From the Financial Times: (and you should buy a subscription)
Piracy is a problem as old as the music indust
ry itself. In Victorian times, it was illicitly copied sheet music that was the avowed enemy of the artist, and the operetta team Gilbert and Sullivan paid toughs to go round London pubs smashing up pianos with sledge hammers whenever they found bootlegged scores.
Anderson: So what have all your creative people come up with, then? What’s different in your basic technology versus 50 years ago?
Musk: I can’t tell you much. We have essentially no patents in SpaceX. Our primary long-term competition is in China—if we published patents, it would be farcical, because the Chinese would just use them as a recipe book. [Wired]
This is probably a smart idea, but it illustrates the advantages of a working patent system. The inventions and advances that Space-X develops are kept secret. Engineers and scientists around the world can’t look at what they did, think of alternatives or better processes, or license technology and add new innovations on top of it. Without a working patent system, innovators have to obscure what they discover and, as Musk does, say very little. This slows down the progress of science.
Many of the critics of the patent system have a peculiar idea that there is some powerful advantage to being the first to market for a new idea. There is not. If Space-X gave its recipes away, Chinese and European companies would copy and cut into their market. Maybe eventually US companies would do the same thing (or put flags on something made in China and mark it up). Anyone who thinks that Space-X could successfully sell rockets that were equivalent to or even not a lot better than those being sold by Lockheed has no idea how markets work. There is a nice sounding myth about how “agile” and “innovative” producers will by some magic be able to outcompete larger companies that copy their work and have far greater marketing, production, and distribution systems (and better political connections). That’s not how hardball works.
US Patent Number 4701722 A is a perfect example of everything software patent opponents hate about software patents:
US 4701722 A is is one of the basic patents of Dolby B noise reduction awarded to Ray Dolby 
back in 1987. It’s not a software patent, it is a circuit patent. The usual arguments about why software should not be subject to patenting make little sense. If a circuit can be patented, then it should be possible to patent a program. The beginning of the study of computation as a mathematical subject was the discovery that a simple general purpose engine reading instructions from some sort of store can emulate any circuit. The early computers were “programmed” by physically moving wires around. The photo below shows ENIAC being programmed. A “program” then was obviously a circuit design. Technology advanced so that these circuits could be stored in memory and on disk drives. But that did not change the basic process – writing software is conceptually the same as wiring up an electrical circuit.
And around the same time Nyquist/Shannon showed that analog and digital signals could be equivalent to each other. Ray Dolby knew, and noted in this patent, that the analog signals transformed by his invention could be transformed into digital information and transformed back – as convenient. If there is an intrinsic flaw in the concept of software patents themselves, something fundamentally distinct in software that makes software inventions impossible, then the critics of software patents have failed to explain what that could be. See also Martin Goetz which I found via the anti-software patent arguments (1 and 2) of Tim B. Lee (who is not Tim Berners-Lee).
Streaming services rely on a weird conceit, but it’s not a new one. Like record labels, these companies can’t exist—they literally have no product—without musicians. Yet hardly any musicians are pleased with the advent of digital streaming, and understandably so—they were already screwed by greedy record labels back when people went into actual brick-and-mortar stores and walked out with albums; so screwed in fact, that it’s entirely possible to sell four million albums and not make a cent. Meanwhile, record labels are happy to throw their weight behind anything that isn’t the old iTunes model, even if it’s Apple’s own Pandora copycat.
http://readwrite.com/2013/12/06/streaming-music-competition-pandora-rdio-spotify
http://assets.sbnation.com/assets/1257891/Samsung_unredacted_trial_brief.pdf
Contrary to the image it has cultivated in the popular press, Apple has admitted in internal documents that its strength is not in developing new technologies first, but in successfully commercializing them. When Apple was developing its campaign to promote the first iPhone, it considered – and rejected – advertisements that touted alleged Apple ?firsts? with the iPhone. As one Apple employee explained to an overly exuberant Apple marketer, ?I don‘t know how many things we can come up with that you can legitimately claim we did first. Certainly we have the first successful versions of many features, but that‘s different than launching something to market first.? See Ex. 4 (DX 578). In this vein, the employee methodically explained that Palm, Nokia and others had first invented the iPhone‘s most prominent features.
Popcorn?
The witnesses allege a software company NDS, owned by News Corp, cracked the smart card codes of rival company ONdigital. ONdigital, owned by the ITV companies Granada and Carlton, eventually went under amid a welter of counterfeiting by pirates, leaving the immensely lucrative pay-TV field clear for Sky.
The allegations, if proved, cast further doubt on whether News Corp meets the “fit and proper” test required to run a broadcaster in Britain. It emerged earlier this month that broadcasting regulator Ofcom has set up a unit called Project Apple to establish whether BSkyB, 39.1% owned by News Corp, meets the test.
Panorama’s emails appear to state that ONdigital’s secret codes were first cracked by NDS, and then subsequently publicised by the pirate website, called The House of Ill Compute – THOIC for short. According to the programme, the codes were passed to NDS’s head of UK security, Ray Adams, a former police officer. NDS made smart cards for Sky. NDS was jointly funded by Sky, which says it never ran NDS.
Lee Gibling, operator of THOIC, says that behind the scenes, he was being paid up to £60,000 a year by Adams, and NDS handed over thousands more to supply him with computer equipment.
He says Adams sent him the ONdigital codes so that other pirates could use them to manufacture thousands of counterfeit smart cards, giving viewers illicit free access to ONdigital, then Sky’s chief business rival. From the Guardian.
Apple’s initial legal victory over rival HTC in a patent infringement suit could pave the way for Apple to collect high royalties from devices running Google Android, according to one analysis.
Mike Abramsky with RBC Capital Markets believes that Apple has the upper hand over HTC, which is a smaller handset maker with a limited portfolio of intellectual property. As such, Apple could potentially push for an injunction and ask the U.S. International Trade Commission to bar the import of HTC handsets.
Instead, Abramsky believes it’s more likely that Apple will try to establish a high royalty precedent on Android devices. He said the iPhone maker could garner a deal that’s similar to or even higher than the $5 per unit that Microsoft collects on HTC Android devices.
From Apple Insider
$5 a unit. Wow. But Apple has some remarkable technology covered by the patents at issue. For example
When the handler 44 requests a facsimile transmission, for example, the real-time function block issues commands to start the real-time engine and install the various modules that are needed for it to function as a virtual telephone. Binary facsimile image data is transferred to the real-time engine via the FIFO buffers, where it is encoded as PCM data which is further encoded according to the transport medium over which it is to be transmitted. If the adapter is connected to a telephone line, for example, these signals can be encoded as 16-bit pulse-code modulated (PCM) samples, and forwarded directly to the adapter 36 via the serial driver 42 . Alternatively, if the transport medium is an ISDN line, the modem signals are encoded as mulaw-companded 8-bit PCM signals. The different types of encoding are stored in different tables, and the appropriate one to be used by the real-time engine is installed by the real-time function block during the initial configuration of the engine and/or designated by the API 48 at the time the command to transform the data is issued.
Too stunning. There should be a Nobel prize in there – at least. Take a look.
This is one of my big beefs with the way we think about capitalism in this country: We fundamentally support what I call incumbency capitalism. We don’t support innovation capitalism. What’s the difference? Every rule around tax credits in the oil industry is set up by, and influenced by, the lobbyist from the oil industry. The royalty rates aren’t free auctions for offshore drilling; they are influenced by the oil industry. Depreciation policy is incumbency policy meant to benefit large capital expenditures instead of R&D investments. So, we can easily change a few of the rules, encourage more R&D and maybe less capital investment or other things. And almost all policy, because it is influenced by incumbents—and not just in oil and gas, but in nuclear, in solar, in wind—is influenced and shaped by incumbents. And I call that incumbency capitalism.”
Two lawsuits provide the frame for The Social Network. One was brought by Cameron and Tyler Winklevoss, twins at Harvard who thought they had hired Zuckerberg to build for them what Facebook would become. The other was brought by Eduardo Saverin, Zuckerberg’s “one friend” and partner, and Facebook’s initial CFO, who was eventually pushed out of the company by Silicon Valley venture capitalists. These cases function as a kind of Greek chorus, setting the standards of right, throughout the film. It is against the high ideals they represent that everything else gets judged. And indeed, the lawyers are the only truly respectable or honorable characters in the film. When they’re ridiculed or insulted by Zuckerberg, their responses are more mature, and better, than Zuckerberg’s. (If you remember the scene in “The Wire” where Omar uses his wit to cut the lawyer to bits, that’s not this film.) The lawyers here rise above the pokes, regardless of the brilliance in Zuckerberg’s charge. This is kindergarten. They are the teachers. We’re all meant to share a knowing wink, or smirk, as we watch the silliness of children at play.
In Sorkin’s world—which is to say Hollywood, where lawyers attempt to control every last scrap of culture—this framing makes sense. But as I watched this film, as a law professor, and someone who has tried as best I can to understand the new world now living in Silicon Valley, the only people that I felt embarrassed for were the lawyers. The total and absolute absurdity of the world where the engines of a federal lawsuit get cranked up to adjudicate the hurt feelings (because “our idea was stolen!”) of entitled Harvard undergraduates is completely missed by Sorkin. We can’t know enough from the film to know whether there was actually any substantial legal claim here. Sorkin has been upfront about the fact that there are fabrications aplenty lacing the story. But from the story as told, we certainly know enough to know that any legal system that would allow these kids to extort $65 million from the most successful business this century should be ashamed of itself. Did Zuckerberg breach his contract? Maybe, for which the damages are more like $650, not $65 million. Did he steal a trade secret? Absolutely not. Did he steal any other “property”? Absolutely not—the code for Facebook was his, and the “idea” of a social network is not a patent. It wasn’t justice that gave the twins $65 million; it was the fear of a random and inefficient system of law. That system is a tax on innovation and creativity. That tax is the real villain here, not the innovator it burdened.
What struck me about the movie was how it showed the misogynistic shallow world of Silicon Valley as even more shallow and misogynistic than it really is. Must be what Hollywood is like. As for Lessig’s argument, I wonder how many people sympathized with those Greenwich/Harvardians who, by the way, look like they’ve gone back to Federal Court to get more money. And does Lessig really think those lawyers came off looking wise and mature?
For me, the funniest thing about the movie was the dreary Harvard OS class that Zuckerberg walks out on. Oy,did that seem tedious.