The perpetual Apple vs. Samsung smartphone smackdown returns to court today, with the latest round of litigation beginning jury selection in San Jose.  As Ev Ehrlich argues at SFGate, the ongoing litigation doesn’t bode well for smartphone innovation.

While this particular offensive does not include any of the ridiculous rounded rectangle design patents that characterized some of Apple’s previous attacks, it nevertheless illustrates some of the continuing problems in the patent system.  While I will leave it to Patent Progress and others to dig through the claims, it bears noting that one of the patents at issue, Apple’s autocomplete patent, seems to be a variant of “+ Internet” patenting that DisCo has described before — the practice of filing claims on known functionality (autocomplete), situated it in a next context (touchscreens).  This Mad Libs approach of patenting seems to tax every generation of technological innovation, from combustion engines to computers to the Internet, and now smartphones.



Todd Spangler’s piece in Variety yesterday argues that the Supreme Court’s upcoming Aereo case has nothing to do with the cloud.  As Aereo’s day in court approaches, it is being preceded by a wave of “denialism” — grand assurances that a broad interpretation of the Copyright Act’s public performance right won’t have any affect the growing cloud computing industry.

The only unifying characteristic I’ve discerned among the deniers is that none of them are actually in the business of providing cloud services.

As my Aereo primer pointed out, the outcome of this case can have a grave impact on cloud computing.  Spangler tells us this isn’t the case, however, and waves off “the idea that Aereo is akin to Dropbox.”   As far as I can tell, however, no one except Spangler is saying Aereo is the same as Dropbox.  The point is — as my primer post explains — that when the broadcasters describe why Aereo is infringing, the broadcasters could just as easily be describing what happens when you stream your own files from your cloud account.   The broadcasters urge what is essentially a legal fiction: that multiple private transmissions of the same work over the same system, even at different times, should be aggregated into one single public performance.   Unfortunately, and probably entirely by accident, this argument seems to apply to cloud music lockers as much as it describes Aereo.  A service need not resemble Aereo (or Dropbox) to be endangered by a poorly-reasoned Aereo decision. MORE »


This article concludes our mini-series on the opportunities and challenges of cloud computing in the developing world. Previous posts covered the following topics:

Having discussed the potential of cloud computing for development and the downsides of forced localisation, let’s now look at the communication strategy of the Internet industry on these issues.

For some time, the US and Western business community has warned against the dangers of local hosting requirements in international trade fora. They did so for the right reasons and they did it forcefully. However, in light of continued US dominance of the cloud and in the wake of the surveillance revelations, I would argue that their approach may, in fact, be counterproductive. The problem here may not be the message but the messenger.

On a general level, a narrow focus on forced localisation by Western industry can sound to policymakers in the developing world like a bumper sticker slogan, which fails to address legitimate policy concerns. To (ill informed) Governments it can sound like a pretext to further cement US dominance of the Internet or, worse, an attempt to circumvent local laws. Also, advising developing countries to stay away from forced localisation can come across as deceptive since many Government agencies in the West actually demand their data to be hosted locally (e.g. Google vs City of Los Angeles).



This post is part of a series on the opportunities and challenges of cloud computing in the developing world. Previous posts covered the following topics:

ICTs are generally among the most restricted of all industries when it comes to forced localisation. They suffer from virtually all types of localisation barriers, from local production requirements to local content requirements. With regards to the cloud, the two most relevant localisation barriers are IT infrastructure requirements and data storage requirements (e.g. forced localisation). The use of those two barriers increased significantly in the past few years.

Local IT infrastructure requirements are designed to force Internet companies to establish data centres and other infrastructure within the country as a condition to be granted access to the local market. A number of countries have adopted such laws or are considering them, including Brazil, China, Indonesia, Nigeria, Norway, Malaysia and Vietnam.

Norway and Denmark, for example, introduced laws in 2010 that stop municipalities from using cloud services unless the servers are located in-country. Meanwhile in Brazil, the original draft of the ‘Marco Civil da Internet’ included a provision to force Internet companies to “install or use structures for storage, management and dissemination of data in the country”. That’s similar to a new law introduced by the Vietnamese Government this summer, which will require Internet companies to keep at least one server in Vietnam to service the local market. Indonesia, on the other hand, intends to go one step further than that: If adopted, a proposed new law will mandate all data carriers including foreign banks operating in Indonesia to establish local data centres.


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This post is part of a series on the opportunities and challenges of cloud computing in the developing world. The previous post covered the transformative potential of the cloud and the different types of cloud services.

Let us now turn to the economics behind the cloud. It’s a tough, fast-moving business involving substantial investments, and, most importantly, cloud services are effectively competing in a global marketplace. The ‘borderless’, instantaneous nature of online communications means that cloud services can be provided from anywhere in the world, creating almost perfect markets in some areas. At least technically, competition is just a click away. That’s particularly relevant in an environment where many of the competing services are “free” to end-users (supported through ads, donations or other business models).

At the heart of any cloud business is computing power and this is where the economics of data centres come into play. To be able to offer high performing, global services, cloud providers need to be able to exploit economies of scale. Having fewer, larger data centres increases operational and hardware efficiency because the larger a data centre, the less inefficiencies it creates in power and cooling. Also, larger data centres tend to allocate staff resources more efficiently.

Let’s first look at energy, which is one of the fundamental cost factor of data centres. In an average facility, power consumption contributes up to 40% of the annual operating budget. What makes this particularly relevant is that unlike other inputs, such as hardware, which are effectively global commodities, the price and quality of energy varies widely. Not surprisingly, then, energy considerations are one of the main drivers in the selection of data centre locations.



This post is the first in a series of articles on the opportunities and challenges of cloud computing in the developing world.

It’s worth reminding ourselves that innovation is an inherently uncertain business. Its disruptive potential depends to a large degree on the social and economic context into which it is born. Groundbreaking inventions remain unsuccessful because no market has developed yet or because people simply don’t see the value. “Television won’t be able to hold on to any market it captures after the first six months. People will soon get tired of staring at a plywood box every night”, film mogul Darryl Zanuck of 20th Century Fox famously said in 1946. At the time, 8000 U.S. households had a TV set. By 1960, that number had climbed to 45.7 million.

Also, whereas the potential of disruptive innovations may not be apparent at first, its negative effects, e.g. copyright infringement, are immediately visible and can go against powerful, established interests. Economists call this the ‘innovation asymmetry.’

Other inventions become successful for uses that are different from what they were originally designed for. One such example is the smartphone, branded initially as a status toy for the urban elites, which has become the entry point to the Internet for billions of people in the developing world. The same may be true for cloud computing.



DMCA Month Continues

by Ali Sternburg on March 19, 2014

Lately it seems like it’s all DMCA all the time.  In addition to last week’s hearing on Section 512, and yesterday’s announcement that Viacom and Google settled their seven-year copyright litigation involving the safe harbors, tomorrow the PTO and NTIA are holding a multistakeholder forum on the notice and takedown system.  (Eric Goldman also informs us about a CafePress suit over Section 512 safe harbors, and Eriq Gardner reminds us that there is a verdict forthcoming in the MP3Tunes case.)

Tomorrow’s PTO/NTIA event comes out of last summer’s Commerce Department Green Paper, and is not a rehash of the hearing; the timing is merely coincidental.  Despite the similarity in subject matter, the goals of these inquiries are very different.  Whereas the hearing explored policy questions about the design and effectiveness of the DMCA, the PTO and NTIA’s stated objective is different.  The Federal Register notice explains the Commerce Department’s intentions:

[T]he Task Force stated its intention to establish an open multistakeholder forum aimed at improving the operation of the notice and takedown system for removing infringing content from the Internet under the Digital Millennium Copyright Act (DMCA).

. . . .

The goal of the open multistakeholder forum is to provide a collaborative forum through which stakeholders will identify best practices and/or produce voluntary agreements for improving the operation of the DMCA notice and takedown system.

Thus, Commerce is focused on improving the operation of the existing statute and the existing processes under the law, rather than changing them.

As agencies, Congress, and courts consider the DMCA notice and takedown provisions, it’s important to keep in mind that no amount of enforcement is going to work if there aren’t easily-accessed lawful alternatives.


As I wrote yesterday, the House Judiciary IP Subcommittee held a hearing today on the DMCA, with several of the misconceptions I predicted appearing in full force.  Live tweets from DisCo are available here.

One thing I didn’t anticipate was today’s fixation on the word “free” in search results.  It is odd that in the United States the word “free” should be so stigmatized, but several members of Congress took issue with search results that contain the word “free,” apparently with the aim that such results should be suppressed.

Of course, every use of the word “free” is not unlawful, even in relation to content.  Indeed, there is a considerable amount of free content online (including this site).  Some artists give free content away for various legitimate reasons, such as promotional samples.  “Free” is a time-honored marketing term, used liberally.  Many rights-holders now wisely advertise when they are offering free content, e.g., “get a free trial to the song here”, to better compete with pirated alternatives, or to drive other revenue streams, such as live performances, subscriptions, merchandise.  If services started blocking content online using the term “free,” this could easily penalize lawful services providing promotional content in order to crowd out infringing options.

The conversation also focused extensively on the prominence of allegedly infringing search results, even though, as I’ve pointed out before, mainstream search engines are not the primary tool in infringers’ toolbox.  One congressman contended during the hearing that one of the top “two or three” Google results for the Netflix show ‘House of Cards’ was an infringing site.  The screenshot after the jump, taken at that moment, instead shows a host of lawful options.  But even assuming that somewhere in the 730 million results for the program there are results that infringe, that doesn’t necessarily mean that anyone ever actually clicks on those results.  Far more frequently, infringers navigate directly to their preferred sites. MORE »


Tomorrow, the House Judiciary’s Subcommittee on Courts, Intellectual Property and the Internet is holding a hearing on the safe harbors of the Digital Millennium Copyright Act, Section 512, as part of a continuing reexamination of U.S. copyright law.  We cover this important framework frequently, because it has been instrumental to the growth of the Internet – by many accounts online safe harbors “saved the Web.”  Now that the DMCA is over 15 years old, a number of pervasive misconceptions have developed about its safe harbors.  Let’s consider some of the top DMCA misconceptions that we’re likely to hear tomorrow.

(1) “No one anticipated there would be so many DMCA takedowns.” (Also, “filter because whack-a-mole.”)

One of the critiques of the DMCA is that because it is used so frequently, it must not be working.  It is strange to argue that a system isn’t working when demand for it is going up, but I hear ‘the Internet must be filtered because whack-a-mole’ so often that if I owned the Whac-A-Mole trademark I’d be worried about it going generic. MORE »


If you are a reader of DisCo, you undoubtedly know about the fight between Tesla and independent auto dealers.  To sum it up, independent auto dealers have successfully lobbied for laws in nearly every state that prevent manufacturers from operating their own dealerships (i.e. auto manufacturers must use an “independent” dealer to sell cars to consumers) – thus protecting the dealer’s privileged economic position as the middleman in the auto distribution chain.

Therefore, today’s news that the New Jersey Motor Vehicle Commission, with the backing of Governor Christie, reversed its previous course and voted to ban the direct sales of automobiles in New Jersey should not come as a surprise to anyone.  Unfortunately for New Jersey consumers, this puts Tesla’s future expansion in the Garden State in serious doubt and casts a shadow of uncertainty over the two stores it currently operates in New Jersey.  As the company describes the situation in its blog:

Since 2013, Tesla Motors has been working constructively with the New Jersey Motor Vehicle Commission (NJMVC) and members of Governor Christie’s administration to defend against the New Jersey Coalition of Automotive Retailers’ (NJ CAR) attacks on Tesla’s business model and the rights of New Jersey consumers. Until yesterday, we were under the impression that all parties were working in good faith.

Unfortunately, Monday we received news that Governor Christie’s administration has gone back on its word to delay a proposed anti-Tesla regulation so that the matter could be handled through a fair process in the Legislature. The Administration has decided to go outside the legislative process by expediting a rule proposal that would completely change the law in New Jersey. This new rule, if adopted, would curtail Tesla’s sales operations and jeopardize our existing retail licenses in the state.

The larger problem for Tesla is that the independent auto dealer model that has been statutorily enshrined in the majority of states thanks to the political influence of the car dealer lobby does not work well for the company.  As a company that, at least right now, only sells a little more than 20,000 vehicles a year (compared to 15.6 million cars sold annually in the United States), they don’t have the scale to support a nationwide network of dealers.  Furthermore, as Tesla’s CEO has previously referenced, Teslas are competing directly against nearly all the other gasoline powered inventory on the dealers’ lots.  Would independent dealers really be fully vested in disparaging the majority of their inventory in order to sell a few Teslas?  Probably not.