Is Figuring Out A Slot Machine Software Glitch & Making Money From It A Crime?

from the apparently dept

Over the last few years, casinos around the globe have been using increasingly high tech slot machines, but with high tech slot machines come the usual bugs. And that raises some interesting legal questions. In the past, we've noted numerous examples of casinos blaming software glitches for slot machine awards, and refusing to pay them out. And, usually, they're being allowed to do this. That seems a little troubling, but it can get a bit more complex, as in one case a few years ago, where a guy used a slot machine that had faulty software -- and was arrested for doing so. Each time he put in $1, it was credited as $10. Now, once he realizes this is happening, perhaps you can consider that fraud, but it does seem a bit dangerous to blame the guy for what was really a software glitch by the casino or slot machine vendor.

The latest such case, found via Slashdot, might not be quite as troubling. In this case, a guy more or less figured out a software glitch in a variety of slot machines that would enable a series of button presses that would lead to larger awards, and then he used that to win a lot of money. Now, I can definitely see the case for fraud here (and the guy has now been arrested). He didn't just spot a machine with a glitch, but he then actively exploited that glitch, knowing it was a glitch, and took steps to enable that glitch on various machines (to make it work, he apparently had to have casino staff change some settings on the machines, which they would do since he was a "high roller.")

Given that he was knowingly abusing this glitch, the fraud claims seem much more reasonable. However, there is still something worrying about charging someone for a crime for doing what a computer system allows them to do. He didn't technically hack the system -- he just figured out a bug in the software and used that to his advantage. There is at least some gray area, concerning whether or not some of the liability should fall back on the maker of the slot machine for leaving such a glitch in their software.

Filed Under: glitches, scams, slot machines, software

Are Companies Scanning Open Source Commit Logs And Patenting What They Find?

from the prior-art? dept

It's funny how often we hear patent system supporters tell us that if you haven't actually gotten a patent for your invention, it's perfectly reasonable for someone else to go and patent it instead. The idea of presenting an idea for the public domain or for open source purposes seems foreign to them. Recently, I've seen two examples of questionable patent applications that appeared to take content that was put out publicly, and tried to turn them into patents. The first, found via Dave Farber's IP list is a patent which an open source developer suggests almost identically matches code that he committed to an open source project. The guy who wrote that post has since backed down a bit on his original claims that the patent was clearly "copied" from his open source commits, but still notes that the patent application in question is ridiculous.

Then there's a similar story, found via Slashdot of a guy who coded an open source library for Windows in 2001 (inspired by a Bruce Perens project from 12 years earlier) and just discovered that IBM appears to have patented the same technology -- even mentioning this guy's own blog post in the references section.

Whether or not these two patents are examples of various companies trying to patent open source technologies as they're being developed, it does highlight yet another problem with the patent system as it is set up today. Even if there does appear to be clear prior art, it's not as if the Patent Office seems willing, capable or interested in actually understanding how these patents are simply copying what's already being done elsewhere.

Filed Under: open source, patents, software

Microsoft's Anti-Piracy Efforts: Millions Spent Driving People To Open Source Software

from the surely-that's-not-the-best-use-of-money? dept

In the past, Microsoft used to be willing to admit that unauthorized copies helped the company, as it helped establish its software as a near-monopoly in certain areas, and kept competitors out. But, in the past few years, the company has become more adamant, not just about denying any possible "benefits" to unauthorized copies, but in trying to crack down on them at any cost. The NY Times has an article highlighting Microsoft's "fight" against unauthorized copies, and does so with dramatic (and cinematic) claims about how organized crime groups are turning to software copying, as an alternative to drugs.

Of course, this ignores the fact that such organized crime groups have actually discovered that it's harder and harder to make money with counterfeit software -- because more and more such software is just available for free online, leaving little reason to pay anything for it, especially from counterfeiters. But, what strikes me as most interesting through the blatantly ridiculous claims throughout the article from Microsoft's folks and its stand-ins at the BSA, is that all the company is really doing here is spending a ton of money to convince people to look at cheaper (or free) alternatives.

Filed Under: anti-piracy, piracy, software
Companies: bsa, microsoft

BSA Sends Ridiculously Bogus Letter To European Commission

from the the-lies-the-bsa-tells dept

Is it just me, or is the BSA becoming a bigger and bigger joke each time it does just about anything these days? For years, the organization has put out its yearly bogus stats on "piracy," which have been debunked over and over and over again. They're about the only trade group that still has the gall to equate a single unauthorized copy to a single lost sale (even the RIAA and MPAA have moved away from that claim). They've also been known to simply make up survey numbers, rather than actually ask people in certain countries. And then, even on news stories, they seem to make it clear that they have no clue what's going on -- such as last week's announcement that ACTA was a treaty already signed by 37 countries, when it's neither a treaty, nor has it been signed by anyone.

The latest is equally as ridiculous and makes the BSA look even more uninformed than usual. As a whole bunch of you have sent in, the BSA apparently sent the European Commission a letter, objecting to the proposed "European Interoperability Framework for European Public Services." You can read the letter below: The Free Software Foundation Europe has done an incredibly thorough debunking of the letter, which is a worthwhile read from top to bottom. One key snippet is in response to the BSA's absolutely laughable assertion that "royalty free" means "non-commercial":

The BSA argues that "[m]any of today's most widely-deployed open specifications incorporate patented innovations that were invented by commercial firms...including WiFi, GSM , and MPEG."

This is an attempt to create a false dichotomy between "commercial" companies inventing patented technology, in contrast to "non-commercial" inventions which are not patented. In reality a great wealth of unpatented modern technology originating in commercial companies constitute globally implemented standards (such as HTML5), whilst continuing to provide their creators with revenue. There is no such divide, either economical or ideological, between hardware and software technologies which are patented, and those which are not. Yet the BSA divisively implies there is a difference between conventional and accepted business methods, which they associate with patents, and un-businesslike non-commercial organisations, which they associate with patent-free technology. Given the increasing prevalence of Free Software in Europe's IT service market, such a claim is plainly false.

It really does make you wonder why anyone takes the BSA seriously these days, as it's even more ridiculous and unbelievable than your average protectionist industry trade association. What's amazing is that the folks at the BSA actually think such buffoonery is a good idea, when all it's really continued to do is sap the organization of pretty much any credibility.

Filed Under: commercial, free, intellectual property, software, standards
Companies: bsa

Microsoft Massively Expands Program To Freely License Software To Nonprofits In Countries With Authoritarian Regimes

from the about-time dept

We recently wrote about reports that Microsoft was often seen as being complicit in helping the Russian government crack down on dissenting nonprofit groups by charging them with copyright infringement for software (even when some of the organizations claimed to be fully licensed). While we had reported on similar accusations in the past, it seems that this time, Microsoft finally realized it needed to do something. In backing down, the company put forth a surprisingly heartfelt and honest apology, and insisted it would move to stop such activities from happening in Russia.

It appears the company is now going even further, announcing that nonprofit groups in 12 countries known for having governments that lean towards authoritarian, are automatically covered for free licenses should they want them. While it is a bit late, kudos to Microsoft for at least stepping up now that the company is more aware of how "copyright infringement" is being used to suppress free speech and government criticism.

Filed Under: copyright, free speech, russia, software
Companies: microsoft

Canadian Court Says Amazon's One-Click Patent Should Be Allowed

from the one-click-to-patent-insanity dept

Ah, Canada. We thought you were so reasonable last year when your Patent Appeal Board rejected Amazon's one-click patent north of the border, and said that it wasn't in favor of either software or business method patents, stating:

"since patenting business methods would involve a radical departure from the traditional patent regime, and since the patentability of such methods is a highly contentious matter, clear and unequivocal legislation is required for business methods to be patentable."

Of course, Amazon appealed, but who would go against such a reasonable argument? The Canadian courts apparently. A Federal court judge in Canada has ruled that the one-click patent should be allowed, as should business method patents. Apparently, someone hasn't been paying attention to the disaster that is business method patents south of the Canadian border. While the judge quotes liberally from patent laws around the world, he does not seem to take into account how much damage such patents do. It's a shame. Of course, the real shame here is Amazon's decision to fight for what it knows is a ridiculous patent that should not exist. It's sad. The company has the opportunity to be a real leader in condemning bad patents, but instead seems to want to expand the concept of bad patents to other countries.

Filed Under: business methods, business models, canada, one-click, patents, software
Companies: amazon

Red Hat Settles Patent Case With Acacia... But Won't Share The Details

from the too-bad dept

Of the software companies out there, Red Hat has been the most aggressive in fighting against software patents. It's stood up on principle, and earlier this year even won a lawsuit from one of Acacia's many, many shell companies (and it won in East Texas too, making it that much more impressive). However, Slashdot points us to the news that, in another lawsuit involving another Acacia shell company (this time, called Software Tree) it looks like Red Hat has settled -- and, unfortunately, it's keeping pretty quiet about what happened. I'm sure that's part of the terms that Acacia negotiated (patent hoarders never want the details of settlements released), but it's unfortunate, because it leaves everyone else in the dark, and lets Acacia continue to shake down others with this patent. The patent in question (6,163,776) covers "System and method for exchanging data and commands between an object oriented system and a relational system," because, you know, without patents, no one would have ever figured that out.

Filed Under: patents, settlements, software
Companies: acacia, red hat

If The BSA Is So Sure Companies Would Pay For Software, Why Did It Use Free Webserver Software?

from the well,-look-at-that dept

We recently did our latest debunking of the BSA's latest laughable report on "piracy" of software and its impact on the economy and jobs. We have to do this every few months, as the BSA continues to trot out the same laughable and debunked analysis, including the flat-out ridiculous idea that every unauthorized copy is a $1 for $1 lost sale. A few years ago, when a BSA VP and IDC VP called me up to defend the report, they insisted that "their research" showed the $1 to $1 ratio was pretty accurate, insisting that companies who need software really want proprietary software, and that open source or other alternatives generally aren't what they're looking for.

Of course, most people know better than this, but a recent Matt Asay column highlights how more and more of the world moves to open source and cloud-based solutions could seriously change that equation. In it, there's a lovely tidbit about how much the BSA itself doesn't seem to believe its own claims about open source software -- or, even that good software is worth paying a license for:

Ironically, the BSA has discovered one of the few ways to "pirate" open-source software, and is apparently an advocate. The BSA's website apparently runs on Red Hat Enterprise Linux clone CentOS. Surely a license-respecting organization like the BSA would want to pay full freight for a RHEL license rather than undermine Red Hat by choosing CentOS? Evidently not.

Yes, so even in a case where the BSA itself can pay for a nice open source license, it chose to go with a free version instead. This is, of course, perfectly legal. But it seems pretty ridiculous that the BSA would claim that others wouldn't do what it seems to have done. That said, as you look into the details, it appears that the main BSA site does, in fact, run on Microsoft IIS (I'm sure with a nice license from BSA favorite member, Microsoft). The site that was claimed to be on CentOS was a separate "educational" (and I use that term loosely) site called b4usurf.org (gotta love the attempt to sound relevant using txt-spk). Oddly, I can't find any info on what that site now runs on Netcraft. Anyone have a better way of figuring this out?

Filed Under: free, licensing, open source, software
Companies: bsa

Vast Majority Of Software Patents In Lawsuits Lose

from the as-you-suspected,-they're-really-bad dept

Well, this is interesting (and quite surprising). A new study by John Allison, Mark Lemley, Joshua Walker looked at highly litigated patents to see how well they did in court, and came up with some really unexpected findings. The summary of the findings are as follows:

We designed this study to explore the effects of repeat play on litigation behavior, contributing to a literature on the economics of civil procedure as well as the substance of patent law. But what we found was dramatic and unexpected: The patents and patentees that occupy the most time and attention in court and in public policy debates -- the very patents that economists consider the most valuable -- are astonishingly weak. Non-practicing entities and software patentees almost never win their cases. That may be a good thing, if you believe that most software patents are bad or that NPEs are bad for society. But it certainly means that the patent system is wasting more of its time than expected dealing with weak patents. And it also suggests that both our measures of patent value and our theories of litigation behavior need some serious reconsideration.

Digging deeper into the report, it looks at and tests a variety of different concepts around patents and litigation. In theory, if a patent is used in multiple patent cases, you tend to think that it must be a pretty solid patent, and one that has been vetted plenty of times. And yet, when the researchers looked at the 106 patents that have been involved in eight or more lawsuits since 2000, they found that the patent holder wins such cases only 10.7% of the time. For patents that have only been brought to litigation once, the patent holder wins 47.3% of the time -- an astounding difference.

My first thought on hearing such numbers is that the data could be misleading in that many companies may be a lot more willing to settle when sued by a serial patent litigator. However, the researchers tested that and while they did find that a higher percentage of those sued will settle in cases involving a "most-litigated" patent as compared to a "once-litigated" patent, the higher settlement rates don't offset the huge difference in win rates.

The study also looked at the differences in entities doing the suing as well as the types of patents involved in the lawsuits. And, once again, there are some interesting finding. Patents that initially came from big companies "represent only 22.4% of the assertions in the most-litigated group." I don't find this all that surprising. Big companies tend not to be serial patent litigators over the same patent. There certainly are some exceptions, but in general, it does seem like big companies tend to view proactively suing for patent infringement as a "last resort." However, patent hoarders and non-practicing entities who base their entire business model on demanding money from patents are probably a lot more likely to sue. But where it gets interesting, is the fact that they're also a lot more likely to lose their patent infringement lawsuits: only 12.3% of "small entity plaintiffs" win their lawsuits (excluding default judgments).

Of course, size doesn't necessarily indicate whether or not the company is a "product" company or a non-practicing entity (commonly called a patent troll). In the "most-litigated" patent group, not surprisingly only 16.7% of the assertions came from actual product companies -- meaning a whopping 83.3% of the assertions in the most-litigated group came from patent trolls. So how do the trolls do? Not so well. If they fail to settle, patent trolls win just 8% of their lawsuits (9.2% if you include default judgments). For comparison's sake, companies that actually make stuff, win 40% of their cases and 50% if you include defaults. It certainly sounds like juries are a lot more sympathetic to companies that actually make stuff.

Of course, it's important to point out that patent lawsuits almost always settle. The settlement rates tend to hover near 90%, because the cost of litigation is often so high that it's cheaper to settle. But, if anything, this data suggests that patent trolls probably are better off not pursuing the lawsuit if they can't get the companies they sue to settle (and, correspondingly, it may make more sense for those sued to actually fight back).

The final part of the study breaks down the different patents by type -- and provides some interesting info for those who dislike software patents. Once again, litigating frequently over a software patent tends to be a loser's game -- even though software patents were 93.7% of the most-litigated assertions. And yet... software patent litigants in the most-litigated group only win 12.9% (with or without default judgments) of the time. Non-software patents, however, win at much higher rates: 37.1% without defaults and 51.10% if you include defaults. In other words, the feeling most people have is probably true: the software patents that we see in various lawsuits tend to be of dreadful quality, and the results of the lawsuits support that view.

The authors do try to analyze the data -- and one key missing data set in all this are licensing deals outside of settlements. Oftentimes, lawsuits won't even be filed if companies realize it's cheaper to pay up on the threat of litigation. From there, the authors note that once a patent has a few licensing agreements, the patent holder will probably be a lot less interested in suing anyone else, because if the patent gets invalidated, that patent holder will likely lose the licensing revenue stream.

As for what this means for the overall patent system, the authors note two possible (contradicting) interpretations, and then split the difference:

On the one hand, it should give substantial ammunition to those who argue against software patents and who want to restrain patent trolls. If software and NPE patents are overwhelmingly bad -- either invalid or overclaimed -- the social benefit of allowing them may well be outweighed by the harm they cause. At the same time, however, one could read this evidence as proof that the system is working -- that the bad patents are being weeded out of the system and are not stifling innovation.

The truth probably lies somewhere in between. The latter claim -- that the widespread invalidation of software and NPE-owned patents shows that the system is working -- seems altogether too facile. After all, roughly 90% of those cases settled without judgment. While those settlements are confidential, we expect that the vast majority involved some sort of payment to the patent plaintiff -- a payment that the outcomes data suggests might represent not the acquisition of real legal rights but a nuisance settlement over a likely-invalid patent. At the same time, the fact that these patents are so weak should -- at least once exposed -- limit the value of those settlements, and quiet concerns that software or troll patentees will actually shut down very many innovative products.

I'd argue that when you include license agreements based on threats of legal action along with all the settlements it helps to dilute the value of the data even more, to suggest the idea that the "system is working" is false. The number of companies who pay up without a legal ruling is many, many, many times the number who actually go through to the end of a lawsuit. And, while the authors hope that exposing this data might convince more companies to push back against weak patents, I'm not convinced that will actually happen. It's still going to be cheaper for many companies to just take out a license or to settle than to fight. And, finally, as the authors point out later in the report, when you see the massive size of a few patent awards, the patent holders may view them as lottery tickets. Quoting the paper:

If the payoff for victory at the end of the day is $1 billion, a 10% chance of success doesn't sound so bad.

On the whole, the results certainly seem to suggest that patent trolls with software patents do very much view the system as a lottery ticket, and they're willing to use really weak patents to try to win that prize. That is not at all what the patent system is designed to do, but it's how the incentives have been structured -- and that seems like a pretty big problem that isn't solved just by showing how many of these lawsuits fail. The amount of time and resources wasted on those lawsuits, as well as the number of companies who pay up without completing a lawsuit, suggest that there is still a major problem to be dealt with.

Filed Under: lawsuits, patents, software

BSA Again Lies With Stats; IDC Should Be Ashamed To Put Its Name On Pure Nonsense

from the not-again dept

For nearly a decade now, research firm IDC has done research for the Business Software Association (BSA), which BSA has long used to purposely mislead the press and politicians. Back in 2004, at least, the research at IDC was willing to admit that the BSA was being purposely misleading with its report, and yet it's continued to do the research and stand by it year in, year out -- despite the continued efforts to use the stats to flat out lie. As far as I'm concerned, this makes all IDC research totally suspect. Until IDC steps up and admits that the research it has put together does not say what the BSA claims it does, IDC has to be considered a joke.

This year's study, of course, was no different than in past years, so we'll point you once again to the explanation we put together in 2008 of how the BSA blatantly misleads with statistics.

Beyond the basic report, though, the BSA likes to dribble out other ridiculous claims based on the same report from May. The latest, is the blatantly false and simply laughable claim that "reducing software piracy would inject $142 billion into the global economy and create nearly 500,000 new jobs. This is wrong. Not only is it wrong, it's been widely debunked a variety of times. There are two key (but related) problems. The first, is that IDC/BSA count "ripple effects," which they don't seem to realize mean double, triple or quadruple counting the same dollars. But, more importantly, they only count those "ripple effects" in one direction. That is, they look at how they believe software companies would make more money (and then hire more people and pay more taxes) if there was less software piracy, but they don't even pretend to cover how paying for such software would mean tons of others would employ fewer people and pay less in taxes.

And, if you dig into the details, as Glyn Moody recently did (amusingly, after having to dig through many, many different reports to finally discover IDC's questionable methodology), you realize that reducing software piracy actually would probably do more harm than good for jobs and tax revenue in many areas:

One thing that is always omitted in these analyses is the fact that the money *not* paid for software licenses does not disappear, but is almost certainly spent elsewhere in the economy (I doubt whether people are banking all these "savings" that they are not even aware of.) As a result, it too creates jobs, local revenues and taxes.

Put another way, if people had to pay for their unlicensed copies of software, they would need to find the money by reducing their expenditure in other sectors. So in looking at the possible benefit of moving people to licensed copies of software, it is also necessary to take into account the *losses* that would accrue by eliminating these other economic inputs.

One important factor is that proprietary software is mainly produced by US companies. So moving to licensed software will tend to move profits and jobs *out* of local, non-US economies. Taxes may be paid on that licensed software, but remember that Microsoft, for example, minimises its tax bill in most European countries by locating its EU headquarters in Ireland, which has a particularly low corporate tax rate....

So in addition to causing money to be taken out of the country (and hence the local economy), licensed software would probably also bring in far less tax than money previously spent on local goods and services, which would generally pay the full local taxes.

Another factor that would tend to exacerbate these problems is that software has generally had a higher profit margin than most other kinds of goods: this means any switching from buying non-software goods locally to buying licensed copies of software would reduce the amount represented by costs (because the price is fixed and profits are now higher). So even if these were mostly incurred locally, switching from unlicensed to licensed copies would still represent a net loss for the local economy.

Similarly, it is probably the case that those working in the IT industry earn more than those in other sectors of the economy, and so switching a given amount of money from industries with lower pay to IT, with its higher wages, would again *reduce* the overall number of jobs, not increase them, as the report claims.

Of course, a bunch of folks have been pointing out these kinds of problems with IDC's research methods and with the BSA's claims about them for the better part of a decade. At what point do people start actually holding IDC and the BSA accountable for blatantly lying with stats?

Filed Under: jobs, piracy, software, stats
Companies: bsa, idc