But there’s more: Content is also struggling, because there is simply too much of it.

The combination of a data flood of biblical proportions with exploding possibility of function, will drown any business model based simply on charging for content.

Business and investors should realize this, and adapt accordingly.

A number of recent events have shown that the conflict between Function (Silicon Valley) and Content (Hollywood) is clearly heating up.

The successful actions against the proposed PIPA and SOPA legislation may well have arisen a new political player in the murky field of lobbying: the social Internet. The political implications are in my view much more important than the issue of copyright – but it is no coincidence that this new phenomenon of not just collecting political funding or votes, but actually determining the political agenda through the Internet and social media, has first arisen around the issues where the Internet and social media cause most havoc: the disruptive effect on 20^th century business models. Expect ACTA to be the next battleground.

At the same time, the US government shuts down the Megaupload site, and manages to convince New Zealand to arrest, in New Zealand, a German national for reasons of copyright infringement in the US. Depending on your political view, the alleged actions are massive theft (Hollywood) or exposing the inefficiency of a distribution monopoly (Silicon Valley). Either way, it remains remarkable that criminal law is used to this extent in order to protect a business model.

More interestingly in the long term, of course, is that within hours, useful alternatives to Megaupload were available. In other words, the policing is obviously failing. My personal view is that this is because criminalizing normal human behavior like sharing what you like just does not work.

Finally, we see that more and more economic studies start to look at empirical evidence, to verify if the basic theory of IP rights, which claims that imposing a monopoly in order to rectify the inefficiency of the market to sufficiently reward innovation and creativity, is actually correct.

How to make sense of it all?

As I wrote earlier, I think the main conflict is between Content (music, film, etc – symbolized by Hollywood) and Function (what we can do with our computers – symbolized by Silicon Valley).

I think Function is most likely set to win, because it evolves faster, and adapts better. Darwinian logic tends to be merciless.

Regardless of mine or your preferences, the observation remains that technology is destroying the possibility to efficiently enforce IP rights, whose function it is to restrict the right to copy. The music industry has still not understood that fighting peer-to-peer copying (and hence piracy) is utterly useless. The argument that this causes economic damage because, as the middleman, they stand out to lose quickly falls apart once you take a good look at it. It is no coincidence that, while the revenue and jobs of the music industry fall, the income and distribution potential of the creators (the musicians) rise.

And Hollywood is obviously next on this slippery slope down the abyss of non-revenue just for Content – neatly illustrated by the fact that Amazon sells 20% of its books at a price of 0.01$, while and still making a small profit, on shipping and availability.

But there is more.

The amount of data produced in our world is exploding. In 2009, more data was created in one year, than in the entire history of humanity until 2008.

And most of that data is still created by humans, not by machines. Expect that to change – the era of data creation has just started, and the speed of data creation will continue to go up.

To put that into perspective: humanity exists for about 150,000 years. In the last two of those, we have produced 9 times as much data as in the whole period before.

Now, under the theory of copyright and other IP rights, all of that data, to the extent there is an expression of human creativity in it, is subject to a distribution monopoly of its creator.

That’s just plain ridiculous. It can never work.

All of those data are creating a biblical flood of massive proportion, drowning out all payable content.

And the turning point is user generated content – which is almost always derivative work. Not only will be it be impossible to stop it, it is actively supported and offered pretty much for free by an ever growing number of technology firms (Silicon Valley).

From an IP perspective, user generated content is a new, hybrid animal.

It typically uses partly automated creation (outside copyright), partly genuinely user generated content (those holiday pictures you took, within copyright, but your own), and partly existing works (that song you put in the background – someone elses copyright). Throw in some user generated functionality, and it becomes clear that most what is created will include elements of copyright and other IP rights, but those IP rights will become utterly unenforceable.

So, not only are IP rights losing the race to keep track with the development of technology, they are also drowning in a sea of newly created content.

How should we react?

Certainly not in the way the old content distribution business is reacting. The idea that distribution monopolies based on copyright will continue to provide a superior return to a business, and allow for margin based on the mere action of distributing, is effectively dead.

Legislating against this phenomenon is as useful as legislating to modify the value of the number pi.

In practice, this means that businesses will have to adapt their business models.

If Content is an important part of the value proposition, it needs a lot more than just the distribution ability in order to become a viable business. Such additional features can be services,  analytics, or intelligence, or indeed technological function.

But selling content, by itself, is probably no longer a viable business proposition.

In other words: Hollywood loses, and Silicon Valley wins. But that is not necessarily bad for the economy as a whole.

This has a profound effect on Business Models based on IP rights.

The SOPA discussion is a good example of the fight between Function and Content – which IP right will win?

 What is Content, what is Function?

Content is the stuff you access and use when you deal with media. A book (the writing, not the physical object) is content.

Other examples of content are music, blogs, film, video, etc. You get the picture (pictures are also content).

Function is what you do with it. Playing a video, copying a song, reading a book, modifying or analyzing data, uploading your photos, etc, etc. are all Functions.

Traditionally, Content and Function are clearly separated. A publishing press produces copies of a book, but the relationship to the content of that book is minimal.

When you scroll through a website reading articles, you don’t perform functions on it that modify or manipulate the content other than storing a copy in the cache memory of your computer, and displaying a view.

So, Content and Function are quite different. You don’t need Content to run e.g. Word or Excel on your computer, but you use their Functions to create such Content.

But that is starting to change. Content and Function are starting to merge – their separation wall is slowly disintegrating.

What does that mean?

Look e.g. at Software as a Service providers. The content they store (the data) is typically only accessible through the functions provided on the website.

If you were able to download the data, and apply the functions on your own computer, that wouldn’t matter. But that is often not the case. You can only get access to the data (the content) through the functions made available in the integrated service.

Any change to either content or data modifies the value of that integrated service to you. If the provider gives you a new analytical tool, the value of your data actually changes, without the data themselves having changed.

And if either the function or the content of the integrated service is unavailable, the other is also useless.

So, the Cloud is breaking down the distinction between Content and Function.

But not only the Cloud. Look at e.g. newspaper Apps on a mobile device. These are software programs, but with functions specifically geared towards specific content. You could not use the Washington Post App to apply functions (e.g. view, post, forward, share) to content from the New York Times website or App.

Content and Function are bundled, they are offered together, and they become the same product or service.

With the rise of User Generated Content, this will massively increase. Look e.g. at www.tabletquiz.com, a website that allows you to easily generate your own App with your own content. In other words, it is User Generated Content and Function (UGCF).

Since it is made in HTML5, it is also platform-neutral, and can run on any environment.

This means that it becomes effectively impossible to apply any kind of Content control system from the outside, because the technology is too open, and too accessible, allowing users to generate not only Content, but also the Function to distribute or reproduce the Content.

So why should I care?

From a business perspective, this has the potential to be quite significant.

This is because Content and Function are typically sold in a very different business model, based on different IP rights.

In a digital world, IP rights are an essential part of the go-to-market strategy. Businesses offer licenses, rights to use, and access to service. These are all based on IP rights.

Content is typically protected by copyright. But Function is not. To the extent function is protected by an IP right, it is protected through the secrecy of software source code (in theory enforceable through copyright, but in practice it is the non-disclosure of the source code that does the trick), or through patents on software.

But what will happen when Content and Function are starting to merge? Which IP right will prevail, and, more importantly, which IP right will the right one for businesses to apply?

In essence, this can go two ways. Function IP rights can prevail, or Content IP rights can prevail.

If Function IP rights prevail, then the merger of Function and Content will lead to looser protection on Content. This has already partly happened as a result of e.g. the fact that technology allows much cheaper copying (Napster and the file-sharing revolution, in other words).  In this scenario, the relative freedom of copying a Function will impact the Content interconnected with the Function, making effective protection of Content very difficult, if not impossible.

Under this scenario, any attempt for a DRM (Digital Rights Management) system is effectively doomed.

If Content IP rights prevail, then the merger of Function and Content will lead to stricter protection on Function. In such a scenario, Content will be used to restrict the function applicable to it.

Currently, I see a movement in favor of Function prevailing over Content. But it clear that anti-piracy initiatives are trying to roll back this tide of free Function liberating Content from its copyright protection. The fact that Content-based industries (“Hollywood”) are having a fight over SOPA with technology-based industries (“Silicon Valley”) is a normal consequence of the merger of Content with Function.

In this battle, of course, Function has one advantage that may well be decisive: it is based on evolving technology, and as we have seen from the continued success of Open Source, technology that is based on openness seems to outcompete closed technology. While this seems inconsistent with the paradigm’s of traditional IP theory, it does seem to indicate that Function may well prevail.

What is certain, in any case, is that this evolution confirms my earlier observations about our current IP rights (especially copyright, but also others) being quite out of date, and not fit for purpose in a digital, connected world, based on collaboration, open innovation and sharing of Content.

No more people dying on the roads, no more traffic jams, important reduction of CO2 exhaust, but also massive job losses for car insurance people, taxi drivers, etc.

I concluded by saying I didn’t see a lot of IPR issues there. How wrong I was.

Only last week it emerged that Google is patenting some core technologies – you can read about it here.

Goes to show : understanding IP means understanding technology, and where it leads us.

So I stand corrected: self driving cars have important IPR aspects.

Open Source hardware is starting to be mentioned from time to time.

Unlike Open Source software, which is now well established, it is still relatively unknown.

One of the best-known examples of Open Source hardware is the Arduino board. The Arduino board is a single board microcontroller. It was once described to me as “the hardware core of a robot-brain”, which explains it well enough.

With an Arduino board, you can direct hardware. It can work e.g. as the on-board computer of a toy car, or it can connect your fridge to the Internet, or it can be the core of a private security system in your house. And you can very easily access it, program it, connect it to other machines, engines, etc, and make it do pretty much anything you want it to do.

That flexibility shows the way towards an important development, where a growing part of our hardware will convert into a combination of computer hardware and software. Hardware becomes “programmable”, if you want.

Expect Arduino boards to be found in a product or application near you soon. Since they are Open Source, it is very easy to integrate them into other technology, and the cost of technology (as with most Open Source) is relatively low. As an example, the new “desktop” open source 3D printers use Arduino boards.

So how enforceable is such Open Source hardware? Does it – legally – work?

For software, the question has been answered a number of times. In most countries, Open Source software and Creative Commons licenses have been held to be valid and enforceable.

To my knowledge, no similar decisions exist regarding Open Source hardware. (If you know of one, please comment below and provide a link).

But we can have a look at how current Open Source hardware is put together, and take that as a basis on how enforceable it would be.

When we look at Open Source hardware, a lot of it is actually not very “open source”. Not because it’s not Open, but because it’s not Source. Hardware is – still – not software. If you copy source code of software, you can reproduce it, theoretically, at zero variable cost. For hardware, you still need the actual material to assemble, 3D-print or otherwise manufacture it.

Moreover, the Open Source software system works, because the concept of sharing back changes you make to a software product under the same license is relatively easy, both technically and legally.

So how are Open Source hardware licenses structured, and would they work as well as Open Source software?

Open Source licenses work at three levels.

The first is the design of the hardware. Design documents on Open Source hardware are distributed, either under a Creative Commons license or an Open Source hardware license that has the same effect. That means that the design information is freely available, and that changes to that information must be distributed under the same license. We know that Creative Commons licenses are enforceable. That means that Open Source hardware, at the level of the design knowledge necessary to manufacture the hardware, is probably enforceable Open Source (with the interesting side effect that Creative Commons works more efficiently at protecting content or ideas by ensuring they stay within the Creative Commons, than actual Copyright is in shielding ideas from the public domain).

The second level is software. For Arduino, e.g., the software you need to make it actually work, is licensed under GPLv2.

Again, this is enforceable. So, to the extent software is necessary to operate the hardware (as will become more and more the case), the Open Source character of the hardware is, at least partly, ensured through the software necessary to operate the hardware.

The third level is the hardware itself.

To my knowledge, there are two main licenses known: the TAPR open hardware license and the CERN open hardware license.

The TAPR license specifically states that it is not a copyright license, but an agreement. It covers distribution of the documentation of the hardware, as well as the way in which hardware is built and distributed.

However, it excludes software from its field of application.

The TAPR license works, again, at several levels.

It gives a license to documentation, and obliges the licensee to copy the documentation and share changes under the same principle. This effectively repeats the creative commons approach to design.

It incorporates a duty to attach documentation to any product manufactured using the documentation, and imposes a covenant not to sue for patent infringement against licensees or licensors.

It is the last bit that seems truly new.

What the Open Source Hardware license does, is effectively prohibiting downstream users from enforcing any patents they would have on their improvements of the design or the product.

Is such condition enforceable?

First, we need to see if such license is actually necessary to copy the product itself. In my view, this is not the case. This has to do with the fact that ideas and design information are free to be copied, unless protected by registered design or patents.

What that means is that, anyone who sees a design or a product, is in principle free to reverse engineer or copy it. The fundamental freedom to copy applies.

This fundamental freedom does not apply to software – where any copy of the code is prohibited by the general and automatic copyright monopoly. However, no such automatic monopoly exists for designs or products.

So, therefore, the Open Source hardware license would limit its application to the extent there are patent or design rights in the product or a derivative thereof (as opposed against the Open Source software license, which applies for every copy of the software).

The question then arises whether a contractual undertaking as described in the Open Source hardware license (“covenant not to sue”) would be enforceable against someone obtaining a patent on an inventive step in developing a future version of Open Source hardware. This question is still open.

A second question arises whether the remedy set out in the license (“you lose the right to produce the product if you enforce a patent based on it”) actually makes sense. It may well not.

In a nutshell, the TAPR license seems less obviously enforceable than an Open Source software license, precisely because hardware is in general free to be copied, except if covered by patent or design rights (which are the exception), whereas for most software, the opposite is true (it is automatically covered by copyright). Only certain kinds of software (e.g. software where the expression merges with function, or software code that is not original, or created by a machine, and, in the EU, the code of interfaces) fall outside copyright.

The TAPR license also has a rather interesting reference to “emailing” information. I would have expected an innovative organization to recognize that email is not necessarily the obvious communication tool of the future.

The other Open Source hardware license is the CERN license.

The CERN license differs somewhat from the TAPR license, in two important aspects.

There are also clear similarities. There is a “creative commons” kind of license on the documentation, and a covenant not to sue for patents on new developments.

The most important differences are in the fact that the CERN license acknowledges more clearly the copyright nature of the documentation license, and also clearly mentions design rights (and not just patents).

Again, the question as to how enforceable the covenant not to sue is, remains open.

The essential question is this: if I use the documentation in order to manufacture and distribute the “Product”, and subsequently then modify or innovate, and register my innovation (either as patent or design), and then try to enforce such patent or design – what happens to the products I sold, and what happens to the products (with the new, registered modification)? Can I still manufacture and sell them?

And which remedies are available to the original licensor? Because that could well determine the success of Open Source hardware licenses.

Interesting questions ahead. But first, let’s wait and see if Open Source hardware really can become as successful as Open Source software.

Any science fiction fan will recognize the concept of uploading your personality into a computer or a network.

Indeed, this is supposed to be one of the ways in which we may attain immortality.

But, as is often the case with SF, reality is stranger than fiction.

The uploading of our personalities into the digital world has already started.

Anyone who has a Facebook, LinkedIn, Twitter or Google+ account knows what I mean.

Part of you, of your identity, is online. Uploaded & digital.

Part of you exists only in Facebook, or any other social media. You now have different layers of existence, and some of those only exist on the Internet, through Facebook or some other social media system.

And, no matter what the social media tell you, it’s not free. And neither is your digital you free.

The social media business model is based on acquiring all of the digital, web 2.0 version of you, and then commercially exploiting it.

In a sense, by signing up a social media account, you become their digital slave. Voluntarily.

Because they can do with your digital person whatever they want. They can sell you, or your data, or your pictures, or whatever you post, to whoever they want. And you can’t stop them, you have no rights in this layer of existence.

Have a look at the terms of Facebook, LinkedIn, and other social media. Not only do they have effectively unlimited rights over whatever you post, they have much stronger rights than you, the user, have over your own digital existence. They use the “license”, which is effectively Intellectual Property Rights in the copyright of their code, and potentially some patents in their functionality, combined with what they call a contract, to impose their “rights” to use your digital you.

When Google+ started, Facebook very quickly disabled an application that allowed any user to export their data and other account information (the layer of their existence on Facebook) into Google+. That would have amounted to users effectively switching provider of their digital existence. But Facebook quickly closed that back door of the slave pen.

What that means is that Facebook blocks its users from doing with their digital life what they want. Only Facebook gets to decide what happens with your digital you, with your “Facebook you”. That’s why I call this digital slavery.

And they don’t have to respect any of your rights, because “you agreed to the terms”.

The fact that you didn’t have a choice makes no difference – they own your digital you.

They will say some things like “we value your privacy”, but that is mainly because they understand how to make money on the back of it. Maybe that is the true meaning of their expression “we value”.

Is this surprising? Not really. Most SF fans will recognize the story line how colonists of new worlds often go through a period of slavery.

The online digital planet Earth (v2.0) seems to be no different.

Is it sustainable? Probably not in the mid- to long term. But short term, since we have no digital human rights, corporations will be able to develop this new feudal online system, where you and I have no rights, outside the scope of our poor world v1.0 court system.

It is no coincidence that so few court cases are filed against Facebook. Normally, you would expect hundreds or even thousands of them. But you can’t even access the evidence, and Facebook cleverly moves the goalposts about every two months (“We’ve updated our privacy policy – have a look, we’ll think you’ll agree – because we really value your privacy”).

In the end, I think, two things will happen.

The first is that the new, digital, generation will revolt, and demand and obtain digital human rights.

We will have to formulate that “we hold the extension of dignity, equality and self-determination into the digital world to be self-evident”, so that only the digital person will decide on who owns him/her, and their data.

The second is that market forces, when allowed to wreak their creative destruction, might push new entrants to compete on quality of rights granted on their platform. Google+ is a small step in that direction.

Will others follow? It remains to be seen.

What could stop those market forces? Intellectual Property Rights in their current shape and form are probably a prime candidate, since they allow to project monopolistic rights deeply into the value chain. I would not be surprised to find that, certainly at the moment, governments will prefer Facebook’s monopoly on its platform, and hence the functionality therein, over the rights and freedom of its digital slaves.

My prediction is that this will be one of the political fault lines of the 21st century, as the rise of the Pirate Party in countries like Sweden and Germany forebodes.

Funny how Facebook, less than 10 years after its creation, is already deeply reactionary. Guess that’s what happens when you become a slave-trader.

The key point I made was that Open Innovation benefits greatly from properly functioning Intellectual Property Rights.

My particular focus was on copyright, which I believe is broken up to the point that it currently prevents or hinders Open Innovation, and is becoming an impediment to creativity and innovation.

The first observation is that the copyright system is quite broken. We have established a system of “thought crime” reminiscent of George Orwell’s “1984” in our failed efforts to prevent copyright infringement.

When I reproduce a copyright-protected picture (say, a drawing of Tintin) with the intent to develop my own business, I’m liable to imprisonment of between 3 months and 3 years, and a fine of up to € 100,000. And if I repeat that thought crime, those numbers can double.

So why are we doing this? Why are we locking away the product of our collective innovation and creativity behind the bars of a thought crime system? Why is it illegal to use someone else’s content, depending on the purpose for which you use it?

The answer is actually quite absurd, specifically when applied to 95% of all copyrighted material (which includes my earlier example of a Tintin drawing): the reason is to promote the creativity of authors. Now, Hergé, the creator of Tintin, unfortunately passed away in 1983. So how does threatening me with a jail sentence of up to six years in 2011 promote Hergé’s creativity?

And it gets more absurd after that, because, while it is clear that the copyright infringement criminalization has no moral or logical justification, it also simply does not work.

The music industry provides a good example: its revenues have dropped of a cliff, and there is no prospect of recovery. The same forces are at work for film, video games and e-books.

So, we have a draconian system of thought crime, that is illogical and unjustified, and does not work in practice.

And that is not a good situation, at many levels, including the principle of respect for the rule of law.

But most importantly for this blog, we need a properly functioning copyright system. It would be of great benefit to systems like Open Innovation – any collaborative system greatly benefits from clear rules about who owns what, who can do what, as well as the general acceptance of such rules. That is currently, patently, not the case for copyright.

So, copyright is broke, and needs fixing.

In order to know how we can fix it, we first need to understand why it is broken.

Is it broken because of piracy? I don’t think so. The “pirates” are the messengers, showing by their behavior that copyright is broken. They didn’t break it, they just show us it’s broken.

Moreover, pointing the finger at other people’s “bad behavior” has very little credibility when it comes to analyzing why something doesn’t work. It’s an intellectually lazy attitude, and almost always misses the key points.

“If only other people would change their behavior…” No, it’s just not sufficient as an explanation.

I think the key elements in understanding why copyright is broken, can be found in its origin.

Copyright, as we still know it today, was created by the Berne Convention on the protection of literary and artistic work. The first signed version of that Convention dates from 1886. That’s 125 years ago.

To give an idea, that’s the year in which a Mr. Benz in Germany was granted his first patent on an automobile car, when the Spanish Empire abolished slavery in its Cuban colony, when Coca-Cola first came onto the market, and when the first linotype printing press was invented, paving the way for cheap mass publication of newspapers.

And that far away origin is, in my view, still responsible for the major flaws we see in today’s copyright system. I will highlight what I think are the five most important ones.

First, copyright assumes that innovation and creativity are individual, singular activities. It’s what the lawyers call “a clean room environment” in which innovation takes place. Unaffected by any other information or influence. Except, of course, it doesn’t exist.

No-one works in a vacuum, no-one invents or creates from scratch. The Beatles, among the greatest song-writers of the 20^th century, always clearly acknowledged they were “stealing”, as they themselves called it. It wasn’t really stealing of course; it was sharing, and acknowledging the truth.

Certainly in an Open Innovation environment, the concept that the default system are single individuals coming up with these brilliant ideas that need individualized protection, is quite simply inappropriate, and unfit for purpose. We need to recognize the inherent multi-layered and composite character of any innovation or creativity. “Standing on the shoulders of giants”, what we see all around us, should be our guiding principle, rather than the lone (mad?) genius, a figment of our collective imagination.

The second flaw is that copyright focuses on the author, and not on the work itself. It’s one of the reasons why its duration is measured in years after the death of the author, rather by reference to the work itself. That simply does not make sense in today’s world. Moreover, it is one of the key reasons why most of the 20^th century’s creative production is locked away behind the bars of what is called “orphan works”. Works we know or suspect are under copyright, but not quite sure for how long, or who could release them. All of this to “promote creativity”, indeed.

The third flaw is that copyright assumes that technology is static and more or less irrelevant. While already challengeable in 1886, when mass media were invented, it is definitely an absurd assumption today.

Without that assumption, Napster would never have had the impact it actually had, and we would not be plagued by the ridiculous situation that, whenever technology changes, content “owners” expect consumers to pay again for something they already purchased. Anyone who still has a collection of vinyl records, or who saw a Blue Ray version of a DVD they already own, knows exactly what I’m talking about.

Not only peer-to-peer networks, but also developments like machine-generated content (e.g. sports articles) or software written by other software, which fall outside copyright, are clearly challenging the static nature of copyright. Technology does affect copyright, and the way it is created. The Berne Convention does not state explicitly that copyright is the result of “human” creativity – but it clearly implies it. At the time, no non-human creativity was envisaged, though.

The fourth and fifth flaws are connected. The Berne convention assumes that copying is expensive and that distribution channels can be controlled. This is clearly no longer the case, as any person working in Digital Rights Management will confirm, and we should abandon these illusionary concepts.

So, what does this all mean? Is there a solution?

The analysis above is not complete, of course, and there are other issues that play.

Moreover, it is unlikely that any solution would be complete, or enable us to have a system that answers to the needs of all involved.

Copyright is at the crossroads of different, sometimes competing and conflicting interests.

As a society, we should try to and choose the option that benefits the most and damages the least, taken as a whole, and without undue consideration of private interests over and above those of society as a whole.

I think there’s one beginning of a solution that would tackle most of the flaws exposed. Moreover, it would also clearly be of benefit to any system of Open Innovation, or any other collaborative activity that involves copyright.

Every solution must be based on the principle that registration becomes a necessary condition for copyright to exist.

Registration is key.

It clearly identifies the work, and the author. It avoids discussions on who owns what. It creates clarity. It allows for unclaimed work to fall in the public domain, where it can be re-used for the benefit of society as a whole.

In today’s world, where we upload all of our virtual personalities into social media, it must be possible to organize a free or very cheap system of registration for any work that claims copyright.

If you don’t register, it means it’s not important enough to attract copyright. But the current system, which automatically confers a worldwide exclusive monopolistic right on anything anyone creates, until 70 years or more after the author’s dead, is clearly passed its sell-by date.

The registration solution addresses each of the flaws mentioned above. Not necessarily comprehensively or completely, but it does provide for a start of a solution to all of them.

Because, if we want IPRs, and copyrights, to support and enable Open Innovation, we should not only ensure that we can trust each other, but also that we can verify who owns what.

“Trust, but verify” – never thought I would quote Ronald Reagan in a blog on IPRs. But I do agree with him on this.

The project has been very successful; from a technology point of view, a human driver is, today, no longer necessary.

That got me thinking – would it be a good idea to abolish human drivers?

After thinking about it, here’s four reasons why I think we should, and two reasons why it may take a lot longer than it could. Most of my calculations are “back of envelope” quality, but they give a pretty good idea of the potential.

First: it would really help to save the planet.

As you can see from the film, automatic cars would probably mean that the average person would no longer own a car, but just order a robot taxi whenever needed, be driven to their destination as and when they want it, and then see the car move on to another drive. I would also assume all those cars would be electric.

Most people I know use their car less than 20% of the day (that means that they drive less than 5 hours per day, seven days a week).

Sharing automatic cars would enable the cars to be used at least 60% of the time (taking into account night time with less traffic and charging time). That would mean we could cut the number of cars necessary to do the same amount of transport as we use today by more than 40%, maybe even more than 50%.

Most of the CO2 exhaust is still caused by the production of a car, rather than its use. So, this would already have a major impact on CO2 reduction. If all those cars become electric (for robot taxis, charging is much easier, they would do it in their free time at central locations), the CO2 exhaust would, again, drop massively. My guess is it would make a real difference.

Second: no more traffic jams.

It goes without saying that when you have the computing power to drive a car safely in the challenging environment of today’s inner city traffic, then you would enable that car to have access to traffic information in real-time, and compute the fastest way to your destination based on that real-time information about traffic density, road works, etc.

In other words, you would always get there in the fastest way possible.

But there is another advantage of robot taxis. Their driving patterns would be much more efficient. It is a well-known fact that traffic jams (e.g. on motorways) occur much earlier than they should because of human errors (braking slightly because the person ahead of you moves lane, etc.).

All those factors of human error would disappear out of traffic. Robot taxis would be able to have much more cars on the same road before it would become an actual traffic jam.

Combine that with the reduction of the number of cars on the road, because of higher utilization rates, and its clear that traffic jams would, by and large, become a thing of the past.

The economic benefit would be huge.

Third: You can finally drink and drive again. Or work and drive. Or…

Driving a car in everyday traffic is actually a rather useless activity. It doesn’t do more than getting you from A to B. But imagine that you can use the time in the car to make telephone calls without having to watch traffic? To catch up on your email, or to prepare for that meeting you’re going to?

The potential increase in productivity would be very significant.

When you start to use your imagination, you could really do anything in a car that you also do in your living room…

Also, since we have our robot taxi to drive us home after that party, no more reason to stay away from that drink. Not that I’m encouraging people to get drunk, but imagine no more risk of accidents caused by drunk drivers (apparently, 1 out of 4 accidents are caused by drinking & driving).

Fourth: safety.

Which brings me to my main, fourth argument. The “Killer App”, so to speak.

We would no longer have traffic accidents or victims. Imagine that a simple traffic accident would become so rare, that it would immediate make the headlines. The crash wouldn’t even need to have someone dying in it (I know how cynical that sounds), a simple injury would immediately be big news.

Imagine that.

If cars as we know them now would be invented today, they would immediately be banned on grounds of health and safety. And rightly so. In Belgium alone, a country of a mere 11 million people, we have almost a thousand people dead every year, several thousands of heavily injured, and a lot more lightly injured.

That’s a lot of people’s lives to be saved. In the EU alone, more than 35.000 people die on the roads every year. You can find the statistics here.

Imagine we could actually stop that completely. Imagine all the human suffering we would save ourselves. Imagine all those hundreds of thousands of families, friends and lovers who no longer have to hear that terrible news “I’m afraid he/she has been in an accident, and it doesn’t look good”.

Imagine the savings in loss of experience and human potential. Imagine the savings in health care.

Imagine no longer being afraid to send your five-year old on a bike into the street.

I think Paul Rojas’ film shows us it is perfectly possible.

Why has it not happened already?

Now, this news is not really “new”. These developments in technology have been going on for a while.

Why has society not jumped on these possibilities? Why do we not see politicians stating that human driving should be banned, after a transition period of some years? Why are we not taxing human-driven cars out of existence? Why is Jeremy Clarkson not foaming at the mouth (well I guess he is, because he always is, but so far for other reasons).

I see two powerful reasons why we accept all those tens of thousands of deaths and injured every year.

The first is purely emotional, and as we all know, emotional arguments tend to be very strong, often much stronger than rational arguments. I see two strong emotions.

First, we love our cars. We love that it is OUR car, and we identify with our cars.

We really dislike abandoning that love, that attachment, the idea that we are safe in OUR cocoon when whizzing around in a dangerous, unknown environment. And that doesn’t even address the deeply emotional approach to car brands.

Second, we distrust robots. I haven’t seen any survey on this, but I’m pretty sure that if you asked people whether they would accept robot cars if they reduced dead and injury caused by car crashes by 80%, they would probably refuse. Rationally, that doesn’t make any sense, but I’m pretty convinced we would never accept a robot killing a person in a traffic accident, whereas we are perfectly willing to accept lots of humans being killed by other humans’ ineptness to drive, or even mere distraction, in today’s traffic accident (“because that just happens”). Our emotional tolerance to machines killing us, even when they would kill enormously less than humans in the same situation, is very, very low.

So my guess is society will demand actual proof that these robot taxis are completely, 100% safe, before we would consider allowing them, let alone encouraging or imposing them.

The second reason is economic and political.

Again, back of envelope, here’s a short list of industries who would be deeply affected by such a change, and who would all see more or less lay-offs:

-       the car insurance industry (would disappear almost completely)

-       the legal profession (all traffic accident related litigation)

-       the taxi industry

-       public transport

-       the car manufacturing industry (still at the heart of our industrial production system) – remember that 50% drop in production?

-       car travel assistance

-       the health care system (yes, I know, cynical, but probably true).

And I’m sure I’m missing some.

That’s an awful lot of creative destruction, and an immense amount of lobbying and political firepower to try and stop it, or slow it down as much as possible.

So my guess is we will probably, and unfortunately, in the name of “safety” (i.e. the carnage taking place on our roads every day) and “jobs” (causing & cleaning up that carnage) introduce this life-saving technology much later than we could.

There’s no real link with Intellectual Property here, although I wonder if Hertz, Avis and their ilk should not use this new technology to really develop their business. If I was their head of strategy, I would know what to do. Maybe even develop some innovation & occupy the market space.

I hope I’m wrong, and that we’ll see this a lot sooner than I think we will.

Headlines about patent trolls, the great patent bubble, patent warfare, pirate parties and the broken patent system appear almost daily.

This is good, because there are obvious problems with our IPR system. It seems that most observers are agreeing that the current IPR system risks preventing, rather than promoting, innovation and creativity.

In my analysis, there are two key causes for this.

The first is that lobbyists for existing businesses have succeeded in convincing law-makers that “ever stronger IP protection = more innovation”. Because IPRs are, in essence, monopolistic rights, this position is fundamentally untrue. But it does give government the possibility to protect existing champions against innovators and new developments; in return the existing champions can subsidize the politicians’ election campaigns.

It is clear that only to the extent the inherent anti-market monopolistic entitlements granted by copyright and patents turn out to generate more innovation than a normal free market would, would they be justified.

And that brings me to the second key problem with current IPRs. They are extended all over the value chain, and apply not only to development, but also to reproduction (manufacturing) and distribution, up until first end-user sale (and sometimes beyond, e.g. for the software on your smartphone). And that is patently stupid.

Distribution (and, arguably, manufacturing) processes should be driven by market efficiency, not by government picked monopoly. Otherwise, you get lazy distributors, raking in monopolistic rents, and desperately trying to prevent innovation or others to enter the market.

Until recently, the problem was not felt very clearly.

But with the current patent wars in mobile telephony, and the rise of the patent trolls, who now charge billions of dollars in “private taxes”, paid by innovators to existing (i.e.. old) technology, it is clear that the current patent system is hindering innovation, not promoting it.

One of the causes that keeps being mentioned is the low quality of patents, and the fact that patent offices (often the USPTO) grant ever more ridiculous patents that obviously don’t comply with the non-obvious requirement (let alone the inventive step and the disclosure requirements).

But tackling this problem is not easy; the system seems to have built-in drivers reducing the quality of patents, and hence increasing their cost to society and innovation.

“But”, argue the defenders of the patent system (and patent trolls) “the IPR system rewards innovators, and is necessary”.

That may or may not be true, either in practice or in theory (there seems to be an amazing lack of economic empirical data supporting this position), but it is actually completely besides the point, and does not address our current problem.

Our current problem is not that innovators don’t get paid (although it seems in reality they actually don’t, under the current system), but that manufacturers and distributors also enjoy the monopolistic protection granted by IPRs. This is where the current system prevents market efficiency, and prevents or blocks innovation.

Luckily, there is a very simple and efficient solution to this problem, which would completely safeguard innovators’ rewards.

For patents, the solution is to make compulsory licensing and non-discriminatory and transparent pricing a condition of patentability.

How would that work? Well, when an invention is granted a patent monopoly, one of the conditions we (i.e. the law) attach to it is that the patent holder cannot refuse anyone a license, i.e. the right to use the invention. The patent holder is entitled to set a fee against this, but (and this is crucial), that fee must be the same for everyone, and freely accessible.

In other words, we remove the power of the inventor, or their assignee, to project his/her monopoly at unknown or random pricing into the manufacturing and distribution parts of the value chain.

The effect is to tremendously increase price stability and market transparency. Rather than allowing patent trolls to threaten anyone with extremely expensive law suits unless they pay ridiculous amounts of what is in effect a protection racket, we establish clearly what the cost is for an invention AND ensure that the inventor, but not the distributor, is properly rewarded.

This way, we will also resolve the issue of what the value of a patent is: that value will be determined by the market, on a continuous and transparent basis.

What does that mean? It means we would re-introduce market efficiency into the manufacturing and distribution process, as well as in the valuation of innovation and patents.

For copyright, a similar system can be easily set up (see my earlier blogs here, here, here and here). The key point is registration – which will also solve the problem of “orphan” works. Compulsory licensing is probably also the answer for copyright.

One of the legal instruments to do this, is the much under-valued relationship between competition law and intellectual property law. Let’s recognize exclusive licenses as anti-competitive by default, because that’s what they are.

Will such a system be perfect? Probably not, no system ever is. One potential issue of discussion will be price-setting, and whether it should be fixed or allowed to change over time. If you can think of others, please comment on this blog.

What about patent trolls? Well, I would suggest we simply convert them into collecting societies – we know that that can work. And it would probably introduce competition there as well, which would in turn bring down the management cost of all that IPR.

To conclude, let me quote the US constitution’s IP clause. It says it quite well: “To promote the Progress of Science and useful Arts,…”.

That is, of course, the whole point of IPRs: they don’t aim to protect innovation, they aim to promote it. Exclusive protection should only be allowed to the extent it ensures more innovation and creativity.

So, we need to find the right level of protection, which effectively promotes innovation and creativity. The current system massively overshoots on protection, and, as a result, prevents innovation and creativity. This goes against the original purpose for which IPRs were set up.

Let’s re-invent IPRs so they do what they are supposed to do.

The Court of Appeal of Antwerp, Belgium’s second city, ruled on a request to block access to the Pirate Bay website on 26^th September 2011. Many people have reported this decision and have commented on it.

However, don’t try to find the decision online on any official government or court website. It isn’t available. For those of you who are interested, I’m posting a downloadable copy BAF-TPB-Telenet-Belgacom-Antwerpen-arrest.

When I wanted to obtain a copy to blog about it, I rang the clerk of the court’s office, to request a pdf copy, because I had been unable to locate the decision online.

The woman who picked up the phone informed me, very friendly and efficiently, that no court rulings are made public online, except for some specific ones, selected on a completely random and unpredictable basis by each specific court chamber president.

No emails can be sent or received, because they are “not equipped” to deal with them. Oh, and most people who work in the courts don’t have Internet access.

This is in the country where the capital of the European Union is located, in the second decade of the 21^st century.

You wouldn’t make it up – but this is the sad reality of Belgium’s court system. No use of technology, no transparency, no accountability.

It does make one wonder about the credentials of independence and impartiality of a justice system that does not provide any information to its funder, the taxpaying public.

And of course, the issue goes much further. Court cases decide daily on interpretation of matters such as tax law, commercial law, and other rules of engagement of, among other things, the economy and trade. Not providing this essential information in real time effectively delays and prohibits the value of the court systems’ function to be absorbed by society. It is very obvious that this costs business a lot of money, because information that should be freely available, is now charged at a premium, because of the inefficiency of the public sector.

How did I manage to get a copy? By email, from a lawyer I know, who got it through email as well.

As one would expect, such use of information technology do not bode well for the possibility that this same court system would understand the finer details of technology, downloading, peer-to-peer networks, and their effect on copyright and freedom of speech.

So, as to the decision itself. My appreciation is that the blogs and articles mildly laughing at the decision for seeming technically illiterate (banning the use of “www.thepiratebay.org”, but not the use of “thepiratebay.org”) are not quite correct: the Court seems to know what it’s doing in terms of the technical irrelevance of its decision.

A number of aspects are interesting. The first is that the Court seems to imply that, because the measure it imposes is technically irrelevant and easily circumvented, the measure meets the proportionality requirement. That seems a rather bizarre way of addressing the proportionality requirement.

The second is that the Court seems strangely unconcerned about the fact that the measure would also block the sharing of material that is not under copyright, in the public domain, or under licenses that allow sharing, such as e.g. creative commons. The reasoning used is similarly bizar: users would be able to share those through other means than the Pirate Bay – in other words, because the measure is inefficient in blocking “piracy”, it doesn’t matter very much that it also prohibits (partially) sharing of material under freedom of speech.

The third is that the Court does not address the issue of censorship at all – which is a great pity. The balance between freedom of speech and copyright is a core issue at the heart of this discussion – and the Court refuses to take it into consideration, other than stating that copyright is a fundamental right (which, if confirmed, would be a rather revolutionary statement), and that no other fundamental rights are affected by its decision to – on purpose inefficiently – block access to a website.

It seems here that the Court is having its cake and eating it too. It allows in principle that websites enabling users to swap material, part of which may be copyright-infringing (but without the copyright owner or its assignee having any duty to establish they have such copyright and that there is actual infringement, and not fair use or other allowed use), and part of which may not be copyright-infringing, can be blocked in general. But since such blockage is – on purpose – not made very efficient, it is not really an issue for censorship or free speech.

Again, you wouldn’t make it up.

On the other hand, if appealed, it would make for some interesting debate. It would be a great pity if issues such as whether copyright is promoted from a limited monopoly to a fundamental right are treated as obiter by a rather incompetent Court of Appeal.

That last post only addressed part of the characteristics – here’s the rest.

1.    The platform will become a social marketplace for content empowering the users.

In today’s world, authors must either publish themselves on the web, with all risks of illegal copying, or put their stuff on Facebook or other social media, thereby relinquishing all control.

This platform will offer a middle ground. Creators can provide their stuff along a number of ways, and the platform will allow them better and effective enforcement.

Effective protection will become possible, because the platform will effectively become the standard of proof (including, after some time, for “old” copyright cases) of ownership.

This will be the marketspace for musicians, writers, artists, and all creators of content.

By registering their content they will have more control over its distribution than any currently existing distribution channel – they will be able to choose how their content is distributed, re-used etc. On that basis, it will be easier to enforce those choices – because they will be clear.

Call it the social network that really empowers its users.

2.    Users know what they get

In today’s system, users don’t know what they get.

They are hardly informed of what they can do with what they buy online, but in practice, their rights are typically extremely limited.

However, this overkill of restriction leads consumers straight to the assumption that they can do anything, as in an obvious act of revenge or resentment.

But users are not as stupid, indifferent or hostile as the current system expects them to be. When they become interactive players, who will not only acquire content, but also post it straight back (e.g. when they’ve altered it, or created a derivative work), they will quickly understand and value the interest in “fair play”.

The current system gives users no incentive whatsoever to play fair – users who do play fair only feel like being ripped off every time they get upgrade their technology.

But people prefer being fair over any other kind of action – we just haven’t given them the tools empowering them to do so yet.

3.    For Software, it will boost both FOSS and proprietary software

Already, the open source movement is starting to put FOSS software into a registration system.

The new platform I propose would include FOSS deposit and registration, but would go further.

By allowing registration and upload of source code under a FOSS license, the duty of making available the source under the relevant license would become easy, centralized, extremely cheap and very transparent. This will encourage the uptake and enforceability of fOSS licenses.

But also for proprietary software, a similar system needs to be set up.

Source code can be deposited in a safe, confidential and protected way for proprietary software. Automatic screenings will then apply to ensure it does not contain any other, previously deposited software.

For proprietary software, the new copyright will have last a lot shorter, though. There is no economic need to make it last any longer than five years. After that, unless the owner pays a fee, it will be released into the public domain. After the first five years, the fee doubles every two years for further extension. That way, we ensure that any software that has low or limited commercial value, is released in order to allow further technological innovation, interoperability etc… Very successful software can remain proprietary much longer, but no longer for “ever”, as is now the case.

However, the public registration system (and automatic control with existing work) will remain a very strong incentive for businesses in proprietary software to register their work.

4.    Licensing will be done automatically, and the platform will have an open format

The platform will operate as an exchange for licensing content. Content that is offered under certain restrictions in this new copyright system, will be automatically offered for licensing and resale at prices fixed by the author.

In other words, everyone will be able to offer their music through a new form of iTunes, not just those with a contract with record companies. And through registration, authors will be enabled and empowered to choose their own online model of distribution.

It seems advisable to make sure the platform is in an open format, allowing easy API development, and the creation of new applications and ways to distribute content made available on the platform.

It is impossible to envisage all the possible new ways of distribution of content that new businesses will come up with – but the platform should enable this as much as possible.

5.    It can be used for pretty much anything that can be digitized

As the digital world becomes ever more an essential feature of every part of our life, this platform will enable a vast array of activities to become identifiable, traceable, exchangeable, and governed by their creators.

Examples are the creative barcode, in essence a registration system, but also all future files for activities like 3D printing (like Shapeways).

All such systems would benefit from (or tap into, or being replaced by) this platform.

6.    It will fundamentally alter copyright

Currently, copyright is clearly too restrictive. It is not respected, and does not function properly.

By limiting effective copyright to registered work, offering authors an real choice on how they want their work to be used, drastically reducing the duration of copyright, and re-introducing the possibility to transfer work to the public domain, this platform will enable and stimulate innovation and creativity, while at the same time increasing the protection and enforceability of registered works.

Moreover, the duration of this new “i”copyright will have to be much more limited.

For content, which is not software, terms of 10 or 20 years should apply. For software or technical inventions, the initial duration would be 5 years. Any renewal would be subject to increasing fees (doubling every 2 years).

The income from these fees should be sufficient to cover the costs of the system.

As to enforcement, the principle of registration should make enforcement (and compliance) a lot easier. A potential way to make it cheaper is to alter the role of collection societies (who are currently facing extinction) into enforcement agencies, allowing them to take a cut of proceeds.

In my next post, the last on this topic, I will address the issues of how such a system can work, and who would be the winners and losers.