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Thursday, 15 March 2007

Viacom Sues YouTube for USD1 Billion

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In Monopoly, sometimes somewhere along the way, the "vicissitudes" of life do take place. You go to jail. You end up on someone else's place and you pay them rent. This. That. And as the game goes on, the stakes climb up. So how does Monopoly relate to today's topic? Plenty.

Here's the basic proposition: Google's purchase of YouTube was aimed to cash in on the large online viewership, with one goal in mind: Generate a better business proposition for its AdSense programme. I may be mistaken, but consider the fact that prior to the purchase, Google already had Google Video in its arsenal. Why did it need another Flash Video community? The answer would probably be the brand name that YouTube had generated amongst bloggers.

Enter Viacom. Viacom alleges that there are some 160,000 music videos that are circulating on YouTube.

The Viacom Building @ #1, Astor Plaza
Picture: The Viacom Building @ #1, Astor Plaza
[source: indyken's photostream @ Flickr]

Justin Hughes, director of the Intellectual Property Law Program at Benjamin N. Cardozo School of Law, suggests that Google should have anticipated this problem in purchasing YouTube, because of its business model which allows users to infringe copyright.1

At present, the burden of policing infringing material on a web server is on the copyright owner. The USA Digital Millennium Copyright Act of 1998 requires a webmaster to remove infringing material from a web server only after being served notice by the copyright owner. If the removal is "expeditious" then the Act provides a "safe harbour" for the webmaster.2

Personally, I feel that Viacom would not have pursued the court case against YouTube if YouTube had not been purchased by Google for the following reasons.

  1. Financial Viability
    Quite frankly, if YouTube had not been sold to Google, it would not have been such a profitable target. Just as parents are the target of child kidnapping, Viacom is eyeing a rich payout from Google -- not YouTube.


  2. Support
    Let's face facts. The entertainment industry is worried about dwindling power. While the big corporations spend billions of dollars seeking out new artistes and grooming them up, helping them shoot their music videos, churning out their music CD's, etc, along come the new age pirates who upload tonnes of music videos and MP3 albums to RapidShare et al. The big boys were getting fed up of the DMCA. Something had to give sooner or later.


  3. Deterrant Factor
    Viacom is sending a message to all the other small timers who aspire to be the next YouTube: Cool your horses, or you may be the next. But what it does not realise is that YouTube can continue to operate until a court order is obtained. If, on the other hand, it wishes to get an interlocutory restraining order, Viacom may have to put up security for costs -- not that that would be much of a problem.


However, in the event that the lawsuit does go on, of course Viacom would have to justify its claim of USD$1 billion. How can it show that it is justified in claiming such a big sum? The answer lies in IP valuation -- the art of putting a price to a "work". IP valuation approaches are varied and it is clear that there is no one cohesive approach. Perhaps, this topic will be dealt with in a later article. For now, suffice to say that there are three main means of valuation: the cost method, the market method, and the income method.3

Has this been useful? Send me work.

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Notes

1. Source: Viacom Sues YouTube for $1 billion, MSN Money, 13 March 2007 [link]

2. Ibid.

3. For my personal reference, and I believe for the reader's benefit as well, I would say that WIPO has a set of documents about IP valuation. [link]. Also check out [this link]
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Tuesday, 6 March 2007

Starbucks vs. Starstrucks

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Who?
Shahnaz Husain, an Indian entrepreneur in Mumbai.

What?
She plans to start a string of 25 glamourous coffee shops in India, decorated with posters of (presumably Bollywood, and not Hollywood) movie stars.

When?
God knows.

Where?
India.

An excerpt from Reuters' report (Source: The Brunei Times):

Starbucks, the latest in a line of foreign companies facing branding challenges in India, is reported to be awaiting permission to open its coffee shops.The government had sought some clarifications from Starbucks on its joint venture arrangement.


Apparently, Starbucks has "complained to India's Controller-General of Patents, Designs and Trademark that the name is deceptively similar to its own name." Indeed, that sounds like they mean business, but does such a complaint seek? Is it to strike off the Starstruck mark from the Register of Marks? Otherwise, Starbucks may have to rely on other remedies, e.g. passing off by imitation of get-up, and also a prohibitive injunction/restraining order.

Confusing, deceiving marks would not be allowed registration. [link] A similar matter happened in the "MikeRoweSoft" case, where Microsoft bought over the domain mikerowesoft.com from a 17 year old student named (eeriely enough) Mike Rowe. [link]

If you are from Starbucks and want some more advice on Starstrucks, feel free to contact me. :) [link]
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Saturday, 3 March 2007

Dell's Customers Want Preinstalled Open Source

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Dell Computers recently launched a feedback website, Dell IdeaStorm which allowed its customers to submit ideas for new products. An interesting turn of events showed that many Dell customers wanted Dell to ship computers with Linux pre-installed.

More than 45,000 users over a three-day period agreed with a suggestion that Dell should "preinstall Linux" to cut the price of new PCs. A related suggestion that Dell offer new-computer buyers an option to have the open source suite OpenOffice preinstalled on new systems garnered some 25,000 votes in two days.

Source: Tech News World


Part of the reason vendors themselves prefer bundling computers with Windows (in America, at least!) is the aggressive pricing strategies that Microsoft has adopted. Under such pricing arrangements,

Manufacturers end up paying just as much in total for a smaller number of copies of Windows than it would if it shipped every machine with Windows.

--Bernard Golden, CEO of open source strategy consulting firm Navica. [source]


In a comment posted on bloggingstocks.com, a certain "David Skilling" offered the following advice:

... the second most onerous thing in Dell is the preinstalled junk or trial software. If Dell included full versions of software (60 day trial period/completely uninstallable) as a CD to be installed at the new owners option it would be an improvement.
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Hard Disk Loading and IP Enforcement

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What's "hard disk loading"? A very hard way of loading up a disk?! Well, unfortunately it's a little closer to home than that. Notice every time you purchase a new (and sometimes shiny) computer, it comes with Windows? Well, not just Windows but also lots of nice software. Like DreamWeaver, Microsoft Office, etc. You just need to tell the guy who sold you the computer what you want. "Ah, Tony ah... This one... can give me Windows XP? Or better yet maybe Vista??" And the reply is always "Can!! No problem!!" And of course it's no problem. You got your computer your way with the stuff that you need. And then you surf the Net and you read my blog.

Well, I am here to tell you that "hard disk loading" Google it! -- or the act of copying unlicensed commercial software into computers -- is an offence. Here's a mini quote from The Star Online, Feb 26th 2007:

The enforcement division of the Domestic Trade and Consumer Affairs Ministry is using agents disguised as customers in order to nab unscrupulous computer dealers who offer pirated software via "hard disk loading."

Hard disk loading refers to the act of installing unlicensed software into a PC by copying directly from another computer's hard disk.

source: The Star Online


Section 41(1)(d) of the Malaysian Copyright Act 1987, provides sanction against software piracy by way of a fine of up to RM20,000 and/or a jail term of up to five years for every count of infringing copy of software. One interesting issue: How do you define an "infringing copy"? That would hinge on the word "copy". And if "copy" is defined properly, it includes an "installation" -- but that word ("installation") seems to be missing from the statute. Section 27(2) of the UK Copyright, Designs and Patents Act defines "infringing copy"Google it! as follows:

An article is an infringing copy if its making constituted
an infringement of the copyright in the work in question.


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One interesting nugget that I gleaned from this particular news article is that trapping of software pirates themselves are prohibited. It is up to the vendor himself to offer the pirated "goods". Also interesting is that it is "difficult" to arrest end-users found at such stores. That would explain why the authorities would "advise" the end user and ask him to be their witness.

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Here's something interesting. Whereas the recent news announced that computer traders have been recently caught for hard disk loading, a not-so-recent article in New Straits Times brazenly blared: "Bukit Bintang Declared Zero-Piracy Zone". [link] [link2] You will note that the cached copy of the article (link2) states that "82 shops trading in illegal optic discs at the shopping complexes have now been turned into outlets selling shoes and apparels." We need to think: How did these shops get "turned into" something which they were not in the first place? Just like a computer virus, there must be an author behind those actions. Some other interesting factoids found in the press statement of Ahmad Dahuri Mahmud:

There were 17 cases of copyright infringements in 2005 with seizures of software and hardware, valued at RM99 million.

The number of cases increased to 21 last year, involving 172 units of hardware, valued at RM516,000, and 228,000 copies of software, worth RM23 million.


Two observations. First, of the 17 cases in 2005, none of them passed through my hands. But there was another case which if it had gone to court, would have pushed the number to 18. Second, there were 21 cases in 2006 and only 17 cases in 2005. The value of disputed items in 2005 was valued at RM99 million.... while in 2006, the seized items only amounted to a value of RM23.5 million. That shows a great drop in value. Who evaluates these things, anyway? IP valuation is time consuming and very pricey. Personally, I believe that the figure of RM99 million was the result of some creative individuals who believed in the value of suing for a high sum.


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Hard disk loading -- how is the average computer trader supposed to sell computers without losing his client? Granted, all computers are created equal. But the clients who buy computers pre-loaded with pirated software are usually those who cannot afford licensed software. These would include teenagers and those from the senior community. Their requirement is "anything will do lah, as long as the computer boleh jalan." And the solution is probably something to do with the fact that those pushing for enforcement against hard disk loaders are the big names: in short, Microsoft et al [link].

In recent years therefore there has been a shift toward open source. The open source softwares are constantly updated and bugs ironed out. On the minus side is that the open source movement in reality is ironically powered by many programmers who work for big name proprietary software companies. But that is missing the point that in purchasing the computer, you seek usability. If you were planning to buy a new computer, I would advise you to get it preloaded with ReactOS and Open Office. Of the two, I am currently using Open Office, and I am planning to install ReactOS on my new computer. But for the meantime, I shall stick to my (licensed) copy of Windows XP.
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