When Patents and Network Effects Collide

March 2nd, 2010 by rubenr

In the past week we’ve seen lots of news about Patents.  Last week, Facebook was granted a patent on it’s “News Feed” feature, prompting concern that it might try to kill Twitter.  This morning, Apple sued Android phone-maker HTC over a litany of patents.  All this high-stakes patent news comes just as the Senate restarts work on a Patent Reform Bill that has been pending for years.  Needless to say, it’s an exciting time to be digging into issues of patent law (well, as exciting as that gets).  Facebook and Apple patents can be starting points to discuss lots of issues: Are they valid? Are they infringed? Do we even need Software patents? Etc.  I’m going to however look at just one aspect of the iPhone and news feed patents, and that’s their interaction with the network effects of the technologies they cover.

Network effects happen when the value of a good or service is directly related to how many other users use that good or service (ie. you value your phone because of how many people you can connect to with it).  The network effects on Facebook are pretty straightforward: more people join Facebook because it’s the social network most people are already on.  I’ve written about the Privacy implications of Facebook’s network effects here.

The network effects on the iPhone are a little more nuanced, the wireless telephone network isn’t the issue (that’s operated by AT&T, and that network isn’t covered by iPhone patents).  The network effects with the iPhone arise from the users and developers of iPhone apps.  The iPhone is just a platform for connecting users and developers.  Developers want the platform with the most users, users want the platform with the most apps.  The iPhone is the dominant player in this market, but Google’s open-source Android platform has been quickly catching up.

The interesting thing about markets with Network Effects is that they usually only support one dominant player (we only have one phone network, there’s only one DVD standard, and now only one HD playback standard: Blu-Ray).   So that means that under normal competition, the superior product will win-out in the short term and become the market dominator (most recently we saw this with Blu-Ray beating HD-DVD).  But what happens when we introduce patents into the equation?  They could be used to stop  short-term compitition, leading to eternal market dominance by an inferior product.

Patents exist to incentivize creation and protect inventions, not to help one entity obtain a monopoly in a market susceptible to network effects.  By many metrics, Google’s Android platform is superior to the iPhones (for example, the ability to run multiple apps at once, which the iPhone does not support).  If Apple uses its patents to block the development of other platforms, it gains much more than a simple 20 year right to exclusively practice its invention.  Rather it effectively becomes the only smartphone platform for the eternity of smartphones (which will likely be more than 20 years).  To those who think 20 years is an eternity in software and that by then the point will be moot, I point you towards the still-dominant Windows operating system (which benefited from its own initial network effects, and faced multiple antitrust inquires, imagine if they had patents to block every other OS developer at the infancy of the computer age).

As a patent attorney, I’m generally pro-patents, but I think we need think about their role in networked industries a lot more, particularly since so many modern-day innovations take place in a networked environment.

In Defense of Primaries

February 26th, 2010 by rubenr

A couple of days ago I was talking to someone who was smitten with the fact that the Indiana Democratic Party gets to hand-pick a Democratic nominee to succeed Evan Bayh (since no one  is running in the Democratic Primary for his seat).  The logic was this:  Primaries can get bad candidates elected; the fear in moderate Indiana being that “too liberal” a candidate could win the primary and lose the general election.  Meanwhile, in Minnesota’s race to replace Governor Tim Pawlenty, the DFL (Democratic-Farmer-Labor Party, the equivalent of the the State Democratic Party elsewhere) has decided to move their party convention from June to April (even though the official primary isn’t until September) in the hopes of endorsing a candidate early (and making the primary election moot), the goal being to “build greater momentum for the general election.”

What’s going on here?  Since when do we hate primaries?  While it may be true that a bad candidate can get elected via a primary, I seriously doubt having elites hand-pick candidates leads to a better result.  I’m actually a huge fan of primary elections.  I think competitive primaries are the only way to truly test candidates (their ability to campaign, connect with voters, flush skeletons from opponent’s closets, etc.) and thus go into the general election with a broad base of established popular support and some momentum.

So why is everyone so scared of them? There seems to be two different driving forces to the situations I described above, in Indiana the fear is of the Democratic voters, who may elect someone too liberal (a valid concern, but one that can be addressed during a primary: someone can run as the moderate electable candidate).  In Minnesota, the DFL seems to want to mimic an incumbent’s advantage in a general election: not having to face a primary challenger and thus the ability to campaign in a general election early (while the opposing party “wastes” time on primaries).

I’m not convinced that this sort of incumbent-type advantage is actually worth it, especially if you’re not running against an incumbent! (The Governor’s seat in MN is open)  Particularly when you consider the benefits of a primary (rigorously testing a candidate, gaining tested popular support, media attention, etc.) against the possible flaws of having elites cherry-pick candidates (such as general discontent with elites deciding rather than voters, picking someone who looks great on paper but can’t campaign, or picking someone with a hidden October surprise that could have been flushed out during a primary).

Plus, we don’t have great modern examples of elite-selected candidates.  Let’s look at last year’s Senate Vacancy Shuffle:  We got Roland Burris in IL and Kirsten Gillibrand in NY.  Burris is widely unpopular and is stepping down, while Gillibrand is facing a primary challenge from Harold Ford Jr.

So, now that I’ve boasted the greatness of Primaries, I’d like to point out that not all primaries are equal.  An effective primary battle that produces a good candidate for a general election should be competitive, it should be long (since voters aren’t as tuned in to primaries as much as they are general elections, for example Illinois’ recent primary is likely too early), and the election system should allow, at the very least, independent voters to participate in either the Democratic or Republican ballots.

Don’t forget to participate in your primary elections this year! (If you’re lucky enough to have one)

Follow-Up to Political Inconsistency

February 21st, 2010 by rubenr

This Editorial Cartoon from earlier this week does a good job of capturing the sentiment I was getting at in my post on Political Inconsistency:

Playing with Political Data

February 19th, 2010 by rubenr

It’s pretty widely understood that you can arrange and manipulate data to make it show whatever you want, and you can do this to varying degrees.  This graph released by Organizing for America got me thinking:

The Rate of Changing Unemployment Rates (Obama v. Bush)

It’s a very effective communicator of the changing rate of unemployment, though it could be considered slightly misleading since throughout this entire period we’ve still seen a net loss of jobs.  That said, the changing rates are worth looking at, it means we’re likely going to start seeing a shift towards adding jobs rather than losing them sometime in the near future.

TargetPoint, a GOP consulting company, decided they’d retort this graph with some graphs of their own.  While I think it’s a valid criticism of the Obama data to point out that we’re still losing jobs (just at a much slower rate), TargetPoint created some graphs that are really distorting:

It’s powerful, but extremely disingenuous.  First off, the rate for Bush is the average for his entire presidency over 8 years while Obama has only one-year’s worth of data.  The high unemployment during Bush’s last year in office is thus weighed down by his other 7 years.  But that’s not the most disturbing part of this graph.  You wouldn’t know from looking at it quickly, but the x-axis is set at 2.5% rather than zero.  While its true that unemployment has never been 0%, shifting the axis this way without proportionally changing the scale leads to quite a deceiving result: it looks like the red bar is less than half the size of the blue bar, but the last time I checked 5.3% is more than half of 9.3%.

Moral of the story: beware of data visualizations.  Also, people should actively call out shenanigans like this when they see them.

Political Inconsistency?

February 16th, 2010 by rubenr

I was struck today by this article in the New York times describing a Tea Party activist who supported federally-subsidized housing programs.  It made me think of the stories coming out of Massachusetts after the Brown/Coakley campaign describing how Scott Brown received substantial support from rank-and-file members of labor unions.  If you assume people are going to vote based on their own rational self-interest, this all seems pretty inconsistent.  One of Scott Brown’s first actions was to block Obama’s nominee to the NLRB; and while the Tea Party doesn’t have an organized platform, I’m pretty sure there’s a consensus within it against federally-subsidized anything.

So what’s going on?  People are angry, and that anger comes from multiple places.  You have bona-fide ideological conservatives who are simply angry at Obama policies and Democratic rule,  but then you also have people angry at their own economic situation (or that of friends and loved ones) who are less interested in positions on issues or ideology.  This anger is aligning itself in unprecedented fashion to fuel a strong anti-incumbent sentiment across the nation.

And candidates are starting to cash-in on it.  The Scott Brown campaign is the clearest example, but others have started to exploit inconsistency to their favor.  Here in Wisconsin, Terrence Wall, a GOP challenger to Senator Russ Feingold, has been using ads calling Feingold an obstructionist and himself “real change”.  There’s little merit to the claim that Feingold is obstructionist, and most of the hold up in Congress these days arises out of Republican-threatened fillibusters rather than Democratic inaction (though the Democrats have failed miserably in messaging this properly).  That said, this line of attack is brilliant given the current sentiment.

But it’s likely not going to last.  Economic indicators suggest that the Recession has likely peaked and that the economy is improving.  While unemployment numbers are still high they’ll likely get better throughout the spring and into summer.  As this happens I imagine we’ll see a lot of anger dissipate, and with it general anti-incumbent sentiment.  By the time the midterms roll around this fall, political inconsistency might be dead, and candidates who’ve waged campaigns relying on it will probably be in trouble.

Welcome to DeObfuscate!

February 14th, 2010 by admin

Welcome to a new online forum for posts and discussion on current events on political issues, law, and technology.   Below is an FAQ of sorts about our new site.

Do we really need another political blog?

Of course not!  But Yes, we do.  While searching for political blogs I really haven’t found a lot of original content.  Way too many are focused on regurgitating talking points or spreading news articles.  Some are great, like FiveThirtyEight.com but are very focused.  At DeObfuscate we intend to discuss broad political issues (like 2010 Midterm election), but also become a source for issues on technology policy due to our collective expertise in the area.

Why Politics, Law and Technology?

The focus on Politics, Law, and Technology is an attempt, albeit possibly futile, to have some focus.  Granted, DeObfuscate may become a forum for many  other things, but for now we have experience in politics, law and technology so that’s what we’re rolling with.  That said,there’s currently a lot of interest on the upcoming 2010 Mid-Term elections, so we’ll be talking a lot about those over the next few months.

What’s with the name?

Well, as you may have figured out by now, DeObfuscate isn’t a real word. But ob·fus·cate is: to make obscure or unclear <obfuscate the issue>.  Too many political blogs have turned into forums for repeating talking points and platforms for political “obfuscation”.  This is particularly true on issues of science and technology policy (thus the original motivation for the blog and the name).  DeObfuscate hopes to (brace yourself) “De”-obfuscate the issues: cut through the buzzwords, one-liners, and talking points.  While we expect to soliticit contributors from varying political ideologies, we expect the site to develop with a moderate-liberal focus, though with resistance to deceptive tactics.

Who are you?

We’re Awesome (capital A, mind you).  The Blog will be primarily edited by one person, but will feature a number of select contributors with varying areas of expertise in politics, law, and technology. OK, What does that mean?  We’ve got lawyers, political consultants, software developers, and other politically-active techies with lots on their mind hankering for an outlet to bring up and discuss ideas relevant to current events.  DeObfuscate is that outlet.  A concrete (and public) list of contributors will be developing over the next few weeks.