Australian Official Admits That Of Course Murdoch Came Up With Link Tax, But Insists The Bill Is Not A Favor To News Corp.

from the did-he-just-say-that-out-loud? dept

Earlier this year, we wrote a lot about the ridiculous anti-open internet Australian link tax that is now being pushed elsewhere around the globe. Anyone paying attention to the details knew that it was extreme crony capitalism at work, with the government forcing one set of massive companies (namely, Facebook and Google) to pay another set of massive companies, led by Rupert Murdoch's News Corp and Nine. For all the talk of how big tech companies are "monopolies," if you look at Australia's news companies, it's considered among the most concentrated in the world, and has been quite profitable for the likes of Murodch.

And while defenders of the bill insist (incorrectly) that the bill is not a link tax, but is merely a "competition bill" to help those few giant newspaper companies "better negotiate" with the giant internet companies, that's bullshit for two reasons. First, it's a "negotiation" to pay for links, and no one should ever have to pay to link to some other site. That's just fundamentally against the concept of an open internet. Second, it's no real negotiation because if Facebook and Google fail to agree to a deal that satisfies the Aussie media bosses, the government can step in and force an agreement on them.

Lots of people -- including those in Australia -- noted that this all seemed like a scheme to make Rupert Murdoch richer. And now the Australian competition official, Rod Sims, who "oversaw drafting of the law" has flat out admitted that the whole thing was Murdoch's idea in the first place, though he insists it's "extremely strange" that anyone thinks it's a favor to Murdoch.

Australian Competition and Consumer Commission (ACCC) chair Rod Sims, who oversaw drafting of the law, acknowledged the negotiating system was proposed by the Rupert Murdoch-controlled publisher but said all major media operators in the country supported it.

I mean, yeah, of course they supported it. Because it's the government forcing other companies to give them free money in response to their own failures to innovate. Why wouldn't they support it?

It is true that Google and Facebook are bigger than News Corp., which is the point that Sims really really wants to focus on. But that doesn't even touch on whether or not it's appropriate to force one set of companies to pay for something that should be free (linking), to another set of companies that are still making a shit ton of money on their own.

"News Corp is 1% the size of Google. News Corp is one of four main media companies (in Australia). It's very likely not the one with the biggest reach. I just think this is a line put out by Google," Sims added.

"There were many people giving us ideas. News Corp was but one. This whole notion that this is about News Corp is extremely strange."

You literally just admitted that the idea came from News Corp! It wasn't "a line put out by Google." It was you, who just admitted what was obvious to anyone who's been paying attention to Murdoch for years. After all, Murdoch has been publishing op-eds (in his own company's publications, of course), demanding Facebook and Google pay him for years. It's not like he made it a secret.

Can you make an argument that Google and Facebook are too powerful? Sure, absolutely. But, can you then make the argument that these companies which found a way to build internet services billions of people like... should be forced to pay for Murdoch's brand of propaganda, despite there being no fundamental reason that he deserves any of that money? Not unless you want people to think you're in Murdoch's pocket.

Filed Under: australia, competition, link tax, news organizations, rod sims, rupert murdoch
Companies: facebook, google, news corp., nine

Daily Deal: The World Traveler Bundle Featuring Rosetta Stone

from the good-deals-on-cool-stuff dept

The World Traveler Bundle has what you need to help you get ready for your next grand adventure. With its intuitive, immersive training method, Rosetta Stone will have you reading, writing, and speaking new languages like a natural in no time, and with this bundle you get a lifetime subscription. You also receive a 3 year subscription to Matt's Flights, a site dedicated to finding the cheapest flights anywhere. The third part of the bundle is a course that will teach you how to travel the world on a shoestring budget. The bundle is on sale for $199. We're also having a sitewide Father's Day sale. Use the code WELOVEDAD to get 20% off.

Note: The Techdirt Deals Store is powered and curated by StackCommerce. A portion of all sales from Techdirt Deals helps support Techdirt. The products featured do not reflect endorsements by our editorial team.

Filed Under: daily deal

Canadian Privacy Commissioner Says RCMP Broke The Law By Doing Business With Clearview

from the nice-work,-law-enforcers dept

Since its unceremonious exposure by the New York Times, internet-scraping facial recognition tech company Clearview has been the subject of nothing but negative press, lawsuits, and law enforcement denials of its self-proclaimed crime fighting abilities. Apparently to the surprise of Clearview, few people were receptive to the idea of having their personal info scraped from the web by the company and served up to law enforcement officers, private companies security personnel, and any billionaire wondering about what to throw their money at.

The dubious legality of its efforts has seen Clearview exit certain markets in the United States. It has also exited an entire nation, pulling the plug in Canada while under investigation by the country's Privacy Commissioner.

Earlier this year, the Privacy Commissioner released part of its report, finding that Clearview's offering was mass surveillance that was illegal under federal and provincial laws. The second half of its investigation deals with the Royal Canadian Mounted Police and its use of Clearview during investigations. The Commissioner's conclusion? The RCMP also broke the law.

[O]ur most recent investigation has concluded that the RCMP contravened the federal public sector law, the Privacy Act, when it collected information from Clearview. In our view, a government institution simply cannot collect personal information from a third party agent if that third party’s collection was unlawful in the first place.

According to the Privacy Commissioner, RCMP violated the Privacy Act by using Clearview to search for information about citizens. It doesn't matter that the database used to perform these searches was owned and maintained by a private company. If Clearview violated Canadian laws collecting and providing access to this data, the RCMP similarly broke the law when it accessed it.

The Commissioner notes the RCMP still does not believe it did anything wrong.

The RCMP is no longer using Clearview AI as the company ceased to offer its services in Canada in July 2020 in the wake of our then ongoing investigation. However, we remain concerned that the RCMP did not agree with our conclusion that it contravened the Privacy Act. The RCMP argued section 4 of the Privacy Act does not expressly impose a duty to confirm the legal basis for the collection of personal information by its private sector partners. Requiring the RCMP to ensure a third party’s legal compliance with PIPEDA would create an unreasonable obligation on the RCMP, the RCMP maintained.

That's a pretty interesting counterpoint by the RCMP. It basically argues it should be able to do business with outside vendors that break the law. Despite its spicy take on the legalities of paying third parties to break the law for it, the RCMP has agreed to revamp its policies and procedures to provide more control and direct oversight of tech use by its investigators and officers.

But if the RCMP was so sure it was in the right, one has to wonder why it attempted to downplay its use of Clearview to mislead the Commission's investigators.

We were also concerned that the RCMP at first erroneously told our office it was not using Clearview AI. When it later acknowledged its use, it said publicly it had only used the company’s technology in a limited way, primarily for identifying, locating and rescuing children who have been, or are, victims of online sexual abuse.

However, our investigation found the RCMP did not satisfactorily account for the vast majority of the searches it made.

These don't appear to be the actions of an agency that firmly believes it's in the clear, legally speaking. The most generous take is that the RCMP wasn't tracking use of Clearview by its employees, which is its own problem and one hopefully addressed by the recommendations of the Commission. But more realistically it suggests the RCMP knew it probably shouldn't be using the highly questionable facial recognition product and tried to cover up how often it had actually been used.

Most damning of all is the undeniable fact that the RCMP continued to use Clearview while it was under investigation by the government. It only stopped because Clearview decided to exit the Canadian market rather than risk any additional scrutiny of its software and site scraping efforts.  

Filed Under: canada, facial recognition, privacy, rcmp
Companies: clearview

Recent Antitrust Push Is Weirdly Narrow, Pretends Telecom And Banking Don't Exist

from the do-not-pass-go,-do-not-collect-$200 dept

As you've probably noticed, there's a big new "antitrust" push afoot in DC. As you may have also noticed, many of these proposals don't actually do a whole lot to reform US antitrust or monopoly problems in any broad way. Scholars for decades have warned that US antitrust enforcement has become feckless, and that we need to rethink how we approach antitrust in a world in which companies often seem to have more and more power over our lives.

The U.S. is dominated by anticompetitive giants in banking, telecom, insurance, health care, air travel, and countless other sectors. And generally, we've historically encouraged them by underfunding our regulators, steadily weakening antitrust enforcement, rubber stamping merger after terrible merger, and replacing competent Judges with bobble head dolls. All under the pretense that doing anything else would be disastrous, while clinging tightly to a consumer welfare standard that sometimes seemed incapable of addressing modern market, labor, and consumer harms.

That's a lot to fix, but with this vast interconnected dysfunction being so profitable, and with so many cross-industry corporations (with bottomless budgets and immense lobbying control over Congress) opposed to real reform and oversight, that doesn't seem likely to actually happen. So instead we've been getting something else. A very selective new wave of "antitrust reform" that focuses exclusively "big tech," while leaving sectors like banking or "big telecom" free to run amok. Despite evidence that those latter sectors actually do things that harm consumers (the supposed standard for antitrust).

The movement to rein in big tech and shore up antitrust enforcement certainly has valid components, based on justified anger at years of dodgy business practices. But this anger has been proven to be exploitable by folks like News Corporation and AT&T. Both companies are looking to saddle their Silicon Valley competitors in online advertising with rules that don't apply to their own businesses, while simultaneously demolishing constraints and oversight of their own sectors (see: net neutrality, the dismantling of FCC authority, or the steady erosion of media consolidation rules protecting small businesses).

Enter Rep. David Cicilline, in charge of the House Judiciary Committee's antitrust panel. He says Democrats have introduced a suite of different antitrust bills in the belief it will keep "big tech" on its heels, making it harder to defeat one centralized bill. He claims that by narrowly targeting specific issues of antitrust it will be easier to get the 10 Republican votes needed to pass the bills with a 60 vote majority in the Senate. But so far there's no indication the obstructionist GOP, whose interest in "antitrust reform" has generally been of the performative populism variety, has any interest in helping out (last I saw the proposals had about 3 GOP votes in the House, just enough to market the effort as "bipartisan").

Meanwhile, many of the bills are oddly selective in what they deem to be a "dominant platform." The Platform Competition and Opportunity Act (pdf), for example, greatly restricts what constitutes a monopolistic offender, making sure to carve out exceptions for telecom giants, Mastercard, VISA, and Walmart. The bill bans companies from owning or operating a business that "presents a clear conflict of interest," but only if the company in question has 50 million monthly active U.S. users and a market cap of over $600 billion:

"...is owned or controlled by a person with net annual sales, or a market capitalization greater than $600,000,000,000, adjusted for inflation on the basis of the Consumer Price Index, at the time of the Commission’s or the Department of Justice’s designation under sec13 tion 4(a) or any of the two years preceding that time, or at any time in the 2 years preceding the filing of a complaint for an alleged violation of this Act."

Again, this very specific restriction omits a lot of companies that are engaging in the same kind of anticompetitive behavior, including many that see overlap in markets dominated by technology giants (telecom). It's also just kind of an arbitrary restriction given that what others value you at isn't necessarily what determines whether or not you're engaging in anticompetitive behavior. The actual, anticompetitive behavior does.

But just looking at the $600 billion valuation threshold gives a sense of just how this line-drawing happened. Under this definition (including the number of US users), it looks like the law only applies to Apple, Microsoft, Amazon, Google (Alphabet) and Facebook. That's it. It seems notable that companies which are also kinda powerful and dominant, but happen to fall just somewhat beneath the threshold, include Visa, Mastercard, JP Morgan Chase, Bank of America, Walmart, Disney... and Comcast, AT&T, and Verizon. How very, very interesting.

It's hard to argue that different rules should apply to Amazon as compared to Walmart. Or that Comcast, AT&T and Verizon should be spared from such antitrust scrutiny, when their control over some markets is clearly a much larger stranglehold than the five impacted companies. It's almost like these bills are designed to be a performative attack on just one sector while pretending otherwise.

That's not to say that all the proposals in all the bills lack merit or benefit. I think at least one part of the Merger Filing Fee Modernization Act does something important: namely shoring up lagging FTC funding in an era where the agency is being asked to do more and more with a fraction of the staff and resources of their international counterparts. Recall a major reason the telecom lobby neutered net neutrality and FCC oversight is that they knew enforcement responsibilities would fall to an FTC without the resources, staff, or authority to do the job properly.

But given the tight restrictions of most of the proposals, I'm still left wondering just how much input into these bills media/telecom policy and lobbying folks had as authors built in compromises for the sake of "bipartisanship." Telecom giants like AT&T and Comcast have spent the last three or four years successfully convincing many DC policymakers that Silicon Valley giants are the only dominant giants worth worrying about. Rupert Murdoch has been playing similar reindeer games. Pretending "big tech" monopolies are the only monopolies that need immediate fixing benefits both, and exploiting legitimate public anger at big tech isn't particularly hard right now on either side of the aisle.

US Antitrust most definitely needs reform, but it's unlikely we'll obtain it through legislation so compromised for the sake of "bipartisanship" that it views the issue through a pinhole. Or via bills heavily shaped by telecom and media monopolies that want to be excluded from meaningful oversight. The appointment of Lina Khan does suggest a government awakening to the narrowness of the consumer welfare standard in the Amazon era. But like so many issues (climate comes quickly to mind) passing meaningful legislation will first require cleaning up Congressional corruption, and that still seems well over the horizon.

Filed Under: antitrust, banking, big tech, telco, valuation

After Eight Years And Three Reviews Of The Case, Indiana Supreme Court Rules Police Must Return Seized Car To Its Owner

from the thousands-of-dollars-spent-fighting-against-the-public's-interests dept

It's now been eight years since Indiana law enforcement seized Tyson Timbs' Land Rover following his arrest for distributing drugs. In eight years, this case has made multiple visits to the state trial court, the state court of appeals, the state's Supreme Court, and the nation's Supreme Court.

This isn't just due to Timbs' tenacity and his desire to have his car returned. His only car -- worth $35,000 when it was seized -- has been sitting in an impound lot for most of decade, all because of criminal charges that netted Timbs $1,200 in fines and one year of home detention.

No, these multiple trips are due to the state of Indiana attempting to prevent precedent from being set that would prevent it from seizing whatever it wants whenever it wants. Previous rulings found excessive fines -- in this case taking the form of a $35,000 vehicle seizure over $400 of heroin sold to undercover officers -- violate the Eighth Amendment. And these rulings also reminded the state that it had incorporated that part of the US Constitution years ago and couldn't try to ignore it now just because it still wants to avail itself of Benjamins when ringing up people on nickel-and-dime charges.

So, for the third time, the Indiana state Supreme Court is forced to handle the Timbs case because the state has refused to accept every previous ruling that has gone against it, including the one handed down by the US Supreme Court. The opening of the ruling [PDF] expresses some of the court's exasperation with the state's stubbornness.

We chronicle and confront, for the third time, the State’s quest to forfeit Tyson Timbs’s now-famous white Land Rover. And, again, the same overarching question looms: would the forfeiture be constitutional?

Reminiscent of Captain Ahab’s chase of the white whale Moby Dick, this case has wound its way from the trial court all the way to the United States Supreme Court and back again. During the voyage, several points have come to light. First, the vehicle’s forfeiture, due to its punitive nature, is subject to the Eighth Amendment’s protection against excessive fines. Next, to stay within the limits of the Excessive Fines Clause, the forfeiture of Timbs’s vehicle must meet two requirements: instrumentality and proportionality. And, finally, the forfeiture falls within the instrumentality limit because the vehicle was the actual means by which Timbs committed the underlying drug offense.

All of these questions have been capably handled at each step of this long, laborious process. The problem is the state doesn't like the answers it's been getting. And the state Supreme Court doesn't appear to like the state's refusal to listen. There are some facts to consider, but as far as the state's top court is concerned, they were answered amply by the lower court.

[U]ntil now, the proportionality inquiry remained unresolved—that is, was the harshness of the Land Rover’s forfeiture grossly disproportionate to the gravity of Timbs’s dealing crime and his culpability for the vehicle’s misuse? The State not only urges us to answer that question in the negative, but it also requests that we wholly abandon the proportionality framework from State v. Timbs, 134 N.E.3d 12, 35–39 (Ind. 2019). Today, we reject the State’s request to overturn precedent, as there is no compelling reason to deviate from stare decisis and the law of the case; and we conclude that Timbs met his burden to show gross disproportionality, rendering the Land Rover’s forfeiture unconstitutional.

The key is the excessive fines part of the Eighth Amendment. The courts must decide whether the seizure was proportionate. The lower court -- after hearing from witnesses on Timbs' behalf (the state decided not to call any of its own) -- made the right call by weighing the cost against the crime. The seizure of Timbs' only vehicle didn't serve any greater public interest. All it did was enrich the state at Timbs' expense.

[C]ontrary to the State’s position, we conclude that the $35,000 market value of the vehicle and the other sanctions imposed on Timbs point to the punitive, rather than remedial, nature of the forfeiture. As Timbs II explained, it’s appropriate to evaluate the market value of the forfeiture relative to the owner’s economic means—because “taking away the same piece of property from a billionaire and from someone who owns nothing” do not reflect equal punishments. 134 N.E.3d at 36. And, here, taking away a $35,000 asset from someone who owned nothing else was significantly punitive. Likewise, imposing the forfeiture on top of other sanctions—sanctions that included six years of restricted liberty as well as $1,200 in fees and costs -- shows that the vehicle's seizure was not for remedial purposes.

Finally this comes to an end, years after it should have been obvious seizing Timbs' car violated the Eighth Amendment right to be free from excessive fines.

Accordingly, we affirm the trial court; and the seven-plus-year pursuit for the white Land Rover comes to an end.

The state and its law enforcement agencies are now subject to a proportionality test that weighs the severity of the crime against the value of the items seized. If this test stands during criminal asset forfeiture -- the seizures accompanying actual criminal charges -- it needs to be applied to cases where law enforcement can't even be bothered to affect an arrest, much less pursue criminal charges when seizing property. This is good news for Indiana residents. And it has the potential to disrupt forfeiture efforts nationwide.

Filed Under: 8th amendment, asset forfeiture, civil asset forfeiture, due process, illinois, tyson timbs

FBI's Recovery Of Colonial Pipeline Bitcoin Ransom Highlights How The 'Ban Crypto To Stop Ransomware' Cries Were Wrong Again

from the that's-not-how-it-works dept

Last month we highlighted what seemed like a fairly silly Wall Street Journal op-ed arguing that banning cryptocurrency was the best way to stop ransomware, in response (mainly) to the well publicized ransomware attack on Colonial Pipeline, which resulted in the company shutting down the flow of oil while it sorted things out. As we pointed out, not only was the idea of banning cryptocurrency unworkable, it was unlikely to do much to stop ransomware. Unfortunately, it appears that a number of other cryptocurrency haters jumped on this moment to push the idea even further, claiming that "society has a Bitcoin problem."

Of course, part of the key narrative in all of these pieces is that cryptocurrency and Bitcoin in particular, somehow make it easier for criminals to "get away" with these kinds of ransom demands, highlighting that it is somewhat easier to move around large values of Bitcoin than cash. However, as we noted in our original piece, the idea that cryptocurrency allows criminals to "get away" seemed extremely overblown, as we've seen plenty of cases where criminals using cryptocurrency were caught. And, as if to put an exclamation point on all of this, soon after the huge moral panic, the FBI announced that it had recovered over half of the money Colonial Pipeline had paid.

And, as the FBI special agent's affidavit showed, this was done in part by tracking how the money flowed across the public ledger. The NY Times ran an article noting that the FBI's recovery of the money here "upends the idea that Bitcoin is untraceable." A bunch of long time Bitcoin/cryptocurrency followers scoffed at the NY Times article, because they've long known that Bitcoin's public ledger has always made it so that transactions are traceable. But it's actually important for people not deeply in the Bitcoin space to understand this as well. And the problem with so many of the "ransomware is really a cryptocurrency problem" articles, was that they implied otherwise -- that cryptocurrency was somehow totally and completely untraceable.

As the NY Times article explains, what's important here is that it demonstrates that for all the hand wringing about cryptocurrencies and ransomware, the reality is that law enforcement is evolving with the times, and using the same kind of law enforcement detective work it's supposed to use to solve crimes.

Yet for the growing community of cryptocurrency enthusiasts and investors, the fact that federal investigators had tracked the ransom as it moved through at least 23 different electronic accounts belonging to DarkSide, the hacking collective, before accessing one account showed that law enforcement was growing along with the industry.

That’s because the same properties that make cryptocurrencies attractive to cybercriminals — the ability to transfer money instantaneously without a bank’s permission — can be leveraged by law enforcement to track and seize criminals’ funds at the speed of the internet.

That's an important point and one that often gets lost in the FUD surrounding new technologies (such as encryption) that might make law enforcement's job slightly more complex in the short run. But, at the same time, law enforcement needs to learn to adapt, not by undermining these technologies, but understanding how they work, and understanding how to do the actual legwork to trace those abusing the technology for criminal purposes.

So rather than jumping to the conclusion that we need to ban this or that technology because it makes it slightly more challenging for law enforcement, this is actually an example showing how if law enforcement does their job properly, the technology is not the problem.

Filed Under: bitcoin, cryptocurrency, detective work, fbi, law enforcement, ransomeware, recovery
Companies: colonial pipeline

Think Tech Companies Are Too Monopolistic? Then Stop Giving Them Patent Monopolies

from the no-one-to-blame-but-yourself dept

There is a lot of sturm and drang in the halls of government these days about corporate mergers – or, at least, tech company mergers (oddly, this ire doesn't seem to necessarily extend to all mergers). But despite all the gnashing and wailing there's not a lot of understanding of why they happen. Which is strange, because if you think there's a problem, it would help to understand WHY there is a problem, because that understanding will give clues on how to fix it.

So let's think about why a company "merges" with another. I put "merges" in quotes, because usually it boils down to one company buying another – how much of a "merger" it is depends on how similarly positioned the respective companies are and the details of the deal, but regulators today seem most upset about the A part of M&A (acquisition) so let's focus on that aspect. Why would a company want to acquire another?

One big reason relates to patent law. Let's say you're a company with a product, and you want to make that product do something more, or better, or have some new feature that it doesn't already have. You could develop it on your own but (a) that will take time you may not have (ex: the market opening may close before you can get it out the door), (b) money you may not have (ex: you may not have the liquidity needed), or other resources you may not have (ex: you may not have the expertise needed or be able to easily hire it), and (c) even if you had what was needed you may still not be able to develop it on your own because it turns out that someone has already developed the best method, gotten a patent on it, and now they can block anyone else from implementing it with at least the threat of litigation if not also actual litigation.

So the shortest distance between two points for many companies, especially larger tech companies, is often to simply buy the other company that has the missing piece of the technology puzzle they want. This acquisition then does a few things. For one, it gives the purchasing company access to that technology, which means it could potentially produce a better product. Of course, it also gives the company exclusive access to the technology and lets them block anyone else from using it, including their competitors.

In other words, through patent law (and also copyright law, but we'll set that aside for now) we intentionally give companies the power to act like monopolies, even when it's not actually in our interest. So of course we're upset that companies use that power, but the problem is that it's a power we gave them. Splitting them up is not the cure for the problem we created; the only solution is to stop giving them so much monopoly power in the first place.

There are at least two things we should do differently. First, we need to stop giving out so many patents full stop (and we need to stop condemning the people calling for fewer to be issued). Too often these patents are not for actually significant innovations (or innovations at all), and all too often they are on subject matter that should be unpatentable. Every few decades or so the US Supreme Court wakes from its slumber to remind the world that, at least under US law, software is not patentable subject matter. But these decisions haven't stopped people from pursuing, and getting, these sorts of patents. So it's very strange that people wonder why there are so many tech companies with software-driven products that have so much market clout, when it's a power our own USPTO has been purposefully giving them.

But even where patents are issued appropriately, there are still things we can do to mitigate their anti-competitive effects. One of the problems with patents today is how they give patent holders the ability to shut out other users of the technology. That's why patents can have this harmful effect on the marketplace, and it's also what has put modern patent law out-of-step with the authority granted Congress by the Constitution to pass a patent law at all. Congress gets to legislate in this area for the purpose of "promot[ing] the progress" of science and the useful arts, but the reality of today's patent law is that instead of promoting progress it ends up creating huge obstacles to it.

This injunctive power that comes with a patent is also unnecessary to achieve anything that patent law was intended to vindicate. Even accepting as true the idea that innovators need some sort of reward for being the first to innovate something the world would benefit from – beyond, of course, the inherent market advantage that comes from being first – all that means is that if there's some profit to be had from the innovation that the patentholder should get to realize at least some of it. But you don't need the power to shut out all other uses to glean that profit; all you need to do is license it.

Of course, backed with the power to enjoin other uses, license fees today are less about reasonable market rates that provide benefit to everyone: the innovator, the implementer, and the public, which now gets to have more innovation in the marketplace at prices the market can bear. Instead, patent revenue today is more about extortive windfalls. The policy change we need is to switch up that balance. And one way to do that is by replacing the current (and often disproportionate) ability of patentholders to enjoin any uses of their technology with some sort of compulsory license system. A compulsory license system means that patent holders cannot say no to competitors and other innovators who want to use or build on their technologies, either directly, by refusing permission, or indirectly, through excessive license fees. Instead the reward for their patent is the reasonable income returned by the license they must offer.

There are several upsides to changing patent law this way. For one, even if it somehow diminishes the perceived luster of having a patent that would not be a bad thing: as explained before, the landgrab that has been trying to turn every technological improvement, no matter how small, into a powerfully enforceable monopoly has been at the root of much of the anticompetitive behavior regulators now lament, and discouraging it would, on its own, help mitigate those problems. (Constraining the Patent Office so that it also grants fewer patents, especially specious and/or software ones would help as well.)

Secondly, it also means that more people can use the technology, or even build on it. And that's good for society in general. The point of patents is to stimulate that innovation, and this change would do so by clearing the way to it. Furthermore, it would also have the effect of diminishing the monopolistic effects we don't like. Not only would patents now provide less monopoly power, but they would also lessen the incentive companies currently have to acquire other companies in order to horde more of it.

Which would also lead to less market consolidation. For instance, smaller companies with a sought after-innovation, instead of being bought out by one company that could now exclusively benefit from it, could stay going concerns and continue to put products in the market. If the innovations were legitimately patentable they could also use those licensing profits to subsidize their own further innovation and product development, and to the extent that fewer innovations may be patentable, the good news is that this reduction in patentability would mean that there would be more technologies available for them to help themselves to in order to compete, even against the companies we currently worry are too big.

Of course, there is a catch: compulsory license systems are great in theory but often cumbersome in practice, and, as we see in the copyright space, they can introduce new, unwelcome, and debilitating costs and regulatory impediments. (We'd also want to keep an eye on where non-practicing entities owning patents should be in this ecosystem, if anywhere.) So this isn't a case of "just add water" where tacking any old compulsory license system onto patent law will automatically make everything sunshine and roses. It will take some extremely careful thinking in how to implement.

In the meantime, however, we are seeing some other industry adaptations, like patent pools, emerge to help mitigate the extortive power of patents. And, in general, the idea of minimizing the exclusionary control of a patent, including through compulsory licenses, is a good one we would be better served to be thinking seriously about, rather than the zealous appetite to break up companies that has currently seized all of our attention. Especially when these proposed break-ups are so arbitrary, unprincipled, and ultimately costly in ways regulators do not seem to be contemplating.

In any case it just doesn't make any sense for the government to on one hand tell companies to go be monopolies and then immediately complain they are being monopolies. The solution to the problem of companies acting monopolistic is to not deliberately give them so much power to be.

Filed Under: big tech, consolidation, monopolies, patents

FBI Ignored Its Own Warrant And Search Policies To Seize Millions From People's Safety Deposit Boxes

from the [hangs-GONE-FISHIN'-sign-in-FBI-office-window] dept

This brief clip from an FBI training film helps explain the actions undertaken by agents during a raid on a secure storage facility earlier this year:

In March of this year, the US Attorney in Los Angeles, California secured an indictment against a secure vault company, alleging the company was engaged in money laundering, drug trafficking, and hiding taxable assets. None of the company's employees or owners were indicted.

FBI agents spent five days turning US Private Vaults upside down. Agents apparently emptied every safety deposit box housed by the business. They did this in complete contradiction of the limits imposed on them by the FBI's own warrant affidavit. Here's Eric Boehm of Reason with some background:

[T]he unsealed warrant authorizing the raid of U.S. Private Vaults granted the FBI permission to seize only the business's computers, money counters, security cameras, and large steel frames that effectively act as bookshelves for the boxes themselves. Per FBI rules, however, the boxes could not be left unsecured in the vault after the raid had been completed, so agents had to take them into custody too.

The FBI could have taken custody of the boxes without opening them and sought warrants for those implicated by the investigation. Instead, the FBI agents emptied the boxes while still on the premises, engaging in dozens of searches not authorized by any warrant.

Here's what the FBI said it would do in its warrant request:

If you can't see the picture, the relevant part of the sworn statement says:

This warrant does not authorize a criminal search or seizure of the safety deposit boxes. In seizing the nests of safety deposit boxes, agents shall follow their written inventory policies to protect their agencies and the contents of the boxes. Also in accordance with their written policies, agents shall inspect the contents of the boxes in an effort to identify their owners in order to notify them so that they can claim their property.

And the agents weren't supposed to empty the boxes and catalog the contents. This is spelled out explicitly in the FBI written policies.

The inspection should extend no further than necessary to determine ownership.

So, permission was given to look in the boxes for anything that might identify the owners so they could come get their stuff from the FBI. But instead of doing that, agents took everything from the boxes and started forfeiture proceedings -- all without determining who owned what or providing any evidence at all that the items found in the nearly 1,000 boxes were obtained illicitly. Indeed, no customers of US Private Vaults have been accused of any criminal activity.

Here's what's happening now, in apparent direct contradiction of the search warrant's limits and the FBI's own policies.

[T]he FBI is now trying to confiscate $86 million in cash and millions of dollars more in jewelry and other valuables that agents found in 369 of the boxes.

Prosecutors claim the forfeiture is justified because the unnamed box holders were engaged in criminal activity. They have disclosed no evidence to support the allegation.

[...]

Beyond the $86 million in cash, the FBI is seeking to confiscate thousands of gold and silver bars, Patek Philippe and Rolex watches, and gem-studded earrings, bracelets and necklaces, many of them in felt or velvet pouches. The FBI also wants to take a box holder’s $1.3 million in poker chips from the Aria casino in Las Vegas.

The items the government claims -- without facts in evidence -- are the result of criminal activity includes unemployed food service worker's life savings: $57,000 he obtained from lawsuit settlements stemming from a car accident in which he suffered a spinal injury and a successful claim against a landlord for chronic housing code violations.

Another US Private Vault's customer (being represented, like the man above, by the Institute for Justice) lost her life savings to the FBI's actions, a total of $80,000 that is obviously important to the 80-year-old woman who presumably wasn't participating in drug dealing and money laundering. Contrary to the warrant and FBI guidelines, agents took everything in her safety deposit box even though they found identifying information as soon as they opened the box. Recordings of the raid show an agent holding her ID up to the camera before proceeding to go through the box, opening sealed envelopes and emptying their contents into another container.

It wasn't just cash, coins, and other valuables being seized by agents. The take also included personal items belonging to Paul and Jennifer Snitko. This is what the FBI -- until goaded into being a little less assholish by negative press and a handful of lawsuits -- considered to be evidence of criminal activity.

In the Snitkos' box, along with the baptismal certificate: a pilot's log, heirloom jewelry, collectible coins, a marriage certificate, a birth certificate.

The FBI recently returned these items to the Snitkos, making them one of the lucky few to have their property returned. But those with larger quantities of valuable items or cash are probably going to have to sue to get their items returned. The FBI says it's only willing to return items from about a quarter of the boxes its agents searched and seized without a warrant.

The FBI has returned the contents of about 75 boxes and plans to give back the items found in at least 175 more, because there was no evidence of criminality, Mrozek said. Federal agents have not determined who owns what was stored in many other boxes.

That's the latest from Thomas Mrozek, the spokesperson for the Los Angeles US Attorney's office. The FBI and federal prosecutors are hoping to take ownership of as much as possible from the remaining boxes, all of which is detailed in the very long inventory list compiled by the agents who performed the raid.

This is extremely ugly. Unfortunately, the use of civil forfeiture shifts some of the burden to those whose assets were seized. The government doesn't really have to do anything. If claimants don't come forward before June 24, those unclaimed assets will become government property, whether or not they had anything to do with criminal activity.

Those that do file a claim will have to deal with a convoluted and expensive process that helps ensure the government will still get to keep most of what it seized under the guise of performing an inventory. The burden of proof for the government is extremely low. And it's apparently telling judges a dog gave agents permission to engage in a bunch of warrantless seizures.

Drug-sniffing dogs at the store during the raid alerted to traces of drugs on most of the money found in boxes, FBI agent Justin Palmerton claimed in a court statement. The boxes containing that cash are subject to criminal investigation, he said.

This claim is stupid as fuck and hopefully won't be given any respect from judges that are subjected to it. Most currency contains trace amounts of drugs. That's common knowledge. But the FBI isn't raiding banks just because a dog alerted near the ATM. This is a completely disingenuous claim and, by itself, isn't evidence of anything more than the FBI's willingness to use literally anything to justify its warrantless acquisition of other people's property.

Filed Under: 4th amendment, asset forfeiture, asset seizure, civil asset forfeiture, doj, fbi
Companies: us private vaults

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