A text transcription follows.
This transcript is for anyone with a hearing impairment or who for any other reason cannot listen to the MP3 audio file.
The following is the text spoken by OUT-LAW journalist Matthew Magee.
Hello and welcome to OUT-LAW Radio, the weekly podcast that keeps you up-to-date on all the twists and turns in the world of technology law.
Every week we bring you the latest news and in-depth features that help you to make sense of the ever-changing laws that govern technology today.
My name is Matthew Magee, and coming up on this week's show we hear from the man behind a ground-breaking auction of intellectual property taking place today in New York and we talk to the British Library about its copyright manifesto.
But first, the news.
- IBM sues Amazon over patents;
- US publishers say Child Online Protection Act should be struck down; and
- Youtube takes down 30,000 videos under Japanese pressure.
IBM is suing Amazon.com in a US Court alleging that the online retailer infringes its patents. Two lawsuits have been filed in two different Texas Courts, IBM said.
The company says that Amazon's system is built on technology patented by it as long ago as 1990. It says that it has tried to negotiate licensing deals with Amazon over a four-year period, but that Amazon rejected its attempts to license the technology to it.
Five IBM patents are in dispute, including ones that cover electronic catalogues and online advertising.
A group of US online publishers and a lobby group is taking the US Government to Court to challenge an eight-year-old law which it says amounts to censorship of the internet. The challenge is to the Child Online Protection Act (COPA), which became law in 1998.
Designed to protect children from viewing pornographic and harmful content on the internet, the law makes allowing the possibility of children seeing material which could be "harmful to minors" a criminal act punishable by six-month prison terms and $50,000 fines.
The law has never been used and its constitutionality has been questioned by the Courts in the US. The current case is being taken by the American Civil Liberties Union (ACLU) and is backed by a variety of online publishers who argue that it breaches their first constitutional amendment rights to freedom of expression.
A Japanese entertainment lobby group has succeeded in making video sharing company Youtube delete 30,000 videos from its website. The group may press further to attempt to make Youtube pre-emptively block its material.
The Japan society for rights of authors, composers and publishers searched Youtube, which was bought this month by Google in a share deal worth $1.65 billion, and found nearly 30,000 files which infringed the rights of its members.
The files included television shows, music videos and films posted without the permission of 23 rights-holding companies. The group demanded that the files be taken down, a demand which Youtube met.
That was this week's OUT-LAW news
It is said that everything has its price, but the business of putting a price tag on ideas has usually been an opaque one carried out in the plush backrooms of corporate life where horse trading and hard bargaining can be carried out in comfortable seclusion.
The world of intellectual property deal making is a secret one, but one company will later today attempt to let the light of publicity transform the market in intellectual property.
In New York an IP auction will take place in the full glare of the public eye in a move which could create a whole new market for ideas that has never existed before.
The auctions are the brainchild of merchant bank Ocean Tomo's auctions division. Andrew Ramer will be the man with the hammer later today, and he explains that it all started with collecting cars.
"The live auction idea actually came about through both the Vice Chairman of Ocean Tomo whose name is Dean Becker and the CL of Ocean Tomo James Malcowski, both of whom are avid car buyers and they used to collect cars and one of the problems is that they recognise that in selling intellectual property that there is a huge issue with regard to the amount of time it takes to close a transaction and so what they did was come up with the concept of the auction which was a form that really would deliver a sense of urgency and closure to the process."
The auction idea is so unusual because the world of patents and IP and trade marks is such a private one. Companies usually try to profit from their IP without ever actually selling it. But there is a market for ideas, and all Ocean Tomo is doing is bringing it to the surface. There are problems because usually conservatively conducted deals end in a long period of due diligence, but Ramer is confident he has found a way around that.
"The auction of IP and especially patents is the reverse of the typical transaction, which is the typical transaction you might come to agreement saying we ok we'll pay X amount for these set of patents and then we are going to come in 60 days of due diligence get everything finished and then we are ultimately you know going to wire the funds. This is actually the reverse process, but all that work has to be done up front so what we've done is we've actually put in place entire without call diligence platform so that all that can be cleaned up up front and if there are things like chain of title issues that come up or other issues from the file history, those are addressed prior to the action so that way, the second the hammer comes down at auction, the transaction is closed and we don't have to deal with kind of a latency and I guess you know the taking of time that a lot of major companies do, the lack of flow in some of the transactions."
This is not Ocean Tomo's first stab at an IP auction. That was in spring in San Francisco, where the company sold $10million worth of IP. That, says Ramer, proved the concept
"The goal of the first action really was more to prove that it was a viable form and really you know true market place for transferring IP."
Ramer now has 60 direct sellers compared to Spring's 27, 13 fortune 500 companies rather than six. Lined up to sell are AT&T, Boeing, IBM, Motorola, Dow Chemical and 3com. So why are these major blue chip companies adopting such a new approach to their IP? Ramer says that it's because they can, because there has never been an opportunity to sell intellectual property this openly.
The sale is not just of patents, trade marks and web addresses. Adding a paisley-patterned hatful of glamour – not to mention controversy – is the sale of master recordings and rights to Jimi Hendrix's music. The rights claimed by the estate of his manager Michael Frank Jeffery are for sale. The only trouble is that some of those rights are also claimed by Hendrix's own estate.
Ramer is going ahead with the sale, but says that special conditions will apply.
"To the ones in the Hendrix transaction at least the main catalogue will be held in escrow for up to a year. The buyer's funds will be held in escrow and the buyer has up to a year to back out of this transaction."
There is no doubt that the idea of the auctions is radical, and that it looks as though it is taking off. The implications might be wide ranging. Ramer might well be inventing a whole new market, encouraging deals by providing a public benchmark of IP values.
"One of the problems with IP especially patents is because the transactions are private and because they are behind closed doors, no-one really knows what things are going for and so the fact that these sales has now become much more public with 400 people in a room including the press, can take notes on what was sold and for how much, sure it absolutely is really setting kind of a price on the sealing. In my opinion it will take about two or three more auctions to become, you know I won't say the perfect gauge, but much closer to the perfect gauge. The reason being the market can tell you what it's worth but it only is 100% the right number if you have all the appropriate buyers in that room or the appropriate buyers have done their diligence and sometimes you do and sometimes you don't."
And of course, with Hendrix material up for sale, with a heady mix of controversy and the splashing of hard cash, who wouldn't be attracted to the idea of an IP auction?
"You know if you really want to create the sense of urgency and closure, having the excitement of the action here in the room and 400 or 500 of the World's leading IP professionals in the room, that brings a certain dynamic – the market likes this. They like the certainty of the transactions, they like the fact that you know money wires within 20 days of the hammer coming down, and it really has taken a transaction which normally might have taken 6, 9, 12, 18 months and it's made it really into days."
The British Library has a problem. As a coypright library it recieves a copy of everything published in the UK it is finding that increasingly the material it is charged with storing is in digital form. Easy enough to store you might think? Well, not if every piece of content comes with its own contract and instructions for use. And not if some of those contracts stop the library making copies for the use of disabled or virsually impaired users or for archiving.
Ben White is the library's intellectual property manager. He explains why copyright law needs to change to catch up.
"The last major round of copyright legislation is Copyright Designs and Patents Act 1988 and since then we have had the web and the internet has blown apart many of the understandings that there have been around access to information."
The library wants to be able to store and process digital artefacts for the same purposes as it does analogue ones. The trouble is that the suppliers can, effectively, write their own rules.
"In UK law for copyright works contracts take precidence over copyright law. Whatever you sign in the contract actually takes precidence over the Copyright Designs & Patents Act then the digital age the large body of material that the British Library for example is taking, this all comes with contracts. We have looked at 30 licences which have been randomly selected, and 28 were more restrictive than the current copyright law would allow for."
The British Library now wants the law to change so that it can carry out its duties without breaking either copyright law or disability legislation which demands fair access to material; it also thinks the law needs to take more account of users' needs as well as producers'.
"The kind of restrictions that you're seeing that come with contracts are that you must allow them to archive the material, there will be limitations around copying, particularly sort of fair dealing copying or copying by the disabled and visually impaired so we definitely see contracts as undermining the balance that exists within copyright law. You know we have something like 17,500 electronic titles on 600 plus database which means that we cannot negotiate licences on issues of around preservation and access on a case by case basis. The only practical way that that can happen is by an up-date in the law."
Ben White there.
That's all we have time for this week, thanks for listening.
Why not get in touch with OUT-LAW Radio? Do you have a legal problem you would like us to discuss on air? Do you know of a technology law story? We'd love to hear from you on radio@out-law.com.
Make sure you tune in next week; for now, goodbye