Digital Discourse / Archives for Mark MacCarthy

SIIA Weighs in on China’s Trade Practices at Issue at USTR

September 24, 2012 By

Today, SIIA filed the comments with the United States Information Technology Office (USITO) in the annual review of China’s compliance with its accession commitments to the World Trade Organization (WTO). The review is held by the United States Trade Representative (USTR).

The comments cover a broad range of concerns on the part of the US tech industry aimed at improving trade and investment in China, including China’s indigenous innovation policies, intellectual property rights, market access and technical barriers to trade, national treatment, communications services and commercial Internet regulations.

The annual USTR review provides USITO and its members an effective means to recognize areas where progress has been made, to raise issues of concern and suggest approaches to resolve areas of disagreement with China’s government over implementation of its WTO agreements.

USITO is the leading independent non-governmental policy organization focused on the technology industry in China. USITO acts as the joint office in China of several U.S.-based trade associations representing the high-tech industry, including SIIA, the Information Technology Industry Council, the Semiconductor Industry Association, TechAmerica and the Telecommunications Industry Association.

I will be testifying on behalf of SIIA and USITO at the USTR’s hearing on these issues on October 3, along with Jimmy Goodrich, Director of Global Policy at the Information Technology Industry Council (ITI), and Brian C. Toohey, President & CEO of the Semiconductor Industry Association (SIA).

Mark MacCarthy, Vice President, Public Policy at SIIA, directs SIIA’s public policy initiatives in the areas of intellectual property enforcement, information privacy, cybersecurity, cloud computing and the promotion of educational technology. Follow the SIIA Public Policy team on Twitter at @SIIAPolicy

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Filed Under: Policy, Policy - Intellectual Property Tagged With: , ,

China’s Utility Model Patent System: A Perfect Storm for Patent Trolls

September 20, 2012 By

In testimony at today’s House Subcommittee on Intellectual Property hearing on international intellectual property enforcement, Victoria Espinel, the US Intellectual Property Enforcement Coordinator, made reference to “unexamined utility model patents” as a problem in the Chinese patent system.

Chairman Bob Goodlatte also raised the issue in his opening statement, noting that it is “problematic” when “a country grants many low-quality or “junk” patents to local companies, so that they can sue American companies and get rich quick. Many of these are utility model patents that go through minimal review and lack real inventiveness.”

It is good news that the Administration and the Congress are focusing on this. A recent Washington Post story highlights the problem.  It looks as if China is about to recreate the patent troll problem we are struggling with here in the United States.  The Post story puts the problem this way: “ Small companies that take on bigger firms in questionable patent cases have become known here as “patent cockroaches,” a play off the U.S. term “patent trolls,” used to describe companies that make money primarily by hoarding flimsy patents and suing others.”

A recent report from Thompson Reuters describes how this lesser-known part of China’s patent system works. It is intended to apply to incremental improvements that change the shape or structure of an object.  It is typically used for electronic or communication devices but software implemented inventions have also been issued as utility model patents.

The problem is that it is too easy, cheap and quick to get these patents.  As a result, they are often of low quality.  Despite this they carry with them the same arsenal of remedies as higher quality invention patents do, including substantial fines and even injunctions.

The threshold of inventiveness is lower for utility model patents.  As compared to prior art, an invention patent has “prominent substantive features and represents a notable progress;” while a utility model patent merely has “substantive features and represents progress.” As a result it is more difficult to invalidate a questionable utility model patent. And there is no mandatory examination upon filing an infringement action.

The utility models are issued without substantive examination typically in under 6 months (3 months is the target) Utility models are 20% cheaper than invention patents to obtain.

Because of these attractive features utility model patents are growing quickly.  Most of these are owned by Chinese individuals.

A few problematic cases have already surfaced. Several years ago, the French company Schneider lost a utility model suit in China, costing them a $23 million settlement. A patent infringement case was filed on July 30, 2012 involving a utility model against Apple by Mr. Lee of Taipei in Zhenjiang Immediate People’s Court.  The case involves Facetime.

The situation is ripe for abuse.  Since 2008, well-known non-practicing entities have begun to establish a presence in China. It is only a matter of time before the patent troll problem burst out there and by then it will be too late to prevent the damage these.

We know the extent of the problem here.  A recent study by Boston University faculty members James Besen and Michael Meurer suggest that the economic loss from patent trolls reached $29 billion in 2011. We don’t need to recreate this problem in the world’s second largest economy. The time is now to begin consultations with industry and other governments to investigate remedies to this potential problem.

Mark MacCarthy, Vice President, Public Policy at SIIA, directs SIIA’s public policy initiatives in the areas of intellectual property enforcement, information privacy, cybersecurity, cloud computing and the promotion of educational technology. Follow the SIIA Public Policy team on Twitter at @SIIAPolicy

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Filed Under: Policy, Policy - Intellectual Property Tagged With: , ,

Google in the Middle

September 18, 2012 By

A U.S. ambassador is killed in a consulate in Libya, along with three other Americans. Anti-US riots spread throughout the Middle East.  At the heart of the unrest is a short anti-Islamic video posted on YouTube.

What should YouTube’s parent company, Google, do? It cannot review videos before the fact, because there are too many of them, and because its system of user-generated content is designed to allow a broader range of expression than the old broadcaster/newspaper model of strict editorial control.

But Google has an elaborate system of review after the fact. After its review of the anti-Islamic video, it made a judgment that the video “is clearly within our guidelines and so will stay on YouTube.  However, given the very difficult situation in Libya and Egypt we have temporarily restricted access in both countries.”

YouTube blocked access in others such as India and Indonesia because it is localized in those countries and received a valid court order or official government notification that the video violated local law.  Other countries including apparently Afghanistan blocked access to all of YouTube pending the removal of the video.

The U.S. government asked Google to review its decision to keep the video up, but Google repeated its judgment that the video was within its community guidelines.

The issues here are complex and muddied.  Jonathan Zittrain got it right when he dismisses those who think this is a “no-brainer.” What is clear is that Google is in the middle.  They have a responsibility to act in the face of this complex mixture of speech that is offensive to some, and yet appears not to violate its community guidelines.

So Google did the right thing by acting. In our system it is their decision, and that’s the way it should be. It has stepped up to its responsibility by crafting a balanced, reasonable response to this challenging situation.

Mark MacCarthy, Vice President, Public Policy at SIIA, directs SIIA’s public policy initiatives in the areas of intellectual property enforcement, information privacy, cybersecurity, cloud computing and the promotion of educational technology. Follow the SIIA Public Policy team on Twitter at @SIIAPolicy

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Filed Under: Policy Tagged With: ,

Do Not Track is at a Crossroad

September 17, 2012 By

The New York Times weekend piece on Do Not Track revived the debate on what the industry should do when users’ online privacy choices are made for them. Our view is that the choice should be left to the user, and not imposed by any platform or service provider. Last week, Google announced that it would make available this user-controlled feature in its Chrome browsers by the end of the year.

In June Microsoft disrupted the industry discussions about how to provide a workable mechanism to empower users to make choices about online privacy and personalization. It announced that it would turn on the Do Not Track (DNT for short) signal in Internet Explorer 10 by default. Mozilla, the maker of the competing browser, Firefox, was critical. SIIA objected. Advertisers announced that this decision ran counter to an agreement struck between the industry and the White House around opt-out as a genuine consumer choice.

Last week, Apache revealed that it will disable the DNT signals coming from Internet Explorer 10. Roy Fielding, an author of the DNT standard and principal scientist at Adobe Systems, wrote a patch for Apache that sets the Web server to disable DNT if the browser reaching it is Internet Explorer 10.

The message is that a unilateral action forced on users by one industry player is not a sustainable solution. We as an industry have to do it together, or not at all. If websites powered by Apache do not accept the IE10 DNT signal, it simply won’t reach critical mass. Consumers, mislead by industry announcements and superficial stories from the trade press, might think their browers are giving them privacy over personalization–but the reality will be very different.

The danger is that the collaborative effort that has been building toward real privacy protection collapses. As Peter Bight said in ArsTechnica in August,” …there’s a very real prospect that the Do Not Track header will be both widely used, and widely ignored. In this situation, it would be difficult to describe it as anything other than a failure.”

Do not track is at a crossroad. Now it is up to the industry to create a a simple, easy to use, consumer activated Do Not Track system that all parties can respect.

Mark MacCarthy, Vice President, Public Policy at SIIA, directs SIIA’s public policy initiatives in the areas of intellectual property enforcement, information privacy, cybersecurity, cloud computing and the promotion of educational technology. Follow the SIIA Public Policy team on Twitter at @SIIAPolicy

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Filed Under: Policy, Policy - Privacy Tagged With: ,

Mobile Privacy: Time for Collaboration, Not Legislation

September 12, 2012 By

Representative Ed Markey’s proposed mobile legislation, scheduled to be introduced today, is the wrong way to go. It would impose rigid privacy rules on the mobile industry that can only lead to stagnation and a loss of innovative dynamism.

And what a loss that would be for such a dynamic, growing industry. According to a recent study, there were over 44,000 app-related positions open in the U.S. in the last quarter of 2011, and overall, there were 45 percent more open app positions than in the previous year. Based on this number, the study found the app economy firms represented 311,000 jobs. Using a standard multiplier, this number grew to nearly a half a million jobs created by the app economy in both direct and indirect jobs since 2007.

Rather than overregulating an industry that holds such potential for economic growth, Congress should be following the House Energy and Commerce Committee’s lead in supporting the industry. The Committee is holding a hearing today focused on apps and where the jobs are.

So if legislation isn’t the answer, what should be done?  Over the summer, the National Telecommunications and Information Administration (NTIA) launched an effort to nudge stakeholders into adopting codes of conduct for mobile transparency.  SIIA was supportive of this effort and remains so.  But after several meetings it appears that things may be starting to drift. Some scheduled meetings have been postponed. Fortunately, discussions between various industry stakeholders, as well as discussion between industry and consumer watchdogs, are ongoing.

The industry needs to get the substantive mobile transparency discussion moving again, if not through NTIA action then separately.

It’s also important to remember that consumers are not passive victims.  If they think they are being abused, they have a healthy capacity for self-defense. As the New York Times wrote last week “many consumers seem to be already taking steps to guard their personal information from data-grabbing apps. A study by the Pew Research Center, released Wednesday, found that among Americans adults who use smartphone apps, half had decided not to install applications on their mobile phones because they demanded too much personal information. Nearly a third uninstalled an application after learning that it was collecting personal information “they didn’t wish to share.” And one in five turned off location tracking “because they were concerned that other individuals or companies could access that information.”

This is good.  In the absence of government mandates, and industry codes of conduct, consumers are doing some sensible things to protect themselves.  But the lack of consumer trust is troubling and can only inhibit growth in the market.  If consumers just say no, the whole industry suffers.

The FTC is trying to help with some guidance.  Last week it published its recommendations for mobile application developers, suggesting that companies seek “express agreement” for consumer data they collect and share.  Nothing is binding on companies, however, and there is no indication that these recommendations are forming the core of industry codes of conduct or best practice.

Recommendations are good.  Consumer self-help is good.  But the world is looking to us to show that self-regulation can work as a viable alternative to government mandates.  To allow the multi-stakeholder efforts on mobile transparency to falter now would confirm their belief that only the government can set the rules of the road in this area.  It is time for the industry to step up and make progress on setting its own rules of the road.

Mark MacCarthy, Vice President, Public Policy at SIIA, directs SIIA’s public policy initiatives in the areas of intellectual property enforcement, information privacy, cybersecurity, cloud computing and the promotion of educational technology. Follow the SIIA Public Policy team on Twitter at @SIIAPolicy

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Filed Under: Mobility, Policy, Policy - Privacy, Software Tagged With: , ,

Do Not Track and Consumer Choice

June 1, 2012 By

Yesterday, Microsoft announced that that the latest version of its Windows 8 operating system has an Internet browser that has the “do not track” feature turned on as the default. This might seem like just a business choice, and one that is pro-privacy as well. But it’s not. This unilateral action will set back the cause of industry self-regulation, produce considerable consumer confusion and delay the introduction of an effective “do not track” feature.

The essential problem is that a “do not track” flag works only with the cooperation of websites and ad networks. If they do not honor the “do not track” setting in the consumer’s browser, the consumer will be tracked. But the industry has announced that they will cooperate with a “do not track” request only if it is an opt-in choice from the consumer himself, not a choice made on his behalf by a platform provider. If they stick to this position, the new “do not track” feature described in today’s announcement won’t in fact stop tracking.

And here’s where the consumer confusion comes in. Some reports say flatly “…when browsing on PCs and mobile devices featuring Windows 8, a user automatically won’t be tracked on the Web.” Well, that’s wrong, but most users will believe what they read and think they have successfully turned off advertising tracking by using the latest Windows operating system. It will take months to unwind this consumer confusion.

But why would the industry refuse to honor a consumer “do not track” request? Targeted ads are more effective and more valuable than regular ads. If regular ads replace all or most of the targeted ones, ad revenue declines dramatically. And the content that depends on ad revenue declines as well.

If ad networks and websites honored “do not track” requests that are on by default, they would be accepting a dramatic decline in their revenue. People rarely change a default setting unless they really care about something. Getting regular ads instead of targeted ones is not so intrusive, annoying or disturbing that people will go out of their way to change things. So if the default is set at “do not track” it will stay there.

Is that the right way to structure the consumer choice? No. Arranging the choice that way threatens the economic basis for Internet content for no good reason.

When people care about something, they will act, as they did in response to the FTC’s Do Not Call rule. That rule required consumers to affirmatively call or email the FTC to ask to be put on a Do Not Call list. Three quarters of all Americans have signed up for the registry accounting for over 200 million phone numbers. When they want something, people will take affirmative action to get it.

But it makes sense to see if they really want it, rather than making the decision for them. When the economic basis of Internet content is at risk this is the only sensible choice. Put “do not track” on the same track as Do Not Call – make it opt-in.

The way forward is for the industry to coalesce around an opt-in “do not track” mechanism. The advertising industry has already agreed to cooperate with that. The details have to be worked out, but the right direction is clear. Today’s announcement means that it will take longer for the industry to come to a real agreement on the topic. It is a detour that will only delay the arrival of an effective “do not track” mechanism.

Mark MacCarthy, Vice President, Public Policy at SIIA, directs SIIA’s public policy initiatives in the areas of intellectual property enforcement, information privacy, cybersecurity, cloud computing and the promotion of educational technology.

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Filed Under: Policy, Policy - Privacy Tagged With:

SIIA Applauds Resolution to Promote Global Internet Free from Government Control

May 31, 2012 By

SIIA lauds the bi-partisan House Resolution (H. Con. Res. 127) introduced introduced by House Commerce Committee leadership yesterday, which reaffirmed “the consistent and unequivocal policy of the United States to promote a global Internet free from government control and preserve and advance the successful multi-stakeholder model that governs the Internet today.” This was followed by a hearing in the House Commerce Committee airing the problems in international regulation of the Internet.

The concern is that control over the Internet might move to international bodies that could be hostile to today’s reality of Internet freedom. Last year, for example, Russia, China, Uzbekistan and Tajikistan proposed a code of conduct for information security on the Internet at the 66th session of the United Nations General Assembly. The code said many sensible things including an injunction to “fully respect rights and freedom in information space, including rights and freedom to search for, acquire and disseminate information on the premise of complying with relevant national laws and regulations.”

It also said that “policy authority for Internet-related public issues is the sovereign right of States, which have rights and responsibilities for international Internet-related public policy issues.” Many government agencies, especially law enforcement and national security departments, but also consumer protection agencies, would readily agree that their jurisdiction extends to actions on the Internet.

The real worry is that in the application of these broad principles countries or international agencies acting on their behalf could effectively limit the ability of individuals and firms to exchange Internet traffic across borders and create what amount to digital trade barriers of the 21st century. All countries have benefited from the open, transparent character of the Internet, and will continue to do so under the current multi-stakeholder approach to Internet governance.

SIIA applauds Commerce, Manufacturing and Trade Subcommittee Chairman Mary Bono Mack (R-CA), along with Chairman Fred Upton (R-MI), Ranking Member Henry A. Waxman (D-CA), Communications and Technology Subcommittee Chairman Greg Walden (R-OR), and Ranking Member Anna Eshoo (D-CA) for their sponsorship of this important resolution defending Internet freedom.

Mark MacCarthy, Vice President, Public Policy at SIIA, directs SIIA’s public policy initiatives in the areas of intellectual property enforcement, information privacy, cybersecurity, cloud computing and the promotion of educational technology.

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Filed Under: Policy Tagged With: ,
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