IAB Takes On FTC Over Silly Blogger Disclosure Rules

from the good-for-them dept

While more disclosure is generally a good thing, the FTC's new guidelines for blogging disclosure have some pretty massive problems, and probably aren't legal. As more and more people are recognizing this -- and interviews with the FTC folks in charge of this suggest they either haven't put very much thought into this issue or they don't quite know how the world works outside of their government cocoon -- the backlash is growing. Now, the Internet Advertising Bureau (IAB) has stepped in with quite the open letter to the FTC, asking them to scrap the rules, while noting (snarkily) how impossible they are to follow, in practice:

So there I was last Saturday, about to send out on my Twitter feed -- which automatically updates my Facebook page and links to my personal blog -- a photograph of this wonderful baked halibut dish I'd just made as a surprise for my wife. I was in the middle of typing a rave review of the recipe, which I'd pulled from my favorite cookbook, Delicioso! The Regional Cooking of Spain by Penelope Casas. But before I could press the "post" button, I stopped and canceled the whole thing.

I remembered that the book was a freebie, sent to me by an editor at the Alfred A. Knopf publishing house 13 years ago. And I didn't want you guys to haul me into court and fine me for violating the rules you've just promulgated to muzzle social media.

While this may seem silly, it really does highlight the problems with the FTC's rules. They're totally unclear and absolutely could concern things like this. Getting a free book here or there happens all the time -- and the FTC actually claimed that if people don't return them, then they may face sanctions. That's ridiculous. Last month, we ran a fun contest for people to win free copies of a Kevin Smith book. If the winners from our comments mention that book anywhere online, do they need to mention they got the book for free? If they mention it to a friend, do they need to do the same thing? Because most of the time when posting stuff online, people really are just talking to their friends.

Again, it's not clear why people can't just sort this out themselves. People who post bogus reviews of things because someone pays them to, or because of something "free," are going to get called out on it eventually and lose their credibility. When people talk amongst friends, they don't reveal where they got the products they talk about, or if they happened to get a promotional sample -- and that's fine. While you can understand where the FTC is coming from, it really has gone overboard with these rules.

Filed Under: blogging, disclosure, free speech, ftc, liability, section 230
Companies: ftc, iab

More Problems With The FTC's New Disclosure Rules: Free Speech And Liability Problems

from the disclose-everything dept

I've already noted my general problems the FTC's new disclosure rules, but as others look into the details, the worse they seem and the more you realize the unintended consequences may be pretty bad. Jeff Jarvis makes some key points concerning how this could be seen as a restriction on free speech. And that's because the FTC seems to be viewing blog posts as if they are media, rather than straightforward communication. As we've pointed out in the past, for many, blogging is often no different than a conversation. It's not journalism. It's not reporting. It's having a discussion with people:

Second, the FTC assumes -- as media people do -- that the internet is a medium. It's not. It's a place where people talk. Most people who blog, as Pew found in a survey a few years ago, don't think they are doing anything remotely connected to journalism. I imagine that virtually no one on Facebook thinks they're making media. They're connecting. They're talking. So for the FTC to go after bloggers and social media -- as they explicitly do -- is the same as sending a government goon into Denny's to listen to the conversations in the corner booth and demand that you disclose that your Uncle Vinnie owns the pizzeria whose product you just endorsed.

As such, you could make a case that the new rules are an unconstitutional law hindering First Amendment guarantees on freedom of speech. As I noted originally, it seems like these things get sorted out in the marketplace of ideas -- whereby those who do something so stupid as to sell their "views" on things face the potential of a substantial loss in credibility. But suddenly demanding people reveal the sourcing of some product they mention in blogs leads to all sorts of silly results, amusingly mocked by Mark Cuban in a blog post, where he wonders what sorts of disclosures he'll have to make if he mentions a breakfast at IHOP where the managers comps the breakfast. And while he's mocking the overall situation, it's not so silly. You shouldn't have to confer with your lawyers to figure out how you mention any particular product, just because you got a freebie or a sample somewhere.

And, what's really scary? It appears that even the FTC isn't sure what the policy actually means, and hasn't thought through any of the unintended consequences or fuzzy borders.

Separately, Eric Goldman highlights another massive problem with the new guidelines that no one else seems to have picked up on yet: that in some cases it's the company providing the product that will be liable -- ridiculously blaming the company if a blogger makes claims about its products that are not true. As Goldman points out, there's no way the FTC would be successful in going after companies for that, as Section 230 clearly would protect the advertiser from bogus statements by someone else. But, even assuming that the FTC never considered the Section 230 issues, why would the FTC ever think it's reasonable to fine an advertiser for statements made by someone else?

Despite tons of feedback and discussion when the FTC first proposed these new rules a few months ago, it really feels like no one at the FTC put much time into actually thinking through what these sorts of rules would actually mean in the real world.

Filed Under: blogging, disclosure, free speech, ftc, liability, section 230
Companies: ftc

Did The FTC's New 'Blogger' Guidelines Just Change The Way All Book/Music Reviews Must Be Conducted?

from the just-wondering dept

A bunch of folks have been sending in the fact that the FTC has (as was widely expected) approved new rules on "endorsements" or "testimonials," including a section on bloggers or "word-of-mouth marketers." The end goal here is definitely admirable, but I question whether or not this ruling really makes sense:

The revised Guides also add new examples to illustrate the long standing principle that "material connections" (sometimes payments or free products) between advertisers and endorsers -- connections that consumers would not expect -- must be disclosed. These examples address what constitutes an endorsement when the message is conveyed by bloggers or other "word-of-mouth" marketers. The revised Guides specify that while decisions will be reached on a case-by-case basis, the post of a blogger who receives cash or in-kind payment to review a product is considered an endorsement. Thus, bloggers who make an endorsement must disclose the material connections they share with the seller of the product or service.

Again, the concept is definitely admirable. There's long been a fear that companies are effectively bribing people with free stuff in order to get good reviews, and the FTC wants people to reveal that info. But... does that really make sense? It seems to me like this could just create a totally unnecessary minefield for anyone who blogs. And why is this focused on bloggers and word-of-mouth marketers? Almost all book and music reviews in the mainstream press involve the books and music being sent for free - and there's never been any question of impartiality of most of those reviews -- but why are they now left out of these rules? Is every blogger who reviews a book going to have to disclose where they got it? What about music? Many music bloggers are sent mp3s by the record labels. Do they need to reveal who sent them stuff? Does that really matter?

The real question, from my standpoint, is whether or not the FTC is really needed here. If someone is constantly blogging positively about stuff they get for free, they put their own credibility at risk, as people realize that the products aren't actually very good. It seems like the type of situation that sorts itself out. Those who are constantly pushing products for questionable reasons hurt themselves and soon no one trusts them. Does the FTC really need to be involved in that process? In the meantime, I'm suddenly glad that we don't do reviews on this site for the most part. I do occasionally mention or review books, but I guess I'll have to mention when I buy those books vs. when I'm sent them for free (it's about 50/50), which seems pretty pointless.

Filed Under: bloggers, disclosure, endorsements, review, testimonials, word of mouth
Companies: ftc

Microsoft Employee Admits That Patent Disclosure Is A Myth

from the and-here-we-go-again dept

Defenders of the patent system quite frequently point out that one of the main benefits (some claim the only benefit) of the patent system is "disclosure." That is, because the patent system requires you to disclose your patent, the patent system is quite helpful in spreading ideas. This is a myth that's easily debunked on a few points. First, it only really makes sense to get patent protection if you know the idea will get disclosed or figured out anyway. In those cases, the disclosure via the patent system is meaningless, since the info would have gotten out anyway. Second, these days, thanks to "willful infringement" tripling the damages you pay, many corporations tell employees not to look at relevant patents, as it only opens up more liability. Third, many patent lawyers are taught to write claims that are as broad and vague as possible while still getting approved. This way, the patent can be construed to cover much more than the actual invention.

Now, Slashdot points us to a Microsoft employee admitting that looking at patents is a total waste because they never actually disclose anything useful:

When using existing libraries, services, tools, and methods from outside Microsoft, we must be respectful of licenses, copyrights, and patents. Generally, you want to carefully research licenses and copyrights (your contact in Legal and Corporate Affairs can help), and never search, view, or speculate about patents. I was confused by this guidance till I wrote and reviewed one of my own patents. The legal claims section -- the only section that counts -- was indecipherable by anyone but a patent attorney. Ignorance is bliss and strongly recommended when it comes to patents.

Of course, technically, a patent is supposed to be written so that someone skilled in the art can replicate the invention from the patent alone. But, when even patent holders can't understand their own patents, it's quite clear that reality doesn't match up with the theory here. So, the next time you hear a patent system defender claiming the importance of disclosure, it might be worth pointing out that one of the biggest patent holding companies in the world instructs its own employees to ignore patents, because you can't actually learn anything from them in the first place.

Filed Under: disclosure, myth, patents
Companies: microsoft

Judge Still Keeps MIT Students Gagged Over Subway Hacking Presentation

from the keep-quiet dept

The EFF tried to get the gag order lifted off the three MIT students who had planned a presentation on how Boston's subway system was vulnerable to some hacks. However, a judge has left the gag order in place, saying that it will be discussed at a hearing next Tuesday. He also ordered the students to hand over more information.

There's been a long debate in the security community about what is proper "disclosure." There are some who believe that you should wait until a vulnerability is fixed before disclosing it, while others believe that only by disclosing it are people really motivated to fix the vulnerability. However, most of those debates haven't taken place in court -- so this particular case should be quite interesting for those who are involved in security research, no matter which side of the "disclosure" debate you fall on.

Filed Under: boston, disclosure, gag rule, hacking, mit, subway

DNS Flaw Is A Serious Security Threat

from the patch-those-servers dept

Aaron Massey has a good write-up of the DNS vulnerability that was discovered by security researcher Dan Kaminsky and leaked onto the Internet this week. In a nutshell, a flaw in the design of the DNS protocol (which translates domain names like "techdirt.com" to IP addresses) will make it possible for malicious individuals to invisibly redirect web traffic from legitimate sites to sites of the attacker's choosing. This is a huge deal because a ton of online applications and services depend on reliable DNS for their security. You might think you're visiting your bank's website, but if your DNS server isn't patched you could really be sending your password to hackers in Russia. Kaminsky tells Wired that fewer than half of the DNS servers on the Internet were patched when the details of the vulnerability leaked, so it's a real problem. If your ISP hasn't patched its DNS servers, you can protect yourself by switching to OpenDNS until they do so.

There's a long-running argument in computer security circles about the best way to release information about security vulnerabilities, with a lot of security professionals favoring immediate, public disclosure of all vulnerabilities. Kaminsky chose not to go the public disclosure route because he felt this bug was too serious to take the risk of its being misused. Kaminsky approached the major DNS vendors in March, and managed to keep the details secret long enough for them to develop fixes for their products. Then, on July 8, Kaminsky announced the simultaneous release of these fixes, while still keeping the details of the vulnerability secret. (The fixes worked in a general enough way that they didn't give away the details of the vulnerability.) He had been intending to keep it secret until August 8, so that systems administrators would have a full month to prepare their networks. Unfortunately, the information leaked out on Monday, leading to a scramble to patch the remaining DNS servers before exploits start showing up. Given the scope of the patching effort (16 people from various organizations were invited to the secret March summit among DNS vendors), I think it's pretty impressive that the details didn't leak out earlier.

Filed Under: disclosure, dns flaw, security

Should Printer Companies Tell You Your Printer Leaves Secret Identifying Info?

from the disclosure-seems-appropriate dept

Every few years or so, the press picks up on the story that laser printers leave some dots that are invisible to the naked eye on every print. These dots are included for the purpose of anti-counterfeiting efforts. Each printer leaves a unique mark that can be read with special blue LED light, and interpreted with a decoding system that only the printers and the secret service are supposed to have. The story is getting some press again as the EFF is pointing out that laser printers have become cheap enough that many people have them and it's possible that the identification dots could be used for other purposes, meaning that people who print stuff out on the assumption that the documents would be anonymous, may be wrong. Officials in the article scoff at the idea that the codes would be used for anything other than anti-counterfeiting efforts. And, indeed, it does seem unlikely that the codes could be used for very much (not only would you need to interpret them, you'd also need the means of tracking down who owns a specific printer). But there is a good point in all of this: why shouldn't the printer providers be forced to at least disclose that their printers mark every document with a unique identifier?

Filed Under: counterfeiting, disclosure, identification, laser printers, printers

Dutch Chipmaker Sues To Prevent Researchers From Publishing Info About Security Flaws

from the security-by-obscurity? dept

NXP Semiconductors, which was formerly Philips Semiconductor division, is suing some researchers to prevent the publication of a paper outlining the security flaws in smartcards made by NXP. These smartcards are widely used for transit systems and building locks. Of course, the fact that these cards have been insecure has actually been known for quite some time. Rather than fixing the problem, though, NXP spent plenty of effort denying any problem existed. Now that multiple researchers have demonstrated that the problem really does exist, NXP is claiming it hasn't had enough time to fix the problem, and thus is suing to prevent publication.

Of course, if NXP hadn't wasted so much time insisting there was no problem, perhaps it would have been closer to a fix. And, most importantly, those who are looking to use this vulnerability already have access to it. Publication in a journal isn't going to alert criminals -- they already know about it. What it could do, however, is get more researchers helping on a solution. But, apparently, NXP would rather pretend that if they keep the details hidden, they can pretend there is no problem.

Filed Under: disclosure, lawsuits, security, smart cards
Companies: nxp semiconductors

Why Do Patents Tend To Cause More Harm Than Good?

from the monopoly-economics dept

Continuing my series of posts on some of the basics behind intellectual property, I wanted to delve further into the discussion I kicked off last week about judging the harm vs. benefit of intellectual property, and being able to properly balance the two. As we pointed out last week, nearly all of the economic evidence shows that patents tend to do more harm than good. Researchers James Bessen and Michael J. Meurer (perfect timing again) have gone into a little more detail as to how much damage is done, but I wanted to focus on why the downsides to patents are so often worse than the upsides.

At one level, it goes back to basic fundamental economics. Any given monopoly is going to be bad. There are economic rents associated with a monopoly. It limits the supply available and increases the cost, acting as a deadweight loss to society. That's absolutely true with patents as well (as much of the research has shown). However, there are a few more reasons why patents tend to be a net negative. First, let's focus on why the reasons in favor of patents aren't particularly strong.

The first is that it should act as an incentive to create the product. Yet, as the research has shown, that's almost never true in practice. More innovation tends to happen with weaker patent laws, and when stronger patent laws are put in place, the pace of innovation decreases. The reason is that real innovation almost never happens because of patents. Very few people invent stuff "to get a patent," but because there's a need in the market and they can help solve it. That's true with, or without, patents. Furthermore, it's that need in the market that is the real incentive for innovation. If you can serve a market, there's a way to make money from that market, and that acts as plenty of incentive.

The fears that an "easily copied" product will damage the original inventor are also wildly overblown. Study after study after study has shown that there is a distinct first mover advantage, and even things that are easily "copied" doesn't mean that the copycats get success in the market. People put a premium on buying from the original creator. Furthermore, they often believe (correctly in many cases) that the original creator has a better understanding of the market, and is likely to continue to innovate faster and with better solutions. Finally, in the worst case scenario, where a copycat is able to do a better job, that's also not a bad thing, because the societal benefit is still a better product. It's called competition, and is generally considered a good thing in a market economy.

Another popular claim is that patent benefit us via "disclosure." Because patents require the inventor to "disclose" the invention, the idea is that these patents will spur additional innovation as others learn from the patents and build on them. The idea is that there's obvious benefit in keeping the idea secret, so in exchange for disclosing the idea, the government gives the inventor a monopoly. However, this is easily shown to be false. First, very few patents these days are written to the point where they actually disclose enough to be useful. They tend to be broadly written in a way that can cover as much as possible. However, there's an even better simple logical rationale for why disclosure is a myth when it comes to patents. If the inventor truly believes there's tremendous value in keeping the idea secret, he or she will still keep it secret. There's no real benefit to disclosing it to get the patent. You get just as much benefit from keeping it secret. The only benefit is if you think that others will be able to figure out the same concept in less time than it takes for the patent to expire. In other words, if you realize that others will be able to come up with the same thing in that amount of time. So getting a patent prevents others from doing that. But if you truly believe that it would take longer than the length of the patent to figure out its secrets, then you'll keep it quiet anyway.

As for why the downsides to patents are almost always present, it's based on a fundamental understanding of how innovation works. If most innovation was a single burst of inspiration, then patents could make sense. However, in a scenario where innovation is an ongoing process of building, trying, adjusting, building, trying, adjusting -- then patents are likely to be harmful. They add a cost and a hassle at many of the steps along the way. They add a series of hurdles that involve time, money and effort for each step of that process. That, alone, significantly slows down innovation. Studies have shown, in fact, that most innovation is an ongoing series of innovations rather than a single burst of inspiration. Furthermore, great breakthroughs tend to come not from a single mind, but in different people looking at the same problem, learning from each other and building on each other's work. By throwing tollbooths into that process, you slow down the innovation.

Thus, the supposed benefits of patents rarely are all that beneficial, and yet the downsides to patents are quite large and show up quite often. So, it should be no surprise that the research shows patents tend to do quite a bit to slow down innovation, rather than accelerate it.

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Links to other posts in the series:

• On The Constitutional Reasons Behind Copyright And Patents
• Patents, Copyrights And Trademarks, Oh My!
• If Intellectual Property Is Neither Intellectual, Nor Property, What Is It?
• What Kind Of Progress Are We Promoting?
• Why Do Patents Tend To Cause More Harm Than Good?
• The Case For And Against Software And Business Model Patents

Filed Under: disclosure, harm, monopolies, patents

The Harm Caused By Patent Disclosure

from the willful-infringement dept

Alan Wexelblat has an interesting post over at the Copyfight blog. After participating in a mailing list discussion about some new patents, he's rather stunned to learn that many firms forbid their employees from looking at published patents. He thinks the lawyers are confused about the difference between trade secrets and patents -- but that's probably not true. What's most likely happening is that the lawyers know that you get treble damages if you can prove willful infringement, and you do that by showing that the infringer knew of the patent. So, the way you avoid that is you don't look at any patents. This is exactly the opposite of what the patent system is supposed to be about. In fact, many patent system defenders insist that "public disclosure" is the key benefit of the patent system -- but that's a complete myth. David Levine and Michele Boldrin have already shown why patents are unlikely to increase the disclosure of inventions (because the only people who will disclose are those who know their "invention" would become public no matter what, otherwise they're better off keeping it secret), while other reports point out that patent attorneys are increasingly focused on filing vague patents that can cover lots of things, without actually disclosing anything useful. Now we can add this growing fear of willful infringement to the reasons that public disclosure isn't what it's cracked up to be -- and, in fact, may be hurting innovation by forcing those knowledgeable in a space to ignore the state of the art to avoid the possibility of huge fines for willful infringement.

Filed Under: disclosure, patents