California has imposed its “fix” on something that wasn’t broken in the first place. As a result, veterans who need Telehealth services are being locked out because of California’s imposition of its own version of “net neutrality.” California now flatly prohibits Internet Service Providers (ISPs) from offering selective free data plans — including Telehealth services to veterans.
Net Neutrality is always sold as being “fair” and “just” and treating all internet traffic “equally.” Government imposed net neutrality may sound good in theory, but the reality is it often harms consumers. In this case, the first and most obviously harmed consumers will include veterans who have lost access to a mobile app called VA Video Connect. This innovative app allows veterans to receive Telehealth services without incurring data usage charges. This obviously helps veterans who have been underserved in the past and suffered long delays in obtaining medical help. This also helps low-income persons the most.
But in California’s infinite wisdom, this sort of free internet access must be stopped. Telehealth services are an innovative and efficient way to receive certain important healthcare needs— particularly counseling and initial or followup consultations. Given that veterans have suffered a backlog and long waiting periods, Telehealth has been an important tool to provide a wide array of healthcare services that work well with virtual visits to the doctor. Admittedly, Telehealth isn’t a way to have surgery, but many healthcare consultations can be done effectively via Telehealth. And it speeds quality medical care and counseling to veterans who need it.
This free data prohibition imposed by the new California law is now becoming a choke point in shutting down free data used in the VA’s Telehealth app. So veterans in California are locked out. But this law doesn’t stop at California’s borders. Even though the law is California’s law, it imposes restrictions on people who do not live or work in California, or have any relationship to the state at all. And the VA is sounding the alarm.
Major carriers like AT&T have removed all free data services from its offerings in all 50 states because they believe keeping free data options in the other 49 states would still violate the new California law. So effectively, we are allowing misguided do-gooders in California to dictate what the nation’s high tech policies will be in every other state in the country. That’s not only unconstitutional, but it is crazy stupid.
Nonetheless, this is what the Left calls progress. For more than a decade I’ve warned of precisely these kinds of “unintended consequences.” Yet, the Left rolls their eyes and says that they have the intelligence and wisdom to do it right and that we shouldn’t worry about silly hypotheticals.
Notwithstanding the warnings, the Left has had an almost maniacal drive to impose government regulations on how internet traffic is prioritized. Most ISPs have a system that prioritizes certain internet traffic that must be top priority to work properly. For example, a zoom call won’t work properly if it is delayed by even 1 second. But an email could be delayed by 1 second and not even matter. Or if you’re downloading a movie, a momentary delay won’t impact things because you begin watching the movie while the rest of it downloads. ISPs know this and since you’re paying them to give you a good internet experience, they have every incentive to get things right and to allocate scarce internet resources to give their customers a high quality experience.
But the Left and many government regulators confidently claim that giving them the power to set the rules and priorities will yield better results. But as this situation with veterans and Telemedicine proves, government frequently makes things worse — which is why we shouldn’t reflexively trust government. There are some things that should be regulated. But that is not a reasonable or rational argument that government should regulate virtually everything.
And there is no good reason to have government regulate the flow of internet traffic as virtually no consumer is thinking, “If only the government would regulate the priorities assigned to my email, video downloads, and zoom calls, life would be so much better!” We may wish for faster speeds and more network investment, but net neutrality won’t do any of that. It simply puts government in charge of directing internet traffic. But it does nothing to build more “internet highways” or to increase our connection speeds.
Policy that promotes internet freedom and allows innovative services like VA Video Connect and other free data offerings makes a lot more sense. Adopting policies that encourage private investment in expanded networks makes sense too. But having government regulate internet traffic is a horrible idea. And thanks to California, we now have the rock solid proof!
On February 8, 2021, the Financial Times published an op-ed authored by Eric Schmidt titled US’s Flawed Approach to 5G Threatens Its Digital Future. In it, Mr. Schmidt makes a series of claims, but his central theme is that the U.S. is not doing enough to promote our 5G infrastructure and, worse, forcing us to forfeit the U.S.’s dominant position in the race to 5G to China. He even goes as far as to suggest that the U.S. should throw the proverbial baby out with the bathwater by adopting a more nationalized approach to 5G vis-a-vis the Department of Defense (DoD) spectrum sharing plan. In this article, I address the most glaring of his assertions to put the 5G debate in the proper context.
Claim: “…China, is already far ahead [in 5G].”
Response: Mr. Schmidt’s article does not provide a metric when he says that China is “far ahead.” Based on the article, it appears that Mr. Schmidt might be comparing the two countries in the following ways: 1) internet speeds; and 2) national 5G coverage. In each case the United States is excelling. Although both countries have taken very different approaches to 5G, both countries’ 5G strategies involve blending their 4G/LTE networks with their nascent 5G networks. Hence, it is appropriate to compare the countries’ progress on those measures.
In terms of broadband speeds, China has an average internet speed of just 105.2 mbps where the United States has an average of 124.1 Mbps. In terms of broadband speed, we are far ahead of China. Moreover, a study conducted by Global Wireless Solutions released network performance testing from Super Bowl LV in Tampa and found that all three of the nation’s carriers averaged more than 1 gigabit per second on their respective 5G networks, which for the uninitiated means that we have past light speed and are now entering into ludicrous speed. Hence, we are certainly leading in this area.
In terms of 5G coverage, China appears to be deploying far more infrastructure than the U.S., but basing China’s success in 5G purely on the amount of infrastructure deployed may be misguided. The main issue China is having is making its 5G infrastructure compatible with its 4G/LTE networks. This issue is so prevalent that Huawei’s Ryan Ding described China’s 5G rollout as “fake, dumb, and poor,” because most of the applications China is calling 5G is really just disrupted 4G due to the frequent and sporadic handover between the two networks. This is distinct from the U.S.’s plan where it and its carriers have a slower deployment strategy to ensure that its 5G networks can efficiently interoperate with its 4G/LTE networks. However, China’s aggressive 5G policy should be taken seriously, but we should not assume that China is in fact “ahead” of anyone.
The one place where China may pose a competitive threat is in spectrum. This is because China can more easily clear incumbents from spectrum bands for 5G due to its heavier regulatory control when it comes to property rights. Also, China has much more local zoning control over deployment. It is similar to its government’s control on spectrum where it relies on heavy centralized state control allowing quicker infrastructure deployment without public input. If the U.S. wanted to emulate China’s approach, then Mr. Schmidt is essentially advocating that the U.S. allow the FCC to clear bands with disregard to the property rights of incumbents operating in those bands.
Claim: The FCC’s C-Band Auction is a “digital setback,” because the auction provided “no meaningful requirement to build necessary network infrastructure.”
Response: This criticism is simply untrue. As it relates to its C-Band Order, the FCC requires C-Band licensees to meet multiple performance metrics based off of the service or services the provider wishes to provide. For example, In paragraph 93 of the C-Band Order, the FCC requires licensees in the A, B, and C Blocks offering mobile or point-to-multipoint services must provide reliable signal coverage and offer service to at least 45% of the population in each of their license areas within eight years of the license issue date (i.e., first performance benchmark), and to at least 80% of the population in each of their license areas within 12 years from the license issue date (i.e., second performance benchmark). These population benchmarks are actually more aggressive than those for other flexible-use services under part 27 of the FCC’s rules.
There are even performance metrics for licensees providing IoT-type fixed and mobile services on paragraphs 97-99. The C-Band Order requires licensees providing Fixed Service in the A, B, and C Blocks band to demonstrate within eight years of the license issue date (first performance benchmark) that they have four links operating and providing service, either to customers or for internal use, if the population within the license area is equal to or less than 268,000. If the population within the license area is greater than 268,000, the FCC requires a licensee relying on point-to-point service to demonstrate it has at least one link in operation and providing service, either to customers or for internal use, per every 67,000 persons within a license area. The FCC requires licensees relying on point-to-point service to demonstrate within 12 years of the license issue date (final performance benchmark) that they have eight links operating and providing service, either to customers or for internal use, if the population within the license area is equal to or less than 268,000. If the population within the license area is greater than 268,000, the C-Band Order requires a licensee relying on point-to-point service to demonstrate it is providing service and has at least two links in operation per every 67,000 persons within a license area.
Claim: “Future auctions must set stringent build requirements, with penalties for underperformance.”
Response: In paragraphs 102-103 the C-Band Order goes into detail about the penalties for each licensee for not meeting the performance metric. For example, the C-Band Order outlines that, in the event a particular licensee fails to meet its performance benchmark, the licensee will have its license term substantially reduced and, when the shortened term is exhausted, the C-Band Order states that “licensee’s spectrum rights would become available for reassignment pursuant to the competitive bidding provisions of section 309(j) [of the Communications Act of 1934 that articulates restrictions on spectrum license applications] and any licensee who forfeits its license for failure to meet its performance requirements would be precluded from regaining the license.”
Claim: “Pursue alternatives to auctions.”
Response: Mr. Schmidt’s statement is myopic as auctions are only one way the U.S. has advanced 5G. His article failed to review or even mention the myriad of 5G policies in place now. In fact, the U.S. has taken an holistic approach to advance our 5G networks through: 1) a series of subsidy programs (e.g., Rural 5G Fund, RUS Fund, USF programs, etc.); 2) clearing spectrum and auctions (e.g., 24 GHz Auction, CBRS, Ligado Order, and, yes, the C-Band auction); 3) granting key mergers (e.g., T-Mobile-Sprint, AT&T-Time Warner, etc.); and 4) lowering regulatory burdens for wireless infrastructure (e.g., 5G Upgrade Order, 5G Small Cell Order, One Touch Make Ready Order, 6409 Order). Again, Mr. Schmidt fails to mention or even allude to these policies focused on infrastructure.
Claim: “The defense department has proposed sharing government-controlled spectrum with commercial providers if they build infrastructure quickly.”
Response: Mr. Schmidt’s endorsement of the DoD’s proposal is misguided.As I and others have argued before, the DoD’s blue-chip in 5G is that it sits on most of our Nation’s valuable mid-band spectrum, which is essential for 5G deployment. This is clearly evident from every other countries’ inclusion of these frequencies in their respective 5G plans. This is especially true in the case of China that is a leader in mid-band spectrum deployment for 5G. The DoD’s frequencies in its RFI (i.e., 3450-3550 MHz) are prime “beachfront” mid-band spectrum and are critical to open up for commercial use. This is because U.S. commercial 5G networks are severely lacking in mid-band spectrum; a fact of which the DoD is well aware. DoD’s offer to industry is, thus, enticing, but it comes at a hefty price: every carrier must go through the DoD to access this mid-band spectrum that they all will need to make their networks functional. This is a Hobson’s choice for carriers: either they want a functioning 5G network or not. Hence, they will be compelled to work with DoD if this proposal moves forward. This will most likely translate into the DoD being yet another bureaucratic barrier of entry for carriers looking to deploy 5G, which, in turn, slows down the deployment that Mr. Schmidt says the DoD’s plan will promote.
In his article, Mr. Schmidt makes assertions that are either exaggerated, myopic, or confused on the issues of 5G. We can both agree that China’s growth in the area is concerning. However, the arguments Mr. Schmidt presents regarding our auctioning process are not at all the issue and, ironically, is an example of the U.S.’s success in this technological race.
• • • • • • • • • •
Joel L. Thayer is an attorney with Phillips Lytle LLP and a member of the firm’s Telecommunications and Data Security & Privacy Practice Teams. Prior to joining Phillips Lytle, he served as Policy Counsel for ACT | The App Association, where he advised the Association and its members on legal and regulatory issues concerning spectrum, broadband deployment, data privacy, and antitrust matters. Prior to ACT, he also held positions on Capitol Hill, as well as at the FCC and FTC. The views expressed here are his own and do not reflect those of Phillips Lytle LLP, or the firm’s clients.
By Red State•
While the rest of the country enjoyed their Thanksgiving dinners and began their Christmas shopping, the big brass at Google had a lot to think and worry about over the long weekend.
You may recall that earlier this year, Google was the recipient of a bipartisan grilling in Congress over its predatory business practices. The big tech goliath was unable to offer up even a semblance of a convincing defense, leading some to speculate that an antitrust bust-up was awaiting on the horizon.
Over the past few months, those rumblings have turned into reality.
First, in October, the Department of Justice announced a formal antitrust lawsuit, putting the full weight of the federal government on Google’s neck. Then, last week — just two days before Thanksgiving — a bipartisan coalition of state attorneys general announced plans for a second lawsuit, which may come this month (a third antitrust suit spearheaded by Texas is also in the works). It is very likely that by next summer, every state and federal division of the judicial branch will be pursuing the breakup of the search engine giant.
But it may be the Supreme Court, traditionally the final stop on legal journeys, that strikes the first blow.
Observers may recall that back in October, the Supreme Court heard oral arguments in a copyright infringement case regarding the shady origins of Google’s Android software. The lawsuit’s gist is that Oracle claims Google sticky-fingered Java source code developed by its subsidiary, Sun Microsystems, to build up Android OS — a multi-billion-dollar revenue generator that runs on millions of smartphones.
Consider some of the most damning details.
According to the lawsuit, Google stole what it refused to buy after Sun offered Google a three-year license to use its code. The deal would have cost Google $100 million. Google decided that, as Woody Woodpecker used to say, free was a much better price.
This is an interesting argument. If Google initially sought permission to use Sun’s code, it implies that Google knew perfectly well the code wasn’t just theirs to take. One doesn’t ask permission to use the public sidewalk. One does ask permission to borrow the neighbor’s car — and if the borrower takes it for a drive without permission, everyone understands what that is.
The Supreme Court appears to understand this point very well, which doesn’t look good for Google.
As Justice Brett Kavanaugh put it: “You’re not allowed to copy a song just because it’s the only way to express that (particular) song.” In other words, the fact that Stairway to Heaven by Led Zeppelin is the only song that sounds like Stairway to Heaven doesn’t mean that people who didn’t write it have a right to record it and sell it just because they like the way it sounds.
If they did so, everyone would understand a theft had occurred, and the thief would be held accountable.
Justice Neil Gorsuch made the point that the existence of one avenue, however popular it may be, doesn’t prevent creators from finding new ones. The fact the Led Zeppelin wrote Stairway to Heaven and made a lot of money selling albums in no way prevented Stone Temple Pilots from writing Plush and selling lots of albums of their own.
Gorsuch’s reasoning explains why other mobile operators managed to create their products without using Java at all. Java wasn’t the only way into town, so to speak, as Google claims; the tech giant just refused to find a new path.
While we likely won’t know the official decision until the summer, Google is likely sweating bullets.
It’s one of the wealthiest companies in history, but it’s facing an unprecedented level of legal pressure due to two decades of bad behavior. From the outside looking in, it appears the courts are circling the wagons.
Consumers need not worry. None of the services Google provides are irreplaceable innovations or at threat of disappearing in the case of a breakup. It’s even possible that, with the market’s largest digital predator subdued, a breakup would lead to a flurry of new digital services.
The only people who have to worry are Google shareholders and employees. They’re looking at legal cases and potentially billions in losses. Those prospects would dampen anyone’s holiday season.
Larry Dean is not as famous as he deserves to be but, as the man who developed the code that allows automatic teller machines to accept cards from other banks and outlets, he birthed a revolution in banking that forever changed the way people shop and get cash. His innovation allowed debit cards to function like credit cards, taking money directly from accounts and pushing the nation and world closer to a cashless economy.
Dean’s innovation made banking easier for millions. The application programming interfaces – the APIs – he developed were protected by copyright, meaning his intellectual labors produced great wealth. Outside Atlanta, he built Dean Gardens, a 33,000 square-foot, 15-bedroom home was so extravagant the annual up-keep alone cost $1.5 million. Infamous for the iconic “Liberace Meets Napoleon” style later imposed by Dean’s son – who lived there until 1994 – it featured a Moroccan theater, 24-karat gold sinks, a gallery of Hawaiian art, 13 fireplaces, an 18-hole golf course, and a 14-seat dining room whose most prominent feature was a wall-sized aquarium known as the “Predator Tank.”
This monument to conspicuous consumption, which might have given even pre-presidential Donald Trump pause, was bulldozed into rubble ten years ago. What endures is his code which, thanks to a legal push by Google seeking to eliminate the copyright protections coders enjoy for the APIs they develop might make innovators like Dean a thing of the past.
Whether that happens is in the hands of the United States Supreme Court which, in a matter of weeks will finally hear oral arguments in the matter of Google v. Oracle, a landmark case that will decide the course of intellectual property development going forward. If a majority of the justices side with Google, then future innovations like what Dean wrought will likely be few and far between.
The case stretches back over a decade. At one time, hard as it may be to believe, Google was losing out to BING in the critical mobile search engine market while the Apple iPhone was beating its brains out in the competition among smartphones.
Seeking to improve its competitive position, Google took 11,500 lines from Java’s API coding which the company used to pay to use to construct the Android mobile operating platform, installing its search engine as the default option. As Android grew more popular, so did the Google search engine, creating a boom for the company without, the suit alleges, paying licensing fees for the use of Java to its owner Oracle.
Google does not dispute it took the code. What its briefs do argue is that these types of software APIs may not be copyrightable and, even if they are, that Oracle cannot force them to pay for using it because what it did is covered under the fair use doctrine – and copyright law exception often used when news stories are reposted and circulated for comment but seldom in commercial situations.
As even those who are not lawyers may recognize, Google’s interpretation of the copyrightability of software and the fair use doctrine as applied in this situation cannot be sustained by historical and legal precedent or by common sense, not that it bothers the biggest of big tech very much.
Google’s layers have already admitted the company “doesn’t care much about precedent or law” when it comes to copyright. When the company didn’t like the licensing terms offered to it by Sun Microsystems (then the owner of Java) Adam Rubin, the father of Android, bluntly wrote in an e-mail the company would simply “do Java anyway and defend our decision, perhaps making enemies along the way.”
Being big doesn’t allow you to ignore the law. Google’s lack of concern for intellectual property doesn’t come as a surprise – some have argued its business model depends on using the IP of others without paying for it. And the court would do well to note that others have made similar complaints in the past including the American Association of Publishers, which settled a case alleging Google has posted books online with the permission of the authors, a lawsuit by PayPal arguing an ex-employee turned over trade secret IP used to construct Google Wallet, and a suit settled with Viacom over videos posted without permission to YouTube.
These issues persist, in part because of the lack of clarity in the law protecting intellectual property and because the white shoe lawyers employed by big tech make fortunes of their own finding, exploiting, even creating loopholes that end up exploiting consumers and inventors alike. The Supreme Court is being asked to slam the door on this kind of exploitation and should.
No one likes government interference in the marketplace or the court making law from the bench but that is not what a decision favorable to Oracle would do. A decision favorable to Google would set a precedent adversely affecting software development and every other industry that relies on innovation and creativity to maintain and enhance its market petition. For the sake of private property and our nation’s founding principles, the court must come down firmly on the side of protecting intellectual property rather than affirm the idea that loopholes exist allowing big tech to take the innovations of others for their use without compensation or consent. That’s not the American way.
Can Joe Biden withstand the storm of political correctness?
Before Thursday morning I had not heard of Thomas Bosco, and I am willing to bet you haven’t heard of him either. He runs a café in Upper Manhattan. From the picture in the New York Times, the Indian Road Café is one of those Bobo-friendly brick-lined coffee shops with chalkboard menus affixed to the wall behind the counter and a small stage for down-on-their-luck musicians to warble a few bars of “Fast Car” as you sip on a no-foam latte while editing a diversity training manual. It looks pleasant enough. “Local writers, artists, musicians, and political activists are regulars,” writes metro columnist Azi Paybarah. “And for years, two drag queens have hosted a monthly charity bingo tournament there.” Drag queens! You can’t get more progressive than that. Bosco seems like a noble small businessman making his way in a turbulent world.
There’s a problem, though. He once expressed an opinion. Though Black Lives Matter signs are posted throughout the restaurant, and its owner identifies as “a liberal guy who supports almost every liberal cause I can think of,” in early June Bosco told MSNBC that he voted for Donald Trump in 2016 and expects to do so again. Omigod no. “The backlash was swift, as you might expect,” writes Paybarah. Neighbors denounced Bosco on Facebook. Some vowed not to patronize the café. Randi Weingarten, who as president of the American Federation of Teachers draws close to half a million dollars in salary and benefits, wrote online that it would be “hard to ever go back.” No more tips for the barista from her. As for the drag queens, they are taking their glitter elsewhere.
Bosco is distraught. “My staff feels like I let them down to a certain extent,” he told the Times. He has supported Bernie Sanders, donated to immigrant groups, contributed to the food pantry, provided child care for an employee, and plans to change the name of the café to Inwood Farm to avoid any possible offense toward the Indigenous. None of this is enough to quell the fury of the Very Online. “Similar backlashes have erupted in liberal New York City, usually after a business is revealed to have financial links to Mr. Trump or socially conservative causes,” notes Paybarah, citing the example of Stephen Ross, an investor who had to cut ties to the Equinox and SoulCycle gym chains after it was revealed that he was going to throw a fundraiser for the president. “But Mr. Bosco is no Mr. Ross.”
No, Mr. Bosco is not. He is instead one of the countless private individuals whose lives have been upended by the gale of righteousness blowing through this country since the killing of George Floyd in police custody on May 25. For all of the high-profile sackings, vandalism, and cancellations—the editor of the New York Times opinion pages, the CEO of Crossfit, the editor in chief of Bon Appétit, the head of Adidas human resources, the Atlanta police chief, statues of Confederates, Columbus, Grant, and Douglass, and the Washington Redskins—there have been an equal number of stories concerning absolute nobodies, pipsqueaks, formally anonymous men and women whose unpopular opinions or boneheaded errors of judgment, widely publicized on social media, transform them into public enemies, splittists, and heretics whose livelihoods suffer as a result. Andy Warhol’s 1968 prediction of the future was wrong. It’s not that everyone is world-famous for 15 minutes. It’s that they are infamous.
This towering inferno of outrage culture, social media virality, and social justice journalism reached new heights on June 17, when the Washington Post devoted thousands of confusing and bizarre words to an investigation of a Halloween party at cartoonist Tom Toles’s house two years ago where a random neighborhood woman, in a gross misjudgment and lack of self-awareness, showed up in blackface. “I’m Megyn Kelly—it’s funny,” the woman is said to have toldpartygoers agog and offended by her costume, demonstrating the truism that any “joke” requiring explanation is a bad one. The embarrassed Megyn Kelly impersonator left the gathering, not knowing that two years later she would lose her job because another guest at the party could not take her mind off the incident. “Why Did the Washington Post Get This Woman Fired?” asked Josh Barro and Olivia Nuzzi in New York a week after the superfluous exposé appeared in the paper. No one they spoke to could explain why.
Here’s one theory. Bouts of hysteria are often accompanied by loss of perspective and lapses in critical thinking. In a moment of national self-examination, distinctions between private and public, between guilty and innocent, between criminal and clueless are tossed aside. What was precious and inviolable minutes ago—the musical Hamilton, for example, or Harry Potter—becomes the object of suspicion and derision. The frenzy builds on itself, and grows stronger, and doesn’t know where to stop.
At first the flagellation is sincere. No one, no society, is without fault. But the self-punishment soon becomes an end in itself. And for some, it even starts to feel … pleasurable. Confessing your badness turns into an uplifting sensation. It’s good. You help make bestsellers of How to Be an Antiracist, Between the World and Me, White Fragility, Stamped from the Beginning, So You Want to Talk About Race, The New Jim Crow, Begin Again, Why I’m No Longer Talking to White People About Race, White Rage, The Boy, the Mole, the Fox, and the Horse, Me and White Supremacy, and I’m Still Here. You get into Run the Jewels. And before long, you can’t contain the self-criticism, it has to be poured outward, unleashed, directed at others. Whoever that may be.
When Noam Chomsky, who had no trouble putting the crimes of the Khmer Rouge into “context,” signs a letter warning that “The free exchange of information and ideas, the lifeblood of a liberal society, is daily becoming more constricted,” it is a sign that things … things have gotten out of control. Social media has become a system of surveillance, policing, and stigma, news media the vehicle for an attack on the American Founding and on classical liberal principles, and progressive politicians the saps for a revolutionary ideology that hides behind egalitarian ideals.ADVERTISING
Joe Biden better be paying close attention. The other day a member of his vice presidential shortlist, Senator Tammy Duckworth, expressed her willingness to “listen to the argument” of radicals who would tear down statues of George Washington. As I wrote this, Nancy Pelosi shrugged off the illegal desecration of the Columbus statue in Baltimore, saying, “People will do what they do.” You know how people are—they get angry and wild and destroy public property. So fuggedaboutit. Would she say the same if vandals tossed the sculpture of her dad into the Inner Harbor?
There is only so much self-abasement a nation can take. And when the winds of woke start to blow, millions of Americans find that there is one way left for them to oppose political correctness: pulling the lever for the man in the White House.
The dynamic nature of our tech sector fosters a flow of new startups entering markets constantly. The speed at which companies can collaborate and innovate can significantly influence which may be the next Apple or Google and which will fail in their first year. These innovations, often the result of tireless investment in R&D, are frequently safeguarded through our system of intellectual property – through protections like patents and trade secrets.
However, abuse exists in nearly every system, and a 2018 Texas trade secrets decision boasts record-setting spoils for potential abusers and how a so-called expert witness can derail a jury. This case, if left unchecked, is a stark warning of just how high the cost of collaboration can be.
As I’ve previously written, since the enactment of the Defense of Trade Secrets Act (DTSA) in May 2016, the United States has experienced a rapid spike in trade secret lawsuit filings – with the number of civil trade secrets cases filed in federal and state courts increasing by 30%.
For example, in 2018 a suit involving autonomous-driving technology trade secrets between Uber and Waymo resulted in a $245 million settlement in San Francisco early last year. In another California-based lawsuit, a jury awarded the U.S. branch of a Dutch semiconductor maker, ASML, $223 million in its suit against a local rival, XTAL, for misappropriating trade secrets.
But the $740 million award handed down in Bexar County, Texas’ Title Source v. HouseCanary takes the cake for 2018’s most costly verdict in a trade secrets case. This record-setting award is especially concerning because just days following the decision it emerged that the victor, HouseCanary, may never have possessed any of the trade secrets at issue in the first place.
Title Source, now known as Amrock, sued Silicon Valley-based HouseCanary for breach of contract when the company failed to develop an automated valuation model (AVM) mobile application. In the meantime, Amrock developed their own AVM based off common industry practices and publicly available information. HouseCanary, in turn, accused Amrock of trade secret misappropriation.
The case is currently under appeal with the Texas Fourth Court of Appeals, which rests on the new evidence that emerged only after the award was already handed down. Whistleblower testimony from four former HouseCanary employees confirms that the app they were hired to develop was not a “functioning product,” was “vapor ware,” and had “none of the [promised] capabilities.”
Notably, the high-dollar remedy was awarded with reliance on suspect “expert” testimony from HouseCanary’s witness, Walter Bratic. As it turns out, Bratic knows his way to the witness stand, having established a career as an expert witness willing who doesn’t let logic or facts inhibit his “expertise,” so long as the check clears. Several of his lofty uncorroborated damages estimates have ultimately resulted in reversal on appeal with his logic-defying damages figures cited prominently among the reasons why the lower court had erred in its initial findings.
In what would have been one of the largest patent awards to date, a U.S. District Judge in East Texas in 2011 overturned a $625 million jury verdict in Mirror Worlds LLC v. Apple Inc. The judge pointed out “the scope of Mirror Worlds’ case and Apple’s potential liability exposure changed during the course of trial” and “Mr. Bratic did not adjust his damages calculations after dismissal of Mirror Worlds’ indirect infringement claims,” – which would have reduced damages by approximately 50% to about $300 million.
In his opinion overturning the verdict, the judge wrote the record “lacks substantial evidence to support the jury’s award of damages” liable for patent infringement, taking particular issue with the damages in Bratic’s dubious valuation suggesting Apple should pay whopping royalties.
However, these damages are only considered if it was proven that the infringed patent was so central to the entire product that it can be considered key driver of customer demand. On whether or not that standard was met, the appellate judge stated, “The record lacks substantial evidence to support the jury’s award of damages. The Court grants Apple’s request for Judgment as a Matter of Law to vacate the jury’s damages award.”
Bratic’s handiwork doesn’t end there. In 2013, his testimony in Xpertuniverse v. Cisco was deemed baseless and thrown out after he employed a bizarre “hypothetical negotiation” in which he contended both parties would have agreed to a $32.5 million lump sum royalty.
In the 2015 case IVS v. Microsoft, in which IVS accused Microsoft’s Xbox and Kinect of infringing on a facial recognition patent, the court ruled that Bratic erred in opining that royalty damages should be a running royalty of 3x the court-ordered royalty rate based on a prior case involving handheld controllers.
Likewise in his damages valuation testimony for HouseCanary, Bratic used an outrageous price of $11 per use for the AVM, which emails between Amrock employees from February 2015 make clear would never have been the agreed upon rate.
This case is the epitome of trade secrets litigation abuse – potentially an ominous high-dollar indication of an even costlier problem with broader impact on American innovation and competitiveness in a global technology sector. If the decision stands, the established precedent will further open the floodgates for abuse of IP protections – offering an attractive option for companies looking for a way around fair market competition and innovation.
What began as a $5 million contract has morphed into three-quarters of a billion dollars and a legal spectacle – in large part due to faulty reasoning and voodoo math of an expert witness with a history of over valuating for his clients and being overturned by the courts. Legal scholars and the entire tech sector are closely watching to see how this case plays out for the future of American innovation.
For us tail-end baby boomers, it’s probably true our view of what life might be like now was influenced by the “Back to the Future” series. Watching ‘Doc’ Brown and Marty travel just a few decades forward in time to a place where the Cubbies won the World Series, hoverboards were ubiquitous, and sneakers laced themselves seemed so wonderfully realistic we believed it was possible.
To be sure, some of the things depicted in “Back to the Future II” did come to pass. The Cubs did win a World Series – though not in the year predicted in the film. And technology has brought about other changes that, while not exactly like what was seen on screen, come close enough for government work that filmmakers Bob Zemeckis and Stephen Spielberg deserve a pat on the back for the visionary insight into how things might be.
One thing they got wrong was the whole business of flying cars. In the movie, they seemed to be standard transportation. In reality, they are just as tethered to the nation’s highways and byways as ever, with most of the innovations going toward fuel economy and alternative power plants. The idea of the airborne vehicle just never got off the ground.
Innovation, especially in the wireless sector, makes up for some of the disappointment. Surprisingly though, the intersection of communications technology and the automotive industry has not developed in the way people thought it might 20 years ago. That’s when the Federal Communications Commission established technology-specific rules for what it called “Dedicated Short Range Communications” in the 5.9 GHz band, reserving the space to allow cars, as it was put at the time, “to talk to one another” and to develop safety-related technologies.
A worthwhile effort to be sure, but other than a few heavily subsidized pilot projects that seem to hold little promise, there hasn’t been much movement toward the original vision, especially in the area of auto safety. At the same time, automakers have used other parts of the spectrum not reserved for these purposes to produce tremendous advances popular with consumers (like radar) and are using non-spectrum dependent tech like lidar, sensors, and cameras. Moreover, new auto communications technologies like CV2X want to access the 5.9 GHz band but can’t under the current rules that allow only for the original DSRC.
FCC Chairman Ajit Pai, who deserves great credit for keeping adaptations to the Internet from being slowed by bureaucratic impulses, is poised to break the logjam. Rather than allow for the 5.9 GHz band to continue to go unused, he’s apparently ready to engage in rulemaking that would carve off the lower end of the band for additional wireless broadband use, while preserving the upper reaches for future automotive safety needs.
Putting new Wi-Fi in 45 MHz of the 5.9 GHz band will create the country’s first contiguous 160 MHz channel, something that is critical to the deployment of next-generation Wi-Fi 6, which is expected to bring gigabit and high-capacity Wi-Fi to American consumers. The unlicensed spectrum available in this area can be used to support 5G deployment. Cisco reportedly expects 71 percent of 5G mobile data will be offloaded to Wi-Fi by 2022 – meaning current unlicensed spectrum resources will be insufficient to keep up with the changes.
It’s an excellent compromise, one that leaves the door open to future developments while recognizing the need for new broadband spectrum that exists today. In the two decades since the DSRC allocation, Wi-Fi has become a core communications technology relied upon in homes, businesses, factories, airports, and hospitals across the globe. It contributes more than $525 billion to the U.S. economy on an annual basis.
It’s earned the opportunity to expand even further.
Dear Chairman Simons,
The Federal Trade Commission (“FTC” or “Commission”) should open an investigation into Ring—a subsidiary of Amazon—and its data-sharing practices with law enforcement officials. Ring’s conduct raises a number of concerns, including fears that (1) the emerging technology may result in discriminatory law enforcement activity, (2) sensitive consumer data may be jeopardized as a result of misuse by Amazon and (3) consumers may be subjected to heightened physical security risks. Given these concerns, which are outlined in greater detail below, and Amazon’s history of data mishandling, the FTC should more deeply examine the damaging effects of these practices.
While innovative, Ring’s home security doorbell and its use of consumer data are cause for significant concern as this conduct has the potential to result in considerable consumer harm. So-called “smart home” technology, still very much in its infancy, and its misuse have the potential to cause lasting damage to consumers if the necessary precautions are not taken.
Despite the potential benefits of “smart home” technology like the Ring “smart” doorbell, the data collected by Amazon opens consumers to exposure under the promise of additional security. As a result, not only is consumer data made more vulnerable, but their physical safety is put at unprecedented risk.
As the Commission is well aware, as more data is collected by Amazon, potential data breaches become more damaging. A data breach of consumers’ home security system by nefarious actors could have direct consequences on consumer physical safety. For example, should home security video footage fall into the wrong hands, consumers’ daily routines—including when they leave home and when they are alone and most vulnerable—would be easily discernible by criminals intending to cause harm.
According to reports, Ring has already misled consumers about its data handling practices. The Washington Post reports that Ring has partnered with over 400 police departments in the U.S., “granting them potential access to homeowners’ camera footage.” Amazon was able to secure hundreds of partnerships by capitalizing on artificially low prices funded through taxpayer resources. Making matters worse, Ring engages in these partnerships without first informing its users. This deceptive practice raises, at best, tremendous ethical concerns.
Amazon’s record on data security is already cause for concern. Recently, two prominent senators have asked the Commission to investigate Amazon’s role in the Capital One data breach, which affected nearly 100 million customers. Given Amazon’s potential involvement in this historic breach and its reckless handling of consumer data captured through Ring, it would be unwise to allow this activity to continue without at least some examination from the Commission.
In addition to the data security concerns, Ring’s video-sharing arrangement raises questions about the potential for profiling. In an open letter to lawmakers, more than 30 civil rights action groups described the threat to civil liberties posed by Ring’s partnership with law enforcement. In the letter, the organizations explain the dangers of this arrangement:
“With no oversight and accountability, Amazon’s technology creates a seamless and easily automated experience for police to request and access footage without a warrant, and then store it indefinitely. In the absence of clear civil liberties and rights-protective policies to govern the technologies and the use of their data, once collected, stored footage can be used by law enforcement to conduct facial recognition searches, target protesters exercising their First Amendment rights, teenagers for minor drug possession, or shared with other agencies […].”
These sentiments were echoed by another prominent senator in a letter to Amazon CEO Jeff Bezos. In the letter, the lawmaker outlined the privacy and civil liberty concerns noted above. Amazon has not yet responded to this letter—a clear indication that, unless pressured by government officials, the company will only act in accordance with its own interests, rather than address the genuine threats expressed here. Because of this, it would be wise for the FTC to act before the situation spirals out of control.
Inaction in light of these facts would subject consumers to risks that are all too dangerous. As the top “cop on the beat,” the FTC has a public responsibility to protect consumers from unfair and deceptive business practices. Given the data security and civil liberty concerns, it would be wise for the FTC to undertake a review of the partnership between Amazon and Ring and law enforcement authorities.
This issue—that of data security and physical safety—is bipartisan in nature. In fact, it transcends politics entirely.
Thank you for your attention to this matter.
 Harwell, D. (2019, August 28). Doorbell-camera firm Ring has partnered with 400 police forces, extending surveillance concerns. Retrieved October 24, 2019, from https://www.washingtonpost.com/technology/2019/08/28/doorbell-camera-firm-ring-has-partnered-with-police-forces-extending-surveillance-reach/.
 Guariglia, M. (2019, August 30). Five Concerns about Amazon Ring’s Deals with Police. Retrieved October 24, 2019, from https://www.eff.org/deeplinks/2019/08/five-concerns-about-amazon-rings-deals-police.
 Fight for the Future (2019, October 7). Open letter calling on elected officials to stop Amazon’s doorbell surveillance partnerships with police. Retrieved October 24, 2019, from https://www.fightforthefuture.org/news/2019-10-07-open-letter-calling-on-elected-officials-to-stop/.
One year ago this month, opponents of the FCC’s decision to loosen Title II regulations told us the Internet as we know it would end. It didn’t.
June 11, 2018, was to be a date that would live in infamy, when the Federal Communications Commission (FCC) repealed the Obama-era net-neutrality rules. It was a decision met with widespread criticism throughout the country. Fire, brimstone, throttled Internet speeds, the silencing of minority voices, attacks on the LGBTQ community, and the end of the internet as we know it were all imminent, according to liberals. We would be getting the Internet “one word at a time.”
One year after the “day the Internet died,” let’s conduct a post-mortem on the post-mortem.
Starting with Bernie Sanders (I., Vt.), who declared that repealing net neutrality would be “the end of the internet as we know it.” He added that it would be “a disastrous decision, it will impact every American. It will give huge advantages to big corporations over small businesses, to big media companies over smaller media outlets.” Has any of this come to pass?
Meanwhile, Senate minority leader Chuck Schumer predicted that the Restoring Internet Freedom Order, as the administration called it, would make it impossible to stream content on your phone, and would cause shows to lag on Netflix. Ask Netflix whether its business has taken a hit: The Sandra Bullock thriller Bird Box obliterated its records this past December.
That self-appointed bastion of truth in journalism, CNN, echoed Senator Sanders’s opinion in a headline, opining that with the repeal of net neutrality, it was the “end of the Internet as we know it.”
Senator Ed Markey (D., Mass.) said that repealing net neutrality would “create a digital oligarchy that serves the wealthy few.” Senator Tom Udall (D., N.M.) said that “ISPs would create internet toll lanes” and would stifle innovation and competition. Senator Richard Blumenthal, who has exaggerated once or twice in his life, said that students, innovators, consumers, and entrepreneurs would all suffer because of the repeal. The Twitter account for the Senate Democrats sent a vertically aligned tweet, separated by paragraph breaks, in a hyperbolic attempt to show how burdensome an Internet without net neutrality would become.
The culture industry got in on the act. Hollywood stalwarts such as Cher, Avengers actor Mark Ruffalo, and Alyssa Milano sought to convince the masses that the net-neutrality rules were necessary for Americans to enjoy a throttle-free, open Internet. The tone was apocalyptic.
The ACLU piled on, saying that the quality of Internet connection and the content available on the Internet were “at risk of falling victim to the profit-seeking whims of powerful telecommunication giants.” Inserting class warfare into the fervor, they declared that the FCC could “favor the content providers who have the money to pay for better access.” Anything but net neutrality, we were told, would result in “authoritarian” rule of the World Wide Web.
Yet we’ve seen the opposite of the Internet Armageddon these sages predicted. Internet speeds actually increased by 40 percent in the United States last year. The data show that there has been a record number of broadband deployment in U.S. homes. Investment continued to grow in 2018, as the country, says the U.S. Telecom association, an opponent of Title II regulations, “expanded on the momentum shift we saw in 2017 when the FCC initially signaled its intention to restore a forward-looking regulatory framework for broadband.”
As the United States progress toward 5G, utility-style Internet regulations impede the development of new technology. The stubborn fact is that Americans have access to faster Internet than ever before. A year after the Restoring Internet Freedom Order went into effect, there have not been any attempts to limit access of content providers. ISPs have not changed the way they charge customers, and the doomsday scenario has not come to pass of an Internet where content is provided only on an à la carte basis.
Opponents of net neutrality could have made their case without channeling a dark, ominous, apocalyptic future. For example, some have argued that net-neutrality repeal would permit ISPs greater authority to promote their own services, limiting consumer choice. However, concerns such as these were all too rarely expressed in political rhetoric. Equating the repeal of net neutrality to an attack on the LGBTQ community, an attempt to silence marginalized people, or cutting off access to reproductive rights was an outlandish attempt to mobilize the Left’s political base. A year’s time has revealed as much.
By David Harsanyi • The Federalist
In a recent op-ed, Facebook founder Mark Zuckerberg implored the state to get more involved in governing the internet. “Every day, we make decisions about what speech is harmful, what constitutes political advertising, and how to prevent sophisticated cyberattacks,” he began. “These are important for keeping our community safe. But if we were starting from scratch, we wouldn’t ask companies to make these judgments alone.”
For starters, there’s no such a thing as “harmful speech.” There might be speech that offends us. There might be speech we disagree with. There’s also speech that’s inarguably ugly, dishonest, pornographic or despicable. “We” allow these unpleasant words to go largely unregulated because we value the broader liberty of being able to offer opinions without government censors dictating which thoughts are acceptable.
But if Zuckerberg wants to rid his platform of this “hate speech,” no one is stopping him. Facebook allegedly employs a number of new mechanisms to achieve this very task. Good luck.
But Zuckerberg also claims that “we,” as society, now have a special responsibility to facilitate his efforts to keep people “safe” from reprehensible rhetoric. We have no such obligation. Facebook already offers users the ability to block or Continue reading
To show support for the promotion and protection of intellectual property rights, the National Center has joined with over 50 organizations in a coalition letter to Congress. This letter lays out the importance of IP in creating American opportunity and competitiveness.
By sharing this set of guidelines and beliefs with lawmakers, the coalition hopes to encourage Congress to show respect and vigilance for this important part of the nation’s economic engine.
In addition to the National Center, other free-market organizations that signed the letter include the American Legislative Exchange Council, Americans for Tax Reform, Frontiers of Freedom and Independent Women’s Voice. Jesse Jackson’s Operation PUSH Coalition has also signed on.
Addressed to the entire 116th Congress, the letter notes that the U.S. Constitution addresses the need to protect intellectual property in Article I, Section 8. This proves the Founding Fathers’ recognition that “the best way to encourage creation and Continue reading
By Mairead Mcardle • National Review
Federal Communications Commission chairman Ajit Pai said Friday that some advocates of net neutrality saw a political advantage in fomenting fear about the policy’s end.
Pai joined Charles Cooke of National Review at the National Review Institute’s 2019 Ideas Summit to discuss how the agency’s role has changed from its founding in the 1930s to today.
“Net neutrality” is a “very seductive marketing slogan,” Pai said. But “ultimately what it means is government regulation of the Internet.”
“As to the question of why people are upset, I’ll be candid. I think it’s because a lot of people saw a political advantage in fomenting a lot of fear,” he continued, recalling the doom-and-gloom warnings of critics who warned that Pai’s rollback of Obama-era net-neutrality regulations would be the “end of the Internet as we know it.”
“Last time I checked, you can still hate-tweet your favorite FCC chairman,” he quipped.
By David Rutz • Washington Free Beacon
The net neutrality debate is a complicated one, so naturally many of the loudest voices against its repeal last year resorted to doomsday rhetoric.
Friday marks one year after the vote by the Federal Communications Commission to undo the Obama-era rules that some called the “end of the Internet as we know it.”
Net neutrality imposed by the Obama administration classified ISPs (Internet service providers) as public utilities rather than information services and subjected them to broad regulations. Supporters fretted that ISPs, without proper oversight, would throttle certain connections and prioritize their own video-streaming services, for instance, rather than treating all sites equally. Continue reading
For those who don’t follow the communications industry closely, you may not know that the Federal Communications Commission has undertaken the herculean and laudable task of reviewing all its regulations applying to TV and radio broadcasters, cable TV operators and satellite TV providers, and repealing or modifying any outdated, unnecessary or unduly burdensome rules. In July, the FCC will start the formal process of reforming its rules requiring broadcast TV stations to air government-specified amounts of children’s educational programming. Frontiers of Freedom supports the FCC’s proposals – released in draft form on June 21 – here – to bring its rules into the 21st century.
From its draft, the FCC clearly recognizes that the children’s TV rules, originally adopted in 1996, must be updated. The current rules betray their analog-era origins, a time when consumers had restricted viewing options and most viewers watched only a handful of broadcast channels. But in today’s digital world, consumers enjoy video programming on multiple platforms via multiple devices at the time and location of their choice – the concept of “appointment viewing” has become meaningless to most consumers, especially younger ones. Children’s programming is now available from 24/7 children’s cable channels and on-demand from cable providers, via major internet sites and popular apps, like the PBS app, and streamed from sources such as YouTube and Netflix. Clearly, the market has not failed to provide abundant amounts of children’s video programming. And this leads to an obvious question – are the FCC’s current rules requiring broadcast TV stations to offer three hours of children’s educational programming every week per every channel they air (including all multicast channels) still necessary? We don’t believe so.
At the very least, the existing “kid vid” rules are overly rigid, causing serious unintended consequences including forcing broadcasters to run programing that meets regulatory criteria but isn’t attractive to parents and their children. Just one example, for any program to “count” under the FCC’s rules, it must, among other requirements, be regularly scheduled, aired during certain hours and last 30 minutes or longer. Predictably enough, these mandates have killed off differently scheduled and formatted children’s programs. Many of us still remember CBS network’s In the News, short-form news stories aimed at children, and ABC’s popular Schoolhouse Rock and Afterschool Specials. But specials aren’t regularly scheduled, and apparently short news isn’t good news, and thus those programs disappeared from the airwaves – a direct result of nonsensical regulation and government overreach.
For all these reasons, Frontiers of Freedom welcomes the FCC’s draft notice proposing changes to its outdated and harmful children’s TV rules. We support the FCC’s proposals – here – and its overall effort to reduce unnecessary and burdensome government regulation.
“URGENT,” read the popular meme on social media on Monday, “If you’re not freaking out about Net Neutrality right now, you’re not paying attention.”
Well, we have some good news. If you can read this editorial, it means you’ve survived the first 24 hours without the regulations that the Obama-era Federal Communications Commission decided were necessary to preserve net neutrality. Your Internet provider has not yet gotten around to censoring the Internet.
CNN, absurdly reported “the end of the Internet as we know it” in a news piece after the FCC voted in December to repeal the Obama-era regulation. That headline was later changed, perhaps because someone figured out that the Internet was only going back to the way it had been pretty much right up until June 12, 2015.