Hacker News new | comments | ask | show | jobs | submit login
Entrepreneurs Tell The White House To Focus On Innovation, Not IP Enforcement (techdirt.com)
232 points by mtgx on Aug 10, 2012 | hide | past | web | favorite | 58 comments



What do these entrepreneurs all have in common? They own, operate, or invest in server-side Internet services. Such innovative products do not need IP enforcement because their core IP assets are protected by the client/server barrier, or they depend on network effects to protect first-mover advantage.

Innovations which must be shipped in whole to the client--like new music, new movies, new games, packaged software, client device software, pharmaceuticals--are not so blessed.

For example: most video game companies ship their entire IP directly to the customer. What keeps from making a copy of Skyrim and selling it on my website for half the price of the original? The legal enforcement of IP protections.

I think it is really easy to fall into a bubble where "innovation" comes to mean "the latest hosted social web service". There's a lot more to innovation than that. Which was more innovative--The Dark Knight, or Triggit? I would say TDK, which was a major cultural event in the U.S. Or how about Gardasil vs. I Can Haz Cheezeburger? One will prevent thousands of cases of uterine cancer, the other hosts user-generated cat pictures.


You're not responding to the article. It is not asking for the standard protections to be dismantled. Indeed, as you point out yourself, piracy of computer games is already a criminal offence that stops you from selling Skyrim rips.

The point in the article is that any additional laws or powers represent a failing strategy when the problems of many industries are due to a failure to meet changing consumer demand; and furthermore that the opportunity cost of strengthening IP law is the collateral damage to innovation.

You are also wrong to suggest that server code cannot benefit from IP protection. If code is misappropriated (e.g. disgruntled employee with git access), only copyright prevents it being released/sold and subsequently operated by others. Furthermore, it is those protections that allow the legitimate developer to confidently sell their business to a third party.


The bigger issue with your argument that IP, copyright, etc legislation needs to start having some separations. Medicine (physical) and mp3s (digital) are so drastically different that there's no way you can have one piece of effective legislation that covers both correctly.


Your example might not be making the point that you want. Drugs are covered under patent law while music is covered under copyright. Unless you're arguing that the MP3 process should not be patentable that same way as the process of making a new drug.


Software patents are the biggest problem in my world. Definitely need reform there.


The legal enforcement of IP protections is already in place. They are not recommending any removal or rollback of the existing legal framework, they are suggesting that there are better things to focus on than expanding the current protections.

Having said that, the list of signers does have a very people-who-don't-have-this-problem feel to it.


To be fair to "I Can Haz Cheezeburger", which admittedly is hard to do on forum like this, it brings entertainment to millions of all ages and hurts no one. Where are the negative side effects in that?


Where was the argument that "I Can Haz Cheezeburger" is harmful? The argument is that they don't benefit from new copyright legislation, and any new legislation is likely to be a burden to them because they'd likely have to police their users more intensively. The list of signatures is from companies like these.

On the other hand, industries that rely on shipping an easily duplicable product with high up-front costs for development are likely to benefit from strong copyright enforcement. They are not on this list, in spite of being arguably more innovative.

Neither result is surprising, but saying "Entrepreneurs" and "innovators" are generally in support of less copyright legislation is disingenuous.


> ...saying "Entrepreneurs" and "innovators" are generally in support of less copyright legislation is disingenuous.

Where did that claim come from? What are you referring to?


Well, there's only one Skyrim. Imagine if you streamed a largely procedurally generated videogame from the Internet though--you'd have an infinity of related games on tap and it would essentially be SaaS. Same for procedurally generated (or live) music, or sports as they are now, or live theatre. Maybe static, finite IP just has less economic value and is less and less practically excludable as technology advances.


I'm actually convinced the future of economic activity will involve lots of live performance.

Extrapolating the trends of automation I see fewer and fewer people involved in the production and distribution of physical goods. Distribution is set for a major workforce implosion with automated packaging and transportation. Production is already largely automated, and becoming more so. Meanwhile, demand for physical goods is at or near peak capacity in much of the world, so cheaper distribution will not mean more goods will be needed.

So, I suspect the majority of the workforce will not be involved in the physical part of the economy, not in production, distribution or services. The economy requires scarcity, but it does not require physicality. What is more scarce than digital live performance? Why couldn't NPC's in games be real people? Why should it be strange to earn a living live-acting a role in a game, and then spending most of your money on live-created digital goods?

The current IP laws make an assumption of mass-distributed centrally-produced IP, and that's why they won't hold in this individualized IP future. Currently the digital economy is run by the agents of mass-distribution: the MPAA, apple, microsoft and so on. While they may seem all-powerful now, in a 100 years their model of everyone owning the same product will seem quaint and archaic. Why would you want the exact same product as your neighbor?


> What keeps from making a copy of Skyrim and selling it on my website for half the price of the original? The legal enforcement of IP protections.

More likely the fact that the odds are low that your pirated Skyrim does not contain at least one of malware, spyware, botnet trojans, viruses, or other crap no one wants on their computer.

The warez scene was cool when it was novelty, but now it's more likely to be an attack vector of some sort.

It's just an easier user experience just to buy the software and know it will install and run without any problems.


What do they have in common?

They don't write big checks to politicos every two years.


Followup: White House tells Entrepreneurs to Focus on Donating to their Reelection Campaigns.

(Note: This is not a dig on the current White House occupants who I voted for and will vote for again, just politics in general).


Where's Peter Thiel when you really need him?


It's a good letter, but I would have appreciated a mention of lowering corporate taxes. With a 35% corporate tax rate, that does encourage innovation -- innovation in tax avoidance. Think of the innovation that could happen if companies had a 15% corporate tax rate.. that would mean 20% available capital to companies. If I suddenly had access to 20% more capital, I would hire more people and build more things. A 35% corporate tax rate is the highest in the industrialized world and it's as big a detriment to company growth as any IP battle.


I'm not an accountant, but aren't the salaries paid to people you hire expenses thus not subject to corporate tax? In other words, if you make $1M a year and spend $1M a year on salaries, you pay $0 in taxes. If you instead spend $800K on salaries and have no other expenses, you pay tax on the $200K in profit.

Besides which, the point of the letter was to argue a single point: innovation over enforcement. Why stuff it up with topics like taxes, healthcare, or any other unrelated topic that would only serve to dilute the core message?


You're right. Taxes are in income net of salaries and expenses. If the tax rate was 15% versus 35%, the correct statement is not that it'd free up 20% of revenue for expansion, but rather that it would increase profits, presumably creating greater incentives for expansion.

The way taxes are structured, lower taxes is a second-order incentives issue, not a first-order availability of funds for expansion issue.


By that logic, isn't there already huge incentive for 'expansion' because anything not plowed in to expansion will be taxed, but anything rolled in to expansion won't be taxed?

EDIT: What we see now is the exact opposite of that - some companies sitting on huge hoards of cash, just waiting. Waiting for what, I'm not quite sure, but there's nothing stopping them from 'expansion' right now.


Sorry, but no. America's level of effective corporate taxation is at a historical low. Corporations used to shoulder more of the tax burden than individuals, now it's the other way around.

We need to keep the rate the same, but close a whole bunch of loopholes. Your expenses are already counted out before you pay the corporate tax.


I keep hearing this with no direct proof.

Most of the proof I've seen involves companies not paying a ton of taxes because of their gigantic losses the previous year.


If you want proof, I suggest you read the 1939 Tax Code, then the 1984 Tax Code, then the 1986 Tax Code. What do they all have in common? Corporate rates went down, and deductions and credits went up. 99% of the complexity of the federal income tax code relates to corporate taxes.

Companies are not paying taxes because they are reporting losses. Tax losses are not the same thing as economic losses. Tax losses are good and desirable; economic losses are not. GE, for example makes billions in profits each yet, yet is able to pay a negative tax rate. Apple and Google make billions each quarter, but avoid taxes on it by parking it overseas.


While that may be true, it's not germane to an RFC for "Joint Strategic Plan on Intellectual Property Enforcement."


It's not even true.

A thriving startup will be reinvesting in R&D and marketing expense, thus bringing profits back down to $0 (or lower if you've got investor funds).

It's absolutely dishonest to pretend that corp income taxes matter to startups in any meaningful way. If you're on track to make $1.2m next year, aim to increase your average monthly spend by $100k, and you'll make no profit (and thus pay no corp income tax), while retaining ownership of an asset whose value is increasing at a multiple of the revenues.

Innovation and IP laws matter to entrepreneurs. Corporate income tax rates are close to irrelevant for entrepreneurs.


Absolutely agree.

Taxes do not matter to young startups, and I get frustrated hearing politicians (mainly from the right) argue that we need to cut corporate tax rates on behalf of entrepreneurs - when the primary beneficiaries are clearly large, established corporations.


This isn't just about startups. Innovation matters to all technology companies; all companies really.


Your first claims were obviously fraudulent.

That said, even after moving the goalposts (and pretending you didn't make your initial claims), your argument is still false just slightly less obviously so. Corporate income tax always costs rentiers more than innovators.

Corporate income tax is a very separate issue.


Corporate income tax rates are close to irrelevant for entrepreneurs.

Only if your plan is to build a paper valuation and then get acquihired by Facebook.

If you plan to build a sustainable business that eventually makes a profit, you certainly care about how high the corporate profits are.


Bullshit, and you know it.

A business that can acquire customers with an LTV of $1,000 for a cost of $500 (read: a good, sustainable business) isn't going to just sit on $1,000,000 of profit. They're going to buy 2,000 customers.

And then next year they're going to buy even more. And then even more.


The company is only reinvesting $1M profit this year in the hopes of making $2M profit next year. The ultimate goal of building a company is for it to generate profit which will accrue to the shareholders.

Your hypothetical process of continually reinvesting all the profit can't continue forever. Even if it could, the company would have no investors. Why throw your money away?


Yes, taxes are eventually paid. But they aren't harmful to the innovation process, rather they provide an incentive to innovate for as long as you can. The corp tax actually provides a net advantage to innovators over rent-collectors.

It's exactly backwards of what briandear was claiming.

As for the rest of your nonsense, you're arguing against things that weren't said or implied.


But they aren't harmful to the innovation process, rather they provide an incentive to innovate for as long as you can.

No, they merely reduce the incentive to innovate.

Taxes don't harm you while you innovate (which is a good thing - don't get me wrong), they harm you when you try to reap the proceeds of innovation.


The letter was written in response to this request for comments: http://www.whitehouse.gov/blog/2012/06/25/help-us-shape-our-...

If you (like briandear) believe that including anti-tax arguments in a response would increase the efficacy of the response, I'd strongly suggest that you avoid a career in marketing or sales. Not trying to be snarky, but I can't think of a polite way of expressing how ineffective the inclusion of general anti-tax sentiment would be when attempting to persuade the target audience.


I never suggested the anti-tax arguments should be contained in the petition, I just said you were wrong in your claim that corporate taxes are irrelevant for entrepreneurs.


The corporate tax rate is progressive, barely. Making it more progressive is also and option. 75.000 - 10.000.000 is taxed at 34%, adding some granularity would help.

source: http://www.law.cornell.edu/uscode/text/26/11


And the white house promptly ignores it.

Guys, it took a near shutdown of the internet to get congress to back off on SOPA/PIPA. I don't think a mere letter is going to sway anybody that matters.


You're right. Pack it up fellas. Let's go home.


Although your post seems to be tongue-in-cheek its effectiveness cannot be understated; we are in a speedy decline that sees no means of slowing down.


I am very impressed with this letter. It summarizes the main points succinctly and forcefully without demonizing ("MAFIAA") or taking on fringe positions ("intellectual property is theft").


I think it is a great article. I really think that all copyrights and patents do is stifle innovation and sadly, they increase the costs for everyone....including right owners themselves. It makes me cringe to see how much money Google and Apple have to spend to duke it out in court. I am sure they feel this way, but it seems like an ever escalating black hole where only the lawyers benefit.


If I spend $1 million to develop something innovative and the guy next to me stole that innovation; he effectively stole $1 million from me. That's a huge disincentive to spending another million to innovate. Copyrights and patents don't stifle innovation, they protect the creators and the resources they expended. To drive innovation, people need to innovate, not steal. If I can't copy the iPhone, then that drives me to create something even better, not just an iPhone with a few little tweaks.

For those that disagree, I challenge you to open source all of the code you're working on for your companies. Then, I'll set up an exact clone of your application (including using your logo) and start making money from your work. That would encourage you to innovate right? Cool, innovate, then I'll use the new code you made, along with the new logo and continue making money from your work.

How is THAT fair?

If you bake amazing cookies and sell them in a shop, should that cookie recipe be given away to a competitor? Intellectual property is a critical piece of developing a competitive advantage. Take away that competitive advantage and we might as well be the Soviet Union.

If you create something, you should have the right to profit from it. If you look at the innovation in China, especially in software, it's very flat because the protections there are almost non-existent. You build something there and it's copied almost instantly, so the incentive to innovate is much, much lower.

Be careful what you wish for.


You are describing what IP is supposed to do- not how it is shaping the industry today.

Why do copyrights need to last hundreds of years?


Which industry? I think there are impedance issues with patents in the faddish Web 2.0 world, but they work fine in many other industries. E.g. In jet engines, where the life cycle of a design might be 30 years, "first to market" is almost irrelevant.



Sure, they don't last hundreds of years. But the can easily last 100+ years. I'm not sure there is that much difference between 75, 100, or 250 years.


I'm very pro-copyright, and I think copyright lasts far too long.


Same here. I'd rather see copyright in the 15-20 year range with an optional extension that must be registered and paid for. Especially, copyrights held by corporations and not individuals.


"They don't last hundreds of years"

...yet.


There may be less innovation in China - not because there are no protections but because they are still playing catch up to the developed world. It is a lot more effective to not reinvent the wheel if there are no need to reinvent it.

Innovation happens when you push the boundaries for what is possible - if you are nowhere near the boundaries then the fastest way to get there is to copy your neighbors map and use that to find the border. Creating protections will just make it harder for them to catch up and will make it take longer for them to get competitive innovation.


You are missing the point. The point is that innovation drives advancements technology, and litigation stifles innovation. Money that companies spend litigating products which will likely be outdated / deprecated in a couple years is not money well spent.

So what if Samsung and Apple both make use of a light-weight rectangular touchscreen? Consumers benefit more when there are competing interests than when there is a monopoly. Consumers benefit when there are two separate branches iterating outward and improving something very basic.


Why doesn't Samsung "innovate" and build a better touchscreen instead of copying someone else. Innovation != copying someone's work and making marginal improvement. Apple didn't copy the Palm Treo or the Blackberry when they built the iPhone. They saw what those products could and couldn't do, so they made something better. THAT'S innovation. Samsung's copying Apple isn't innovation, it's lazy. Consumers don't benefit from "me too" products, unless we treat all technology as a commodity.


your post is full of unproven assertions and rhetoric.

>If I spend $1 million to develop something innovative and the guy next to me stole that innovation; he effectively stole $1 million from me. That's a huge disincentive to spending another million to innovate.

The two are not (directly) related to each other, if you make a profit on the 1 million dollar investment, it doesn't matter how many people "steal it" (bullshit rhetorical term), you WILL invest the next one million dollars. You are totally discounting incentives such as first to market.

>For those that disagree, I challenge you to open source all of the code you're working on for your companies. Then, I'll set up an exact clone of your application (including using your logo) and start making money from your work. That would encourage you to innovate right? Cool, innovate, then I'll use the new code you made, along with the new logo and continue making money from your work.

This is a ridiculous straw man, nobody here is talking about abolishing all aspects of intellectual property law including trademarks.

> Intellectual property is a critical piece of developing a competitive advantage. Take away that competitive advantage and we might as well be the Soviet Union.

It can just as easily be said that intellectual property is a critical piece of tactics to stifle competition, take that away and we have a freer market.

>If you create something, you should have the right to profit from it.

You have no right to profit from anything, the market decides these things (when free of government distortion). I want to profit from posting on HN all day, but that's just not in the cards.

>If you look at the innovation in China, especially in software, it's very flat because the protections there are almost non-existent.

another completely unproven assertion, their are numerous indications that the lack of protections is exactly what is powering Chinese economic growth[1], and powered American industrial growth pre 1900s[2], and powered German chemistry and pharmaceutical industries in the early 1900s[3].

Look, i'm not saying abolish all forms of "intellectual property". Simply that you should not start from the A Priori position that intellectual property is always beneficial.

[1] http://deepblue.lib.umich.edu/handle/2027.42/39400

[2] http://www.cipr.org.uk/papers/pdfs/study_papers/sp1a_khan_st...

[3] http://online.wsj.com/article/SB1000142405297020454240457715...


This letter needs more distinguished signatories. The people who signed it are accomplished in their domains but relatively unknown outside their niches.


from my years of experience working on policy issues i can tell you this: letters like this never really do anything, sadly what works is lobbying. lobbying requires both organization and money. the people who have a stake in IP enforcement not only have money, but represent well established industries that provide an base of existing jobs. so unless entrepreneurs can get their act together -- or unless you can get the grassroots excited about giving money this really isn't going to go anywhere.


> letters like this never really do anything, sadly what works is lobbying.

I'd really like to see tech companies get off their moral high horse and buy my politicians. Their current handlers are about to destroy the 21st century.


Donate to companies like the ACLU and EFF. They're basically doing just what you're asking for.


It's a nice idea, but the White House won't do shit unless they think it will help them get reelected.


yeah no one there gives a crap about entrepreneurs. if you still think they care bout anything else than money then i got a bridge i want to sell ya




Applications are open for YC Summer 2019

Guidelines | FAQ | Support | API | Security | Lists | Bookmarklet | Legal | Apply to YC | Contact

Search: