time of clinical decisionmaking and dispensing.

So why has it taken the FDA nearly a decade to finish a sensible, consumer-driven rule?  The paper industry.  In the United States, there are a number of paper printing companies that specialize in manufacturing drug labeling paper forms.  With the FDA proposing a rule that may diminish pharmaceutical companies’ demand for paper and printing services, it is unsurprising that they are strongly fighting against e-labeling.

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Last Wednesday, Federal Trade Commission (FTC) Chairwoman Edith Ramirez announced that on September 9 the FTC will hold the first seminar of its “Start with Security” campaign (which we previewed in March).  The campaign is aimed at helping small and medium sized companies improve their data security practices based on the knowledge the FTC has accumulated over a decade of enforcement action.  Also last week, the FTC launched IdentityTheft.gov, a website that offers victims of identity theft tools to report and recover from identity theft and data breaches.

The FTC’s recent focus on privacy issues, particularly identity theft and data security, is a recognition of the priority consumers place on trust in the Internet.  Trust in the integrity and security of the Internet and associated products and services is essential to its success as a platform for digital communication and commerce.  One of the earliest government reports on the viability of the Internet for commerce said, in 1997, “[i]f Internet users do not have confidence that their communications and data are safe from unauthorized access or modification, they will be unlikely to use the Internet on a routine basis for commerce.”

Internet users continue to prioritize confidence in the security of digital services above all other privacy concerns online.  In late 2013, CCIA commissioned a survey of Internet users that aimed to better identify the priorities and concerns of Internet users with respect to the handling of the information they share online.  As far as privacy risks go, the study found that nothing is more important to Internet users than the security of their information online, in particular ensuring that their personal data is out of the hands of those who would do them harm.

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Today a federal appeals court in California rejected an effort to use copyright to suppress the distribution of a controversial film online, echoing sentiments I previously expressed in two posts on what I called “IP immigration” [1] [2].  Others have discussed the case at length today [1] [2] [3] [4].  In short, the Ninth Circuit court of appeals rejected a copyright infringement claim by the plaintiff Cindy Garcia, who had been deceived into appearing in a short film titled “Innocence of Muslims,” which made insulting and inflammatory statements about Islam.  When the film was posted to YouTube and translated into Arabic, it resulted in threats to the plaintiff Garcia.

The court’s opinion today recognized that the plaintiff could not and did not have a copyright in her five-second, otherwise-unfixed performance.  As the court put it, the activities surrounding Garcia’s unwitting participation in the film may leave her “with a legitimate and serious beef, though not one that can be vindicated under the rubric of copyright.”  (A separate opinion released today observed that compelling YouTube to take down the video based on threats was a prior restraint of speech prohibited by the First Amendment.) MORE »

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The British election is over: David Cameron is busy picking his cabinet for the first conservative majority government since 1992. While some are popping champagne, others are joining rival political parties and calling for change to Britain’s antiquated electoral system. Known as “First Past The Post” (FPTP) this winner-takes-all system means the 650 seats aren’t distributed on the basis of proportional representation, but that each one is decided independently. In a typical town, a winning candidate might receive around a third of the votes cast — meaning everyone who didn’t vote for him or her doesn’t have their wish reflected in the country’s government. People aren’t happy. And how do we know so much about their level, and flavour of political engagement? Because there was a revolution this election.

It wasn’t the revolution Russell Brand asked for: after the tight-trousered Get Him to the Greek star urged people not to vote, turnout rose slightly, to 66.1% from 65.1% last time round. It wasn’t Nigel Farage’s “purple revolution” either: the UK Independence party (UKIP) leader failed to win a seat in parliament. Instead, we saw a disruptive revolution which gave smaller political parties of every stripe unprecedented access to voters in the run-up to the election — and could well change things for good.

In this election, a greater proportion of the vote went to minor parties than ever before, marking a shift in the way British politics works — as this nifty selection of charts from the FT shows. Those smaller parties made full use of the power of the internet. “Campaigning online meant we could campaign,” said Kate Bisson, who stood for the Green Party in the Northern English city of Leeds. “You don’t have to have an office, or a budget, you just need a laptop.”

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Data is often presented as the lifeblood of our digital economy (please see here why it should not be referred to as the ‘oil’ of the 21st century). Data is everywhere and is collected by Internet companies as well as more traditional businesses like banks. Data has been used by industries for years – think about grocery store reward cards – but advances in the speed of data analysis and the quantity of data available today brought new attention to its use. Of course, data analytics and processing help companies to better understand their customers, providing them with services and products tailored to their needs and preferences.

At the same time, it has been suggested that the possession and accumulation of big data ought to result in more rigorous competition law enforcement. But this argument fails to take into account the low barriers to entry in this market and the disruptive nature of Internet businesses that quickly allow a startup to topple even the most entrenched incumbents. One also needs to remember that the existence of barriers to entry does not in itself mean that competition authorities need to intervene. Competition law is concerned with anticompetitive conduct causing consumer harm. Hence, a competition law analysis of barriers to entry only becomes relevant in merger cases and in determining whether a given company is dominant in a relevant market. Traditional barriers to entry include for example exceptionally large capital investments into a sophisticated distribution network, economies of scale and even the need for large marketing investments (for a discussion of these traditional barriers to entry see the CJEU’s judgment in United Brands v Commission). MORE »

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The European Commission has today released its new Digital Single Market Strategy. The objectives of the strategy sit within the wider political context: helping to restore a limp European economy to growth, whilst maintaining an effective welfare state and public services. Will this strategy help to deliver the kind of dynamic social market economy Europeans demand?

Vice-President of the European Commission Andrus Ansip has rightly set out an ambitious vision of a Digital Single Market. For those who believe in an enabling set of rules that will take society forward now is the time to step forward to support this vision. The alternative — a set of rules that fragment regulation along member state lines and reverse digital progress — is not a viable option. MORE »

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While there has been much discussion of the European Commission’s recent announcement of a statement of objections being sent to Google, over in Paris the French Senate isn’t waiting. The Senate is debating ‘search neutrality’ amendments to the ‘Loi Macron’, an economic reform bill.

This is not a bout of contagion carried on the high speed ‘Thalys’ train from Brussels to Paris. Rather, the French political establishment has long been a critic of Google, and in fact Internet platforms more broadly. While Google may be a tempting opponent, opinion in Paris would like to see Internet platforms more broadly regulated in law, as illustrated by the recent joint Franco-German letter to the European Commission.

So while this initiative isn’t a huge surprise, its consequences could be. Search is a feature of almost every website and application. Putting aside the obvious search engines, think of sites such as Dailymotion, Deezer, eBay, Facebook and Amazon. Without a search function it would be hard to find the information and products you want.

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Today, Maria Pallante, the Register of Copyrights, will testify in the House Judiciary Committee’s twentieth (and perhaps final) hearing in its ongoing copyright review. In her written statement, the Register correctly recognizes that “the ultimate beneficiary of copyright law is the public at large” and that “a sound copyright law will balance the application of exclusive rights with the availability of necessary and reasonable exceptions.” But the testimony treats balance only as benefiting end users, when balance actually is critical to creativity itself.

At the beginning of her testimony, the Register identifies general themes that have emerged from the Committee’s review process. She notes that “it is essential that authors are incentivized to contribute to our culture and society at large….” They must be compensated for the works “we so appreciate and enthusiastically monetize as a nation.” She further observes that copyright law must “promote the many businesses that identify, license, and disseminate creative works.” The law must provide “the certainty they need to protect and enforce their investments.”

At the same time, the Register acknowledges the interests of “individuals who are captivated by a book or film” and “libraries that collect and provide access to our cultural heritage….” It is in this context that the Register mentions the importance of balance and “the ongoing availability of a flexible fair use defense.”

This is an important acknowledgment, but a reading of the Register’s testimony leaves the impression that exclusive rights benefit creators (and derivatively users who benefit from these creations), while exceptions benefit only users (and presumably the entities that provide them with services). Authors get copyrights; users get exceptions. However, copyright’s exceptions and limitations have always played an essential role in providing authors with the raw material for their creative activity. The idea/expression dichotomy allows authors to use themes and genres employed by previous authors. Copyright term enables creators to retell stories from existing sources such as the Bible, Shakespeare’s plays, and folk tales. Indeed, many of Disney’s films, including Frozen, are based on works in the public domain. Fair use is essential for parody (e.g., The Daily Show), documentary films, and news reporting.

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As a fight over the trade promotion authority (TPA) bill “engulfs the capitol,” debate has arisen over whether Congress should identify obtaining balanced copyright language as a U.S. trade priority. Both the Internet Association and the Computer & Communications Industry Association (where I work) criticized the bill’s failure to acknowledge the importance of promoting balanced copyright among U.S. trading partners, since the absence of these protections limits growth opportunities abroad. The Consumer Electronics Association, while applauding the legislation, expressed a similar view, observing that “[f]uture trade agreements should include not only include strong intellectual property protection and enforcement, but also robust and flexible limitation provisions.”

In response to the concerns voiced by the Internet sector, Geoffrey Manne appears to disagree, writing for Truth on the Market that “mandated ‘fair use’ language has no place in trade promotion authority.” (It is important to recognize that these statements do not call on Congress to “mandate fair use” in TPA. The question is whether Congress should direct the U.S. Trade Representative to promote balanced copyright in foreign markets that U.S. Internet companies are entering.)

This issue is important because of the high stakes. Manne is right in saying that trade promotion authority is important, but this glosses over how controversial it can be. As former Deputy USTR Miriam Sapiro wrote at Brookings this week, “the stakes as well as the hurdles for getting trade promotion authority from Congress are high. Critics of trade agreements have been well organized and mobilized.” Trade needs every friend it can get right now, which is why it would be a grave mistake to throw Internet concerns under the bus. This is particularly the case given that the Obama Administration’s last trade effort, ACTA, foundered several years ago due to the perception that the agreement was anti-Internet.

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As Techdirt reported this morning, emails leaked from the Sony hack show MPAA CEO Chris Dodd campaigning to USTR Michael Froman against fair use.

As DisCo has previously covered, Sony Pictures Classics, a subsidiary of MPAA member Sony, successfully argued that its use of a nine-word Faulkner quote in the film Midnight in Paris was fair use, saying: “Fair use is an integral part of the Copyright Act. Without fair use, critics and scholars could not quote the very works they write about.”  Similarly, DisCo covered how the NFL and Baltimore Ravens also successfully argued fair use, with the MPAA filing an amicus brief in support of this doctrine.  After that brief drew media attention, MPAA’s Ben Sheffner wrote in a blog post that the MPAA’s “members rely on the fair use doctrine every day when producing their movies and television shows – especially those that involve parody and news and documentary programs. And it’s routine for our members to raise fair use – successfully – in court.”  And several years ago, Fritz Attaway, then a senior MPAA executive, explained to a National Academies review that the “beauty of fair use is that it is a living thing . . . like our Constitution . . . that can adapt to new technology.”

One would think that when USTR announced in 2012 its intention to promote U.S. limitations and exceptions like fair use in the TPP, the film industry would have supported codifying the exception that it both relies upon and celebrates. MORE »

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