Monday, June 29, 2015

Oracle v. Google Android-Java copyright case goes back to San Fran: Supreme Court denies Google petition

The copyrightability of code relating to Application Programming Interfaces (APIs) may elicit more heat than light from a small but vocal group of people. The Supreme Court of the United States, however, has not concluded that there is anything quite so special about the subject that Google's petition for writ of certiorari (request for Supreme Court review) in Oracle's Android-Java copyright case should be granted. At its Thursday conference, the court denied the petition, as just reported by Reuters court reporter Dan Levine on Twitter. And as he accurately noted, this is a "huge victory" for Oracle.

The order list is now available online. On page 11 you can find this entry:


The petition for a writ of certiorari is denied. Justice Alito took no part in the consideration or decision of this petition.

This means Google failed to persuade at least four justices that the Federal Circuit decision needed a review.

In January, the Supreme Court had asked the U.S. government to express its views, and it responded last month, finding Google's petition flawed and meritless.

Since the court doesn't explain its decisions on cert petitions, everyone is free to speculate, but speculation won't really matter. I fully expect the camp that opposes the copyrightability of API-related declaring code to engage in spin doctoring. They'll argue that the Federal Circuit decision won't have weight because that appeals court was only in charge because patents used to be at issue in this case, but it had to apply Ninth Circuit copyright law and, as that camp claims, got it all wrong. They'll say the decision won't be influential at all. I'll let them say this, though I may comment on the precedential relevance of the Federal Circuit decision at some other point, also in light of Cisco's decision to purposely bring a copyrightability case with certain parallels in a way that the Ninth Circuit would have appellate jurisdiction, though Cisco could just have brought a combined patent and copyright omplaint (as opposed to two separate complaints) in order to give the Federal Circuit jurisdiction.

Statistics are not speculation. Only about 1 in 100 cert petitions succeeds. But Google had apparently hoped that a well-orchestrated amicus brief campaign (see 1, 2, 3, 4) would persuade the top U.S. court to hear the case. Those amicus briefs were more than counterbalanced by the U.S. government's submission.

Google brought its cert petition at a stage at which it could also have awaited the outcome in district court before asking the top U.S. court to revive the non-copyrightability defense. But Google presumably knows that its "fair use" defense, which is the only liability-related question left to address on remand, is not really strong. While the Federal Circuit declined to resolve this question in its entirety and deferred to the district court for factual findings, it still provided some guidance that helps Oracle.

Some "evidence" that most likely influenced the jury at the first (spring 2012) trial in connection with fair use was legally only relevant to Google's equitable defenses, but those equitable defenses failed in district court (I'm not sure this interesting fact was mentioned anywhere other than on this blog) and Google didn't even try to revive them on appeal. As a result, some confusing evidence will be kept out of the further process.

Now that the Supreme Court has denied Google's petition and appellate attorney Joshua Rosenkranz (of Orrick Herrington Sutcliffe) has once again shown why he was dubbed the "Defibrillator" (for bringing cases back to life that appeared to have been lost), the sizable litigation caravan that had gone from California to Washington DC for the appellate proceedings--where an amazing reversal of fortunes occurred, with Oracle now having the upper hand--can finally head back all the way to the West. There, "fair use" will be the topic du jour. And, provided that Oracle wins (which I've always believed it will), remedies. This means injunctive relief more than anything else. The strategic implications are not described accurately by portraying this as a billion-dollar case.

On this occasion I do wish to say a few things about fair use. About a year ago I explained why I ultimately concluded that Google Books probably should fall under the "fair use" exception, but Android should not. What is really the idea of "fair use"? At a philosophical level, it's all about whether, on balance, an unauthorized use of copyrighted material does more good than harm. Part of this consideration is whether a derived work is "transformative" in the sense of really creating something new of a kind that couldn't exist without building on the original material.

Depending on the specifics of a case, there can be a pretty strong argument for "fair use" or at least a reasonable argument, but there are also cases where it's more than a stretch to raise this defense.

A 1990s rap parody of a famous 1960s song is undoubtedly transformative, even in two ways: it's a parody, and it's a different music genre. The original author may not like to be subject to parody, but has to accept this like any other form of free speech. His heirs may not like it, or they may more likely seek leverage to cash in on the parody, but that doesn't make the parody illegal. The parody won't reduce demand for the original song; if anything, it gets an additional audience interested in the original. So this is a rather strong case for fair use, even though the fact that this is a form of commercial exploitation was held against it.

In my post on Google Books I stated that I was initially uncomfortable with the idea of this constituting "fair use," but the more I thought about it, the more I felt that the related decision was good policy. I have found information on Google Books that was useful and without which I might have had to buy a book (not necessarily the book shown on Google Books, but more likely another book on the same subject) to obtain it. So there is an argument for some negative effects, but I can see why on balance, also considering the public interest, Google Books does more good than harm. It's a close call, though.

In the Android-Java case, the part of the 2012 jury instructions that I took most issue with was the one that explained "transformative use" to the jury in a way that I thought was too broad. Copying select parts of a copyrighted work and then building new stuff around it should not be deemed "transformative." If someone stole someone else's car and drove it to a garage where there's 500 other cars, and let's assume he's even the legitimate owner of the other 500 cars, it's still theft and not "transformative." Also, mobile Java existed before Android, and was displaced by Android. This leads us to the commercial implications. It's all about Google making money and Oracle, as the rightful acquirer of the company that gave the world Java, losing out. The remand proceedings are now an opportunity to right this wrong.

On remand, Google will still try to make an "interoperability" or "compatibility" argument, but how credible is that one? The U.S. Department of Justice wrote in its submission to the Supreme Court:

"The Android platform uses the Java programming language, but [Google] purposely designed Android not to be compatible with the Java platform or interoperable with Java programs."

I'm sure I'm not the only one to find it hard to see an interoperability-based "fair use" case here in light of the above.

Finally, apart from expressing, as always, my hope that the parties will now settle, let me point you to my May 2014 refresher Q&A after the Federal Circuit ruling. Since the Supreme Court declined to even consider overruling the Federal Circuit, that Q&A outlines the current situation and explains various key facts about the dispute.

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Thursday, June 25, 2015

1,000 EPO employees took to the streets of Munich to protest hidden surveillance, other violations

About two months after I expressed the opinion that potential union recognition by the European Patent Office (after some 40 years of existence) would be insufficient to solve the social conflict there, it turns out that things have not only failed to improve but actually deterioriated. And president "Blatterstelli"'s days may already be numbered because even the government of his own country appears ready to sack him anytime.

Yesterday, the Staff Union of the European Patent Office (SUEPO) held a demonstration in front of the EPO's main building in Munich. While there have already been various other SUEPO demonstrations in Munich, a couple of which I reported on, yesterday's protest had a new (though not exclusive) focus: surveillance by means of hidden cameras and keyloggers. Participants in the demonstration carried signs showing surveillance cameras:

It appears credible to me that, as the organizers claimed, approximately 1,000 EPO employees participated -- a fairly high percentage of all Munich-based EPO staff. On the next three pictures (this post continues below them) you can see parts of the crowd:

SUEPO's message to the EPO's leadership, particularly the self-serving Administrative Council (which bears the ultimate responsibility for the whole mess), is loud and clear: EPO employees want to see actions, not words. Improvement, not promises. And this has to start with at least a modicum of respect for fundamental human rights, no matter how hard that may be for the members of the Administrative Council, the president and the vice presidents of the EPO.

In April it was already remarkable when a Munich-based Dutch diplomat addressed protesters and expressed concern over bad press. At the same demonstration it was also mentioned that Mr. Battistelli threatened to resign. His resignation may actually be closer than ever now. At a recent EPO event in Paris, French innovation minister Axelle LeMaire said (starting at 109:40 in this official video recording):

"L'innovation c'est un impératif, un impératif économique. Et ce qui est vrai pour la technologie, l'est aussi pour l'innovation publique, les modes de gouvernance, l'innovation sociale. Et à ce titre, même si ce n'est pas l'objet de notre rencontre ce matin, le gouvernement français connaît les difficultés sociales qui s'expriment au sein de l'Office Européen des Brevets et à ce sujet, l'office a un devoir d'exemplarité, de transparence absolue dans le respect des droits des agents qui y travaillent."

My unofficial translation:

"Innovation is imperative, imperative for the economy. And what is true for technology is also true for public innovation, meaning governance structures and social innovation. And while we are on this subject, though this is a departure from the subject of this event here, the French government is aware of the social issues at the EPO and, in this regard, the EPO has a duty of being exemplary, a duty of absolute transparency with respect to the rights of the people who work there."

It's really unusual in two regards. One, this speech was given at the European Inventor Award ceremony, an event at which the EPO wanted to celebrate itself. I consider that event a sad thing. In my opinion, a patent office that promotes in any way (by this I also mean the USPTO with its Steve Jobs patents exhibition) patents that are or could still be used in litigation miserably fails to be neutral and its leadership should be replaced. But for the EPO's leadership, that event is meant to be a day of joy and self-aggrandizement. The fact that a politician would touch on the delicate issue of the EPO labor conflict and human rights issues on such an occasion gives those remarks about ten times more weight than if they had been made in daily business. Two, Mr. Battistelli is French and the national governments of officials of international organizations are usually the last ones to withdraw their support.

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Thursday, June 18, 2015

Samsung requests full-court review of appellate decision on Apple's design patents: claim construction, damages

Samsung filed a petition yesterday for an en banc (full-court) rehearing concerning the design patents-related issues relating to the Federal Circuit's mid-May appellate opinion in the first Apple v. Samsung case. Apple did not file a petition concerning the part that was unfavorable to it (the one on trade dress), so Apple appears to accept that a third California trial in this first case (one also took place last year in the second California Apple v. Samsung case) will be necessary.

There are different angles from which to look at the part on design patents. Samsung did derive certain commercial benefits, including market share, from building products approximately five years ago that looked significantly more similar to the iPhone and iPad than certain alternative Android-based products made by, for example, HTC and Motorola. Should any valid intellectual property rights have been infringed that way, Apple would have to be compensated, not because it would need the money but as a matter of (in that case) justice. However, the longer the whole Apple v. Samsung litigation takes (it started more than four years ago and ended everywhere except in the United States last summer), the more I am concerned about some of Apple's core positions in this context, though I can understand that some people in Cupertino were not amused when they saw some of the early Samsung Galaxy products. The two key concerns here relate to overbreadth and overcompensation:

  • If correctly interpreted and applied, design patents are relatively narrow intellectual property rights. However, juries really need help from judges to get this right. The ability of the average jury member to independently distinguish between functional and ornamental elements of a design is presumably not greater than that to figure out the inner workings of event handlers in operating systems or just-in-time optimization strategies of compilers. Technical patents are hard to understand without specialized knowledge, but just like most consumers don't care to learn about what makes their smartphones work, they also don't usually think about smartphone designs in terms of functional and non-functional, ornamental elements. As a result, they will often consider a design patent infringed because of functional rather than ornamental similarities, and they will consider a design patent valid just because the overall combination of technical and ornamental aspects appears to deserve protection, though an analysis focused on only the ornamental parts might lead to a different conclusion.

    What's even worse is that an overbroad interpretation of design patents can result in monopolies over abstract concepts such as general screen layout and user interface ideas.

  • If an entire product constitutes an infringement of intellectual property rights, it's reasonable that damages exceed the infringer's profits. However, in the hypothetical scenario of a product that is highly multifunctional, does not infringe any valid technical patents, but is deemed to violate three design patents held by three different right holders, it would be irrational to let each of the three design patent holders collect the total profits made with that product.

    Apportionment alone does not guarantee reasonableness, but there can be no reasonableness in infringement damages without it.

Considering that the panel decision was unanimous and that the panel included the appeals court's chief judge, I wouldn't hold my breath but I still think it would be the right thing for the Federal Circuit to give further thought to the points Samsung's lawyers have made in their petition for en banc rehearing. And if not, then I sincerely hope Samsung won't give up. Apart from injunctive relief over standard-essential patents, I haven't seen a "certworthier" matter in all the smartphone patent disputes I've been watching since 2010.

I'll show you Samsung's petition and comment on a couple of points below the document:

15-06-17 Samsung Petition for en Banc Rehearing Re. Design Patents by Florian Mueller

Samsung's petition discusses the absence of guidance for the jury with respect to functional (thus irrelevant) aspects of Apple's design patents first, followed by damages. This does not say anything about its priorities. It's logical to discuss liability prior to remedies.

The legal argument for a full-court review is mostly about conflicts with prior decisions (some of which were made by other circuit courts, going back to when there was no exclusive jurisdiction over patent law) and also about the exceptional importance of these issues.

Samsung's lawyers note that "[i]n contrast to its detailed analysis of trade-dress functionality, the panel spent barely 3 pages rejecting Samsung's argument that the district court had improperly allowed the jury to base its design-patent infringement finding on the same or similar functional features." While I agree with Samsung (by now) that Judge Koh should not have instructed the jury to just compare those design patents, based on the overall appearance of the covered designs, with Samsung's products and should instead have clarified which ones are legally irrelevant because they are functional, I don't think the panel had to write more than three pages. Those three pages were sufficient for the judges to explain their reasoning. The number of pages also doesn't necessarily reflect the amount of thought that went into this part of the ruling. One can spend weeks thinking about a single word or write ten pages in a couple of hours.

Their argument on substance is much stronger. For example, I like this passage:

"[T]he judicial obligation to construe the scope of a design patent cannot be satisfied merely by reciting the term 'ornamental,' which already appears on the face of the patents themselves [...]. Nor can it be satisfied by telling the jury to look at the 'patent figures' unaided by guidance as to what is (or is not) ornamental about them, for the term 'ornamental' is not self-executing, and there can be no doubt that the figures of Apple's design patents contain functional elements, as the panel's trade-dress holding confirms."

With respect to damages, the panel said that it had no alternative under statutory law but to affirm Judge Koh's decision to tell the jury that design patents entitle their holder to a total disgorgement of infringer's profits. 35 U.S.C. 289 says an infringer of a design patent is liable "to the extent of his total profit," but I still don't believe the Federal Circuit panel couldn't have found a way to decide in favor of reasonableness.

Samsung's petition outlines three ways, any single one of which (and especially the combination of two or all three of which) would make it possible to achieve a proportionate result nonetheless:

  • "[T]he phrase 'to the extent of his total profits' is best read as a term of limitation that makes total infringer's profits a ceiling not a floor;"

  • "the phrase 'profit made from the infringement' shows that Section 289 permits only profits caused by the infringement"

    In this context, the petition mentions an interesting fact relating to the legislative intent:

    "[T]he bill's sponsor, Representative Martin, disclaimed any intent to displace the bedrock causation principles underlying patent law, reassuring skeptics that the new act would not permit total-profits awards 'without any proof that this arises from the use of the design' or where 'those profits arise … from various other circumstances which may enter into the manufacture.' 18 Cong. Rec. 835 (1887) (Rep. Martin) (emphases added [by Samsung's lawyers])."
  • "the term 'article of manufacture' is most naturally interpreted to mean the portion of a product as sold to which the patented design is applied, as otherwise a defendant could be held liable for all its profits multiple times over if its product infringed design patents held by multiple patentees."

    (This point was stressed by industry group CCIA in an amicus brief.)

Cases cited in this context include "an award of infringer's profits from sale of a watch case to which the design was applied and not from sales of the watch itself." I'm quite sure Apple would not want to be liable for total profits made with its smartwatch if someone happened to hold a design patent on its case...

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Sunday, June 14, 2015

The so-called data protection officer of the EPO signed off on keylogging, hidden cameras

Given Germany's experience with totalitarian surveillance states before and (in the eastern part) after World War II, I wonder for how long Germany's chancellor and minister of justice, as well as the Bundestag (parliament), can tolerate an international organization on German soil that appears to stop at nothing in its human rights violations. The European Patent Office (EPO) abuses its "immunity" and one of the first reform measures should be to put each facility of the EPO under the jurisdiction of the respective country, at least with respect to human rights including data privacy. There is now conclusive evidence that the EPO has violated basic human rights not only of its staff but even of unsuspecting visitors of one of the EPO's Munich facilities.

On Friday, the data protection officer of the state of Bavaria (whose capital is Munich, where the EPO is headquartered) was quoted by a newspaper (English translation here) with the suggestion "that an external data protection supervisor be assigned to the EPO because the internal inspectors are not independent enough and in the absence of any action matters are likely to get out of hand." It has become known that the EPO used keyloggers and hidden cameras in its internal investigations of what may actually just have been the exercise of one or more people's freedom of speech with respect to the EPO's Jack Warner, vice president Željko Topić. After Mr. Topić lost a court ruling in his country of origin (Croatia), can be accused of pretty bad stuff. The Bavarian data privacy commissioner was spot-on: while the EPO does have a "data protection officer," that person is just a dictator's minion with no say over anything important.

A document has been leaked to me that proves a complete dereliction of duty. The "data protection officer" in name only signed off on covert surveillance measures (keyloggers and hidden cameras) on December 3, 2014 with the following rationale:

"Given the seriousness of the allegations I consider the proposed measures as proportionate."

Seriousness of the allegations? Are you kidding? This here is not about an assassination plot, or about gaming the patent system in the sense that someone would have leaked sensitive information to a patentee's competitors, or about bribery in connection with patent grants. Under such circumstances I would actually support the use of covert surveillance (I'm all for law and order and not really a privacy activist, to be honest). But the request that the "data protection officer" (who is more than 25 years late to serve as a Stasi official) authorized merely refers to freedom-of-speech issues: "a sustained campaign of defamatory and insulting communications against [the EPO's Jack Warner], other senior managers of the Office and possibly Administrative Council Delegates, in the form of normal post and electronic mail."

I also have my doubts that the communications in question were "defamatory and insulting" in light of the aforementioned Croatian court ruling. It's fairly possible that some people just said what one would be allowed to say anywhere except under a lawless regime backed by government officials who are far more interested in getting a well-paid job at the EPO than in supervising its management.

The EPO's lawlessness knows no limits. It would have been unacceptable to use keyloggers and cameras for covert surveillance of people's workplaces, but as the approved request states, "[t]he workstations in question [...] are located in public or semi-public areas of one Office building in Munich."

Here's the complete document with certain passages marked up in red:

EPO 'Data Protection Officer' Authorizing Surveillance by Florian Mueller

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Tuesday, June 9, 2015

Apple may regret its choice of a permissive open source license for the Swift programming language

As the founder of an app development company with one Swift-based project underway, I was excited to hear about Apple's decision, announced yesterday at its WWDC, to open-source the next generation of its latest and greatest programming language. I'll say a few more things about my own perspective at the end of this post (just in case anyone cares to know) but before we get there I'd like to focus on the broader strategic implications.

According to yesterday's announcement, "Swift source code will be released under an OSI-approved [OSI = Open Source Initiative] permissive license." This means Apple will relinquish its rights in that code to the greatest extent it can under all the kinds of software licenses I know. "Permissive" means Microsoft, Google, Samsung (Tizen) and anyone else can just take that code and incorporate it, for free, into their own products, including closed-source, commercial offerings.

The alternative for open-sourcing Swift would have been to release the Swift source code under a copyleft license such as the GPL. That license would give users the same rights but also impose an important obligation: any derivative product would have to be made available on copyleft terms as well. I know the Free Software movement doesn't like the terms "viral" or "infectuous." But I mean them non-judgmentally and they describe the effect. If the smallest piece of a larger work is GPL'd, the whole thing must be GPL'd, too.

The copyleft "share-alike" obligation would have been a poison pill at least for Microsoft and Google. The whole Oracle v. Google Android-Java copyright infringement litigation would never have happened if Google had adopted Java under the GPL (the license under which Sun Microsystems already made Java code available before being acquired by Oracle), but it feared that copyleft would prevent its device makers from differentiating through proprietary add-ons.

The original right holder, Apple in this case, still remains free to make the same code available on two ("dual-licensing") or more licenses in parallel. So Apple could have protected its own ecosystem from copyleft, and could have negotiated case-by-case licenses with others in the industry for the same purpose, while forcing the rest to make an all-or-nothing decision. I have my own (positive) experience with dual licensing as an early shareholder (more than 10 years ago) in MySQL AB, maker of the namesake open source database (which was later acquired by Sun, thus got bought by Oracle alongside Java).

The first beneficiary of Apple's choice of license type that comes to my mind is Microsoft (and, by extension, companies like mine who would like to build Windows versions of their apps provided it doesn't cost us much time). In April, Microsoft announced that it would make the porting of Android and iOS apps to Windows easier. They weren't talking about emulation, just about letting us compile Objective-C and Java code under Windows and giving us direct replacements for key iOS and Android API functions. It was more about familiarity than compatibility, but still very useful. Support for Swift was not announced at the time. With Swift becoming available under a permissive open source license, however, it should only be a matter of time, and probably not a whole lot of time, until Microsoft supports Swift as well. It would be crazy if it didn't.

Sure, Apple could theoretically do the same with .NET and its Common Language Runtime, which Microsoft released under the permissive MIT license. But it wouldn't make sense because Apple doesn't need this to attract developers to its platform. In the post-PC world, Apple is the #1 in economic terms, Google has the largest user base, and Microsoft is a distant third by either measure. If the primary winner and the primary loser in a given market adopt the very same licensing strategy for their platforms, there are only two possibilities: either their license choice is the only one that makes sense regardless of how successful or unsuccessful you've been (for example, it might be great for the ones at the top and the ones at the bottom but squeeze the one(s) in the middle) or one of them has made the wrong choice.

It will take years to find out which of the two is the case. This here is not a prediction post; I just want to discuss the potential implications.

Apple has undoubtedly thought about what Microsoft and Google (and others) might do now. Microsoft will benefit, and I could see Tizen benefit in a similar way. Google has a huge developer base that is happy with Java, and if it ever wanted to replace Java, there's a couple of alternative languages that it's been developing for some time.

Apple may feel that neither Windows nor Tizen are ever going to be a threat, no matter how small the effort to port Swift apps to those platforms might be in the future. Apple could even hope that more market share for Windows and Tizen will just hurt Google (divide and conquer, sort of).

But what is Apple trying to achieve here? A permissive open source license for Swift is the answer... but what is the question?

If Swift had adoption problems, open-sourcing it would be a Hail Mary. But in only a year it has experienced an incredible uptake. App developers have understood quickly that Objective-C is just a legacy and in a few years it may be deprecated.

I already thought five years ago that Android was going to do to the iPhone what Windows had done to the Macintosh. It could still happen, but not too soon. The one thing that would really threaten Apple's business model would be if app developers decided to put major new releases out on Android first, or invested more in their Android versions than in their iOS versions. There comes a point when the collective innovative capacity of an entire ecosystem dwarfs even that of the world's most valuable corporation. It was the Windows ecosystem, not Microsoft alone, who marginalized the Mac. However, as of now, those network effects are still favorable to Apple, simply because its customers spend more on and especially inside apps, so app developers (like my little company) have a greater opportunity, depending on their geographic target markets of course, on iOS. It's also a prestige thing to succeed on iOS. "If you can make it there, you can make it anywhere."

Even in Germany, where I see far more Android than iOS devices on trains and in public places, Google Play revenues have just recently, according to at least one market research firm, exceeded App Store revenues. On a worldwide basis, the Play Store appears to be catching up slowly, and an increasing reliance of app developers on advertising revenues (for example, giving you in-game coins in exchange for watching video ads) could also benefit Android over time. But iOS is still in a strong and safe position, probably due in part to the fact that many Android phones are technically smartphones but practically used like dumbphones. And even if Apple feared Android's ability to close the gap, what good would it do to open-source Swift?

It's really a mystery to me. The iPhone and iPad don't need this; for the Mac it would actually have been an opportunity to be the desktop platform that iPhone/iPad developers can support with the smallest effort, but if Microsoft adopts Swift in some way, this will be just as much of an opportunity for the Windows desktop and, by extension, for devices like the Surface. And on the desktop, the collective purchasing power of all Windows users is clearly greater than that of the Mac user base.

Even in the absolute best-case scenario for Swift, a permissive license would then enable Google (or any company in its ecosystem) to make it easy to port Swift apps to Android. The effect would be commoditization, which is not in the interest of the one with the highest profit margins.

If this strategy didn't work out for Apple, for example because of others having a greater benefit from it than Apple itself, it could always release a future version of Swift -- 3.0, 4.0, or later -- exclusively under a proprietary software license. It can't re-close the source code published by then, but it has no obligation to publish more code on open source terms. And that's why the rest of the industry, in the absence of a multi-company consortium that would control future development of the language, won't rely on Apple's newfound openness anyway. They will just evaluate ways in which they can opportunistically benefit from it. "Embrace, extend, extinguish" will be hard as long as Apple invests significantly in Swift, but it's not impossible.

I'm sure the Free Software movement is very disappointed right now that Apple, like Microsoft, has chosen a permissive software license rather than the GPL. However, permissive licensing might turn out not to be in Apple's commercial interests, and maybe a future version of Swift will be published under the GPL.

[Update] I've received messages via social media stressing that Apple won't open-source the Cocoa APIs. Right: just the compiler and the standard libraries. But this isn't about wholesale emulation. It's about Microsoft (and possibly others in the future) letting you stay in the programming language in which you've developed your original app and giving you replacement API functions. [/Update]

Own perspective

At the beginning of this post I said I was going to focus on the broader, industry-wide strategic implications of Apple's licensing decision and would talk about my own company's perspective only at the end. I've mentioned my game development plans on various occasions since the second half of 2013. I haven't announced any title or even a genre, so arguably this isn't "vaporware," but it's true that it's taken a lot longer already than I would have thought. Part of the reason is that I firstly had to restructure my work so as to be able to focus almost 100% on app development. An even bigger part is that the original project became ever more ambitious, and late last year I decided to start a second project in parallel, with external developers. The internal project will result in a game that I want to revolutionize an old genre. My goal is that people who look at it think it's 90 or 95% new and only 5% or 10% of it is what they have already seen in other games in that category. The second project will have a completely novel task at its center, as the Rubik's Cube or Tetris had. It's not a blend of existing categories either. It will create a whole new category. You'll see.

Right now both games are well on track to be released in the second half of the year, in the fourth quarter more likely than in the third. And both will be published on iOS first, though the internal project originally started on Android. Internally we use Swift, and I'm glad we made that choice last year despite its "childhood diseases," but what really made me determine that "iOS first" was the right choice at the moment is that especially for the internal title a large part of the commercial opportunity will be in the U.S. market, where iOS has been able to even regain market share thanks to the iPhone 6. Apple is doing way better at this stage than I would have thought a year or two ago that it would now.

I still like Android a lot and our Android versions will have the same quality as our iOS products, and at some point I hope to port at least the Swift-based game to Windows as well, so Apple's decision to make Swift available under a license that will enable Microsoft to make iOS-to-Windows ports pretty efficient for Swift apps is good news for me. I still don't understand how this will benefit Apple. Maybe I'll find out over the next few years just like I found out that Apple's (largely) failed patent enforcement efforts were unnecessary anyway because of other success factors it benefits from.

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Monday, June 1, 2015

Striking structural parallels between the European Patent Office and soccer body FIFA

With all the attention that corruption scandals relating to soccer body FIFA are getting these days after certain arrests due to U.S. criminal investigations, I finally wanted to draw certain parallels between the structural deficiencies of FIFA on the one hand and the EPO on the other hand that had already come to my mind last year. I've worked on policy and antitrust issues relating to patents as well as soccer. In connection with the latter, my focus was on broadcasting rights, but I also worked on some overall governance issues on behalf of Real Madrid, the most famous sports club in the world. Obviously, the opinions I express here are just my own.

Parallel #1: Voting rights

Each member state of the European Patent Organisation (EPOrg) or member association of FIFA, no matter how small, has one vote. Based on my observations of what effects this has at the EPO and in soccer, I'm convinced that this is a recipe for bad decisions and only benefits the executive leadership of those organizations. It's easier to bribe a soccer official from Trinidad and Tobago than one from the UK because of the risk-reward ratio for either one (the absolute amount of money involved being equal). UK soccer executives simply have enough opportunity to make money legally. Similarly, paying a visit to a German dentist on the occasion of an EPOrg Administrative Council meeting won't impress an official representing the German government because his healthcare package would cover this anyway, but it could influence someone from a less developed country such as Albania.

It also gives large and rich countries an excuse for not being able to bring about reform: they can always claim they would be outvoted anyway. (Of course, if the Big Three left the European Patent Organisation, that would be the end of it just like no FIFA World Cup would be taken seriously if Germany, Spain, France, Argentina and Brazil refused to participate. But it takes a lot before someone threatens to leave an organization like that.)

Parallel #2: Officials facing accusations of bribery

FIFA officials have been linked to bribery for many years. If you're interested in the longstanding history of corruption in soccer, I recommend this book: "FOUL! The secret world of FIFA: Bribes, vote rigging and ticket scandals" by Andrew Jennings. One of the officials arrested last month, Jack Warner, also features prominently in that masterpiece of investigative journalism. However, as far as criminal charges (whether they will ultimately be proven is another question in all those cases) are concerned, the EPO also has its Jack Warner and his name is Željko Topić. You can read about the related allegations and accusations on Wikipedia, TechRights, IP-Watch and other sites.

If the Administrative Council of the EPOrg was as concerned about the reputation of the EPO as the supervisory bodies of honorable organizations are, they would have ousted a vice president at the latest after he lost a Croatian court case trying to prevent a journalist from making certain claims. But with little attention in mass media (at least outside of Croatia), he can stay in office, which says a lot about the mentality of the decision-makers there. Do you believe the European Central Bank would let a vice president stay in office after being accused of counterfeiting? What this EPO vice president is accused of is the IP equivalent of what counterfeiting would mean for a banker.

Parallel #3: Supervisors receive allowances and other benefits

The aforementioned book about FIFA discusses the effect of allowances on the individuals sitting on its various committees. Same thing about the EPO (where healthcare is part of the deal). In the private economy there is nothing wrong with that. I've received cash and stock for an advisory board membership, too. However, in the EPOrg's case we are talking about public servants. Government employees. They are already paid for this work by their national governments. When they attend an EPorg Administrative Council meeting, they don't do this in their free time. I'm not aware of any other organization than the EPOrg that would pay the representatives of its member states allowances or healthcare.

As I explained above (voting rights), the impact of this depends on the income opportunities those individuals have in their home countries. For those from small and/or less developed countries, this is a significant incentive to turn a blind eye to a lot of issues and to support the leadership. Regardless of which kind of country someone is from, this is questionable behavior. Public servants? Self-service!

Parallel #4: Opportunities for supervisors to get prestigious posts

FIFA has traditionally set up large numbers of committees so as to give as many people as possible the chance to be chairman or vice chairman of something. This, too, is an incentive to side with the executive leadership, which has a lot of influence over those appointments. At the EPO they do the same thing. They have posts to offer on the Budget and Finance Committee (BFC), Select Committee, Patent Law Committee, Board 28 and whatever else they have there.

The situation is even worse at the EPO than at FIFA. It's not just about ego and reputation. Pretty much everyone on the Administrative Council hopes to get a significant raise one day by becoming an EPO vice president or, ideally, president. After taxes, the income of the EPO's top brass far exceeds that of public servants in its member states. But the best way to become vice president is always to be on good terms with the president. (In soccer, it also happens from time to time that executives of national bodies take jobs at international bodies like FIFA and UEFA, but the financial benefit is not nearly as clear as in the European patent system.)

Parallel #5: Lavish buildings and awards ceremonies

When "non-profits" like FIFA and the EPO control billions of dollars/euros, they inevitably look for ways to spend them in ways that could be characterized as self-aggrandizement. They hire famous architects to design new buildings for them, and they throw expensive parties. Here, again, FIFA's Ballon d'Or award ceremony at least serves an obvious and legitimate commercial purpose, while the EPO's European Inventor Award is a major disgrace in ethical terms. I agree with the criticism voiced in this IPKat post. This is indeed a "dangerous compromise of principle." The EPO must be neutral, but it is not. Instead of taking measures that would really contribute to patent quality, it compromises the process as a whole. It crosses the line all the time between what is appropriate for a governmental organization and behavior that would only be acceptable for a private enterprise.

Parallel #6: Member states/organizations must follow the party line to have certain opportunities

Every four years, FIFA gives the World Cup to another country. This gives FIFA's leadership enormous leverage over member organizations and even national governments. If you don't have Sepp Blatter on your side, your country can forget about a bid for hosting the World Cup. While it's doubtful that this actually benefits a country economically, it's certainly a prestige thing for the individuals (including even top-level politicians) involved.

In the EPO's case it's about money for national patent offices rather than prestige. National patent offices benefit substantially from renewal fees (when renewal doesn't really cost them anything). Moreover, the EPO has various cooperation programs in place with national patent offices, and I've heard stories of how national government representatives were threatened (in Administrative Council meetings and elsewhere) with being precluded from such lucrative projects in the future if they disagreed with the EPO's leadership.

Well, here's a New York Times article on FiFA's generous grants to members. Same thing.

Parallel #7: Compromised access to justice

A big part of the problems at FIFA (and smaller problems at UEFA) is that those soccer bodies have statutes that don't allow teams and players to go to a regular court. They all have to submit to rules that require them to bring any claims in the associations' and federations' own tribunals, with the final judge according to those statutes being the TAS-CAS, which is effectively controlled by the likes of Sepp Blatter. Those statutes are obviously unlawful but regulators like the European Commission don't force sports bodies to change them. One can still go to regular court and prevail, as did Mr. Bosman. But when you do that, they will use threats of all kinds. When Swiss team FC Sion went to court, Switzerland was threatened with its national team being excluded from the World Cup and EURO tournaments and with all of its clubs being excluded from the UEFA Champions League and Europa League.

The people pulling the strings at the EPO also seek to compromise access to justice. The only somewhat independent judicial body its staff has access to in labor disputes is the International Labour Organization's (ILO) Administrative Tribunal. Those proceedings take very long, and justice delayed is (often) justice denied. The members of the EPO's in-house courts called boards of appeal should be independent, but the president suspended one of them last year. And with the Unified Patent Court, essentially the same group of individuals that sits on the Administrative Council will, directly or through subordinate employees, control the appointment and reappointment of judges and limit the ability of the Court of Justice of the European Union (CJEU) to give opinions on patent-related legal issues.

So, who's worse?

One could possibly find even more parallels, especially with an inside track to both organizations. For example, FIFA's "For the good of the game" hypocrisy and the EPO's constant claim to promote innovation (when it actually favors patent quantity over quality) are another similarity, or their controversial autocratic presidents -- "Blatterstelli". But no matter how many parallels one finds, there are certainly also more differences than the ones I've outlined above. I just can't compare each and every aspect of two large organizations in a single post.

I don't mean to say here that the EPO is as bad as FIFA is in many people's eyes now. I just wanted to show that both organizations have similar structural issues that lead to bad decisions and bad behavior. Neither FIFA nor the EPO are corrupt per se, but their structural deficiencies have various corrupting effects.

It's very unlikely (and has never been claimed) that the extent of personal enrichment at the EPO amounts to even a fraction of what FIFA officials have raked in. But even the world's number one spectator sport is dwarved in economic terms by the industries in which patents play a key role (whether positive or negative depends on the industry or industry segment, but there's no denying the importance either way). That's why there can be no doubt about where structural reform is needed more badly.

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