Jon Stewart took on MERS on Tuesday night’s episode of the Daily Show; watch it below. As I’ve noted in earlier posts, there is a good deal of recent ongoing litigation against MERS, and it’s not only in the mortgage-registration business, it also markets tools to local governments for vacant property registration.
| The Daily Show with Jon Stewart | Mon – Thurs 11p / 10c | |||
| Residential Evil | ||||
|
||||
Detroit netted the first 3 spots on NeighborhoodScout’s recent list of the 25 most dangerous neighborhoods in America. The Midwest sadly dominates this list. Chicago is on there four times. Overall, the Midwest takes 14 of the top 25 (if you include St. Louis). In the top two neighborhoods in Detroit (W Chicago / Livernois Ave and Mack Ave / Helen St) you have a 1 in 7 chance of becoming a victim within a year. Here’s the link to the full list.
A local paper in Ohio ran a story today hailing Conneaut, Ohio’s new vacant property registration ordinance as a success. The article, unlike most I’ve seen announcing new VPR ordinances, actually gives some statistics. The bottom line is that, for smaller cities, it doesn’t take much to call a VPR program a success.
Conneaut’s program was started last fall and has now registered 19 owners of residential properties and 13 commercial-property owners. The city accomplished this by sending out 54 letters to owners of properties identified as vacant (one method of doing this, the article mentions, is measuring water usage). This equates to registration rate per letter of nearly 60% (58% for residential owners, 62% for commercial). Since the registration fees are $200 for residential and $400 for commercial, the ordinance has likely brought in about $9,000, and all city officials had to do was identify vacant properties, send out letters, and do a property inspection for each building. Not bad. And it may bring in even more eventually, since the fee is escalating: it doubles every year the building remains vacant.
Of course, this success is modest compared to the pioneering foreclosure-initiated program started in Chula Vista, California. As I discussed in a 2010 article, that program brought in $77,000 in registration fees and $850,000 in administrative citations in the ordinance’s first year of existence. But Chula Vista is a city of nearly 250,000 people, while Conneaut has roughly 12,800 residents, so it’s unsurprising that their standards for success in this context differ.
The Conneaut article also notes, interestingly, that banks are sending in registration fees for houses they own without even being asked! Kudos to the banks for that.
Sorry for the overdose of IP law recently, I plan to return to local-government topics ASAP.
But my recent article discussing criminal enforcement of copyright caused me to wonder about why patent infringement is not a crime in the United States (aside from falsely asserting a product is patented or forging the seldom-used “letters patent”).
Why this disparity between different forms of IP protection? It surprised me how many different theories emerge. For example, professor Irina Manta lists three possible justifications in her article “The Puzzle of Criminal Sanctions for Intellectual Property Infringement” (footnotes omitted):
There could be a moral or utilitarian distinction between soft IP and patents, and the differing availability of criminal sanctions may be warranted because infringers of soft IP cause more harm and/or require harsher punishments for deterrence than infringers of patents. Alternatively, perhaps criminalizing soft IP infringement provides the proper balance of incentives for creators by giving them the safety of added protections for their works, whereas it would overly deter inventors in the patent context. Another possible explanation for the distinction is a public choice rationale: while a number of industries lobby for stronger protection for soft IP (especially copyright), different industries are at odds with one another regarding the proper level of protection for patents.
The Executive Office of the U.S. Attorneys also has commented on this disparity in the third edition of its training handbook “Prosecuting Intellectual Property Crimes,” which notes on page 246 the distinctions between patents and other forms of intellectual property:
Although patents and copyrights share a common constitutional source (and the concomitant requirement that these exclusive rights are for “limited times”), they differ in several meaningful respects. First, copyrights grant an author the right to exclude certain uses of the author’s expression of an idea contained in an “original work of authorship,” whereas patents grant an author the right to exclude others from making, using, and selling devices or processes that embody the claimed invention. Second, in exchange for granting the patentee this right to exclude, the patentee must publicly disclose the invention. Eldred, 537 U.S. at 216. “For the author seeking copyright protection, in contrast, disclosure is the desired objective, not something exacted from the author in exchange for the copyright.” Id. at 216. Third, a copyright gives the holder no monopoly on any knowledge or idea; a reader of an author’s writing may make full use of any fact or idea acquired by reading the writing. See17 U.S.C. § 102(b). A patent, on the other hand, gives the patentee a monopoly on his invention to prevent the full use by others of the knowledge embodied in the patent. Eldred, 537 U.S. at 217.
It is also worth considering the difference between a patent and a trade secret. The first difference is naturally that trade secret information is protected only if it is secret (see Section IV.B.3.a.v. of this Manual), whereas a patent is protected even after disclosure. During the patent process, a trade secret contained in a patent application may lose its trade secret protection through disclosure only to gain patent protection. (See Section IV.B.3.a.vi. of this Manual). Second, a patent gives its owner an exclusive right to his invention, even against another who discovered the patented invention independently, whereas a trade secret, like a copyright, gives its owner no protection against independent discovery. Confold Pac., Inc. v. Polaris Indus., 433 F.3d 952, 958-59 (7th Cir. 2006) (Posner, J.).
I think that the most compelling explanation may be that patents, unlike copyright, are especially at risk of being too broad, particularly in particular industries like software, partially because an understaffed patent office cannot sufficiently limit incoming applications. Although Abraham Lincoln once famously remarked that the patent system “added the fuel of interest to the fire of genius,” today many people see the patent system more as enabling arsonists, in that overbroad patents can create a drag on innovation as aggressive patent holders consume competitors through costly lawsuits.
My perspicacious coauthor and I recently accepted an offer from the North Carolina Journal of Law and Technology to publish our article “Criminal Copyright Enforcement Against Filesharing Services,” which I mentioned here last week. In honor of that, I’d like to share the introduction of the article, sans footnotes:
In January 2012 an elite squad of New Zealand anti-terrorism officers, under the direction of the United States Department of Justice, stormed Kim Dotcom’s lavish $24-million mansion. Equipped with body armor, tactical firearms, dog units, and a helicopter, the squad uncovered Dotcom hiding in a specially designed saferoom. As he was whisked to a police van, Dotcom asked the charges against him. The answer was two words: “Copyright infringement.”
The indictment of Dotcom and his infamous filesharing service, Megaupload, marked the start of a new battle in what reporters have christened the “copyright wars.” Yet it is not the federal government’s only recent foray into the fight against online filesharing services, which, viewed as hotbed for copyright infringement, have been under a decade-long siege of civil litigation from media companies. In 2010, for example, the Department of Homeland Security mounted “Operation in Our Sites” to seize the domain names of websites providing access to infringing content, and the operation has since resulted in the seizure of more than 400 domain names. The issue more recently caught the attention of Capitol Hill, where bills were introduced in both the House and Senate to target foreign websites that link to or host infringing content.
But these efforts have not always been effective. For many of the domain names seized by the Department of Homeland Security, the same infringing content quickly appeared on sites with only slightly modified web addresses, and a few sites even grew in popularity. And the backlash against the two new bills was fierce: many popular websites staged a “blackout” in protest, including the online encyclopedia Wikipedia, citing fears that they would face sanctions merely for linking to controversial sites, even in informational articles.
Meanwhile, other countries have seen some success in directly prosecuting the operators of filesharing services. First, Japan convicted Isamu Kaneko, a computer-science researcher who developed Winny, an early peer-to-peer filesharing system. Kaneko arguably fostered dubious uses of his service by collecting feedback and announcing updates through an anonymous Internet forum dedicated to filesharing. But although Kaneko was convicted by a Japanese district court, the Osaka High Court reversed the conviction after concluding that Winny was “value neutral”—essentially, capable of non-infringing uses—and that Kaneko did not offer Winny primarily to promote infringement, even if he knew that it was probably being used for that purpose. This decision touches on a key question in this article: if a filesharing service is known to have rampant infringing uses, at what point do the service’s operators open themselves to criminal sanctions?
More successful was Sweden’s prosecution of the operators of the Pirate Bay, then one of the Internet’s largest peer-to-peer filesharing services. The operators of the Pirate Bay mocked their contribution to infringing activity, often publishing and ridiculing complaints from copyright organizations. Although Sweden once had a reputation for relaxed copyright laws, the country amended its Copyright Act in 2005 to make it a crime to transfer copyrighted content without permission. When prosecutors then indicted four operators of the Pirate Bay in 2008 for “complicity” in violating the Act, the operators raised the same arguments as Kaneko: that their services had noninfringing uses, and that they were ignorant of any specific infringing activity. But the court found them guilty, emphasizing that they had profited from infringing content by collecting advertising revenue and that knowledge of specific infringing content was unnecessary given that they had created conditions that fostered infringement and ignored notices of infringing content. The defendants were sentenced to one year in prison each and ordered to pay restitution of $4.3 million.
The success of this prosecution has been heralded as harbinger of ones like the action against Megaupload. Yet criminal prosecution of filesharing services is a new development in the United States, and only time will tell whether this new approach proves effective, or under what circumstances it should be used. The future holds many questions: What pushes a legitimate online file-storing business over the edge to criminal enterprise? How might criminal copyright enforcement differ materially from civil enforcement? We seek to answer these questions in this article. We focus on those online businesses enabling users to share infringing content with others online, and we refer to these businesses simply as “filesharing services,” intending this definition to cover diverse types of technology—including “cyberlockers” like Megaupload, which host files on servers controlled by the service, and “torrent” sites like the Pirate Bay, which provide links to connect users to infringing files stored by their peers.
In the end, we conclude that criminal enforcement actions should be limited to those filesharing-service operators that, in order to profiteer from infringing content, foster infringement by egregiously defying the established boundaries of copyright law and civil means of copyright enforcement.
“Big Data”— the business-world buzzword for the collection and analysis of massive amounts of data—has caught on with local government officials in the past few years as many cities have developed extensive data portals providing citizens access to heaps of public information like data from 311 calls. And its not only local governments getting involved, in 2012 the White House announced the “Big Data Research and Development Initiative,” through which federal agencies would commit funding toward collecting and analyzing “huge volumes of digital data.”
So, what sparked this interest in “Big Data”? In short, innovations in computing, particularly the ability to allow users to remotely access large data sets stored on third-party servers, i.e., “cloud computing.” But as attorney John Pavolotsky wrote last November in Business Law Today, “[w]hile business publications have written widely about Big Data, legal commentators have written sparingly on the subject.”
Pavolotsky goes on to note three areas of legal concern he see with Big Data: privacy, data security, and intellectual-property rights. He does not dwell long on data security and IP rights for long, other than to note that API licenses should be reviewed carefully to determine the permissible scope of data distribution. He focuses instead on privacy, arguing that, because of the “inherent squishness” of the legal standard applied to collection of cellphone or GPS data under the Fourth Amendment—which protects guards people’s “reasonable expectation of privacy”—perhaps legislatures should limit the length of time data can be stored.
I’d like to add one other interesting question surrounding Big Data, though it leans more economic than legal: whether data collection should remain public or be privatized. This issue comes up with vacant-property registration, which I’ve written about before, as many local governments allow registration through MERS, a private company, rather than directly through local data systems. Government officials are then provided access to MERS.
Privatization of data collection and analysis provides many benefits, particularly in that it is cost-effective for local government to take advantage of an already developed platform. The primaru draw back, however, is the risk of industry capture, as with MERS and its association with the mortgage industry.
The best solution, when available, is for local governments to take advantage of open-source programs or nonprofit developers (as available through Code for America). Otherwise, there are companies like Socrata that, as far as I can tell, are not closely associated with any industry other than the cloud-computing and data-collection industry.
There’s news today of two new bills that may provide funding to cities.
First, as reported by Craig Chester at Atlantic Cities, is the Brownfields Utilization, Investment and Local Development Act of 2013, the “BUILD Act,” aimed at assisting local governments “clean up and revitalize brownfield sites.” Chester sums up the proposal, and its bipartisan support:
The BUILD Act has bipartisan support—noteworthy in and of itself in this Congress—and its sponsors hail from a broad array of states, each with their own brownfield challenges. Senators Lautenberg (D-NJ), Inhofe (R-OK) Crapo (R-ID) and Udall (D-NM) all signed on as original sponsors of the bill, a telling example of just how ubiquitous the issue is.
The bill reauthorizes a wide array of financial and development tools for communities to help with site assessment and cleanup, all administered by the EPA’s Brownfields program. Among its provisions, the BUILD Act expands non-profit eligibility to receive brownfields grants and also allows the EPA to award flexible multipurpose grants to take into account the varied nature of many projects. More information about the specifics of the bill is available at Smart Growth America.
Ultimately the BUILD Act could help communities across the country create the kind of development that’s an integral part of the country’s most vibrant places. Brownfields represent tremendous economic development opportunities. The BUILD Act could help communities make it happen.
Second, as discussed by Alan Mallach at the Center For Community Progress Blog, is the Restore Our Neighborhoods Act of 2013, which also has bipartisan support and “would provide $4 billion in new funding for demolition activities through bonding to states.” Mallach explains the benefits of the bill:
[The Act] would amend the Internal Revenue Code to allow for qualified urban demolition bonds, a type of tax credit bond that can be sold to investors. Under this approach, in lieu of receiving interest, bond holders would receive a Federal tax credit equal in value to the interest they would otherwise receive. The bond issuer would only be responsible for repaying the principal when the bond became due, after 20 or 30 years.
The bill would allocate $2 billion in bonds equally to all 50 states, or $40 million each, while an additional $2 billion in bonding authority would be granted to “qualified” states – the states with the highest levels of vacancies, unemployment and mortgage foreclosures, and the lowest rate of population growth (H.R. 656, Sec 2 (g)(3)). The bill would also amend the provisions governing the Hardest Hit Fund Program to include demolition as a permitted use of those funds. States would have to commit their funds in two years, or they would be re-allocated to other states. All funds must be spent within five years of the legislation’s effective date.
But there are also downsides he discusses, such as this one:
The qualified bond approach, as described earlier, is an effective way of reducing the cost to the bond issuer while limiting the cost to the federal treasury, but bond issuers will still have to spend their money to get this money. Specifically, they will have to create a sinking fund, and deposit enough money into the fund up front so that, after 30 years, that money along with the interest it earns will be enough to pay off the principal on the bonds. A fair estimate, given today’s interest rates, is that they will have to come up with about 40% of the amount of the bond; in other words, if a state were to issue $100 million in bonds, they would have to come up with $40 million from somewhere else to create the sinking fund. The question is: will hard-strapped states and cities be able to come up with that money?
He instead advocates what he calls “a more comprehensive approach” that addresses not only demolition but also “incentives for people to buy and rehabilitate vacant homes in designated neighborhoods, as well as to provide funds for the essential ‘glue’ of neighborhood revitalization – improving the public realm, building stronger neighborhood institutions, marketing and more.”
It is encouraging to see bipartisan support for rebuilding America’s cities. I agree that it needs to be comprehensive and support revitalization whenever possible, as with brownfield sites. What do you think?
Along with a coauthor, I’ve written an article about criminal enforcement actions against filesharing services, including the ongoing prosecution of the operators of Megaupload. The article also touches on the actions against the Pirate Bay and NinjaVideo. This area of law is important in defining how the federal government protects creators of copyrighted content without stifling innovation. Yet many questions remain about the extent of criminal liability of these services as “secondary” infringers. You can download the article here (and if you do, please let us know what you think). The abstract is below:
The high-profile prosecution of the popular online storage website Megaupload for criminal copyright infringement is the latest in a series of recent criminal prosecutions of online filesharing services. But what pushes a legitimate online file-storing business over the edge to criminal enterprise? How might criminal copyright enforcement differ materially from civil enforcement?
This article answers these questions and suggests guidelines for prosecutorial discretion. After a condensed history of criminal copyright law, we explain why “secondary” theories of infringement apply in the criminal, as well as civil, context and why the DMCA “safe harbor” defense is a red herring in criminal copyright actions. We then propose guidelines for prosecutors to consider before bringing a criminal enforcement action against filesharing services: Limiting prosecutions to theories of liability already established in civil case law, and targeting only those filesharing-service operators that openly defy civil enforcement actions.
I want to flag a recent report by Brooking’s Metropolitan Policy Program about rail ridership in the United States. Perhaps the best part is that they have created an interactive map using the data collected, so it’s fun to poke around and look at their findings. I encourage you to check out the full report, but it’s bottom line conclusions are:
Amtrak ridership grew by 55 percent since 1997, faster than other major travel modes, and now carries over 31 million riders annually, an all-time high.
The 100 largest metropolitan areas generate nearly 90 percent of Amtrak’s ridership, especially those in the Northeast and West.
Only ten metropolitan areas are responsible for almost two-thirds of Amtrak ridership.
The short distance routes consistently dominate Amtrak ridership share and captured nearly all of Amtrak’s recent growth.
Combined, Amtrak’s short-distance corridors generated a positive operating balance in 2011—while corridors over 400 miles returned a negative operating balance.
There’s a good article in the New York Times about Michigan Governor Snyder appointing an emergency manager for Detroit at the start of this past weekend. The article has garnered more than 300 comments, and what’s interesting to me is how divergent these responses are. They reflect the polarized opinions on this controversial issue, which I’ve examined here and here.
I’d like to showcase a few of these comments that I think underscore how tricky the problems in Michigan are, and the pros and cons of Snyder’s approach.
First, a Detroit resident, “Neil,” in favor of the move:
For those who criticize the Michigan governor, you have no idea how bad things have become in Detroit. Decades of a dysfunctional, sclerotic bureaucracy, resistance to any reform by unions, operating deficits and complete unwillingness by Democratic elected leaders to fix things have killed Detroit. The local NAACP leader says “its anti-democratic, not needed, and it’s against everything that this nation was founded upon.” Where was the outrage when the city could have fixed things itself? Where was the outrage at the corruption, the sweetheart deals by the pension fund and rampant mismanagement? Most of the objections are racially based…ie, we don’t want “outsiders” coming in to clean up our mess. As to being anti-democratic, local governments are creatures of the state and exist only by the state’s granting that power through home rule laws. When the city council can’t even agree to a plan to have the state lease Belle Isle and give $6 million in badly needed improvements, how can anybody expect city government to fix the big problems? Democratic politicians have failed the city abysmally for decades. I am a Democrat, I live in the city and I worked for a time in a managerial position with the city, but I welcome Governor Snyder’s moves. Maybe now the long term creditors and unions will take seriously the possibility of having their debts discharged in a bankruptcy, for which appointment of an emergency financial manager is a prerequisite.
Then, of course, there are cries of anti-democracy, echoing Rachel Maddow. Here’s “Wendi”:
I don’t believe any state in this Union should be able to get round the Democratic process by appointing a Tsar to take over a city. This is a direct violation of the voting process we have in this country and should not be allowed. The Federal Government needs to step in and stop this from happening or kiss American Democracy goodbye.
Then there’s those who essentially say, “We might as well give it a try,” like “Deebee”:
To anyone who says that a state-appointed financial manager is facism, would you please offer an alternative? Detroit has been rotting for 50 years. One corrupt mayor and city council after another have pillaged the city and turned the region into a city vs. suburbs battle. Entire areas look like the Luftwaffe just flew over.
No objective, clearly thinking human being can look at that city and say it is successful. And the prominent businessman have been enablers basically kissing the you-know-whats of each incompetent mayor because they are afraid of what “everyone” will think if they don’t. In fact, the last mayor was HIRED by a major Detroit company after being forced out of office.
So again, what is your solution? Where are you going to get the money for it?
I’m not sure what I think about this approach, though I tend to lean toward the “give it a shot” position. Detroit needs help, just as Flint did, and perhaps this is worth a try, since it is incredibly difficult for elected officials to make the types of difficult decisions Detroit needs to make to survive. What do you think?