NBR Complete Transcripts for November 22
Thursday, November 22, 2007"Copy Protection" - Copyright It
SUSIE GHARIB, NIGHTLY BUSINESS REPORT ANCHOR: Good evening everyone. The U.S. financial markets were closed for the Thanksgiving holiday. So, tonight, in this program, we'll look at a legal matter with high stakes for business -- the current system of protecting intellectual property. That's the term for information, artistic works, or inventions that result from ideas or creative activity. And, even though intellectual property is literally the figment of someone's imagination, American law treats it as a real item that authors or inventors can control in varying degrees.
PAUL KANGAS, NIGHTLY BUSINESS REPORT ANCHOR: Intellectual property that is in a tangible form is protected against unauthorized copying through copyright law. But, there are questions as to whether the copyright system is still workable, or whether a new model is needed. Correspondent Erika Miller reports.
ERIKA MILLER, NIGHTLY BUSINESS REPORT CORRESPONDENT: Radiohead is a popular British rock group, but it's not just its music that's attracting attention. Radiohead is selling its latest album online directly to fans, for whatever they wish to pay -- even nothing, if they choose. That's a major shift from the traditional ways of distributing copyrighted material and it reflects doubts as to whether the copyright system can still function in the digital age. Following up on a provision in the U.S. Constitution, the first U.S. copyright law was passed in 1790 and signed by George Washington. Its intent?
JEFF KLEIN, INTELLECTUAL PROPERTY ATTORNEY, GOODWIN PROCTER: Essentially promoting the investment, the time and the expense of those authors to actually take that investment and create something that is, for lack of a better word, creative and that people will enjoy.
MILLER: It did that by giving them the exclusive right to authorize copies. In the case of books, writers could give those rights to publishers in exchange for royalty payments. Copyright protection now extends for the life of the artist, plus 70 years. It goes into effect automatically when a work is released, even when an e-mail is sent. But to back up their authorship claims, many choose to register their works with the copyright office at the Library of Congress. There are certain exceptions to copyright protection under the law's fair use provision. This allows limited use of copyrighted material for criticism, commentary, news reporting, education and research.
And in 1984, the Supreme Court extended that loophole to cover electronic recordings made for personal use on video recorders. However, the arrival of digital technology and the Internet in the 1990s made it easier than ever for unauthorized copies of copyrighted material to be distributed. Congress responded in 1998 by passing the digital millennium copyright act. It is intended to deter the use of technology to get around copyright protections. But it's had only limited success in stopping the sharing of copyrighted material online. Today, illegal downloading and copying is rampant, costing U.S. industry a reported $60 billion a year. For that reason, many top executives of content companies favor strengthening copyright protections. NBC's Jeff Zucker says it's the only way that expanding the company's digital content offerings makes financial sense.
JEFF ZUCKER, PRESIDENT & CEO, NBC UNIVERSAL: Their future will depend critically on our ability as the copyright holder to protect this content from being stolen and to prevent our new distribution models from being compromised at birth by pirates and counterfeiters.
MILLER: Others, like Sumner Redstone of Viacom say copyright is needed to keep the American economy competitive.
SUMNER REDSTONE, CHAIRMAN & CEO, VIACOM: Copyright compels creativity. It furnishes the incentive to innovate. If you limit the protection of copyrights, you will stifle the expression of new ideas.
MILLER: But consumer advocates take a different view. Many, like Gary Shapiro of the Digital Freedom Campaign, favor expanding consumer rights to allow the free exchange of copyrighted material.
GARY SHAPIRO, PRESIDENT, CONSUMER ELECTRONICS ASSOCIATION: It's something that is very important that consumers understand as we shift into this digital age, that they have a right to use their lawfully acquired content in their home and in their car -- to manipulate it, to create their own, to video their kids, to put things up on youtube. And they have these rights. And what we're concerned about, we're trying to change, is that the copyright laws have gotten way too strict.
MILLER: However, record companies have declared war on alleged copyright violators by filing over 26,000 lawsuits against individuals. In the first verdict in those cases, a Federal jury recently found a Minnesota woman liable for $222,000 in damages for sharing music online and sums like that are sure to further heat up the debate over copyright protection. Erika Miller, NIGHTLY BUSINESS REPORT, New York.
"Copy Protection" - Interview with Patrick Ross and Alex Curtis
PAUL KANGAS, NIGHTLY BUSINESS REPORT ANCHOR: To talk more about some of the issues about copyright law in the digital age, joining us from Washington we have...Patrick Ross, executive director of the Copyright Alliance. That's a coalition of individuals, industry groups, and corporations that promotes the benefits of copyrights and favors stronger copyright protections. And Alex Curtis, director of policy and new media for Public Knowledge, a Washington organization dedicated to consumer rights in digital media.
KANGAS: Patrick, let's start with you. As we heard, some content companies affiliated with your group have tried to stop unauthorized music and video sharing by suing thousands of individuals, but with file sharing so widespread, isn't this like trying to stop a flood by putting a finger in the dike?
PATRICK ROSS, EXECUTIVE DIRECTOR, COPYRIGHT ALLIANCE: Well, you have to ask should artists just simply forfeit their ability to protect their rights? Yes, it is an uphill battle, but I think the last thing we want to do is to take away the ability for them to even try. I think the better question is why are so many people trying to take these works without even kind of compensation for the artists.
KANGAS: Interesting. Alex, what does your group think of these lawsuits? Aren't the record companies just protecting their rights?
ALEX CURTIS, DIRECTOR OF POLICY AND NEW MEDIA, PUBLIC KNOWLEDGE: They are, but I think something more needs to be considered -- consumer voice. And, even thought artists deserve to get paid and copyright owners deserve the full extent of the law to be able to go after infringers, it is not necessarily the best PR move the industries like the RIAA and the MPA to the extent that they sue their fans. And, there definitely needs to be some sort of middle ground so that consumers' needs are met as well as getting the artists paid.
KANGAS: Now Patrick, in another attempt to stop file sharing, some record companies require copy protection software when their music sold online, usually through the Apple iTunes store. And, yet, none other that Apple CEO Steven Jobs has suggested that online music copy protection be dropped. What do you think of that idea?
ROSS: This is another example where the market can play itself out. We are very early in this stage. If artists want to use technology to help protect their rights, that's great. When you buy music you are only buying a certain set of rights. Alex's group would want you to pay one price and get everything, but that means my in-laws who only might want to have one simple use with music have to subsidize his friends who are doing multiple uses.
KANGAS: Alex, I take it you would like to see anti-piracy software dropped from online music sales, but wouldn't that result in an end to the recording industry as we know it?
CURTIS: I don't think so. I think consumers overwhelmingly have gone after the use of unencumbered, non-copyright protected digital music. If you look at Radiohead's recent push for selling their music, they've gone un-DRM. iTunes has gone un-DRM. Amazon has gone un-DRM. The studios are understanding it that the consumers want un-DRM, meaning un-copy protected, songs so they can use it on more devices and use it more flexibly. Traditionally, the DRMs don't work and unfortunately the industry is learning that hard lesson now.
KANGAS: Let's move on to a related issue involving video. YouTube, which is owned by Google, is testing new software. That software should detect when copyrighted video is posted, enabling YouTube to remove it within minutes. Patrick, would that be good for everyone?
ROSS: Well, I think anybody that profits off of somebody else's creative works without even asking to have those creative works on their site should be taking proactive steps to protect that. But, right now, it is really mostly vaporware that we are getting from Google. We have no idea what this is going to entail, and it is probably going to require a lot more work on the part of the creators in order to make this work. But, it is a positive step.
KANGAS: Alex, is there a downside to automated copyright filters?
CURTIS: Definitely, and this even goes back to your last question. There is a think in copyright law that is a limitation of copyright law and it is called fair use. And, it's essentially an intent-based standard to look at why you are using the work, and if you are using it for the proper reasons under fair use, then it is not an infringement. Many of the uploads to YouTube, like the prince dancing baby -- if you've ever seen that on YouTube -- clearly not a copyright violation. It is a fair use. A lot of uploads you YouTube and sites like that are fair use. Unfortunately, the software that Google has put out and some of the others have tried to put out, don't compensate for fair use. Their intent... A computer can't understand an intent of a user uploading a file.
KANGAS: Patrick...in agreement or disagreement?
ROSS: Basically, fair use is something art creators use everyday. It is very important, but it should not be conflated with the idea of free use where you can do anything you want with the work without getting consent from the creator.
KANGAS: Gentlemen, I want to thank you for voicing your very different views on this important subject. My guests Patrick Ross of the Copyright Alliance and Alex Curtis of Public Knowledge. Thank you gentlemen.
"Copy Protection" - Patent It
SUSIE GHARIB, NIGHTLY BUSINESS REPORT ANCHOR: While artistic and literary works are protected by copyright, inventors rely on another form of protection --patents. A new patent gives the inventor certain exclusive rights over his or her invention for 20 years. During that time, others who want to use a patented item must obtain permission, which usually means paying a license fee. But, as Dana Greenspon reports, the patent system is straining to keep up with rapid changes in technology.
DANA GREENSPON, NIGHTLY BUSINESS REPORT CORRESPONDENT: For more than a decade, scientists at Panacos have been on the cutting edge of HIV research. The company`s major discovery, a drug called Bevirimat, which prevents the HIV virus from maturing and becoming infectious. The hope is that Bevirimat, patented in 1997, will become the first effective treatment against drug-resistant strains of HIV. COO Graham Allaway says the patent system is key to his company`s growth.
GRAHAM ALLAWAY, CHIEF OPERATING OFFICER, PANACOS: Clearly for a company like ours to be able to develop such a novel drug, we need to be able to have some element of market exclusivity through the patent system. The reason for that is it takes many years and many millions of dollars to develop a drug for any indication, certainly for HIV.
GREENSPON: Market exclusivity is a hallmark of the U.S. patent system, which gives patent holders control over their inventions for 20 years from the date the patent application is filed. To obtain that patent protection, the inventor needs to show the U.S. Patent Office that an invention is new, useful and non-obvious. The process can take anywhere from 12 months to five years. And the average cost, including legal fees, ranges from $6,000 to $25,000 for a single patent. Panacos holds nine patents in the United States and has another 19 awaiting approval. The company is constantly on the search for new patentable discoveries. So what are you guys doing in this one?
ALLAWAY: Well, this is where we are doing some of our major drug screening.
GREENSPON: So when you`re searching for new potential compounds in here, you`re also sort of searching for new potential patents?
ALLAWAY: Absolutely.
GREENSPON: Panacos illustrates how it`s possible to register many different types of patents for a single product. Of the six patents the company has for Bevirimat, only one is for the chemical compound itself. The other patents range from the process used to create the drug, to the part of the HIV virus the drug targets. Jon Dudas is director of the U.S. Patent and Trademark Office. He says today his office not only receives more types of patent applications, but also more complex ones.
JON DUDAS, DIRECTOR, US PATENT AND TRADEMARK OFFICE: The applications grow in complexity every year. So what you saw 20 years ago were certainly simpler technologies than they are today. And there`s so much more technology out there today, which is a good thing for our economy, but it`s a challenge for our office.
GREENSPON: A challenge the office has tried to address by hiring 1,200 new examiners a year. Even still, each year the office is swamped with about 450,000 applications. Only about 50 percent will result in patents. Congress is now considering a bill to reform the patent system. High-tech companies like Microsoft and HP support the bill. HP`s Michael Holston says there is a need to update a system that hasn`t seen sweeping changes for more than 50 years.
MICHAEL HOLSTON, EXEC. VP & GENERAL COUNSEL, HP: Making a long- distance telephone call was high-tech in the 1950s and as the law has evolved and things have changed, there`s just a tremendous need to go back and revisit the system.
GREENSPON: Graham Allaway of Panacos agrees the patent system is imperfect, but he`s concerned that proposed reforms might weaken existing patent protections.
ALLAWAY: If we didn`t have patents, our value would be less than 10 percent of what it is, because really the patents are an indicator of the value of all the ideas and the programs that we`re developing.
GREENSPON: But getting a patent isn`t always the end of the process. A patent can be challenged in court and the number of patent cases in U.S. courts has gone up by almost 50 percent over the past decade. Dana Greenspon, NIGHTLY BUSINESS REPORT, Gaithersburg, Maryland.
"Copy Protection" - Trademark It
PAUL KANGAS, NIGHTLY BUSINESS REPORT ANCHOR: There's another form of protected intellectual property that is easy to recognize -- the trademark. Unlike copyrights and patents, trademarks are intended mainly for consumer protection, designed to ensure that consumers understand which goods and services they are buying. They're also intended to encourage companies to invest in branding their products. As Diane Eastabrook reports, an established trademark can be very valuable.
DIANE EASTABROOK, NIGHTLY BUSINESS REPORT CORRESPONDENT: From Charlie the tuna to Ronald McDonald, trademarks help connect consumers to specific products and services. Trademarks are more than catchy words, pictures or symbols. They are important because they represent a company's brand. Consumers often rely on a trademark to make sure they are getting that particular products and the quality they expect. Roberta Kwall is a professor of intellectual property law at Chicago's dePaul University. She says any business operating in today's competitive marketplace should have a registered trademark.
ROBERTA KWALL, LAW PROFESSOR, DEPAUL UNIVERSITY: Why? Because they want to be able to monopolize that particular information-rich signal for that genre of product.
EASTABROOK: Obtaining a trademark usually starts with a visit to an attorney who will conduct a trademark search. Ladas and Parry trademark attorney Marc Trachtenberg says a computer search often takes only a few hours. That involves combing state and Federal registries to see if anyone else has registered that particular word, picture or symbol. If nobody has, then the company can apply for that trademark with the U.S. Patent and Trademark Office. If firms want trademark protection in other countries, they must register there as well. But Trachtenberg says, sometimes that is a problem.
MARC TRACHTENBERG, ATTORNEY, LADAS & PARRY LLP: Information travels so quickly around the world that it's very easy for someone in another country to get online and do a simple search of the Internet and see what brands are popular in the U.S. or other countries and to either preemptively register that trademark in that country or simply start making counterfeit goods.
EDWARD SMITH, MANAGER, GLOBAL BRAND INTEGRATION, CATERPILLAR: The whole decal, if you will, the coloration is literally an identity for Cat machines.
EASTABROOK: Edward Smith, Caterpillar's manager of global brand integration, says trademark protection is a top priority at the Peoria, Illinois, based firm. The company not only trademarks its Cat logo, but also the yellow color that all of its earth-moving vehicles are painted. Caterpillar has sold tractors and trucks in nearly every corner of the world for decades. Recently, it added shoes, clothing and toys bearing the Cat logo to its lineup. Smith says the Cat trademark represents durability and Caterpillar will challenge anyone who uses it illegally.
SMITH: You make a promise and if someone else emulates that promise and passes their product off as ours, then it breaks that promise and we will protect that to the Nth degree.
EASTABROOK: Experts say the Internet is a growing source of trademark misuse. Typo-squatting is one example. It happens when someone registers a variation or a misspelling of a brand name as a domain name. Then, consumers who accidentally enter the wrong name might be directed to a competitor's site or face a barrage of advertisements. Alan Drewsen, executive director of the International Trademark Association, says preventing this type of deception is difficult.
ALAN DREWSEN, EXEC. DIR., INTERNATIONAL TRADEMARK ASSN: Generally, the brand owners have to be very alert policing the net all the time and trying to identify and then get back these domain names that the typo-squatters or cyber- squatters have no right to in the first place.
EASTABROOK: A successful trademark can become one of a company's most valuable properties and since a trademark can have a huge influence on a consumer's buying decisions, experts say trademark protection is still as important today as it was a century ago. Diane Eastabrook, NIGHTLY BUSINESS REPORT, Chicago.
"Copy Protection" - Interview with Beth Simone Noveck and Martin Schwimmer
SUSIE GHARIB, NIGHTLY BUSINESS REPORT ANCHOR: For more analysis on patent and trademark protection, I spoke with two experts -- Beth Simone Noveck, director of the institute for information law and policy at New York Law School, and Martin Schwimmer, an attorney at Moses and Singer, and he also publishes the "Trademark Blog." I began by asking Noveck if the current patent system actually discourages innovation.
NOVECK: There are those who would argue that in fast moving industries like the high-tech industry, a 20 year grant of monopoly rights is frankly too long and depresses innovation in the high-tech industry. Whereas it may be more appropriate for another industry. But, I think, frankly, the issue is having the highest quality patents. The danger is low quality patents are those that depress innovation because they simply promote litigation.
GHARIB: Marty, your practice deals mostly with trademarks and domain names on the Internet. To what extent has the use of trademarks in Internet searches raised some new legal issues?
SCHWIMMER: Well, we are living in the age of search where people use trademarks to find what they are looking for, so competitors fight over that traffic. We had that in the real world, where you wanted to put your ad next to a competitor in the Yellow Pages or you wanted to put your store next to a competitor's in a shopping mall. And, to a great extent, that's what they are doing here. Only, it becomes a trademark conflict.
GHARIB: So, what is the real legal issue?
SCHWIMMER: Well, the legal issue is just confusion, whether someone searches for iPod on Google and whether the ad next to it has to do with iPod or with a competitor to iPod. Is that confusion or is that just good, healthy competition?
GHARIB: Beth, I want to get back to what you were saying about patents. You've come up with a program that could resolve all of these issues of big backlogs and delays in the Washington patent office. Tell us a little about it and how it works.
NOVECK: Well, I don't know if we've fixed all the problems with what we are doing. But, we are collaborating with the U.S. Patent Office in Washington to offer a program called "Peer to Patent." And, what we are doing is giving the public the opportunity in a pilot program to contribute information to the patent office in order to help the examiner make the determination about whether in fact an application or the invention deserves this enormous grant of 20 years of monopoly rights. Basically, it's very hard for the patent office with a million applications -- soon to be a million applications on backlog -- and only about 18 to 20 hours to examine each application, an application that may turn into the next Blackberry or the next iPod, to get all the information that it needs to make that important decision. We want to get them the best information possible in order to ensure that the applications turn into good patents and those in turn promote innovation.
GHARIB: Well, you were talking about Google a moment ago. And, the name Google has become synonymous with doing an Internet search. And "to Google" has even become a commonly used verb. Could that put the Google trademark into jeopardy.
SCHWIMMER: The legal principle you are talking about is genericide. And that is where a trademark becomes a generic term for something. The most famous examples of that would be aspirin and an escalator. On the whole, Google is very, very happy that we use Google as a verb. It is only when a competitor were to describe their own product in such a way that Google is really going to take action.
GHARIB: So, is there something that a company can do so that its trademark does not become a generic term?
SCHWIMMER: Absolutely. Google is going to send out letters to competitors who misuse Google as a trademark. But, I don't think...I think we are safe for now using it as a verb ourselves.
GHARIB: Beth, in our reporting on copyright issues, we've talked a lot about fair use. Do you think that there's a need to expand fair use rights to patents and trademarks?
NOVECK: The notion of giving people a defense against an allegation of intellectual property infringement has been well enshrined in copyright law and in trademark law. In patents, we used to have such an exceptional defense that would allow people to do pure research, but the commercialization of research, of course, that defense has shrunk almost to zero. I think though, first and foremost, in patents is ensuring again that we don't have patents out there that are not deserving of the patent and are then being inserted in litigation against people -- scientists, business people -- unfairly and unreasonably and at great cost to the economy.
GHARIB: Marty, do you agree with what Beth is saying?
SCHWIMMER: Absolutely. I think the law as articulated and as decided is good. The problem is when the overzealous lawyers, overstating their claim, and consumers who are basically abusing the privilege of fair use.
GHARIB: Just to wrap it up...Beth you have written that unlike real property or land, which are limited resources, intellectual property cannot be exhausted. So, in view of that, do you think it is time to rewrite the laws on intellectual property protection?
NOVECK: Well, right now, Congress is considering doing just that with regard to patents. There is a concern about the kind of overzealous litigation that's taking place that Marty refers to in the patent domain. And, so Congress right now is looking at it. It's passed the House and it's pending before the Senate, this patent reform legislation that would in fact make it easier for example, as we discussed before, for the public to contribute more information to create a more open process, that ensures the quality of the patents we issue are better, and that hopefully in turn would decrease the level of litigation.
GHARIB: Fascinating discussion. Thank you both very much. Beth and Marty, we really appreciate your time.
NOVECK: Thank you.
