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Will Copyrights Chill Innovation in the Software Industry?

Edge providers like Google benefit from a “free and open” internet where they don’t have to pay content creators or software developers for using their products, but the outcome of a lawsuit could change that.

Open internet advocates Public Knowledge and the Electronic Frontier Foundation (EFF) have filed amicus briefs for the almost 10-year-old Oracle v. Google case, supporting Google’s argument that application program interfaces (APIs) are “fair use” and not copyrightable.

APIs are essentially computer languages allowing two different software programs to communicate. For example, when you open a word document and type CTRL-P or COMMAND-P, an API communicates the command to print the document from your word processor to the printer. On the internet, APIs can allow an individual to use a preexisting account — like a Facebook or Google account — to log into a separate website, like a retail site.

The argument for Google is essentially the same as the one for net neutrality: the internet should always be free and open, thus edge providers should not pay to use APIs or excerpt or link to news stories, art, music and other intellectual property. In other words, copyright infringement should never be a liability for edge providers.

Some tech experts would describe this as allowing edge providers to make money off of content creators and software developers without fairly compensating those creators and developers.

In their amicus brief, the EFF argues that copyright law was inappropriately applied to APIs, even though the software copyright debate sprawls several decades. Legally, patent and copyright law may both apply to software, although it is standard practice for tech companies to patent their software instead of copyrighting it.

Over the last 20 years or so, the rise of patenting in the software industry proved hugely expensive: not only are there millions of patents and “patent trolls” creating fake patents on a broad range of products, but innovators — including the tech industry — often shell out hundreds of thousands of dollars to patent lawyers to protect their work.

Software developers like Oracle want their APIs copyrightable, which would allow them to make a lot more money off other tech companies who use them (like Google) without legally preventing them from using their APIs, which a patent does. Proponents of copyrighting software say this actually encourages innovation.

Oracle sued Google in 2010 for using its APIs in Google’s Android operating system, and in March 2018 the U.S. Circuit Court of Appeals ruled in Oracle’s favor. Google appealed to the Supreme Court of the United States in January, but the SCOTUS has not yet taken the case.

“The court created enormous legal uncertainty for any software developer thinking about reimplementing pre-existing APIs,” EFF Special Counsel Michael Barclay wrote in a blog post on the new amicus brief. “If the first Federal Circuit opinion means that APIs are copyrightable … then there are few, if any, ways that a second competitor can enter a market with an API-compatible product.”

In multiple other blog posts, the EFF argues copyrighting APIs will hinder tech innovation and allow software developers to “block” competitors and “creative new products.” In a 2013 press release, the EFF highlighted computer scientists siding with Google, arguing that open APIs are “critical to innovation and interoperability in computers and computer systems.”

Part of the problem lies in the nature of an API. Many APIs may share the same basic computer language, so copyrighting them could be extremely difficult and throw the entire software industry into upheaval.

“The Federal Circuit has upended decades of software industry practice and created legal uncertainty that will chill innovation,” EFF Legal Director Corynne McSherry wrote in a March 2018 blog post.

Public Knowledge also sided with Google in its amicus brief.

“It’s no overstatement to say that APIs underlie almost every facet of networked technology,” said Public Knowledge’s Policy Counsel Meredith Rose. “Everything from smart cities to health care to basic web functionality relies on APIs to be able to communicate with one another. The Federal Circuit’s decision in this case throws a huge swath of modern innovation into question, and has the potential to cripple development of ‘smart’ civic services. We support the petitioner’s request for certiorari, and hope the Supreme Court will review and reverse the Federal Circuit’s decision.”

The circuit court’s 2018 opinion specifies that APIs in general may not be copyrightable, but in Google’s particular case, they are. Thus, the decision may not have quite the sweeping effects some tech experts imagine. Innovators already navigate thousands of patents and the software industry still booms, so the argument that copyrighting Oracle’s APIs will set a precedent that will chill innovation may be exaggerated.

“Although Google, and the authority on which it relies, seem to suggest that software is or should be entitled to protection only under patent law — not copyright law — several commentators have recently argued the exact opposite,” Circuit Judge Kathleen O’Malley wrote in the majority opinion. “We thus decline any invitation to declare that protection of software programs should be the domain of patent law, and only patent law.”

Timothy B. Lee, a former adjunct scholar at the Cato Institute, wrote in the Washington Post in 2014, “Innovative companies have been forced to divert resource from hiring engineers to hiring patent lawyers. Large companies that are no longer on the cutting edge have been using broad patents to demand cash from smaller, more innovative companies. Many programmers and software entrepreneurs view patents as more a nuisance than a reward for innovation.”

In fact, Lee wrote, copyrighting software may be better for the industry as a whole.

“Patents are a poor fit for the software industry,” he wrote. “Software patents create a lot of unnecessary litigation while doing little to encourage innovation. … Copyright protection allows someone to independently develop software to achieve the ‘same overall result’ as a copyrighted program. In contrast, patent law doesn’t allow independent invention limiting the opportunities of future innovators and creating the risk of accidental infringement and wasteful litigation.”

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IBM Joins Oracle, HP, Fox, Disney Support for Online Sex-Trafficking Bill

International Business Machines Corp. (IBM) this week joined  a growing list of large media and technology corporations throwing support behind a U.S. Senate online sex-trafficking bill that would penalize companies for enabling the practice, but opponents warn the bill will undermine the internet ecosystem.

Christopher Padilla, IBM’s vice president of government and regulatory affairs, told Senate sponsors of the bill Tuesday that they have IBM’s full support in passing the Stop Enabling Sex Traffickers Act (SESTA). The bill would amend Section 230 of the Communications Decency Act (CDA), a law granting broad immunity to websites from being held liable for content generated or posted by users.

“At IBM, we are technology optimists and believe in the power of innovation to move humanity forward, and to give people the ability to communicate and interact as never before. But we also support appropriate, balanced measures to prevent new technologies and online services from being abused by criminals,” Padilla wrote to Ohio Republican Sen. Rob Portman, the bill’s author, and Connecticut Sen. Richard Blumenthal, one of its Democratic sponsors.

Section 230 was the basis of classified ads website Backpage’s legal defense after CEO Carl Ferrer and executives were arrested and charged with accepting money in the prostitution of minors.

The charges resulted from an 18-month Senate investigation led by Portman and Missouri Democratic Sen. Claire McCaskill that found Backpage knowingly facilitated pimping and child sex trafficking by editing ads to appear less suspicious. Despite overwhelming evidence, both federal and state courts upheld Backpage’s defense, adding Congress would have to amend Section 230 before the websites like Backpage could be held accountable.

Portman’s bill, co-sponsored by more than a quarter of the Senate from both sides of the aisle — would “eliminate federal liability protections for websites that assist, support, or facilitate a violation of federal sex trafficking laws.” The legislation further empowers state law enforcement “to take action against individuals or businesses that violate federal sex trafficking laws,” even absent Justice Department participation.

IBM said the bill “would allow law enforcement officials and victims to take legal action against those who have taken insufficient measures to limit the promulgation and advertising of such exploitative material on the internet.”

“As the National Center for Missing and Exploited Children has noted, there has been a recent surge in suspected child sex trafficking online,” the company said. “IBM believes your bill is an important, necessary and carefully targeted step to address a serious and growing societal problem, and we support its passage into law.”

While large technology corporations without popular, public-facing online platforms such as Hewlett-Packard Enterprise (HP) and Oracle support the bill, some of the biggest tech companies in the U.S. — including Google and Facebook, which boast some of the largest public user groups online — have taken the opposite stance. Those companies along with a large group of digital rights advocates and even Silicon Valley-friendly media outlets say the bill could erode internet freedom by subjecting public online platforms to legal penalties for content posted by users.

The result, they say, will lead to widespread online censorship and an end to free services, like email, which are supported by ad dollars.

Portman challenges that rhetoric, and argues the legislation “only removes protections for rogue online actors that knowingly facilitate and participate in sex trafficking.”

He said in September more companies were silently supporting the bill, and that he hoped more would come forward publicly. Since then, Google-rival Oracle, Hewlett-Packard Enterprise, 21st Century Fox, and the Walt Disney Company have all come out in favor of the legislation.

“There is significant and growing bipartisan support for the Stop Enabling Sex Traffickers Act, and we are pleased that IBM has added its important voice to this effort,” Portman and Blumenthal said in a joint statement. “We have a responsibility to hold online sex traffickers accountable and ensure that trafficking survivors can get the justice they deserve. This narrowly-crafted bill would accomplish that goal. It’s time for the Senate to act.”

There’s already a companion bill in the House of Representatives from Missouri Republican Rep. Ann Wagner. Wagner’s bill, the Allow States and Victims to Fight Online Sex Trafficking Act of 2017, would take away Section 230 protection for online entities engaged in “knowing or reckless conduct . . . that furthers or in any way aids or abets” child sex trafficking, gives states the power to enforce federal laws, and lets victims sue violators for civil restitution.

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Tech Companies Huddle with Republicans and Democrats on Net Neutrality

Representatives from tech companies met with Republicans and Democrats in Congress and the FCC this week to discuss the uncertain future of the agency’s net neutrality rules.

Massachusetts Sen. Ed Markey met with representatives of Microsoft New England, iRobot, Carbonite, TripAdvisor, Wayfair, and other members of the state’s digital economy to discuss the net neutrality policies the new FCC chairman is working to repeal.

“Overturning net neutrality rules would mean Massachusetts’s entrepreneurs, innovators, and content providers would be relegated to internet slow lanes, with fewer customers, and with a bleak future,” Markey, who sits on the committee charged with overseeing the FCC, said Friday. “The movement to defend net neutrality has started in Massachusetts, and it will be an historic fight. I’m proud to stand shoulder-to-shoulder with our digital economy leaders in defending the world’s greatest platform for commerce and communications.”

The Massachusetts Democrat introduced the first net neutrality legislation in the U.S. House of Representatives in 2006, and plans to introduce “legislation to put the FCC’s strong broadband privacy rules back on the books.”

FCC Chairman Ajit Pai stayed the broadband privacy rules that would have required internet providers to get permission from subscribers before collecting their browsing history, app use and other data. In March, congressional Republicans repealed those rules, which were an outgrowth of the net neutrality rules against web traffic throttling, blocking, and prioritizing that Pai voted against as a commissioner, and is now seeking to undo as chairman.

“I urge FCC Chairman Ajit Pai to halt the steps he is taking to eliminate net neutrality,” Carbonite CEO Mohamad Ali said Friday. “Pai’s proposed ‘deregulation’ simply means allowing the large internet carriers to boost their profits at the expense of innovation of thousands of other companies and the reduction of jobs across America. Let’s embrace the power of a fair and level playing field that has served previous generations of Americans so well.”

In February, shortly after taking over the agency, Pai said of net neutrality his “end goal is to preserve the free and open internet that we had for two decades starting in the Clinton administration.”

“That’s a framework that’s served the American public very well and that’s a framework that I hope we’ll be able to return to on a bipartisan basis in the future,” he said.

Pai met with the internet service providers subject to the rules earlier this month, reportedly pitching the idea of repealing the rules in exchange for providers committing to uphold net neutrality protections in their service agreements with customers, which would subject ISPs to legal action if they did otherwise.

After the FCC’s monthly open meeting Thursday, Pai revealed he met with the other half of the internet ecosystem — edge providers, along with software and hardware, makers including Facebook, Cisco, Oracle and Intel — to get their feedback on how to “secure online consumer protections.”

While there was no discussion of any official agency proceeding, the chairman said there was “a lot of common ground…with respect to the need for a free and open internet.”

“I think they were appreciative,” Pai said, adding he’s been “trying to solicit a diversity of views among a diversity of stakeholders” on how to secure “principles of a free and open internet that I think most people agree on.”

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Oracle Says FCC Privacy Rules ‘Handing Google the Market’

Software firm Oracle asked the Federal Communications Commission this week to reconsider tougher new rules for internet service providers it says give Google an unfair market advantage.

The Silicon Valley-based database, cloud and business software giant, second in sales to Microsoft, filed a petition with the FCC Wednesday requesting a rollback of the rules passed in October. The rules placed new limits on how broadband providers like AT&T and Comcast can collect data from subscribers and monetize it using targeted advertising.

“The [privacy] order correctly recognizes that protecting consumer privacy online is ‘fundamental,’ but completely undermines that goal by handing Google the market to the obvious detriment of consumers,” Oracle wrote in an agency filing.

The rules bar providers from collecting virtually any information from subscribers without their permission, including web browsing history or app usage, but only apply to companies providing internet connectivity. Edge providers like Facebook and Google, the dominant forces in targeted advertising, are outside of the FCC’s jurisdiction and subject to less stringent Federal Trade Commission rules.

“Google already has the ability to track virtually every movement of a consumer’s day through an Android phone or tablet,” the Oracle petition reads. “It has created a proprietary Android world to derive substantial economic benefit from advertising and – perhaps even more importantly – obtain access to huge amounts of personal data through search, location tracking, and other activities.”

This isn’t the first time Oracle’s gone after Google with specific regard to Android. The software developer lost a years-long lawsuit to the search giant in May. At the time it tried to sue Google for using Java application programming interfaces (APIs) in its Android OS. Oracle acquired the Java copyright in 2010.

“The Android license required to be obtained by [original equipment manufacturers] as a condition precedent to manufacture includes significant demands that severely constrain developers,” the filing states. “Moreover, because Google controls the distribution mechanism for apps, competition and consumers are further harmed. Google is largely outside the FCC’s authority, and now the commission has handed Google a new regulatory gift in the form of imbalanced burdens on ISPs [internet service providers].”

Oracle is likely to fair better against Google this time than it did in the courts. Democratic FCC Chairman Tom Wheeler, who passed the rules as an addendum to net neutrality along a 3-2 party line vote, will leave the agency in January along with another Democratic commissioner. Afterward Republicans will take the majority at the FCC under the Trump administration.

Both have already announced their intention to roll back net neutrality rules they previously opposed. Commissioner Ajit Pai, the favorite to take over as acting chairman, leveled criticism echoing that of Oracle before voting against the privacy rules.

“Search engines log every query you enter. Social networks track every person you’ve met. Online video distributors know every show you’ve ever streamed. Online shopping sites record every book, every piece of furniture, and every medical device you browse, let alone purchase,” Pai said in May. “And yet the FCC only targets one corner of the marketplace.”

“Selectively burdening ISPs confers a windfall to those who are already winning big in the world of online advertising,” he added.

The letter comes a week after executives from Google, Oracle and other top tech firms met with President-elect Trump in New York. Oracle co-CEO Safra Catz, who attended the meeting, has since joined the Trump transition team.

“I plan to tell the president-elect that we are with him and will help in any way we can,” Catz said before the meeting. “If he can reform the tax code, reduce regulation and negotiate better trade deals, the U.S. technology industry will be stronger and more competitive than ever.”

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Tech Leaders Pivot to Trump After Donating Heavily to Clinton

Executives from the biggest tech firms in the U.S. met with President-elect Donald Trump at Trump Tower in New York Wednesday, where Trump appeared to extend an olive branch to the industry he criticized throughout the campaign season, and in reaction donated heavily to his opponent Hillary Clinton.

Apple CEO Tim Cook, Google parent company Alphabet’s Executive Chairman Eric Schmidt and Facebook COO Sheryl Sandberg, who were all vocal Clinton supporters, were among those invited to huddle with Trump, Vice President-elect Mike Pence, members of the Trump family and venture capitalist and Facebook board member Peter Thiel, the early and seemingly only support Trump received from Silicon Valley.

They represented three of the top four Silicon Valley firms to donate pennies on the dollars to Trump versus Clinton, with Alphabet donating $1,315,545 to Clinton and $21,924 to Trump, Apple $572,350 to Clinton and $4,366 to Trump, and Facebook $418,986 to Clinton and $3,965 to Trump, according to Open Secrets. The fourth was Microsoft with $710,334 to the former secretary of state and $31,372 to the president elect. Microsoft CEO Satya Nadella was also in attendance at the meeting with Trump.

Trump thanked executives for attending and inquired rhetorically whether they were enjoying the “Trump bounce” in the stock market, referring to the Dow’s record-breaking approach to 20,000 points following his election win and despite the Federal Reserve’s announcement to raise interest rates .25 percent.

“Everyone is this room has to like me at least a little bit,” Trump said in a meeting room video broadcast by CNN. “I’m here to help you folks do well. You’re doing well right now.”

Others at the meeting included Alphabet CEO Larry Page, Amazon CEO Jeff Bezos whose company gave $330,895 to Clinton and $3,112 to Trump, IBM CEO Ginni Rometty with $319,714 to Clinton and $28,225 to Trump, Oracle co-CEO Safra Catz with $178,444 to Clinton and $12,880 to Trump, Cisco CEO Chuck Robbins with $157,427 to Clinton and $13,662 to Trump, Intel CEO Brian Krzanich with $146,444 to Clinton and $11,862 to Trump and SpaceX and Tesla CEO Elon Musk, whose electric car manufacturer gave $19,689 to Clinton and $250 to Trump. Executives from Uber and Airbnb were invited but unable to attend.

Combined, the companies with representatives in attendance gave $131,618 to the Republican president elect and $4,169,828 to his Democratic opponent.

Trump said his door was open to hear suggestions from executives, and that his administration would have their backs in improving trade and generally trying to help them succeed.

“You call my people, you call me — it doesn’t make any difference — we have no formal chain of command around here,” Trump said.

The business mogul’s tone marked, at least on the surface, a departure from the barbs he lobbed at Silicon Valley on the campaign trail, where he slammed Apple for refusing to break its own default encryption to aid an FBI terrorist investigation, criticized Amazon for avoiding state taxes, vowed to oppose H-1B visas for skilled workers supported by Facebook and Microsoft, and moved to appoint staunch opponents to net neutrality regulations supported by much of the valley, including Google, which is unlikely to enjoy the same access it had to the White House during the Obama administration.

Particularly on the issue of H-1B visas, Trump initially expressed skepticism with the program for the potential that it displaces U.S. workers. But Trump softened his tone as the campaign continued, reversing himself on several occasions. He said during a debate on March 3, “I’m changing. We need highly skilled people in this country, and if we can’t do it, we’ll get them in. But, and we do need in Silicon Valley, we absolutely have to have.”

A number of tech companies have urged the expansion of the program because there are not enough American workers to fill some highly-skilled positions. Trump’s softening tone on the issue and his outreach to Silicon Valley may be indicators the program is unlikely to be scaled back as Trump stated early in the campaign.

“We want you to keep going with the incredible innovation. There’s nobody like you in the world. There’s nobody like the people in this room,” Trump said. “And anything we can do to help this go long. We’re going to be there for you.”

Twitter CEO Jack Dorsey notably was not invited, reportedly for refusing the implement a “crooked Hillary” emoji for the Trump campaign during election season, according to a Hill report.

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