YouTube version of my seminar:
YouTube version of my seminar:
An interesting story pulled together a couple of my different worlds last week: The Republican Study Committee (RSC) posted an analysis of copyright law.
So Oracle won its big battle with Google. Sort of. In Phase I of the fight over whether Android made inappropriate use of Java, a jury ruled today that Google did, in fact, use Oracle's copyrighted products without authorization. The jury could not, however, determine whether Google did anything wrong because it could not rule on fair use. Was it fair or improper for Google to use Java as it did? We don't know. And since what Oracle really wanted was damages, it's not clear how to proceed with the damage assessment phase (which might be Phase II, or might be deferred until after the patent component of the case).
If the jury couldn't determine the fair use issue, it stands to reason that the two sides were equally persuasive--or unpersuasive. Whose job is it to get this information out? Typically, that task falls to an expert witness.
Patents are back in the news. In the past few weeks alone, Microsoft bought AOL’s patent portfolio for $1 billion, then resold much of it to Facebook for $550 million. Twitter pledged to use its patents only defensively, and to give its employee-inventors a say in the company’s future patent litigation strategy. Controversial trials, appeals, rulings, and awards continue—prompting the Wall Street Journal to publish Andy Kessler’s call for curtailing the rights of non-practicing entities (NPEs), also known affectionately as “trolls.”
Zynga made news last month when it announced its new gaming platform. The asserted goal is to make social gaming easier. The actual goal is to wean Zynga’s gamers away from Facebook.
Understanding this actual goal is critical. The tense but symbiotic relationship between Zynga and Facebook epitomizes the contemporary software industry. Facebook, along with Apple (the iPhone), Google (Android), Microsoft (Windows), and perhaps a few others, build platforms. Almost all other software companies—including, until now, Zynga—develop apps that run on top of those platforms. In economic terms, these app developers operate inaftermarkets that exist solely because of the platform developers. What many app developers fail to realize, however, is that aftermarkets also operate at the sole discretion of the platform developers.
So Facebook filed its IPO papers, and the numbers are eye-popping. The company appears to be worth about $100 billion, or a bit more than the GDP of Tunisia. Others shade it a bit lower, but one thing is certain: it’s good to be Facebook.
Facebook is special because, in network economic terms, its product is a platform, and successful platforms are few and far between. For all its bells and whistles and features and privacy policies, Facebook remains—at heart—a place that people hang out. As the proprietor of a popular hangout, Facebook gets to write the rules guiding all the folks who think it’s a good place to pitch their businesses or to make some sales. In network economic terms, these businesses operating inside Facebook’s business comprise an aftermarket.
Coming up tomorrow (Tuesday 1/31): my one-hour intro to the law & economics of aftermarkets. If you or someone you know plans to make money selling aps for the iPhone, Android, Facebook, or any other proprietary market, you need to know this stuff!
The Stop Online Piracy Act (SOPA), currently the subject of hearings in the House Judiciary Committee, has generated interest far beyond the community of copyright lawyers.
To its proponents, SOPA is a critical addition to copyright law, necessary to help creative Americans protect their legitimate property rights from foreign attackers, and thus to preserve the numerous American jobs in our world-class creative industries.
To its opponents, SOPA is an unprecedented attack on civil liberties that threatens to destroy free speech, the Internet, and the thriving American technology sector—not to mention the many American jobs that it creates.
Who is right? It turns out that they both are: SOPA will help copyright holders protect the rights that copyright law grants them by suppressing free speech and impeding the functioning of the Internet, with predictable consequences on American jobs.
This result is hardly an anomaly.
Last week, Google announced its plans to acquire Motorola Mobility, effecting a vertical integration from the Android operating system into hardware. Investors responded by shaving roughly 13% off Google’s value—roughly twice as much as the NASDAQ lost and three times as much as the Dow.
A few days later, HP announced its plans to shed its PC division and acquire a software company. The combined effect will be a shift from hardware—long HP’s mainstay—towards software. Investors responded by knocking close to 20% from its value in a single day.
One open secret from my past is that I was the clerk who helped Judge Gajarsa draft the Federal Circuit’s controversial Chamberlain v. Skylink, 381 F.3d 1178 (Fed. Cir. 2004). Yesterday, in MDY v. Blizzard, the Ninth Circuit disagreed with our reasoning and conclusions, and took the time to provide a detailed and thoughtful critique.