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.
For a variety of reasons, the U.S.-China rapport established by Richard Nixon has cooled considerably over the past few years. Some experts believe a return to what seemed to be a mutually beneficial status quo is possible once the Trump-era trade war comes to an end.
That’s a fantasy. The relationship between the two superpowers has been on the decline for some time, largely due to unfair trade practices on the part of the Chinese. They do not play fair and no amount of waiting on the part of the U.S. will cause them to change their stripes.
China makes billions by forcing U.S. companies to turn over valuable intellectual property in exchange for entry to its markets. Refusal to cooperate cuts off access to more than a billion potential customers. If America’s leaders aren’t demanding a change, a demand backed up with action, then what incentive is there for Beijing to change its policy?
Most American businesses have been advised by policymakers to wait. They’re stuck, hoping for relief — from international trade organizations to which the Chinese belong (thanks to the U.S. insisting they be admitted) or from U.S. politicians. Nothing will happen unless the pressure on Beijing is maintained.
When President Donald Trump talked about bad trade deals, he usually didn’t mention the World Trade Organization, the U.S. International Trade Commission, and the other multi-national and U.S. governmental bodies that are supposed to referee disputes. Maybe he should have, so that what these organizations accomplish – or more importantly fail to accomplish – will get the scrutiny needed.
Changes must occur. The ITC, for example, continues to show itself to be toothless. It’s failed to be tough on the non-practicing business entities known as “patent trolls” that exist almost solely to make the potentially lucrative charge that deep-pocketed entities have infringed on intellectual property rights so how can we expect tough action from them against China.
Patent trolls are a serious problem and a danger to economic growth and to consumers. They hinder innovation and can force higher prices on consumer technology and other goods now considered critical to life in the 21st century. Yet the ITC refuses to crack down on them, leaving China well-positioned to benefit from the mess they cause.
The commission is currently considering claims lodged by the Irish patent troll Neodron that its patents were infringed upon by major global tech companies including Apple, Microsoft, and Dell. It wants the ITC to grant an exclusion order baring these companies from selling all their major touchscreen mobile devices in the U.S. market.
What’s happening has been likened by some to extortion, with the productive companies being pressured to pay the complaining troll off rather than leave things to the ITC to decide.
Imagine if the ITC decides the issue in Neodron’s favor. The cost of smartphones, tablets, computers, and other devices covered by its order would immediately skyrocket to provide the rents Neodron is demanding. According to some estimates, nearly 90% of smartphones and tablets currently available in the U.S. market would disappear, be replaced by devices from China. The range consumers have when choosing a device would be narrowed while the prices for what they could buy would rise.
China already has a clear lead in developing and deploying 5G wireless devices. Given the critical technology race between the U.S. and China over who will dominate in 5G, how can a U.S. agency even consider a litigation outcome that forces U.S. consumers to buy their 5G devices (as well as their other touchscreen devices) only from China?
Tensions between the world’s two largest economies are already heightened, in part because the U.S. accused China of sponsoring criminal hackers trying to gain access to private data from biotech firms around the world working on coronavirus vaccines and treatments. The FBI said the Chinese government was acting like “an organized criminal syndicate.”
Neodron’s complaint to the ITC places the proverbial thumb on the scale for the Chinese and the technology they manufacture. If they win it would devastate the U.S. tech sector while helping Chinese tech companies gain a greater share of the global market, probably permanently. Like all patent trolls, Neodron’s claim cannot justify this kind of disproportionate and devastating result.
The ITC doesn’t have to go along with this. They can institute policy revisions that will thwart the efforts of Neodron and other patent trolls like them to use the ITC for monetary gain. Those changes should be made now before any more damage is done. There are bigger fish to fry.
Under our current law, federal charges can be brought for arson when a person willfully and maliciously sets fire to a building, structure or vessel. Federal bank robbery charges must include evidence that a person, by force or intimidation, takes or attempts to take something of value belonging to a bank, credit union, or any savings and loan association. And if a new bipartisan bill from two senators were to be enacted, a prima facie case for “unfair or deceptive” conduct would require the government to show that a person…filed for a patent.
Yes, we’ve somehow reached the point where inventing something is only OK if you don’t plan to protect that invention with a patent. Maybe the next step will be to outlaw invention altogether, but I suppose we can be thankful we’re not there yet. For now, Senators John Cornyn (R-TX) and Richard Blumenthal (D-CT) have proposed a new law where if you have discovered a way to help some sick patients and then invest capital in new research that may have the effect of helping additional sick patients, you are presumed liable under the antitrust laws if that new investment leads to a patentable invention.
To ground us in reality — sometimes you have a medicine that helps a group of people get better. In those cases, it should not only be legal, it should be encouraged to pursue additional research to see if that medicine can be improved further, or help people fight other diseases.
After making such an investment, can you hope to argue your way out against the government antitrust enforcers? Good luck with that, since you are starting with presumed guilt. But perhaps it would be wiser, before you undertake resource-intensive research, to check in with the newly installed innovation czars at the Federal Trade Commission. In this way, the FTC will decide who lives and who dies. It’s a reincarnation of the Obamacare death panels, only with FTC bureaucrats instead of bureaucrats appointed by the Department of Health and Human Services.
Companies would also be well advised to study what disease areas are most likely to elicit the sympathy or personal interest of FTC commissioners or their immediate family members and tailor their R&D budgets accordingly. If your research turns out to be insufficient to meet the FTC standards for a substantial benefit, you may not only have wasted your money, you may have committed an antitrust violation.
But what about the Constitution? Well you see, our nation’s founding fathers clearly were unaware of the all-knowing powers of the Federal Trade Commission when they specified a right to one’s own inventions (your Intellectual Property) as the only individual right described in the text of the Constitution. And the icing on this big-government cake is that the FTC can bring this new charge in their kangaroo court of FTC administrative litigation, where the FTC acts as prosecutor, judge and jury.
This bill claims to be about prescription affordability (it is titled the Affordable Prescriptions for Patients Act, or APP Act), but nothing in it makes prescriptions more affordable. The most likely direct effect on pricing will be the cost of parking near the FTC, while diminishing the property rights of American innovators. Antitrust lawyers will certainly derive some benefit, but that could increase their hourly rates if demand for their services goes up. So maybe the APP acronym is really for the Antitrust Practitioners Paradise created by this legislation.
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
Today Americans for Tax Reform, along with a number of center-right organizations, sent a letter to members of the House of Representatives in support of the Music Modernization Act, which will update copyright law benefiting America’s creative community.
The Music Modernization act ensures that music creators get paid for their work, and makes it easier for streaming services to find and compensate artists. The Act will also create protections for sound recordings that were made before 1972 that currently do not have federal copyright protection. This helps the creators of these works receive long overdue royalties.
Congressman Doug Collins (R-GA) introduced the Music Modernization Act in December. The Bill is pending in the House Committee on the Judiciary. Continue reading
by Bill Gertz • Washington Free Beacon
China’s Communist Party recently authorized an aggressive program of stealing U.S. science and technology information by recruiting Americans in the tech sector with access to trade secrets, according to an internal Party directive.
The directive outlines a secret program authorized by the general office of the Communist Party of China (CCP) Central Committee of stepped up technology collection beginning in late 2016 and carried out by an intelligence unit called the United Front Work Department.
The document is an approval order from the Central Committee for a “working plan on strengthening the intensity of United Front Work in the area of science and technology of the United States in 2017.”
“The united front work targeted on the areas of science and technology of the United States is an important measure of our party to deeply divide western hostile forces, to maintain social stability, to ensure national security, to comprehensively advance the rapid development of our own science and technology and economy, to accelerate the construction of national defense modernization, and to consolidate the overseas united front,” the document states. Continue reading
December 18th, 2017
The Honorable Robert E. Lighthizer
Office of the U.S. Trade Representative
Executive Office of the President
600 17th Street, N.W.
Washington, D.C. 20006
Dear Ambassador Lighthizer,
“Intellectual property is a driving force in today’s global economy of constant innovation. It is the wellspring of American economic growth and job creation. With the rise of the digital economy, it has become even more critical that we protect intellectual property rights and preserve freedom of contract rather than create regulatory barriers to creativity, growth, and innovation. …We call for strong action by Congress and a new Republican president to enforce intellectual property laws against all infringers, whether foreign or domestic.” Continue reading
Washington D.C. – Yesterday, a broad coalition of free-market and center-right organizations released a statement regarding a pending decision of Korea’s Seoul High Court, Korea’s court of last resort. The decision will be whether to stay the Korea Fair Trade Commission’s (KFTC’s) overbroad ruling against Qualcomm, Inc., the aggrieved party in the proceeding.
Below is the statement released by the coalition:
“We are troubled by the prospect that the Seoul High Court might fail to stay the KFTC’s grossly overbroad extraterritorial remedies against Qualcomm. Such a ruling by the Court would explicitly condone the KFTC’s intrusion upon U.S. sovereignty, resulting in far-reaching implications harmful to free trade, the United States economy, and intellectual property as a whole.
Earlier this year, the KFTC took the extraordinary step of seeking to impose a one-size-fits-all approach to how patents around the world are licensed. This unprecedented remedy is a bald-faced attempt to slash the value of a U.S. company’s global patent portfolio and shield Korean domestic companies from American competition.
“The KFTC’s extraterritorial remedies go well beyond protecting Korean consumers and purport to dictate the terms upon which a U.S. company can license its intellectual property—even well outside Korea’s borders. Such remedies result in a major transfer of patented technology from U.S. to Korean companies, severely undermining U.S. leadership in innovation and economic growth. This will adversely impact every company in the United States that holds a patent of any kind.
“As the U.S. embarks upon a review of its trade and investment relationship with Korea, we urge the Trump Administration to demand assurances from the highest levels of the Korean government that all U.S. companies will be protected from the KFTC’s extraterritorial overreach. Anything less is a direct attack on our economy, our intellectual property, and our sovereignty.” Continue reading
A Chinese company, Ant Financial, largely owned by the government of China, is intent on taking over MoneyGram, a leading US-based financial payments company. This planned acquisition raises serious questions as to whether ownership of MoneyGram would be part of China’s strategic plan to obtain sensitive personal and financial information of Americans and westerners worldwide as well as to undermine American economic strength. This acquisition should be stopped for that reason.
The Committee on Foreign Investment in the United States (CFIUS) exists to review the national security implications of foreign investments in US companies. CFIUS is comprised of representatives from a number of US agencies or departments — including the Departments of Defense, Homeland Security, State and Commerce. CFIUS can block foreign sales and investments that would result in a foreign power acquiring assets and intellectual property that would harm America’s national security.
There are a number of important national security and strategic reasons that CFIUS should reject Ant Financial’s proposed takeover of MoneyGram. Continue reading
Frontiers of Freedom President, George Landrith, released the following statement on the Register of Copyrights Selection and Accountability Act:
“Frontiers of Freedom applauds the introduction of the Register of Copyrights Selection and Accountability Act. This legislation — which has strong bipartisan support in both the House and Senate — is an important, positive and necessary first step towards a more effective and modernized US Copyright Office.”
“As it is currently organized, the Copyright Office structure is more than 120 years old and designed for a time when intellectual property rights were just beginning to be widely recognized as an important economic driver. Now, copyright dependent industries account for 5.5 million jobs and contribute more than $1.2 trillion to GDP. The time for modernization is now. This legislation begins that important process.”
“This legislation provides that the head of the US Copyright Office, known as the Register of Copyrights would not merely be a staff position at the Library of Congress, but rather would be nominated by the President of the United States and confirmed by the US Senate, thereby elevating the Register to better reflect important economic sector the Office administers
“This is an important and needed first step to make the US Copyright Office work more effectively. America has led the world in creativity and innovation. That has fueled our economic health and strength. Moving forward, intellectual property will play an even bigger role in our economy and it makes sense that the Copyright Office should be prepared to facilitate that growth. A predicate to the continued success of the creative economy is an independent Register who understands and appreciates the importance of intellectual property in a vibrant, modern economy. It also ensures that the Register is accountable to the People through their elected representatives.”
“This legislation begins this important modernization process and is supported by leaders in both political parties and in both houses precisely because it is clearly what is needed to strengthen our creative and innovative economy.”
# # #
by Randolph J. May and Seth L. Cooper • Free State Foundation
Securing protection of American intellectual property (IP) rights internationally is an economic imperative. It is also a constitutional duty. In today’s information economy, copyrights and patent rights provide critical financial investment incentives for research and development of new products and services. And IP constitutes a potent source of economic value and prosperity. According to an official U.S. Department of Commerce report, IP-intensive industries in America generated an estimated $5 trillion in revenues in 2010 alone, providing over 27 million jobs. Since then, those figures almost certainly have grown. Another report estimated that the copyright industries alone contributed $1.1 trillion in value added to the U.S. economy and employed nearly 5.5 million workers in the U.S. in 2014.
As IP becomes increasingly vital to our nation’s wealth and prosperity, the need to ensure its protection on a global basis increases correspondingly. The American economy suffers staggering losses each year to international IP theft. According to the IP Theft Commission (2013), these losses likely exceed $300 billion annually. IP theft is an injustice to the IP owners, diminishes economic prosperity, and undermines job opportunities. Indeed, this is a reason why it is so important to conclude international trade agreements, such as the recently-negotiated Trans-Pacific Partnership, that contain meaningful intellectual property protections. Continue reading
Frontiers of Freedom has long been a leader in protecting property rights. Our Constitution provided for property rights for physical property and for intellectual property. And with good reason. America became the world’s most innovative and economically powerful nation because our Founders grasped the importance of property rights and created a system that incentivized creativity, innovation and the productive use of such property.
Sadly, some foolishly think that property rights are old fashioned or that everything should be free. But these folks miss the point that if new innovations were free, we would see far fewer innovations. That would mean fewer new life sustaining medications, fewer new movies, less new music, and fewer new electronic devices and gadgets. Imagine if someone argued that food is so important that everyone should be able to get it free and simply walk into grocery stores and restaurants and grab whatever food they want. How long would food be available? How long before grocers and restaurants close down? That’s the point. We need to incentivize the production of the things we want and need and we need to encourage innovation.
For this reason, Frontiers of Freedom was part of a group that sent the following letter to Capitol Hill hoping to highlight the importance of intellectual property rights. Continue reading
Frontiers of Freedom is a strong supporter of property rights (including intellectual property rights). Property rights encourage individuals and businesses to innovate and invest in new ideas and technologies. We all win when property rights are respected. So where can you find your favorite movies and shows online and be sure that they are not illegal pirated copies?
The Motion Picture Association of America has launched a new search engine called “Where To Watch” (WhereToWatch.com). This new tool gives consumers a free, simple, and comprehensive way to search every known legitimate platform for movies and TV shows. No more searching 35 different places to find what you’re looking for. It is all at one simple-to-use website. And its free. We encourage everyone to use this tool. Not only will you protect yourself from unsavory and illegal websites that plant viruses on your computer and invade your privacy, but you’ll be supporting and encouraging your favorite artists, actors and film studios to continue making the entertainment that you love. Continue reading
A recent study conducted by NetNames found that in one month alone more than 430 million unique Internet users sought or downloaded copyright infringing music, movies, book, and other materials. This industrial scale theft chills creativity, innovation and investment by depriving creators of a market based return on their investments.. So how do these cyber-thieves steal music, movies, books, and other materials? One tool that is growing in popularity is the shadowy cyberlocker which is designed to sell, not store stolen content.
With so much attention to the “cloud” in today’s online world, it is important that we distinguish between the legitimate cloud storage services like DropBox, Google Drive and Apple’s iCloud, to name only a few. These services allow consumers to store, share, backup, and access data. The so-called cyberlocker business model is very different. Cyberlockers incent users to upload stolen files that are copyrighted and which they have no right to distribute, and then profit by selling subscriptions and advertising. The fact that they pay nothing for the product they sell allows them to enjoy profit margins approaching 90%.
The cyberlocker model is predicated on theft and distribution of stolen property. Continue reading