Archaic patent laws are threatening innovation: Time to introspect

Some ills of patents in general and software patents in particular (presented in the context of the ongoing patents war in the industry that is threatening innovation itself):

1. Obtaining Patents cost a lot of money. They cost even more paying the lawyers to write the application than they cost to actually apply (and perhaps more than creating the invention itself.) 

2. It is ridiculous to provide a twenty year protection in an industry where rate of obsolescence is few months (especially at a time when the software industry is gradually moving to a cloud based service model and where innovations can come up overnight.) Patents are a hindrance to this natural growth of the industry and may result in unreasonably prolonging the life of a product.

3. Software is different from other engineering and mechanical inventions. The latter are generally the kind that can revolutionize a given mechanical process. Software is generally evolutionary in nature. Its utility does not depend as much on the newness of a specific technique as it does on the unique combination of known algorithms and methods. Such methods of innovation should not be protected.

4. The claim that software is a process (therefore patentable) may not be accurate because software is fundamentally a series of machine understandable code which is processed by the processing power that comes with the hardware of the computer. The hardware is patentable, therefore what is the need for patenting software (which is but a series of code and is well covered by Copyright laws.)

5. Combine Patent laws and the FRAND nonsense and you have a situation where a simple, frivolous UI patent like a human gesture of a swipe across the screen associated with an outcome (which may not be novel enough to be granted a patent in the first place) will be rendered more powerful to the extent of imposing a ban on innovative products of companies whose more technologically complex patents like methods for communication will be rendered impotent (in the name of being essential standard) so that large corporate interests like Microsoft and Apple can have a freehold of the market when all others get banned out of it.

6. There is something wrong with the present intellectual property regime in the US. The patent system suits the American businesses who seem to own all the intellectual property with little or no manufacturing capacity. Take the Apple Vs Samsung case... Apple has no manufacturing capacity... (it outsources all of its manufacturing) but has accumulated patents through frivolously aggressive patenting, outright purchases or coercive cross licensing whereas Samsung has end to end manufacturing capacity. Companies holding on to patents without real manufacturing capacity are nothing but trolls. Even worse is the area of software patents where the USPTO has been known to award fairly obvious and very broad patents to various companies. Perhaps, software should have remained solely under copyright protection and not under the restrictive patent regime which, in any case, was designed for the industries engaged in the production of physical products whose research & development costs are much higher and time consuming. Software (both embedded & embodied), on the other hand, is much cheaper to develop and is far less time consuming.

Apple Vs Samsung - A case in vain

Samsung has been in the phone business for about two decades earlier than Apple. It, along with other early entrants like Motorola and Nokia provided the early breakthroughs in technology to establish the mobile phone industry. Therefore, it would be reasonable to assume that a late entrant like Apple would have copied the all-important technologies that defined a mobile phone. But, no, it is Apple that amazingly, claims Samsung copied it. The in-numerous Apple fans who are blinded by the ‘reality distortion field’ of Apple obviously copy what ever Apple has to say. Similarly, the media too is overwhelmingly focused on the Apple’s side of the story.

The fact, however is Apple has rarely done any ground breaking work. It has merely aggregated already prevalent ideas and technologies to successfully commercialize its products with the help of its humongous PR machine which has mastered the art of creating a 'reality distortion field'. Those that are trapped into this field are totally hallucinated by it and seem to believe only what Apple wants them to believe in while being in complete denial of all other developments that happen in other companies around the world. These people may check out Samsung F700 and LG Prada. Both these devices were developed in 2006 before the iPhone was launched. These companies (including Apple) working separately, came up with remarkably similar designs. So, technologies evolve and parallel developments do happen.

The problem is that Apple and its irrational fans (including those in the media) have been rewriting a distorted history by attributing disproportionate/undue credit to Apple and maligning competitors as copycats. The sheer scale at which this distortion campaign is propagated over the web is mind boggling. Today, Apple is more a myth manufacturer than a real manufacturer, far from what a real manufacturer like Samsung is. Apple is the best perception manager, even though it may be at the cost of distorting computing history.

Some popular myths about Google

There are some myths that repeatedly get propagated by anti-Google fellows on the internet:

Myth 1.) Google is an advertising company.

Fact: Google may be making most of their revenue through advertising. That's their business model. But that doesn't mean all or most of their employees are engaged in advertising. Rather they are actively engaged in developing innovative technological platforms. Advertising is incidental, almost an afterthought. A way to survive and further develop their technology. On the contrary, Apple is more of a marketing & retailing company with a humongous advertising & PR budget. Though it does some software and design work, it does not actually manufacture anything. Its hugely overpriced products are manufactured by poor Asian workers on whose sweat blood their American masters have amassed a cash pile of a 100 billion dollars. 

Myth 2) Google sells its users.

Fact: Some accuse Google of selling its users. But by the same logic every publication (online, offline and the dead tree media) that gets its revenue through advertising is selling users. Such people either have no understanding of technology or are talking in twisted tones to appease some deities affiliated to Google's competitors who have been propagating such misinformation. Google does not sell any personal information. (It doesn'€™t need to because it owns the advertising platforms.) Its advertising platforms are automated and are driven algorithmically. I don't mind seeing some relevant ads for the benefit of being able to use world class free services. Relevant ads are of more value to me than an ad that I may not be interested in.

Thanks to the success of Google's ads based model, web based services like search engines, email services, etc can be accessed by vast majority of populations of the world (living in relative poverty) who would otherwise remain excluded from the benefits of the Internet. (Remember, during the late 1990s & early 2000s, when various email services were starting to charge fees for their toy like services, it was Google which reversed the trend by launching gmail with an unheard of gigabytes of storage space for free.)

Ads based revenue has also become a supplementary strategy for most of its premium pricing competitors so it isn't unique to Google any more. So all of them are €˜selling users€™ not just Google!

Myth 3) Google is evil.

Fact: In a world of evil, Google is among the best we have. No company can match Google in terms of transparency & user control. Further, if Google is 'evil' and a candidate for anti-trust investigation in the eyes of the media, I believe its rivals are a bigger (more deserving) candidates for the same treatment for their business practices are more evil and more likely to violate antitrust laws than Google'€™s. Facebook, for example, has close to 1 billion locked-in users who cannot easily take out their data and friend connections and move to competitors. (Only recently it has started data retrieval service, but that is clearly not enough.) All of Google's services on the other hand provide unprecedented control for the user to opt in, opt out, and move to other competitors with their data. Also, facebook by virtue of its large number of users is effectively a monopoly in the social networking market and may be violating section 1 of the Sherman Act and section 5 of the FTC Act by imposing such terms that prohibit automated indexing or retrieval of its users data thus blocking users from removing their own data and friend€™s email connections by reasonable automated means. To make matters worse, Facebook has entered into an exclusive agreement with Microsoft to provide general users'€™ data through automated means for use in its Bing search engine. Twitter too is guilty of such exclusive arrangement. All of these companies (Microsoft, Facebook, Twitter) involved in this exclusive arrangement may be candidates for antitrust investigations under section 1 of Sherman Act and potentially under section 5 of the FTC Act. Similarly, Apple too is a candidate for antitrust investigation under the same provisions for its restrictive (monopolistic) business practices with regard to its App Store and iOS platform. Therefore, people who accuse Google of being evil should look at its competitors and form a more balanced opinion.

Apple is a master of perception management

Apple is predominantly a marketing and retailing company. Though it does some software and design work, it outsources its manufacturing to third party manufacturers. It certainly isn't an integrated manufacturer in the same sense as Samsung. It is all about immense media clout; thanks to its immense advertising & PR machine with a humongous budget. This media clout over a period of 30 years has resulted in an army of irrational fan following who would buy every product that comes out of Apple and defend all devious acts of the company. It's amazing that the largest company by market value, despite having highly questionable/monopolistic restrictions with regard to the App store and its iOS platform, attracts no adverse attention by the media and the FTC. The kind of media coverage that Apple gets is incredible!

What Apple does exceedingly well is to create myths. As Eric Raymond has pointed out in the past, “Mac was a slick repackaging of design ideas from an engineering tradition that long predated Jobs (in this case, going back to the pioneering Xerox PARC WIMP interfaces of the early 1970s). Which would be fine, except that Jobs created a myth that arrogated that innovation to himself and threw the actual pioneers down the memory hole.”

Raymond goes on to state “nearly a quarter-century later Jobs would repeat the same game with the iPhone. The people who did the actual innovating in smartphones – notably Danger with their pioneering Hiptop – got thrown down the memory hole by Jobs’s mythmaking (though in this case some of its principals would later achieve a kind of revenge by designing Android)” , which was founded in 2003 by Andy Rubin and eventually got acquired by Google in 2005.

The problem with Apple and its fans is that they tend to be in complete denial of all other innovations that came before and along side Apple's products. They tend to appropriate all such developments to Apple while deprecating others, which is but a myth.

Google new terms are similar to other major companies

With the updated terms Google is treating an account holder as the same individual accross all its properties just like Yahoo, Microsoft, Apple and Amazon. Like them, Google is enabling sharing of users' data across various applications/properties of Google to give a consistent user experience. Google's new privacy policy/terms have now come to the level of Microsoft whose privacy statement states: "information collected through one Microsoft service may be combined with information obtained through other Microsoft services." Other major internet based companies also have similar policies. So why is Google being targetted singularly?

The changes are obviously intended to improve user experience across Google products. Another obvious consequence of this change is relevant ads across all of Google properties.

Algorithmic usage tracking is a common industry practice. Most internet based firms/websites use tracking software. If you are an Amazon user, you would have surely noticed targetted ads to buy various products from Amazon purely on the basis of your browsing behaviour. By the way, on the internet, every click (that results in a http request) gets registered on multiple servers and is likely being used by the respective service providers. Google is only being transparent about its changes in terms of service.

The tail piece: Since, the changes took effect my search experience has notceably improved. For instance, I was looking for information on ways of installing Android 4 (Ice Cream Sandwich) on my intel x86 PC and then I found the most relevant results as the first link on the search result page (even though they came from an obscure blogger). Thanks to the search engine, I was able to install Android on my USB drive and run it on my PC.

Unusually fussy media on Google’s updates in Privacy Policy and Terms of Use

Yet another preemptive hullabaloo has arisen in the media about some changes in Google’s Privacy Policy and Terms of Use. Some early birds on this report like Cecilia Kang (Washington Post) and others are being unusually fussy about these fairly standard procedures. It makes sense to have one privacy policy rather than 70 different policies while maintaining the existing principles of privacy. It is easier for the users to understand and convenient for the company to maintain one standard Privacy Policy document. Nothing to cry foul about.

Some complain that they can’t opt out:

Opt out of agreement? Yes, you can opt out by declining the terms of use and refusing to use Google's services. Or, some people expect Google to prepare Terms of Use tailored according to the whims of every individual user? That is a ridiculous expectation and can only be proposed by nitpickers or mercenaries hired to attack Google. It is a common practice to update terms of use with impending changes in business/service conditions. Nothing unusual here.

Some have also very stupidly claimed that Google will increase its tracking:

Google (its algorithms) would not know anymore than what it already knows, or what users already provide them with (just like any other web based service provider). With the updated terms It is only attempting to improve the user experience across all Google products by treating you as a single user as explained on Google's Official blog post .  Besides, algorithmic usage tracking is the industry standard. Nearly every internet based firm/website uses tracking software. By the way, on the internet, every click gets registered on multiple servers and is likely being used by the respective service providers. Google is only being transparent about its changes in terms of service. It still has the best policy & terms of agreement compared to the likes of Facebook and Twitter who sell users data to Microsoft via their exclusive agreement for the Bing search engine.

Google and the US Anti Trust Laws

From all the hullabaloo about Google's recent changes in its search engine, two specific allegations that have stood out in the American media are: (1) that the changes potentially infringe on the privacy of people and (2) that the changes warrant anti-trust investigation.

As a disinterested net savvy observer of the recent changes and the subsequent media coverage I have to state the following:

1. The breach of privacy allegations appear to be unfounded and blown out of proportion either because of misinformation or because of lack of understanding of Google’s search system. The truth is that the personalised portion of the search shows only that much that you could already see and not any more than what you already had access to. Further, the personalised search results are unique & restricted to respective users (based on what they have shared and what others have shared to them) akin to viewing ones personal email or social network streams. All the fuss about the new search changes are either guided by misinformed paranoia or simply mischievous propaganda to malign Google.

2. Sections of the media have raised antitrust concerns for not including Facebook's and Twitter's data in Google's search results, but it should be realised that the terms of these companies obviously restrict Google from displaying/using their data on its search results page. Using any other (out of the way) means to bypass their terms of agreement to include Facebook’s and Twitter’s data in the search results page would make Google vulnerable to legal challenges from these firms. After all, these firms are extracting fees via agreements with Microsoft for giving access to users data on their network to be used in Bing's search results. Remember Google use to list profiles & data from these sites earlier, but it discontinued the practice after the terms of Facebook and Twitter became restrictive. Clearly, going by the adverse publicity in the media, Google is damned if it does and damned if it doesn't.

To understand and to investigate the propriety of the claims in the media I had an overview of the American anti-trust laws. After having seen the provisions of sections 1&2 of Sherman Act, section 7 of Clayton Act, section 5 of the Federal Trade Commission Act and FTC's policy Statement on the standards for determining 'unfairness' in business practices or methods I believe that the allegations against Google are flimsy, or even baseless and vexatious in nature, designed to harm the normal business functioning of Google by causing unnecessary distractions and delays in decision making.

Further, if Google is a candidate for such investigation in the eyes of the media, I believe its rivals are a bigger (more deserving) candidates for the same treatment for their business practices are more likely to violate antitrust laws than Google’s. Facebook, for exampe, has close to 1 billion locked-in users who cannot easily take out their data and move to competitors. All of Google's services on the other hand provide unprecedented control for the user to opt in, opt out, and move to other competitors with their data. Also, facebook by virtue of its large number of users is effectively a monopoly in the social networking market and may be violating section 1 of the Sherman Act and section 5 of the FTC Act by imposing such terms that prohibit automated indexing or retrieval of its users data thus effectively blocking users from removing their own data by reasonable automated means. To make matters worse, Facebook has entered into an exclusive agreement with Microsoft to provide general users’ data through automated means for use in its Bing search engine. Twitter too is guilty of such exclusive arrangement. All of these companies (Microsoft, Facebook, Twitter) involved in this exclusive arrangement may be candidates for antitrust investigations under section 1 of Sherman Act and potentially under section 5 of the FTC Act. Similarly, Apple too is a candidate for antiturst investigation under the same provisions for its restrictive business practices with regard to its iOS platform. Therefore, the media should be equally vocal with regard to business practices of Google’s competitors also.

To conclude, as a general observer of the practices of companies engaged in Internet based businesses that involve users data, I have found that Google's practices are most transparent with the best standards in providing user control over their data. Further, with regard to Google's search changes, let us not underestimate the users' wisdom and pre-empt their chance to make a choice. They would not use the features if the results do not match their expectation. Of course, lets not forget that Bing (whose results by and large mirror that of Google) is just a mouse click away.

Important Legal Notes:

1. It is important to understand that the antitrust laws are concerned with the functioning of the marketplace – i.e. competition and not the protection of any individual competitor.

2. According to the rules of reasonableness under American law, there is no per se rule against monopolization, or attempted monopolization.  There is no “no fault” monopolization, no situation in which there is some “magic” number beyond which a firm may not increase its size or market share; the determining factors will include the means by which those numbers were reached – the reasonableness of the actions which produced the final entity.

FTC's policy Statement: http://www.ftc.gov/bcp/policystmt/ad-unfair.htm

Sherman Act:

SECTION 1 (15 U.S.C. § 1). Prohibits contracts or conspiracies in restrain of trade, which phrase has been, since at least 1911, judicially interpreted as meaning unreasonable restraints of trade.

SECTION 2 (15 U.S.C. § 2). Prohibits monopolization or attempted monopolization; it is sometimes used in conjunction with section 7 of the Clayton Act (15 U.S.C. §18), which prohibits mergers or acquisitions which may tend to lessen competition.

Clayton Act:

SECTION 7 (15 U.S.C. § 7). Is probably the most prominent, substantive provision of the Clayton Act. Whereas the Sherman Act was enacted to prohibit concerted activity which actually restrains trade, this provision is directed at preventing activity in its incipiency which may tend to restrain trade. The Merger Guidelines issued by the Department of Justice offer an indication of the ways in which mergers and acquisitions will be analyzed by the Antitrust Division and the FTC; although they are not binding upon the courts, they are considered to be persuasive.

Federal Trade Commission Act:

SECTION 5 (15 U.S.C. §45) is the operative, substantive provision of the FTC Act. It prohibits “unfair methods of competition” and “unfair or deceptive acts” in commerce (15 U.S.C. §45(a)(1)). The provision applies to “unfair methods of competition involving commerce with foreign nations (other than import commerce),” however, only to the extent that such “unfair” conduct has a “direct, substantial, and reasonably foreseeable effect” on the foreign commerce in question (15 U.S.C. §45(a)(3)).

FTC's policy Statement: http://www.ftc.gov/bcp/policystmt/ad-unfair.htm