While We're Making Suggestions To The AP, How About Not Disappearing The News?

In the wake of the ridiculous dustup between bloggers and the AP, where the AP threatened bloggers who help promote AP articles, some are starting to point out that the AP's problem goes well beyond a seriously distorted view of copyright law. The reason this came up at all was because the AP's business model is pretty screwed up in a web world. This was clear from the fact that the more involved the AP gets online the more it ends up competing with all its member newspapers. Almost every action it takes seems to help the AP's business model, while hurting its members. With the latest skirmish, the AP is ensuring that those partner sites get fewer links in and less traffic. Back when the AP signed a deal with Google News, we pointed out that its member newspapers should be pissed off. Basically, the AP and Google had worked out a deal to keep traffic away from the member papers. That's no way to survive. Eventually, if this keeps up, those members freak out and stop supporting the AP.

That leads to great suggestions from Danny Sullivan on how it's time for the AP to totally rethink its business model, recognizing what the web does for its business:

Well, wake up call. You need a new model. Really. Or you're going to die.

The AP should have a news portal. You should take in content from your members, put it up in an easy-to-find way and generate the ad dollars to be redistributed back to your members. Like do it now, before since the entire licensing thing ain't going to live that long.

It's worth reading the whole thing, as it's right on point. However, there is one additional thing that's worth mentioning: the AP really needs to learn to keep its news online. Back when I would link to AP articles, one of the most annoying things was that they would disappear after a couple weeks. We used to get complaints all the time from readers who would find an older post and the underlying AP article would be gone. I had thought that maybe its deal with Google would change this, and started pointing to the Google versions of AP articles... but, nope, those disappeared after a few weeks as well.

In the narrowminded world of an AP exec, they probably think this leads to more licensing revenue, since it will make people search out and license the article after it can't be found any more. Nope. It just makes people pissed off. Many newspapers have realized that there's tremendous value found in freeing up the archives, and monetizing that long tail of traffic via advertisements. That's a lot more effective than pissing off large groups of folks (including the people who promote your articles) and hoping it leads to a little more licensing revenue. So, while I agree with Danny's recommendations for the AP to join the internet era, I'd also add a recommendation that it open up its archives and recognize that URLs should be permanent rather than fleeting.

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Progress Software To Buy Iona Technologies

Iona will become a wholly owned subsidiary, making it likely that its Artix Web integration and Fuse SOA product lines will continue.

First sale limits at risk - they should not be

The Supreme Court has accepted cert in the LG Electronics case.  The issue involves patent exhaustion doctrine.  This is an opportunity for the Court to affirm the right of a patent (or copyright) property owner to control the terms on which its invention or work is provided to the public – by license or sale.  But unless the rights-owner community pitches in, the Court may get it wrong.

The issue is simple – if I own property, should I be able to apportion rights in transactions relating to that property or am I limited to choosing between either selling outright or never providing it to the public or third parties?  The obvious answer is that a property rights owner should have the right to choose the terms on which it makes that property available for others to use.

 

            The LG appeal challenges that concept as it applies to patents. 

 

LG licensed Intel to use a portfolio of patents and to sell products covered by several of the LG patents.  The license provided that Intel sales did not cover buyers’ use of the product in combinations covered by other LG patents.  Intel was required to notify buyers from it that the sale to them did not give them a license to use the products in combinations that controlled by LG patents.  Those notices were part of the Intel-buyer contracts.

 

So it seems simple.

 

            Property owner gave a limited license to Intel.  Intel produced products under that limited license and conveyed them to third parties pursuant to the license and under a contract limiting the scope of the sale transaction.  Transferees went outside that scope.  While transferees are shielded from some infringement claims by exhaustion doctrine, that doctrine applies to authorized unconditional sales; these transactions were not that because there were contractually effective restrictions on the rights transferred.

 

            The Supreme Court has accepted cert on the following issue:

 

Whether the Federal Circuit erred by holding … that respondent's patent rights were not exhausted by its license agreement with Intel Corporation, and Intel's subsequent sale of product under the license to petitioners. 

 

The license here did not permit sales by Intel that would enable the purchaser to use the product in combinations that would infringe the licensor’s other patents.

 

            Of course such transactions did not “exhaust” the patent.  They were a contractual method of commercializing patents under license agreements that commercially apportioned rights or permissions.   If I rent my condo in Taos for a specified, limited use, have I exhausted my rights of ownership as to the lessee for any uses it desires to make of the premises?  Of course not.  The Court needs to make this clear.

 

            So what was the argument by the losing party below?  The following is quoted from their brief:

 

Under the patent exhaustion doctrine that this Court has applied for more than 90 years …. an authorized first sale of a patented article exhausts the patent owner's rights in that article, and nullifies any “conditions” that the patent owner has tried to attach to its use or resale. Beginning with its decision in Mallinkrodt v. Medipart, Inc., 976 F.3d 700 (Fed. Cir. 1992), however, the Federal Circuit has steadily eroded the exhaustion doctrine. In this decision the Federal Circuit held that exhaustion is entirely optional, and easily nullified by a “notice” announcing that the patent owner would prefer that it not apply. That is an unprecedented and extremely dangerous expansion of the patent monopoly, in direct conflict with numerous decisions of this Court.

 

Frankly, this misrepresents the Federal Circuit’s actual ruling, prior law, and what the case involves.

 

The basic rule is and has long been that ideas of exhaustion and first sale only apply where there has been an authorized unconditional sale of a product or a copy or an unconditional and unrestricted license.  As the Federal Circuit commented:

 

The theory behind this rule is that in [an unconditional sale], the patentee has bargained for, and received, an amount equal to the full value of the goods.  This exhaustion doctrine, however, does not apply to an expressly conditional sale or license. In such a transaction, it is more reasonable to infer that the parties negotiated a price that reflects only the value of the 'use' rights conferred by the patentee."

 

The LG?Intel license expressly excluded granting a license to Intel’s purchasers to combine Intel's parts with other components in ways that would infringe LG’s other patents.  This conditional agreement required Intel to notify customers of the limited scope of what they were purchasing, which it did.  Although Intel was free to sell the products, those sales were required to be conditional, and Intel's customers were expressly prohibited from infringing LG's combination patents.

 

            This is the proper rule. If rights owner chooses to commercialize its invention by apportioning rights or permissions, rather than simply selling product, that choice should be respected.  It is not an effort to circumvent ideas of exhaustion or first sale, but simply a decision to not engage in transactions to which those theories apply.

Apple creates "killer" Internet software sales ecosystem with superior ease-of-use, distribution

Apple’s public announcement on March 6 to allow developers to write applications directly for the iPhone and iPod touch, rather than just as Web-based apps, will be a very big deal.

In fact, I believe Apple is creating a “killer” ecosystem of easy-to-use hardware and mobile software downloading that will result in iPhone users downloading more software, per-person, than any other single cellular phone.

I discussed “Apple’s Amazing Mobile, Internet Sales Ecosystem” in my most recent “Thinkernet” column for “Internet Evolution” (see below).

Anti-ROWE

Ron has been blogging a lot about ROWE (Results Only Work Environment) lately and with good reason. It is an idea whose time has come. In fairness, I thought I would present the anti-ROWE or, at least, one element of it.

If you need this product, creepily named Spector 360, let me give you some advice — save your money ($2k) and just go out of business! If anyone can make a rational case for using this kind of software in a professional knowledge worker (or really any) environment, please attempt to educate me in the comments below.