For these reasons, we can no longer protect civil liberties without paying attention to innovation policy and particularly to the individual freedoms to create, modify, distribute, and share advancements in information production and information technology. This freedom to innovate requires an open information infrastructure in which telecommunications policy, intellectual property laws, and technological architectures leave individuals free to build new things out of old, to remix, create, tinker, and repurpose.

Panelists included:

Edward Felten, Princeton University Center for Information Technology Policy

Ronaldo Lemos, Center for Technology & Society, FGV-Rio

Katherine Strandburg, New York University School of Law

Commentator: Nagla Rizk, Access to Knowledge for Development (A2K4D) Center at the American University in Cairo

Some of the questions to be pursued by this panel include:

What policy areas (e.g. spectrum policies, open access) are the critical topics of study to address the freedom to innovate? To what extent is a human rights framing for these issues helpful or desirable?

What are the technological and legal architectures that are necessary to give individuals the space and the opportunity to innovate? How do these structures rely on, enhance or inhibit the enjoyment of rights?  Whose rights are counted in this story?

Where will new content and information technologies come from and how we can empower as many different individuals as possible to maximize innovation? What is the role of civil and political liberties themselves in creating the conditions that facilitate innovation?

Introduction by Nagla Rizk: There is a blurring distinction between users and creators of knowledge. Meanwhile, there is a trend toward horizontally integrated, dynamic small firms, with an opposite trend toward large, vertically integrated players that rely on strong intellectual property protections.

Nagla points out that in developing countries, where market structures, competition law, and institutions are less well developed — and market dominance may be more of a problem — it could be important to make room for open source with supportive public policy.

Ed Felten: As a computer scientist, sees technology as an activity rather than as knowledge: A thing you do. Technologists engage with technology as humanists engage with texts. The freedom to tinker is important.

One key place where this has gone well is open source. Open source tools are a place where people can — as new technologists typically do — rip the lid off and play around with the technology. These settings also have sophisticated models of collaboration and governance.

Mobile phones provide a stark contrast. There’s a battle between open and closed models not only in the U.S. but around the world.

IP protection and innovation can be reconciled. It’s important to create a place where people can tinker, noncommercially, without running afoul of the legal tigers that stalk this space. Also, when we think about competition policy, it’s important to consider the often-invisible smallest parts of the system: small companies and even individuals who don’t think of themselves as companies. Making technology accessible will promote competition and let people in a broader range of cultural settings create things appropriate for the contexts they are in — things the usual suspects would not have created.

Next, Ronaldo Lemos, curator of the largest music festival in Brazil and a leading figure in Brazil’s free culture movement. He will discuss a law for the Internet. In Portugese, this is called a “marco civil” — a civil rights law for the Internet. The goal is to improve lawmaking in Brazil.

First effort was a simple wordpress interface to gather input about what the new marco civil should say. The Minister of Justice and members of Congress from the two leading political parties attended the launch for this project — reflecting support of both the federal government and the congress in Brazil.

The law will cover a long list of topics including:
1) Privacy
2) Freedom of Speech
3) Rights of Access
4) Safe Harbors
5)Net Neutrality
6) Open Government Data

In 2007, a new legal proposal in Brazil would have criminalized many aspects of Internet activity. That proposal was defeated, and the fight galvanized Brazilian civil society. There is now a live and ongoing discussion about what the new marco civil should contain. Associations (including the bar association, and representatives of broadcasters and newspapers) also participated, along with individuals.

To make the project manageable, the marco civil excludes three hot subjects: copyright, telecom policy, and personal data. These areas also already have a body of already-developed policy in Brazil.

Participation by Internet users could emerge as a new collective right or interest, recognized in law, in Brazil. Web link, in Portugese: http://culturadigital.br/marcocivil/.

Next, Katherine Strandburg. Over the last few years, she has focused on the patent law and asked how it should accommodate new ways of innovating, including peer production. She builds on the work of Eric von Hippel and others, who study the extent and importance of user innovation, which happen when individuals make or invent something because they themselves want to use it.

The copyright context has been further ahead on a lot of these issues, but changing manufacturing tools (that allow custom manufacturing) and other factors suggest that physical products and patent law may be catching up.

These paradigms of innovation may be particularly important in developing countries, where mass production will cater less well to local context.

Open source can help because it can offer local control of critical resources such as operating system software.

The ability to innovate promotes lots of values that we generally associate with human rights, such as self-realization.

When people innovative for their own use, the incentive story that justifies existing patent law is weakened. There is nothing like the copyright idea of “fair use,” in the patent system. Existing doctrine cannot recognize collective and incremental inventorship, making it difficult to deal with follow-on innovation. Innovation teams of users don’t want, can’t qualify for, or can’t afford a traditional patent.

Last, what to do about private ordering? Purchase of a patented good will exhaust the patent protection, but contracts of adhesion can impose continuing conditions on users, and effectively circumvent exhaustion doctrine.

Three key papers on these topics:

Users as Innovators: Implications for Patent Doctrine, 79 U. Colo. L. Rev. 467 (2008)

Evolving Innovation Paradigms and the Global Intellectual Property Regime, 41 Conn. L. Rev. 861 (2009)

Constructing Commons in the Cultural Environment, Cornell L. Rev. (forthcoming in special edition with commentary, 2010) (with Michael J. Madison, Brett M. Frischmann)

Discussion and Questions from the Audience:

Nagla asks Ed to expand on public policy of open source: should there be any difference between developing and developed countries? Ed says the agnosticism he suggested was endorsed for the developing world. There is a complex interplay between profit motives and open source. For example, many firms contribute resources to open source projects for strategic business reasons. Many of the most important open source projects are already international in scope. So the projects will not be threatened by national monopolist. As long as policy across the board does not obstruct the possibility of choosing open source, it will be natural for a lot of innovators to end up on the open source side of things, at least when they are getting started.

Katherine adds that it’s important to think also about what government agencies themselves will use. There, you may have a good reason to favor open source, which can give local control over public infrastructure.

Question: What about ownership of research? We need new innovation models and get away from the received view of counting patents as a measure of innovation.

Comment: But a great number of innovations are coming from clients to companies. It may turn out that a lot of the innovation we presently attribute to companies — and allow them to patent — are prior art because the client suggested the idea. We need “innovation traceability” that will allow us to know who actually added the value in the idea.

Katherine points out that tech transfer offices have on average not made money for thier universities, so some universities are starting to think about changing the posture they take toward their IP.

Ronaldo adds that in a developing country, you must change your perspective in order to see where the innovation is. Governments are enthusiastic about “innovation,” but are trying to follow the traditional model of Silicon Valley. Also, another key element in the innovation discussion is to improve the quality of patent descriptions. The patent descriptions for many drugs actually haven’t sufficed to allow a reader of the patent to reproduce the drug.

Nagla points out that innovation policy often comes from a maximalist, enforcement-oriented perspective in the West. Developing countries, on the other hand, need to focus on the innovation itself.

New question: When should you have to pay in order to innovate. Katherine answers by asking a questio of her own, which is, where can we expect innovation to happen without a need for incentives? Where do users already invent things in order to use the things themselves? On the other hand, we should also look at where there is market failure. Where are people not practicably able to pay for something of value, or where is there some other failure? These questions could inform a fair use right for patents. But in today’s culture, everyone assumes that any use of a patent will require licensing.

Ed interjects that the answer depends on which sector you are in. In some sectors, like web technologies, the best tools for building innovation are free. In other sectors the inputs are costly. Low prices for inputs to innovation will attract innovators. Generally, the cost of inputs to innovation have been declining, across the IP sector, in recent years.

Question: That works well for software, but what about biotechnology, where the resource needs are more intensive? How should policy respond to the differences among types of innovation?

Ronaldo says: Ethanol was one area where Brazil did not have patents, and now most people are glad it did not.

Ed adds that in biotechnology, the reality is closer to the textbook story, where heavy upfront investment is needed. In the infotech space, patents strike innovators as irrelevant or a nuisance. They don’t have clear extent that defines a landscape for the innovator to navigate.

Katherine adds that, while this is true, it may not suggest different satutory law for different industries. There are many historical cases in which information is shared among industry players, for mutual gain. This happened with steel mills, for example.

Final roundup questions: Rinaldo says his Center, in Brazil, has counseled those working on similar efforts in Mexico and other countries. In any case, Brazil’s success shows that there is an alternative to three strikes laws and other maximalist policies.

Katherine agrees with a question that it is key to distinguish among various kinds of commons and public domain arrangements. It’s an important area to study going forward.

Ed says it can be hard for people to see the benefits of openness, which can be less direct and harder to measure than the case for strong IP. The argument is more subtle than the argument for strong protection. This means it’s important to make the information available, particularly about the past successes of open approaches.

Katherine points out that the Universal Declaration of Human Rights enshrines rights for authors — rights that assume a traditional model of authorship. There may need to be a dialogue about updating some of those assumptions.

For twitter commentary on this panel from the audience, check out http://twapperkeeper.com/a2k4/ entries for Saturday, February 13 at 14:30h to 16:00h.

Back to A2K4: Access to Knowledge and Human Rights main page

• Penelope Abernathy, University of North Carolina, Chapel Hill
• Steven Brill, Journalism Online Inc.
• James Kennedy, Associated Press, VP for Strategy
• Tom Glocer, CEO of Thomson-Reuters
• Robert Pickard, Jonkoping University, Sweden

Here’s some background on Penelope Abernathy (bio). She asks, why have investors abandoned news conglomerates? Because in their judgment, barriers to entry, which used to be substantial in the news business, are now minimal. On the revenue side, meanwhile, classifieds are gone, and pricing leverage for display ads has declined because Google et. al. create new (competing) ad inventory.

James Kennedy of the Associated Press says he’ll talk about harnessing forces of nature. When the AP did an enterprise (exclusive) story about a computer virus that could fill up your computer with child pornography, a Google search shortly afterward showed 32,000 hits–far more than the number of authorized outlets from which the AP collected syndication fees. [But your rapporteur wonders: doesn't this count also include any secondary comment on the story, and any fair use excerpting, that may have occurred online?]

The old model, Kennedy says, has been upended: There are too many facts, too many updates, being presented, and not enough context or forward-looking prediction. The five story front page and the 6:30 newscast are gone, so people are moving through the news with no rhyme or reason. “It’s not a good experience.” The old business model, that was built on packages, no longer works. Rather than “pushing” packages of news, we have to let users “pull” what they want. Media is atomized, rather than packaged.

Right now, you can have packaged or atomized news for free, and some packages are profitable. Can atomized news be profitable on its own? New initiative called the News Registry is “an effort to standardize the metadata and formatting” of news. Coverage in PaidContent, Poynter. Kennedy calls this “monetizing along a trail [of users' browsing], not trying to monetize the old packages.” [But, technical observers say the press coverage misunderstands the underlying technology.]

Next up is Steve Brill. Here’s some background on him. Short version: He created Court TV and The American Lawyer. His take? “About ten years ago, a bunch of news organizations committed suicide” by making their valuable content available for free. The New York Times’ plan is to charge young people for the newspaper they don’t want, and to give them for free the web site access which they highly value. He says the goal is not to create a new model, but to bring back an old model: readers and advertisers share the costs.

Brill’s vehicle to do this is Journalism Online, LLC. (Here’s a PaidContent writeup.) He says it’s not a paywall, but a “process where you gradually wean people off of the idea that everything is free.” It will allow market segmentation by user geography. [Note this is analogous to ESPN360 and could be considered part of the net neutrality debate.]

Next is Prof. Robert Pickard. (Bio) He says media organizations are focused on the revenue they can extract, rather than focusing on the publisher. “There are about a dozen elements to a good business model, and the last one is price or revenue.” It’s about giving people reason to pay you. He challenges the idea that news media is like other media that people buy online, such as music and video. And the idea that payment systems for news are efficient. People have a much greater willingness to pay for entertainment media than for news, and this is reflected in the prices each get in the market. Further, the offline product is not only news, and is not the same online as off. Print news consumers are buying selection, organization, bundling, delivery, and a tactile experience, none of which remain unchanged online.

Online content is relatively unorganized and much harder to navigate. Less pleasant experience than paper, and the promise of personalization or interactivity is largely unrealized. The worst problem is, you don’t know beforehand whether a story is worth buying (since you haven’t read it yet). [But isn't this also true of other media?].

You need 50-100 online readers to replace a print reader, 15-20 online ads to replace a print ad. Meanwhile, paywalls ask a community who largely are not paying for the offline product to begin to pay for an online product.

Next is Tom Glocer (bio, blog), CEO of Thomson-Reuters. Says what Steve is doing is brilliant, since it will make it easy for content providers to “dial up or dial down” how much of their content is paid for. Creative destruction is supposed to be painful–no surprise there. As a practical person running Thomson-Reuters, it boils down to revenues and costs. The current generation of newspapers “have lost track of that balance.” There has been a cross-subsidy by advertisers, the cover price for newspapers was ridiculously low. Now that advertisers know which half of their ad spend is wasted, total ad spend will go down (even without a recession). The cross-subsidy came in large part from the inefficiency of advertising, which has been eliminated. There is a very bright future for journalism. Thomson-Reuters billions of dollars a year from professionals, 90 percent of it for electronic media. That’s “niche.”

In Q&A, James Kennedy says that once it became clear that online was a substitute for print, they should have begun to rethink revenue. Steve Brill says that he refused to give away the American Lawyer on the Delta Shuttle, even though that would have increased circulation, because the incremental revenue would have been outweighed by the loss of subscription revenue (they were charging about $500 a year for subscription). Brill says the goal is to ask the ten or fifteen percent of readers who are most engaged to pay a small monthly subscription.

Robert Pickard says that in packaged news, there is cross-subsidy for content only a few people care about. Micropayment systems would end this cross-subsidy. Steve Brill points out that his venture aims to sell monthly subscriptions, not micropayments.

Tom Glocer, of Thomson-Reuters, gives an example of news segmentation: A news flash about new Fed monetary policy goes out for free, but specialized traders with special equipment get it a second quicker, or can use it in an integrated computer trading system. Later, the full story goes out to professionals. Later, the story goes out to a public website that, based on advertising, covers its own costs and serves as a storefront for high value products. But ad sales are just two percent of revenues. In the last seven years, Thomson-Reuters has hired hundreds of journalists.

Robert Pickard points out that 90 percent of the online ad revenue goes to the top ten grossing web sites. There’s not a lot of ad revenue online.

James Kennedy is asked, is it plausible to expect that AP will guide people through the news? You said that the user experience on Google is muddled and doesn’t work–but doesn’t Google’s huge success belie this? Kennedy says his point of view is that search “produces results — it doesn’t produce discovery, in a lot of ways.” In some cases, Google shows a tremendous amount of duplication, or things from the wrong geography. What we’re trying to do is to make it possible for machines and humans to connect the dots and understand the news. Steve Brill says, “God forbid that when you hear Michael Jackson died, you go to Google and get a story from a newspaper outside your local geography. I don’t think that matters much to customers” (near-quote). But: community news, whether local geographic community or the community of people who share a certain interest, can indeed be valuable for people. Targeted publications are really giving up a lot when they don’t ask people in that community to chip in something for it.

Tom Glocer acknowledges, in response to a question, that paywalls reduce audience size and make it harder for reporters to get access to their sources. Steve Brill says that targeting the most engaged users won’t raise this problem as a paywall might.

Meanwhile, net neutrality advocates in Congress are pondering new legislation for two reasons: First, there is a debate about whether the FCC currently has enough authority to enforce a net neutrality rule. Second, regardless of whether the Commission has such authority today or doesn’t, some would rather see net neutrality rules etched into statute than leave them to the uncertainties of the rulemaking process under this and future Commissions.

One legislative proposal comes from Rep. Ed Markey and colleagues. Called the Internet Freedom Preservation Act of 2009, its current draft is available on the Free Press web site.

I favor the broad goals that motivate this bill — an Internet that remains friendly to innovation and broadly available. But I personally believe the current draft of this bill would be a mistake, because it embodies a very optimistic view of the FCC’s ability to wield regulatory authority and avoid regulatory capture, not only under the current administration but also over the long-run future.  It puts a huge amount of statutory weight behind the vague-till-now idea of “reasonable network management” — something that the FCC’s policy statement (and many participants in the debate) have said ISPs should be permitted to do, but whose meaning remains unsettled. Indeed, Ed raised questions back in 2006 about just how hard it might be to decide what this phrase should mean.

The section of the Markey bill that would be labeled as section 12 (d) in statute says that a network management practice

. . . is a reasonable practice only if it furthers a critically important interest, is narrowly tailored to further that interest, and is the means of furthering that interest that is the least restrictive, least discriminatory, and least constricting of consumer choice available.

This language — particularly the trio of “leasts” — puts the FCC in a position to intervene if, in the Commission’s judgment, any alternative course of action would have been better for consumers than the one an ISP actually took. Normally, to call something “reasonable” means that it is within the broad range of possibilities that might make sense to an imagined “reasonable person.” This bill’s definition of “reasonable” is very different, since on its terms there is no scope for discretion within reasonableness — the single best option is the only one deemed reasonable by the statute.

The bill’s language may sound familiar — it is a modified form of the judicial “strict scrutiny” standard the courts use to review government action when the state uses a suspect classification (such as race) or burdens a fundamental right (such as free speech in certain contexts). In those cases, the question is whether or not a “compelling governmental interest” justifies the policy under review. Here, however, it’s not totally clear whose interest, in what, must be compelling in order for a given network management practice to count as reasonable. We are discussing the actions of ISPs, who are generally public comapnies — do their interests in profit maximization count as compelling? Shareholders certainly think so. What about their interests in R&D? Or, does the statute mean to single out the public’s interest in the general goods outlined in section 12 (a), such as “protect[ing] the open and interconnected nature of broadband networks” ?

I fear the bill would spur a food fight among ISPs, each of whom could complain about what the others were doing. Such a battle would raise the probability that those ISPs with the most effective lobbying shops will prevail over those with the most attractive offerings for consumers, if and when the two diverge.

Why use the phrase “reasonable network management” to describe this exacting standard? I think the most likely answer is simply that many participants in the net neutrality debate use the phrase as a shorthand term for whatever should be allowed — so that “reasonable” turns out to mean “permitted.”

There is also an interesting secondary conversation to be had here about whether it’s smart to bar in statue, as the Markey bill would, “. . .any offering that. . . prioritizes traffic over that of other such providers,” which could be read to bar evenhanded offers of prioritized packet routing to any customer who wants to pay a premium, something many net neutrality advocates (including, e.g. Prof. Lessig) have said they think is fine.

My bottom line is that we ought to speak clearly. It might or might not make sense to let the FCC intervene whenever it finds ISPs’ network management to be less than perfect (I think it would not, but recognize the question is debatable). But whatever its merits, a standard like that — removing ISP discretion — deserves a name of its own. Perhaps “least restrictive network management”?

Cross-posted to Freedom to Tinker.