CloudLaw Conference: Competition/IP Panel

Posted: October 17th, 2011 | Author: Kevin P. Siu | Filed under: Events, Intellectual Property | No Comments »

The last panel of last Friday’s CloudLaw conference was the Competition Policy and Intellectual Property panel discussing the existing policies regulating cloud computing providers, the effect of government legislation on cloud computing, and how upcoming IP and copyright legislation will affect the future growth of the field.

The four distinguished speakers were Prof. Salil Mehra from the Temple University Beasley School of Law, Prof. Pamela Samuelson from the Berkeley Law School, Dr. Craig McTaggart, Director of Broadband Policy from TELUS Communications, and Prof. Oliver Goodenough from the Berkman Center for Internet & Society at Harvard University

Paradise is a Walled Garden

First up was Prof. Mehra, who named his presentation “Paradise is a Walled Garden”. He explored the tendency for new technology platforms to “monopolize” a particular field, while using user-generated content and user innovation to promote growth and add value. The question he posed was – do we need state intervention to preserve user freedoms within these walled gardens?

Prof. Mehra analyzed new models of services and their platforms, such as Facebook and Wikipedia. These modern services require user-contributed content to be successful, and derives a great deal of value from user innovation. To continue growth, both the platform operator and users must rely on each other. In this newly framed relationship between users and operators, there must be a level of trust and credibility which has never quite existed before between service providers and their users.

Two solutions were proposed to protect user interests under these new settings. The first was an “external” one, for the State to enforce the platform providers’ commitments to users. This would be based on contract law, with a body similar to the FTC enforcing user agreements on platform providers. In fact, the FTC already does this with online privacy – but this concept has yet to be extended to the broader cloud computing field. However, this solution does not address the agreements themselves, which may give more power to monopolistic platform providers than to its individual users.

The second solution, an “internal” one, is to promote user-investor rights within the platform providers themselves. This would include new user governance models, which might involve encouraging user interests at the Board of Directors level, by shielding Directors protecting user interests. It may also involve the creation and distribution of a form of dividend stock to the user innovators, in proportion to the contributions so that they can elect their own directors to affect internal change. This may already be possible under existing laws – the only barrier is the realization that this is possible. Such a solution would allow more credible commitments from platform providers, as users would be involved in such decisions.

Intellectual Property Law in the Cloud

Prof. Samuelson spoke next, about Intellectual Property issues posed by the growth of cloud computing. She first noted that the importance of IP law itself may be waning, as the pace of technological innovation outstrips the ability for policy-makers to keep up. On the other hand, particular rules in the DMCA and CFAA (in the USA) regarding anti-circumvention may become more important than ever, which poses a concern for user rights.

For instance, new cloud computing models are generally in “closed ecosystems” (as Prof. Mehra discussed), and the only way to access your own content (purchased or otherwise) is through cloud providers – and the only way to “reverse-engineer” the protection measures the providers use is through computer hacking, against which are many laws.

Some other questions raised was the secondary use of intellectual property – for example, Google uses its books database (which includes many copyrighted works) for non-display purposes, such as translation, search technology, digital databases, etc. Are copyright owners only entitled to control the “display” uses for books and print media? These rights and other fair use provisions have not yet been settled in the law.

Canada’s Copyright Act (Bill C-11)

Dr. McTaggart then provided a perspective from the industry, discussing Canada’s proposed (and controversial) Copyright Act (Bill C-11). The proposed bill has the stated purpose of overhauling Canada’s copyright laws, striking a balance between legitimizing consumer uses and protecting rights holders.

Bill C-11 provides provisions for many personal use rights that never formally existed before, such as format / platform shifting, time shifting and PVRs. At the same time, ISPs will be protected from liability in hosting copyright infringing content – keeping the “notice-and-notice” regime currently used in Canada rather than adopting the “notice-and-takedown” regime of in the USA.

Meanwhile, “enablers” of copyright infringement will be hit hard with new rules that draws the line between neutral and non-neutral intermediaries. It will empower the courts to ask more contextual questions in deciding whether a provider is an “enabler” or not.

Finally, the most controversial provisions of Bill C-11, the TPM/DRM (Digital Rights Management) provisions were discussed. The government, in drafting this bill, felt that stronger measures to enforce TPM were necessary to enforce international WIPO (World Intellectual Property Organization) treaties, where Canada had been lagging behind previously. Of course, an important question raised here is: if circumvention of access-control and copy-control measures is outlawed, how does one exercise personal use rights set out above? These questions have yet to be addressed, but the government has signalled that it would not amend these provisions.

What kind of “Good” is Cloud Computing?

Finally, Prof. Goodenough discussed how to classify cloud computing as a “good”. The type of “good” that cloud computing is can determine how regulation affects its future. The conventional approaches of classification include public goods, common pool resources, club goods, and private goods. In this context, cloud services look mostly like a private good, as it is possible to keep people out, and it is limited to server capacity. However, is the Internet itself a public good? Certainly one cannot exclude users from the internet, and it is a public service that all people can benefit from.

Prof. Goodenough then described cloud computing as a “trust good” – where failure of trust would discourage or defeat the transaction (e.g. trust between users and providers, who need each other to succeed). The criteria for a ‘trust good’ is that there is a difference of interests between parties, with significant interests at stake, with barriers to supervising performance of the parties. Cloud computing satisfies these, and trust is required to have a successful “Cloud”.

Conclusion

The panel’s discussion raised many interesting and important issues related to the future of cloud computing in the context of public policy and IP law. For one, what role should the government play in regulation of cloud computing? What are the consequences of our increasing reliance on cloud computing, especially in an ever-changing technology landscape? Will increased rights given to rights-holders, will price for users be increased, especially with the upcoming DRM regulations? Will the monopolistic tendencies of cloud providers combined with the powers given to them in the new regulations lead to anti-competitive business strategies like we saw in the early 2000s? All of these issues will become increasingly important as cloud computing becomes more prevalent.

---