Brookings: Topics - Technology

Growing the Global Internet Economy by Ensuring the Free Flow of Data Across Borders

David Dreier and Joshua Meltzer — Thu, 23 May 2013 15:32:00 -0400

Digital connectivity is the most powerful driver of social and economic change the world has seen. The Internet will connect an estimated 5 billion people by 2020. That many already use cell phones. Connectivity is reshaping the landscape we inhabit, changing the ways we communicate, learn and do business. It is behind the world’s most transformative trends, including an unprecedented empowerment of the individual.

The free flow of data is a core element of the Internet that has underpinned this growth in connectivity, innovation and productivity. This freedom has been vital to the growth of digital trade in goods and services, a quickly growing share of global GDP. Its importance is evident every minute as citizens, businesses and governments access global services such as cloud computing, and health and education opportunities. Entrepreneurs in developing countries benefit from free flow as they sell their products globally over the Internet, using international financial data transfers to process transactions. It has also been a critical factor in the explosive growth of access to information and human opportunity.

We are, however, only at the beginning of the digital age. It is hard to grasp the enormity of what this advance portends. More data was created and exchanged last year than in all of human history. The growth in the use and exchange of data is accelerating exponentially--fueling massive new economic activity, enabling major advances in scientific research, analysis of big data, and providing tools to help address existential challenges to human well-being such as climate change.

There are, however, some major speed bumps that threaten this advance as governments around the world are increasingly seeking to restrict or control the flow of data.

No question about it, the Internet is disruptive. That’s why it’s not hard to understand the impulse to control it. But, as with everything, there is a balance to be sought. For example, efforts to prevent cyber crime, or maintain the privacy of personal data should avoid unnecessary restrictions on the free flow of data across borders. Attempts by government to limit data flows to restrict market access or provide unfair commercial advantages to domestic businesses reduces international trade. This is discriminatory and trade-distorting, and should be prohibited.

Many governments are already restricting the free flow of data. These attempts are most blatant in repressive and authoritarian countries, but evident even in open societies. Across the world governments are grappling with how to reconcile the freedom of the Internet with the need to address some of the harms associated with its use.

But as government interference in the free flow of data multiplies, we may be reaching an inflection point that could determine kind of Internet the world ends up with. It could become truly global, open and accessible to all. Or, the Internet could become increasingly balkanized and closed, with a loss of economic and social potential that harms all.

International trade forums are starting to discuss how to find the right balance between the free flow of data and action to address legitimate concerns about harmful use of the Internet. In fact, cross border data flow is quickly emerging as an important 21st century trade issue. It is not adequately regulated under the rules of the World Trade Organization and the Korea-U.S. Free Trade Agreement is the first trade agreement to try to address issues related to cross-border data flows. The issue is also part of negotiations under the Trans-Pacific Partnership and will figure prominently in talks for a projected EU-U.S. trade agreement.

It is vital we get it right in these agreements. To do so we need a deeper and wider understanding of the value and stakes associated with the free flow of data across borders. The Annenberg-Dreier Commission and the Brookings Institution are trying to build that awareness, so vital to the world. We are partnering in a meeting next week—the start of a larger project—that will gather some of the top experts from the Asia Pacific region to examine the interests in play.

The aim of this project is to build greater understanding in this region on the importance of the free flow of data as a driver of international trade, economic growth and innovation. The U.S. has developed a thriving Internet industry with regulation that balances the free flow of data and access to the Internet with the need to protect legitimate interests such as the protection of intellectual property, fighting cyber crime and maintaining the privacy of personal data.

Other countries are also trying to capture the gains from the Internet economy. And while this should be encouraged, doing so with regulation that is discriminatory and restricts access to the Internet will harm trade, impede growth and is will be harmful to all. On the contrary, an open Internet that encourages access to data and fosters competition will deliver the most economic benefits globally.

Developing a common understanding of these challenges and charting a way forward may ultimately be key to global stability, security, and growth—in short, to building the collaboration necessary to sustain a world we’d want to live in.

Authors

Image Source: © Kacper Pempel / Reuters

Mobile Technology’s Role in Combating Global Poverty and Enabling Entrepreneurship

Thu, 16 May 2013 14:00:00 -0400

Event Information

May 16, 2013
2:00 PM - 3:30 PM EDT

Falk Auditorium
Brookings Institution
1775 Massachusetts Avenue, N.W.
Washington, DC 20036

According to the World Bank, nearly one-quarter of the global population lives at or below the poverty line of $1.25 per day. The world’s poor experience barriers to lifting themselves out of poverty because of the lack of access to capital to start small businesses and build personal savings. Yet with the growth of mobile technology, there are now new avenues for individuals to improve their economic circumstances, make monetary transfers, arrange for microfinance loans or establish small enterprises.

On May 16, as part of the Mobile Economy Project, the Center for Technology Innovation at Brookings hosted a forum to investigate the barriers to using mobile devices to conduct business in the developing world, explored how mobile devices enable individual entrepreneurship and small business development and examined mobile technology’s role in alleviating global poverty.

Audio

Mobile Technology’s Role in Combating Global Poverty and Enabling Entrepreneurship

Alleviating Poverty: Mobile Communications, Microfinance and Small Business Development Around the World

Darrell M. West — Thu, 16 May 2013 12:00:00 -0400

Editor’s Note: The Center for Technology Innovation at Brookings releases this paper in conjunction with the May 16 forum at Brookings, “Mobile Technology’s Role in Combating Global Poverty and Enabling Entrepreneurship.” Both are part of the wider Mobile Economy Project which examines how the rapid expansion of mobile technology around the world is transforming economic opportunity for millions.

Poverty is one of the most pressing problems around the world. According to statistics from the World Bank, nearly one-quarter of the global population lives at or below the poverty line of $1.25 per day.[i] With so many people struggling for basic subsistence, it is hard for those affected to get out of poverty, gain access to capital, or develop small firms or businesses that help them build a better life.

Yet with the growth of mobile technology, there are new opportunities for individuals and small businesses to lift themselves up. People can use handheld devices to make monetary transfers, arrange for microfinance loans, establish small enterprises, and improve their economic circumstances. This helps them alleviate poverty and create a better situation for themselves and their families.

Jeffrey Sachs, director of Columbia University's Earth Institute, said that wireless communication is a breakthrough technology that helps to solve the worst problems associated with health care, poverty, and educational access. "Now in every village where I go, someone's got a cell phone, somebody can make an emergency call, someone can find out the price on the market, someone can start a business empowered by the fact that they can reach a customer or a supplier, someone can drive a taxi or a truck for that reason as well. Everything is changing," said Sachs.[ii]

In this Mobile Economy Project report, Darrell West looks at the growth of handheld devices and investigates the barriers to doing business in the developing world. In particular, West explores how mobile devices enable individual entrepreneurship and small business development. Despite the presence of barriers such as corruption, lack of transparency and capital, and poor infrastructure in many parts of the developing world, there are successful ventures enabled by mobile technology.

The report details some of the cases which illustrate emerging possibilities for alleviating poverty in different countries including:

The growth of mobile devices
Mobile money transfer services
Mobile tools for small businesses
Microfinance applications

[i] World Bank data is found at http://povertydata.worldbank.org/poverty/home/.

[ii] Kyla Yeoman, “Can Mobile Phones End Extreme Poverty?”, Global Envision, March 16, 2012.

Downloads

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Authors

Darrell M. West

Image Source: © Mike Hutchings / Reuters

Going Global: Greater Houston’s Economic Future

Wed, 15 May 2013 13:30:00 -0400

Event Information

May 15, 2013
12:30 PM - 2:00 PM CDT

Baker Hall
Rice University, James A. Baker III Institute for Public Policy
6100 Main Street
Houston, TX 77005

As the United States emerges from the Great Recession, it is clear that the nation’s economy must be purposefully restructured from one focused inward and characterized by excessive consumption and debt to one that is globally engaged and driven by production and innovation. A growing chorus of leaders is calling for a new growth model, one that creates more and better jobs by engaging rising global demand and attracting global talent and capital. These leaders recognize that only by harnessing the power of cities and metropolitan areas can the country hope to foster job growth in the near term and restructure the economy for the long haul.

On May 15, the Metropolitan Policy Program at Brookings and JPMorgan Chase hosted a forum at Rice University, “Going Global: Greater Houston’s Economic Future,” the second in a series of domestic and international forums being convened this year by the Global Cities Initiative. This is the second year of the five-year initiative. The forum explores how metropolitan-led economic growth—including global trade and investment—are important for job creation, and how Metropolitan Houston can leverage its position in the global market.

Speakers and panels provided context on the region’s position in the global marketplace and offered insight into how area leaders can work together with international partners to expand global trade and enhance Houston’s economic prosperity.

Join the conversation on Twitter with hashtag #GlobalCities. Photos courtesy of John Everett.

Roundtable Presentations:

View Bruce Katz's presentation on Houston's next economy »
Download Marek Gotman’s presentation on workforce development (PDF) »
Download Amy Liu's presentation on regional export planning (PDF) »

Bruce Katz, Brookings Vice President & Founding Director, Metropolitan Policy Program

Gina Luna, Chairman of JPMorgan Chase for Houston

Bruce Katz, Brookings Vice President & Founding Director, Metropolitan Policy Program

Video

Event Materials

Participants

Moderator

Amy Liu

Co-Director and Senior Fellow, Metropolitan Policy Program

Panelists

Bruce Katz

Vice President and Director, Metropolitan Policy Program
The Adeline M. and Alfred I. Johnson Chair in Urban and Metropolitan Policy

Honorable Peter Ammon

Ambassador

Honorable Richard M. Daley

Former Mayor of Chicago
Chairman

Dr. David Leebron

President

Gina Luna

Houston Market President

Amy Liu

Co-Director and Senior Fellow, Metropolitan Policy Program

David McClanahan

President and CEO

Strengthening U.S. Manufacturing, Region by Region

Mark Muro — Mon, 13 May 2013 16:17:00 -0400

Last week President Obama used his trip to Austin, TX to announce the creation of three more public-private manufacturing research institutes as nodes of a $1 billion National Network for Manufacturing Innovation (NNMI). On the same day, though, there was another intriguing if lower-key announcement on the Obama administration’s manufacturing agenda.

That’s the new Investing in Manufacturing Communities Partnership, the first phase of a two-phase effort aimed squarely at communities and regions, announced by the Commerce Department’s Economic Development Administration (EDA).

Focused squarely on the fact that the locus of U.S. manufacturing prowess is emphatically local and regional, the new competitive solicitation will allow as many as 25 local communities to be awarded $200,000 this year to create smart strategies for leveraging and aligning their public- and private-sector assets to provide a promising environment for advanced manufacturing. These awards will in the near term allow ambitious communities to develop “bottom-up” plans for strengthening their regions’ intellectual, human, and physical infrastructure.

But beyond that, the small grants and the resulting regional strategies will also help prepare a cadre of U.S. regions to compete for the second phase the partnership, which will next year entail a competition that will award (contingent on congressional support) five to six U.S. communities with up to $25 million for the implementation of regional advanced manufacturing strategies. That’s real money that would—like the full build-out of the NNMI initiative—allow for real strides in advancing U.S. manufacturing in the country.

Yet, while such material awards would be welcome, what is key to the Manufacturing Communities Partnership is its four-square focus on the local and regional angle. For several years now we at the Metro Program have been harping on the sub-national underpinnings of manufacturing competitiveness and the importance of recognizing those underpinnings, establishing state and regional innovation centers to foster them, and making sure to embed regional advanced industries hubs in their surrounding industry clusters and supply chains. Most recently my colleagues Bruce Katz and Peter Hamp proposed creating a “Race to the Shop” competition aimed at calling forth bold regional visions for advanced industry growth, rewarding those visions, and better organizing disparate federal programs in support of the strategy.

We believe all of this is critical because advanced industry dynamism does not grow up just anywhere. Rather, industries reach critical mass in places—most notably, metropolitan places—where firms and workers tend to cluster in close geographic proximity whether to tap local supplier networks, work with local research institutions, draw on local workers, or profit from formal and informal knowledge transfer. In this respect, smart companies are more and more deciding where to locate facilities and hire workers based on the quality of a community’s infrastructure, institutions, and human capital—what the Harvard Business School scholars Gary Pisano and Willy Shih call its “industrial commons” and others its “industrial ecosystem.” The upshot: If U.S. regions—working with their states and the federal government—can bolster the density, efficiency, and vitality of the nation’s regional industrial clusters they will add to overall advanced industry competitiveness.

Broadly then, the EDA and its agency partners are not restricting themselves solely to broad (and needed) national and macro-economic policies on research, trade, taxes, and regulations. Instead, by going local, they are getting at the regional sites in communities where manufacturing supply chains actually come together and generate prosperity. That’s a good place for federal manufacturing policy to be.

Authors

Mark Muro

Image Source: © Aaron Josefczyk / Reuters

Bending the Cost Curve in Health Care the Right Way—Through Better, More Person-Centered Care

Mark B. McClellan — Thu, 09 May 2013 13:54:00 -0400

The United States spends about 17 percent of GDP annually on health care, a figure that is projected to grow substantially in the years ahead, despite the recent slowdown in health care spending growth. Rising costs mean insurance coverage keeps getting more difficult to afford. Those rising costs, plus the aging demographics of the nation, account for most of the spending side of our nation’s long-term fiscal challenges at both the federal and state level. They mean higher expenditures on Medicare and Medicaid, and the tax subsidies for employer-provided coverage and the new subsidies for private insurance in the individual marketplaces. At the same time, biomedical innovation using genomics, systems biology, information technology, and innovative and convenient ways to deliver care holds the potential for much more effective, personalized care – if we can afford to develop and use it. That’s not the case so far: patients often do not get treatments we know to be effective, innovative treatments and ways of delivering care are hindered by payments that are tied more to the site of services and what we’ve paid for in the past than the value of these treatments for particular patients, and we often pay more for complications than for the coordination of care and person-focused support that could help health care providers and patients get much better results for the money they spend. Something has to change, not just to make sure that healthcare costs can be contained, but also to make sure that the quality of health care gets better by providing better support for what patients need.

Our new report, “Person-Centered Health Care Reform: A Framework for Improving Care and Slowing Health Care Cost Growth” is a system-wide framework to address our cost problems by improving care – by leveraging the large and growing opportunities for more person-focused care. We have developed a set of proposals for saving $1 trillion over 20 years and improving care at the same time. Written in collaboration with leading experts from across the academic and political spectrum, our report proposes a framework for how to improve health care financing and regulation so that we can achieve better, higher-value care for each person. The report describes a specific series of steps to improvement the way care is delivered in each part of our health care system, including Medicare and Medicaid, the employer and individual insurance markets, antitrust enforcement and other regulatory reforms. Focusing on person-level quality of care as the fundamental strategy for addressing health care cost growth is in some ways new, but it builds on promising ideas and trends throughout our health care system. It is an idea whose time as come, and which we should start to adopt as our long-term approach to addressing the health care quality and cost problems now.

This report is the third in our “Bending the Curve” series. While building on the past reports, it also differs from our previous work in some very important ways. First, we have broadened our group of authors. Still with us is the core group of experts who participated in previous reports – people like Joe Antos from AEI, Mike Chernew and David Cutler from Harvard, Mark Pauly from University of Pennsylvania, Dana Goldman from USC, Steve Shortell from UC Berkeley, and others who have a tremendous amount of health policy expertise and experience. We’ve also benefitted from some new expert perspectives, including Kate Baicker from Harvard. And along with that expertise, our group now includes some other experts with extensive policy and political experience – including NGA director Dan Crippen, former Senate Majority Leader Tom Daschle, former CEA chair and Columbia dean Glenn Hubbard, former Utah Governor and former HHS Secretary Mike Leavitt, former HHS Secretary and University of Miami President Donna Shalala, and former budget directors Peter Orszag and Alice Rivlin. Together, this unique group sparked a new and welcome level of discussion about reform. In particular, as Mike Leavitt put it, if Republicans and Democrats were at the point where they had to reach an agreement on reforming care and addressing the challenge of rising costs, what would they agree on – and how could we make sure it would work?

As we worked to answer these very practical questions, we were forced to consider the full range of key technical and political issues involved in health reform. We reviewed the kinds of reforms that we have considered before to improve quality and lower costs, along with new evidence on how those reforms and others being implemented now are working (with different degrees of success) in the public and private sectors. We combined that with consideration of how best to move forward in a way that avoids the need for disruptive short-term payment cuts, provides the policy certainty needed to accelerate the trends toward the availability of much better, more personalized care, and addresses serious short-term weaknesses in in Medicare, including unstable physician payments and a lack of support for beneficiaries to save money when they get better care These considerations led to a plan that involves implementing reforms that are not disruptive in the short term while supporting better quality and coordination of care, leading to a large impact over time on supporting improvements in care that can sustain slower cost growth in the years ahead. Our conclusion is that enacting these health care reforms will not be easy, but we agree that this is the best path forward.

We do need to act now. If enacted, our framework is able to avoid the more aggressive steps that will almost certainly be needed in the years ahead to achieve more urgent reductions in federal spending, like cuts in payment rates as in sequestration, or restrictions in coverage for vulnerable populations and in access to new types of innovative care. And even more importantly, it will speed up the innovations in health care and biomedical technology that lead to better results and lower costs for patients. The bottom line is that the best way to control health care costs is to have health care policies now that do as much as possible to support better care for each patient.

We have a window of opportunity right now for implementing thoughtful health care financing and regulatory reforms that improve care today and promote much better, person-centered health care for the future. This is the best way for the country to achieve its overall deficit reduction targets. We should act now before the window closes, and we are left only with policy options that shift costs, reduce quality, and most importantly, diminish the ability of patients and health care providers to achieve better care and better health.

Downloads

Download the report

Authors

Mark B. McClellan

Image Source: © Keith Bedford / Reuters

Five Ways Teachers Can Use Technology to Help Students

Darrell M. West and Joshua Bleiberg — Tue, 07 May 2013 08:59:00 -0400

Thomas Edison once said, "Books will soon be obsolete in the public schools...our school system will be completely changed inside of ten years." Amazingly enough, however, one of our nation's most important inventors was proven quite wrong. The American education system has a remarkable resistance to innovation and the classroom experience has changed very little in the 100 years since Edison's prediction.

Advances in information technology have revolutionized how people communicate and learn in nearly every aspect of modern life except for education. The education system operates under the antiquated needs of an agrarian and industrial America. The short school day and the break in the summer were meant to allow children to work on family farms. Schools have an enduring industrial mentality placing students in arbitrary groups based on their age regardless of their competencies.

Technology has failed to transform our schools because the education governance system insulates them from the disruptions that technology creates in other organizations. The government regulates schools perhaps more than any other organization. Rules govern where students study, how they will learn, and who will teach them. Education regulation governs the relationships of actors in the system and stymies the impact of innovative technologies. Furthermore the diffuse system of governance creates numerous veto points to limit innovation.

To overcome these obstacles, we must persuade teachers that technology will empower them and help their students learn. We argue that there are five strategies for successful teacher adoption of education technology and that these principles will help fulfill the potential that Edison saw a century ago:

Schools must use technology that empowers teachers. Teachers rightly reject education technologies that divert their attention from instruction. The best education technologies enable teachers to do more with fewer resources. Communication platforms like Twitter, Facebook, or Tumblr enable dynamic communication with students. Teacher-empowering technologies include mobile apps that grade written student work and provide lesson plan databases. School systems need to aggressively track what works for their teachers and put all other unworkable technologies aside.

Teachers should treat the adoption of technology as part of lesson planning. One of the major drivers of bad policy is policy churn. New district leaders want to make their mark adopting new policies and jettisoning the old. This constant changing of priorities makes beneficial reforms difficult to implement. Teachers can incorporate technology directly into their practice and insulate their students from the deleterious effects of policy churn. For example teachers can use Khan Academy or other online resources to improve remediation. Systematic adoption of technology at the classroom levels limits the damage of shifting policy maker priorities.

Teachers should not fear open-source technologies. Many mistakenly believe that education technologies are expensive and complicated to use. Open-source technologies are stable, secure, and compatible with other platforms. Organizations both small and large use open source devices every day. Many businesses use open-source servers for their efficiency and costs savings. They often have large communities that provide high quality customer support. Best of all, open-source technologies often cost less than proprietary products.

Use online education portfolios to evaluate students. Educators have known about the benefits of paper based portfolios for generations. Portfolios allow students to express creativity for difficult to assess subjects. Teachers can choose from a variety of online portfolio providers tailored to the needs of their classroom. They also serve as a platform for students to demonstrate growth. Online portfolios have many advantages over paper based options because they cost less and allow for more robust outreach. Online portfolios are also amenable to a wider variety of formats including video, music or other interactive features.

Teachers should embrace the Common Core State Standards. Common standards make teaching simpler. Teachers have to write lessons that comply with district, state, and national standards (e.g. NCTM or NCTE). Having a single set of standards eliminates redundancy and conflicting guidelines. Furthermore universal adoption of common standards will support future technological innovations that aid teachers. From a technical perspective, standards facilitate the development of new technologies. Innovators can focus on developing tools that better serve students rather than solving technical challenges of interoperability created by multiple sets of standards.

Undoubtedly weak financial support inhibits the adoption of education technology. Despite this obstacle, teachers working together have tremendous potential to reform education. Every day teachers face choices about how to implement the curriculum and instruct students. Those moments are opportunities for teachers to engage in education reform that has a real impact on students. Teachers should use education technologies that are inexpensive, easy to use, and improve student learning.

Authors

Darrell M. West
Joshua Bleiberg

Publication: The Huffington Post

Image Source: © Thomas Peter / Reuters

DOE’s Clean Energy Manufacturing Initiative Leverages Regions

Scott Andes and Mark Muro — Mon, 06 May 2013 17:26:00 -0400

This spring, the U.S. Department of Energy (DOE) is launching a new Clean Energy Manufacturing Initiative that will support both clean energy and manufacturing competitiveness by promoting greater energy efficiency in the U.S. production sector. Rolled out at Oak Ridge National Laboratory (ORNL) in Tennessee last month, the new initiative advances a smart take on both the nation’s energy and manufacturing strategies. But more than that it reflects a welcome new spatial and geographic emphasis at the Energy Department.

At the most general level, the new initiative marshals a number of DOE offices, research institutions, and private sector partners to map out and implement networks that promote clean energy production and energy-efficient manufacturing. Key to the effort is that this new push—like the Obama administration’s National Network for Manufacturing Innovation (NNMI) proposal—takes an explicitly regional approach to innovation and the diffusion of next-generation technologies.

In this respect, the initiative aims to engage with regional epicenters of advanced manufacturing such as smart automation in Austin, Tex. and low-heat stamping in Denver, Colo. to drive local and national advances. These areas have established production ecosystems and are driving the technological frontier within clean energy; they are prime sites of U.S. innovation. Along these lines, the initiative has already awarded a total of $15 million to five projects in five different regional manufacturing clusters.

Yet the new focus is not just about covering the geographic bases. By supporting centers of excellence close to regional industrial clusters, DOE is leaning on a large body of literature that suggests innovation results from an iterative set of exchanges between production and research activities that more often than not thrive on proximity.

To be sure, old-line thinking continues to maintain that R&D facilities develop prototypes out of whole cloth and then transfer design requirements to manufacturers, wherever in the world plants are located. However, while this may be the case for low-tech industries, the reality for advanced industries is often the other way around. The genesis of many new technologies comes from within the production process via daily interactions with production facilities. These “co-location synergies” emerge as manufacturers adopt new techniques and equipment to increase efficiency and R&D engineers build upon shop-floor technological competencies to create innovate products and services. And within strong regional clusters, particularly metropolitan regions, such co-location benefits are able to penetrate beyond the incumbent R&D performing firm into the local supply chain—creating high-value start-ups and upstream innovation.

And in fact the ORNL launch event highlighted all of this. Led by Assistant Secretary for Energy Efficiency and Renewable Energy (EERE) Dave Danielson with Tennessee Gov. Bill Haslam in attendance, the event highlighted both a very cool DOE facility—the Carbon Fiber Technology Facility (CFCF) at ORNL—and EERE’s emergent regional stance. CFCF is a production line-sized test bed for public and private sector researchers to explore new carbon fiber composites at scale. As such, it offers to both East Tennesssee and the nation a one-of-a-kind piece of shared industrial infrastructure as well as a focal point for local technical exchange. Currently, for example, 45 firms make up the carbon fiber composite consortium that work with CFCF researchers—many of which are small-and medium-sized firms located in East Tennessee. In that way, the CFCF is emerging as the hub of an nascent “industrial commons,” where firms of all sizes can leverage not only CFCF resources but the broader R&D infrastructure at Oak Ridge, the University of Tennessee, and in firms. In other words, the carbon fiber hub and cluster being fostered in East Tennessee—like Austin and Denver—epitomizes the increasingly “bottom-up” feel of U.S. and global innovation systems and likewise highlights a new region-oriented stance at DOE.

While it’s too early to judge the impact of the Energy Department’s Clean Energy Manufacturing Initiative, the new push looks promising. By focusing more of DOE’s efforts on regions, a historically isolated, sometimes obtuse agency may be beginning to align itself with some of the most dynamic technology development exchanges of all—those that happen locally.

Authors

Scott Andes
Mark Muro

Image Source: © Jason Reed / Reuters

The 'First Sale Doctrine' and Its Impact on the Music Business

John Villasenor — Fri, 03 May 2013 11:16:00 -0400

On March 19, the Supreme Court issued its decision in Kirtsaeng v. John Wiley & Sons, a landmark copyright case examining the reach of the “first sale” doctrine. Under that doctrine, the owner of a copy of a work that was “lawfully made” in accordance with U.S. copyright law “is entitled, without the authority of the copyright owner, to sell or otherwise dispose” of it. For instance, if you purchase a lawfully produced music CD or movie DVD in the United States, you are free to later sell it at a garage sale, donate it to a library or loan it to a friend.

But what about goods made and sold overseas and then imported for resale? After all, there is another provision of copyright law that prohibits the importation into the United States, without the authority of the copyright owner, of copies of a work “acquired outside the United States.”

These two potentially contradictory features of copyright law were tested by Supap Kirtsaeng, who built a business around importing textbooks that had been lawfully made and sold overseas and then reselling them at a profit in the United States. After publisher John Wiley & Sons filed suit against Kirtsaeng in 2008, a federal district court found that his actions infringed Wiley’s copyrights, and the Second Circuit affirmed. However, the Supreme Court reversed these decisions on March 19, holding that the first sale doctrine “applies to copies of a copyrighted work lawfully made abroad.” The ruling will make it very difficult for sellers of physical goods like music CDs to price the same products differently in different markets.

So what will this mean for music sales? In an amicus brief filed in the case, the RIAA and Motion Picture Assn. of America warned against exactly the decision the Supreme Court has now made, stating it “would undermine the copyright protection on which artistic fields like the motion picture and music industries depend for their economic viability” and “have deleterious consequences for the U.S. economy as a whole.”

The Supreme Court’s Kirtsaeng decision undeniably weakens the power of copyright holders. But it’s a bit of a stretch to suggest that the entire U.S. economy might suffer significant harm as a result. In fact, the negative impact on music copyright holders will likely be far more modest than some people expect. Why? Because the first sale doctrine applies to sales. By contrast, music download and cloud-based access services can be delivered using licenses that allow copyright holders to retain a much higher level of control over use of the work.

Not all licenses, however, are equivalent. For example, ReDigi has built an online digital music marketplace based in part on its belief that the iTunes terms of sale, in contrast with the terms of use for Amazon’s online music store, provide for a transfer of title that allows iTunes customers to resell their songs. Whether that interpretation carries the day will depend on the outcome of an ongoing lawsuit filed against ReDigi by Capitol Records in a New York federal district court.

More generally, it is certainly possible -- and very common -- to design licenses in which customers do not become owners of a copy of a song. Under such licenses, music copyright holders can and routinely do impose restrictions on resale and geographic portability. Whether these sorts of restrictions are well matched to the ways in which people and information move in today’s world is a debate for another day. But as profoundly important as Kirtsaeng is for copyright in the broader sense, it may have little impact on a music ecosystem increasingly built around licensing-based approaches for distributing “purchased” content.

Authors

John Villasenor

Publication: Billboard

Image Source: © Siphiwe Sibeko / Reuters

No-Fly Zone: How “Drone” Safety Rules can also Help Protect Privacy

John Villasenor — Thu, 02 May 2013 15:54:00 -0400

Editor’s Note: This article on how drone safety rules can also help protect privacy arises from Future Tense, a partnership of Slate, the New America Foundation, and Arizona State University.

For most of the 20^th century, obtaining overhead images was difficult and expensive. Now, thanks to advances in unmanned aircraft systems—people in the aviation field tend to dislike the word drone—it has become easy and inexpensive, raising new and important privacy issues [PDF]. These issues need to be addressed primarily through legal frameworks: The Constitution, existing and new federal and state laws, and legal precedents regarding invasion of privacy will all play key roles in determining the bounds of acceptable information-gathering from UAS. But safety regulations will have an important and less widely appreciated secondary privacy role.

Why? Because safety regulations, which aim to ensure that aircraft do not pose a danger in the airspace or to people and property on the ground, obviously place restrictions on where and in what manner aircraft can be operated. Those same restrictions can also affect privacy from overhead observations from both government and nongovernment UAS. FAA regulations make it unlawful, for example, to operate any aircraft (whether manned or unmanned) “in a careless or reckless manner so as to endanger the life or property of another.” Aircraft must also be operated at a sufficiently high altitude to allow “an emergency landing without undue hazard to persons or property on the surface” in the event of an engine failure. Flying a UAS around someone else’s backyard can be a bad idea for lots of reasons, including the possibility of violating these rules.

UAS safety (and other) regulations are in the midst of an overhaul. Last year, President Obama signed an FAA reauthorization bill that provides for the integration of UAS into the national airspace by late 2015. Under this new law [PDF; see Sections 331–336], since May 2012 law enforcement agencies have been able to apply for expedited authorizations to use certain types of small UAS, which must be operated during daylight, less than 400 feet above the ground, and within “line of sight” of the operator. This means that the operator can see a UAS with his or her own eyes as it is being flown. (The phrase “visual line of sight” is sometimes distinguished from “line of sight,” which can refer to operation in which a radio signal can be transmitted directly from an operator to a UAS that may be beyond visual line of sight. However, in the 2012 FAA reauthorization bill, “line of sight” is almost certainly intended to mean “visual line of sight.”)

Visual line of sight operation is also required under a definition [PDF; see Section 336] provided for “model aircraft” in the 2012 law. However, that definition is specific to that section of the law and may not apply to all hobbyist unmanned aircraft. The FAA’s Advisory Circular [PDF] on “model aircraft operating standards” does not mention line of sight, though model aircraft operation beyond the line of sight would risk being viewed by the FAA as careless or reckless. The FAA is also very likely to require visual line of sight operation in new rules for most (but not all [PDF]) commercial, research, and other uses of UAS.

From the FAA’s standpoint, line-of-sight rules are aimed solely at ensuring safety, since an operator who can’t see the aircraft he or she is flying can find it harder to “see and avoid” other aircraft in the vicinity. But line-of-sight operation also provides some measure of privacy protection by excluding some of the most egregious potential abuses. It is very hard for an operator in front of a house to maintain visual line of sight while lowering an unmanned aircraft into the fenced‐in backyard to obtain eye‐level images through the back windows of the house.

While there is nothing physically preventing an unmanned aircraft from being flown in violation of these and other FAA rules, the potential consequences of doing so can provide a strong set of disincentives. An individual, company, or other organization that runs afoul of FAA rules could face fines or other legal consequences and find its authorization to operate unmanned aircraft suspended or revoked. That may not stop the most determined paparazzi from snapping overhead pictures of sunbathing movie stars, but it should help dissuade many would-be UAS voyeurs.

And what would happen if a law enforcement agency violated FAA rules while using a UAS to get images of a suspect’s backyard? Would acquiring those images be a Fourth Amendment “search,” and therefore be unconstitutional without a warrant?

While the Supreme Court has never specifically ruled on UAS privacy, it considered warrantless observations from manned government aircraft on three occasions in the 1980s. In the 1986 California v. Ciraolo decision, for instance, the court ruled that police observations from an airplane flying at 1,000 feet of marijuana growing in a backyard were constitutional. Noting that the “observations … took place within public navigable airspace … in a physically nonintrusive manner,” the court held that the “Fourth Amendment simply does not require the police traveling in the public airways at this altitude to obtain a warrant in order to observe what is visible to the naked eye.” In two other decisions involving observations of private property from aircraft—Dow Chemical Co. v. United States in 1986 and Florida v. Riley in 1989—the justices also viewed the fact that the aircraft were lawfully operated as a factor, although far from the only one, in finding no Fourth Amendment violation. In light of these precedents, a court might well find gathering images from government aircraft operated in violation of FAA regulations to be unconstitutional.

It’s still far too early to know exactly how FAA rules designed to provide safety and efficiency will affect unmanned aircraft privacy. Commercial UAS operation in the United States is not yet permitted, and the number of law enforcement organizations that have received FAA authorizations for operational (as opposed to training) UAS use is still very limited. And while there is a large and growing community of “drone” hobbyists, the overwhelming majority of them fly safely and in a manner respecting privacy.

However, as unmanned aircraft use increases there will inevitably be instances in which UAS are operated by private individuals, paparazzi, companies, and law enforcement agencies in ways that raise privacy concerns. Determining whether those uses violate reasonable expectations of privacy will sometimes start—though certainly not end—with an inquiry into whether the UAS was operated in compliance with FAA regulations.

Authors

John Villasenor

Publication: Slate

Image Source: © Jean-Paul Pelissier / Reuters

Six "Megatrends" That Will Shape the Future of Digital Media

John Villasenor — Wed, 01 May 2013 16:47:00 -0400

Editor’s Note: John Villasenor’s piece on the six "megatrends" that will shape the future of digital media was first published in Forbes. Villasenor is a nonresident senior fellow in Governance Studies’ Center for Technology Innovation at Brookings and is a member of the World Economic Forum’s global agenda council on the intellectual property system.

The World Economic Forum is perhaps best known for its annual meeting in Davos, Switzerland, which brings together heads of state, CEOs of some of the world’s largest companies, and assorted other movers and shakers for a week of speeches, panels, and workshops in the Swiss Alps each January. But the Forum also works year-round through its network of over eighty global agenda councils, which address a diverse range of topics including biotechnology, climate change, energy security, and youth unemployment.

Since last year, I’ve been a member of the Forum’s global agenda council on the intellectual property system. We’ve taken a careful look at the forces shaping how people are creating and sharing digital media today, and perhaps even more importantly, what the world of digital media will look like in the coming years. We’ve distilled these down to a set of six digital content “megatrends” that, translated from policy-wonk language into English, are as follows (the unsimplified version is here [PDF]):

Content distribution models are shifting towards instantaneous, ubiquitous access, often using social networks
New technologies, big data, and the growth of virtual content are reshaping the creative economy landscape
The traditional lines between content creators and content consumers are blurring, with consumers playing an increasingly important role in collaborative content creation
Business models for digital content distribution are changing, with licensing and service-based delivery models replacing traditional sales-based distribution
Commerce in creative works is increasingly global – but national and regional intellectual property frameworks have yet not caught up with the full range of cross-border content movement enabled by today’s technologies
Technology is making it easier to modify and redistribute content. The resulting complex chains of “derivative works” provide increased opportunities to capture creativity, but also create challenges to managing copyright.

Many aspects of these trends are obvious. It’s not news to anyone that technology has altered how we create and distribute content, that business models for media distribution have evolved dramatically over the last decade, or that intellectual property laws need to be updated. But articulating the key trends impacting digital media can provide a useful framework for rethinking intellectual property, both at the level of individual companies as well on a national and global scale.

For example, if your business uses crowdsourcing to capture the collective creative input of a large customer base (or for content distributors, a large audience), there are important questions that can arise regarding ownership of the associated intellectual property – questions that don’t always end with the terms of use that your customers accept as a condition of joining your ecosystem. If your company is contemplating a business model that includes cross-border distribution of certain types of digital media, you will likely encounter a complex licensing landscape that can make it difficult to maximize your market reach.

Addressing the many challenges of doing business in a global digital media environment requires not only working effectively within existing intellectual property frameworks, but also helping policymakers identify ways in which those frameworks can be suitably updated. The trends listed above can provide context for conversations serving both of those ends. The result can be a set of intellectual property solutions allowing content creators to reach larger and more engaged audiences, consumers to benefit from increased choice, and the businesses that connect them to broaden the scope of their products and services.

Authors

John Villasenor

Publication: Forbes

How Not to Die: Revolutionizing End-of-Life Health Care

Jonathan Rauch — Tue, 30 Apr 2013 16:32:00 -0400

Editor’s Note: This short blog post is based on the longer The Atlantic article, “How Not to Die,” by Jonathan Rauch. It focuses on revolutionizing end-of-life care by utilizing entrepreneurs in the medical system.

Here in Washington, we talk obsessively about reforming health care as something the government needs to do. Which it surely does. But one thing we forget is that a lot of reform is coming up from the grassroots, and this bottom-up reform, by showing the way forward, will be every bit as important as top-down reform, and a lot less subject to political gridlock.

Example: Dr. Angelo Volandes, of Harvard Medical School and Massachusetts General Hospital, has a gold-plated medical-establishment pedigree. But he’s also a zealous reformer who believes that much of the treatment administered to people nearing the end of life is not only unnecessary but, much worse, actually unwanted—because patients are not given the information they need in order to set treatment goals. He and colleagues are pioneering short, easily understandable videos that illustrate treatment options and goals of care visually, giving patients a clearer idea of what their choices really are.

Read about it here. The U.S. medical system is not friendly to disruptive entrepreneurs. But if we're going to improve value, reduce medical inflation, and make patients' experiences better, we'll need to make the most of entrepreneurs like Volandes.

Authors

Jonathan Rauch

Pentagon Paying China — Yes, China — To Carry Data

Noah Shachtman — Mon, 29 Apr 2013 00:00:00 -0400

The Pentagon is so starved for bandwidth that it’s paying a Chinese satellite firm to help it communicate and share data.

U.S. troops operating on the African continent are now using the recently-launched Apstar-7 satellite to keep in touch and share information. And the $10 million, one-year deal lease — publicly unveiled late last week during an ordinarily-sleepy Capitol Hill subcommittee hearing — has put American politicians and policy-makers in bit of a bind. Over the last several years, the U.S. government has publicly and loudly expressed its concern that too much sensitive American data passes through Chinese electronics — and that those electronics could be sieves for Beijing’s intelligence services. But the Pentagon says it has no other choice than to use the Chinese satellite. The need for bandwidth is that great, and no other satellite firm provides the continent-wide coverage that the military requires.

“That bandwidth was available only on a Chinese satellite,” Deputy Assistant Secretary of Defense for Space Policy Doug Loverro told a House Armed Services Committee panel, in remarks first reported by InsideDefense.com. “We recognize that there is concerns across the community on the usage of Chinese satellites to support our warfighter. And yet, we also recognize that our warfighters need support, and sometimes we must go to the only place that we can get it from.”

The Apstar-7 is owned and operated by a subsidiary of the state-controlled China Satellite Communication Company, which counts the son of former Chinese premier Wen Jiabao as itschairman. But the Pentagon insists that any data passed through the Apstar-7 is protected from any potential eavesdropping by Beijing. The satellite uplinks and downlinks are encrypted, and unspecified “additional transmission security” procedures cover the data in transit, according to Lt. Col. Damien Pickart, a Defense Department spokesperson.

“We reviewed all the security concerns, all of the business concerns with such a lease,” Loverro said. “And so from that perspective, I’m very pleased with what we did. And yet, I think the larger issue is we don’t have a clear policy laid out on how do we assess whether or not we want to do this as a department, as opposed to just a response to a need.”

Every new drone feed and every new soldier with a satellite radio creates more appetite for bandwidth — an appetite the military can’t hope to fill with military spacecraft alone. To try to keep up, the Pentagon has leased bandwidth from commercial carriers for more than a decade. And the next decade should bring even more commercial deals; in March, the Army announced it was looking for new satellite firms to help troops in Afghanistan communicate. According to a 2008 Intelligence Science Board study (.pdf) — one of the few public reports on the subject — demand for satellite communications could grow from about 30 gigabits per second to 80 gigabits a decade from now.

The Chinese are poised to help fill that need — especially over Africa, where Beijing has deep business and strategic interests. In 2012, China for the first time launched more rockets into space than the U.S. – including the Chinasat 12 and Apstar-7 communications satellites.

Relying on Chinese companies could be a problematic solution to the bandwidth crunch, however. U.S. officials have in recent years publicly accused Chinese telecommunications firms of being, in effect, subcontractors of Beijing’s spies. Under pressure from the Obama administration and Congress, the Chinese company Huawei was rebuffed in its attempts to purchase network infrastructure manufacturer 3Com; in 2010, Sprint dropped China’s ZTE from a major U.S. telecommunications infrastructure contract after similar prodding. Last September, executives from the Huawei and ZTE were brought before the House intelligence committee and told, in effect, to prove that they weren’t passing data back to Beijing. “There’s concern because the Chinese government can use these companies and use their technology to get information,” Rep. Dutch Ruppersberger, said at the time. The executives pushed back against the charges, and no definitive links to espionage operations were uncovered. But the suspicion remains. And it isn’t contained to these two firms.

“I’m startled,” says Dean Cheng, a research fellow and veteran China-watcher at the Heritage Foundation. “Is this risky? Well, since the satellite was openly contracted, they [the Chinese] know who is using which transponders. And I suspect they’re making a copy of all of it.”

Even if the data passing over the Apstar-7 is encrypted, the coded traffic could be used to give Chinese cryptanalysts valuable clues about how the American military obfuscates its information. “This is giving it to them in a nice, neat little package. I think there is a potential security concern.”

And even if the Chinese don’t intercept the data, there’s always the danger of them suddenly deciding to block service to the American military.

For his part, Loverro says the Department of Defense will be reviewing its procedures to ensure that future satellite communications deals both let troops talk and let them talk in private. The Pentagon will get another opportunity shortly: the Apstar-7 deal is up on May 14, and can be renewed for up to three more years.

Authors

Noah Shachtman

Publication: Danger Room (Wired)

Becoming a Techno-Industrial Power: Chinese Science and Technology Policy

Joel R. Campbell — Mon, 29 Apr 2013 09:05:00 -0400

Editor's Note: This paper by Joel R. Campbell, which outlines the history of Chinese science and technology innovation since the founding of the People's Republic, is the April 2013 installment in the Issues in Technology Innovation paper series, which is part of the Center for Technology Innovation in Governance Studies at Brookings.

China’s science and technology policy has developed through four phases since the founding of the People’s Republic in 1949. In the first phase, to 1959, technology supported the creation of heavy industry along Soviet lines, while the second, up through the end of the Cultural Revolution in 1976, saw economic stagnation and ideological domination of technology projects. A third phase, under reforms launched by Deng Xiaoping and carried forward by Jiang Zemin to 2001, stressed building of an independent research base and the gradual shift to market-oriented, product-driven research. Since 2002, Chinese policy has increasingly backed high technology industrialization, along with support for the nascent green technology industry.

Chinese technology policymakers also have promoted an innovation-driven economy. The Ministry of Science and Technology (MOST) is the key policymaking and policy coordination organ, and it funds the five most important technology development projects:

The Key Technologies Research and Development Program, focused on industrial technology
The 863 Program, centered on basic and applied research on marketable technologies
The Torch Program, which supports commercialization of high tech products
The 973 Program, funding multi-disciplinary projects in “cutting edge” technology, and
The Spark Program, promoting development and use of technology in rural areas

Science and industrial parks are key venues for high tech research and development (R&D). Currently, there are fifty-four such parks, mostly located in large cities or provincial capitals. Firms operating in the parks must create or apply technology in high tech fields, devote at least three percent of gross revenues to R&D, and employ at least thirty percent of college degreed workers. The information technology (IT) industry is one of the leading industries in the science parks, and has received special policy recognition since 2000.

The space program has become one of China’s proudest recent accomplishments. Building steadily on its experience with military and civilian missile technology, China has already launched four manned space missions, and has ambitious plans for a space station and unmanned exploration of the Moon, along with possible manned lunar missions. China has also made a major push into green (or “clean”) technology, driven by twin concerns about dependence on foreign oil and serious environmental degradation within China.

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Joel R. Campbell

Tech Transfer Policy: Bayh-Dole has Distributional Consequences

Walter D. Valdivia — Fri, 26 Apr 2013 08:59:00 -0400

Editor’s Note: This article first appeared in Innovation: America’s Journal of Technology Commercialization (April/May 2013; Volume 11, Number 2).

The sequester will have a negative effect on federal R&D of $9.6 billion, that is about a 7 percent cut with respect to the 2012 budget. These cuts will renew the urgency of figuring out how to maximize the social return on public R&D investments. That is a complex question because social returns are not only a function of the pace of innovation but also depend on how the benefits of innovation are distributed across society. Federal agencies that fund research as well as universities and national laboratories have an important role to play here. Not only can they rebalance their research portfolios but also they can improve technology transfer—the dynamic exchange of knowledge between research organizations and the private sector.

One important channel for technology transfer is patenting and the licensing of those patents to industry. These activities are primarily regulated by the Bayh-Dole Act of 1980. Think privatization of public assets where the assets are public patents—patents derived from federally funded research. The act introduced in this way the profit incentive to develop commercial products from public research. Under this act, the research contractor (generally a university or national laboratory) can take title to patents and to subsequently license those patents to private companies or other agents with the only proviso that the licensee takes reasonable efforts to practice the patent, that is, to develop it into a practical application.

The ostensible goal of Bayh-Dole was precisely to maximize the social benefit of federal R&D investments. We must then ask if this policy has delivered and if taxpayers are receiving a social return commensurate to their investment in research. The answer is inconclusive. There is some evidence that the translation of federally funded research into market products has increased but Bayh-Dole has also had unanticipated consequences—patenting has moved upstream to research tools creating what legal scholars Michael Heller and Rebecca Eisenberg have characterized as the tragedy of anticommons. In addition, it is not at all clear how widely the benefits of public patents have been distributed. Therefore, a fair assessment of Bayh-Dole must address at least two questions: Are the unanticipated consequences undercutting efficiency gains? And, are social returns from innovation concentrated or broadly distributed?

Regarding efficiency, a concern of the first order is that universities are patenting research tools. Scientific research is a collective effort that requires an active intellectual exchange at the outer boundaries of knowledge. Among the goods traded there are research tools, materials, and data. The patenting of reagents, cell lines, chemical compounds, raw datasets and other materials and the strict enforcement of those patents poses the risk of slowing down innovation at the headspring. A sensible answer to this problem would be to modify the statute to allow an exemption for non-profit research institutions. The exemption must at least apply to public patents. Universities and laboratories wanting to negotiate exclusive licenses on research tools would then be required to demonstrate that such an arrangement is in the interest of science and the public good. Complementing this solution, federal research contractors could benefit greatly from organizing a system-wide consortium for sharing research tools. This patent pool, chartered as a not-for-profit organization, would guarantee access to its patents (or at least patents on research tools) to all its members at fair licenses fees.

Beyond efficiency, there is an equity concern. That a public patent is developed into a product doesn’t directly imply maximum social benefit. If a new product is priced so high that only very few people can afford it, the social return will be minimal. Consider the effect of innovation in the pricing of drugs. If pharmaceutical companies are allowed to charge as high prices as they wish, only patients with prescription drug coverage in their health insurance will afford new medicine. If health insurance is universal, the effect will be deleterious for society because insurance prices will have to keep pace with drugs prices. A good indicator of the social return on public investment in biomedical research is therefore affordability. Amidst budget cuts and inflationary pressure on prescription drugs, policymakers are taking this issue seriously; for instance, Senator Ron Wyden (D-OR) has recently asked the NIH to “revisit the idea of striking a better balance between encouraging profit, innovation, accessibility and affordability.”

If public patents are a steady source of innovation in the biomedical sector, pricing excesses should be disallowed or at least regulated. Let’s be clear that companies that take a public patent and commit significant resources to its development are justly entitled to recoup their investments and even to retain a profit margin. But they did not incur in the full back-to-back investment—they did not invest in the expensive portfolio of blue-sky research out of which one program resulted in the patent they have come to license—it was the taxpayer that incurred in that high-risk investment. Put shortly, companies cannot assume a right to maximum profit when selling products based on public patents.

Federal agencies should be empowered, under Bayh-Dole, to promote competitive markets in high-tech sectors. One area where this can be done is defining better the conditions for exclusive licenses. While exclusive licenses are well justified in the case of start-up companies—they use these intangible assets to raise investment capital—the same rationale does not hold for large companies with high liquidity or easy access to credit. This kind of safeguard was part of the original intent of the act; Bayh-Dole originally limited to five years exclusive licenses for large companies. Another safeguard is the march-in rights provision. Federal agencies retain a royalty free license to all public patents and they can practice their licenses if the private sector shows no active effort to develop the patents or to satisfy public health and safety needs. Executive action should allow federal agencies to apply this provision to curb pricing excesses, for instance by linking need to affordability. The sole threat of intervention would curb pricing while still allowing companies to make some profit.

Congress and the federal government can help universities and national laboratories maximize the social returns of research by encouraging licensing practices that ease scientific collaboration and by curbing pricing excesses.

Authors

Walter D. Valdivia

Publication: Innovation

Google Glass, Resale Restrictions, and the Demise of Ownership

John Villasenor — Fri, 26 Apr 2013 12:02:00 -0400

Editor’s Note: In this article, first published by Slate, John Villasenor writes about Google Glass and how restrictions on its resale affect consumers and the privileges of ownership. It arises from Future Tense, a collaboration among Arizona State University, the New America Foundation, and Slate. Future Tense explores the ways emerging technologies affect society, policy, and culture.

Late last month, Google selected 8,000 people to be given the privilege of forking over $1,500 to purchase a pair of Glass, the Internet-connected glasses that promise to bring wearable computing to a whole new level.

But ownership isn’t what it used to be. According to the Google Glass terms of sale,

[W]hen you purchase Glass devices or accessories from Google … [y]ou may not commercially resell any Device, but you may give the Device as a gift, unless otherwise set forth in the Device Specific Addendum. Recipients of gifts may need to open and maintain a Google Wallet account in order to receive support from Google. These Terms will also apply to any gift recipient.

Welcome to the shrinking privileges of ownership in an always-connected world. Are these terms beneficial for consumers? Clearly not. Are they even enforceable? To at least some extent, they probably are.

Prohibiting resales, loans, and other transfers after an initial sale has long been understood to be bad for both markets and consumers. Back in the 1600s, English jurist Lord Coke recognized [PDF, see section 360] the harms to “trade and traffique, and bargaining and contracting” that could result from transfer restrictions placed on owners. In its March 2013 ruling in Kirstaeng v. John Wiley & Sons Inc., the Supreme Court cited Lord Coke and wrote that “American law too has generally thought that competition, including freedom to resell, can work to the advantage of the consumer.”

In copyright law (which protects original works of authorship), an owner’s freedom to resell, donate, or otherwise dispose of lawfully made printed books, music CDs, movie DVDs, and other physical (but not electronic!) copies of works is known as the “first-sale doctrine.” For patented inventions, the analogous concept is called patent exhaustion. As the Supreme Court explained in a 2008 decision in Quanta Computer Inc. v. LG Electronics Inc., the “longstanding doctrine of patent exhaustion provides that the initial authorized sale of a patented item terminates all patent rights to that item.” If you own a lawfully made music CD or a legitimately purchased automobile (which contains many patented components), you are free to resell either one without first seeking the consent of the associated copyright and patent holders.

But that doesn’t mean you are free to resell Google Glass. Why not? Because the first-sale doctrine and patent exhaustion, which reflect federal law limitations on the rights of intellectual property holders, are not the only considerations. Contractual obligations are also important. A purchaser who enters into and then violates an agreement prohibiting resales could be exposed to a breach-of-contract claim. If your purchase of Glass from Google was accompanied by a promise not to commercially resell it, turning around and offering your Glass to the highest bidder on eBay could land you in hot water.

Another complication is that Google Glass, like many recent- and emerging-generation consumer electronics products, is made useful largely through its ability to connect to license-based service offerings. When you use a service such as Google Maps, you do so under a license to access the associated content—you’re a licensee, not an owner of that content.

The model of requiring purchasers of consumer electronics devices to first enter into restrictive contracts as a condition of sale and then to agree to restrictive licenses when using those devices raises multiple concerns. Most fundamentally, it does an end run around legal frameworks that evolved specifically to prohibit anti-competitive and consumer-unfriendly downstream control over transfers of ownership. And it’s confusing for consumers.

t’s tempting to think of the Glass resale restriction as simply another unwelcome consequence of the many legalese-laden agreements that we all encounter when using almost any online service. But most of those agreements involve restrictions on data, not the devices on which they reside. You can’t resell files containing songs downloaded from Amazon, map data from Google, or restaurant recommendations from Zagat. Our purchased devices, by contrast, have generally been ours to keep, sell, loan, or donate as we see fit. That flexibility is lost when a purchase comes with restrictions like those in the Glass terms of sale.

So, what’s the solution? Ideally, device sales shouldn’t come with downstream resale restrictions. People who buy consumer electronics devices ought to be free to enjoy all the traditional privileges of ownership—including the ability to dispose of them on terms of their own choosing. Companies unwilling to provide that flexibility should at least ensure that their customers are clearly informed of the strings attached to “ownership.” In this respect, Google could do better. The Google Glass terms of sale, for example, purport to “apply to any gift recipient” to whom you might give Google Glass. What does that really mean? If you give someone Google Glass, is it your responsibility to ensure that the recipient is duly informed of and agrees to the resale prohibition? If you don’t even raise the issue—or if you do but the would-be-recipient doesn’t agree—can you still give the gift? And if that person sells your gift on eBay, was there a breach of contract, and if so, of what contract?

Consumers, too, can push back against what may be a growing trend to encumber purchases of advanced consumer electronic devices. If consumers display a reluctance to accept overly restrictive device sale terms, market pressure should force companies to adopt terms ensuring that we really own the things we buy.

But if the heated competition for the right to buy Google Glass is any indication, we won’t see that market pressure brought to bear any time soon. That’s unfortunate, because there’s a risk of creating a new normal that leaves consumers with a substantially diminished set of rights regarding their devices. In the mean time, if anyone offers to give you a pair of Glass as a gift, you may want to read the fine print.

Authors

John Villasenor

Publication: Slate

Building Trust in the Global Supply Chain

Thu, 18 Apr 2013 09:00:00 -0400

Event Information

April 18, 2013
9:00 AM - 12:00 PM EDT

Falk Auditorium
Brookings Institution
1775 Massachusetts Avenue NW
Washington, DC 20036

Register for the Event
Long supply chains and inadequate product evaluation before deployment create a situation of widespread vulnerability in Information and Communications Technology (ICT) supply chains. As trade grows more globalized, the supply chain has become more complex and challenging. Contemporary commerce involves hundreds of individuals, organizations, technologies, and processes across continents. In this situation, what are the vulnerabilities and what are the possible remedies for addressing those threats? What steps should be taken to ensure that supply chains are protected?

On April 18, the Center for Technology Innovation at Brookings will host a forum to explore operational and technological threats to the ICT global supply chain and ways to identify best practices, standards, and third-party assessment for supply chain assurance. A panel of experts will discuss the problems involved in cross-border supply chains and ways to address industry-wide risks.

After the program, panelists will take audience questions.

Twelve Ways to Build Trust in the ICT Global Supply Chain

Darrell M. West — Thu, 18 Apr 2013 00:30:00 -0400

Editor's Note: This paper was released in conjunction with the Building Trust in the Global Supply Chain event at Brookings on April 18, 2013. It is a part of the Center for Technology Innovation's Issues in Technology Innovation paper series.

The globalization of commerce and trade has created many benefits. Supply costs have been reduced for many products. Computers and other items can be made of parts from a number of different locales. Countries can specialize in particular goods and companies can focus on the things they do best. Raw materials may come from one area, while manufacturing and production lie elsewhere, and sales and marketing take place in still another place. In this as well as other examples, contemporary commerce involves a complex interchange of hundreds or thousands of individuals, organizations, technologies, and processes across a variety of different continents.

But long supply chains and inadequate or nonexistent product evaluation before deployment, create a situation where widespread vulnerabilities exist in products and networks that can be exploited by others during design, production, delivery, and post-installation servicing. There are industry-wide risks associated with procurement, transportation, and management. Everything from raw materials and natural disasters to market forces, national laws, and political conflict can be problematic. Problems in one area can cascade elsewhere and magnify risks dramatically for the system as a whole.

In this paper, West discusses twelve ways to build trust in the Information and Communications Technology (ICT) global supply chain. With the assistance of a group of leading experts brought together at the Brookings Institution in February, 2013 plus follow-up interviews, he explores the operational threats and technological vulnerabilities that we face, and makes recommendations to identify best practices, standards, and third-party assessment for supply chain assurance.

West argues that vulnerabilities in the supply chain and product development, generally, facilitate a myriad of attack and exploitation techniques, such as unauthorized remote access after product deployment for many malicious activities, degradation of ICT networks, and damage to critical infrastructures. West suggests that developing agreed-upon standards, using independent evaluators, setting up systems for certification and accreditation, and having trusted delivery systems will build confidence in the global supply chain as well as the public and private sector networks that sustain them. These and other types of evaluations make information available to purchasers and therefore give them a firmer basis for product selection.

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Darrell M. West

Building on Recent Advances in Evidence-Based Policymaking

Jeffrey B. Liebman — Wed, 17 Apr 2013 08:00:00 -0400

Abstract

The current fiscal environment makes it imperative that we produce more value with each dollar that government spends. Doing so will require better use of evidence in policymaking. The good news is that over the past decade new government strategies have begun to emerge—at the federal, state, and local levels—that simultaneously offer the potential to make better use of taxpayer dollars and speed up progress in addressing serious social problems. These strategies: subsidize learning and experimentation so that new solutions are developed, increase the amount of evidence on the effectiveness of existing and potential new programs, make greater use of evidence in budget and management decisions, make purposeful efforts to target improved outcomes for particular populations, and spur innovation and align incentives through cross-sector and community-based collaborations.

This paper describes the new strategies. It also proposes several steps to advance the use of evidence-based policy in the federal government, including giving agencies the authority to reserve a percentage of program spending to fund program evaluations and expanding the use of tiered evidence standards in grant competitions. Finally, it recommends two initiatives that would supplement the diffusion of these evidence-based practices with a more-focused approach that aims to supply solutions for specific high-priority social problems. The Ten-Year Challenge would tackle ten social problems by establishing data-driven, outcome-focused initiatives in one hundred communities. A federal Pay for Success initiative would help state and local governments establish Pay for Success projects in areas like early-childhood education where state and local activity has the potential to achieve important federal policy objectives or produce significant federal budget savings.

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Authors

Jeffrey B. Liebman

Publication: The Hamilton Project

Revving Up Manufacturing, Region by Region

Mark Muro and Jessica Lee — Thu, 11 Apr 2013 14:44:00 -0400

For some time now we’ve argued that one of the best ways to drive innovation and economic growth is by connecting critical R&D-focused anchor institutions—like the Department of Energy’s Energy Innovation Hubs or the Advanced Industries Innovation Hubs that we advocated establishing earlier this year—to broader regional strategies that seek to strengthen a region’s innovation ecosystem. In providing intentional support for regional innovation clusters, such strategies nurture these major centers of research by fostering knowledge sharing and spillovers, expediting technology transfer and commercialization, and fostering entrepreneurialism.

Now, a pair of items in the new Department of Commerce budget has picked up on that logic by placing side by side two welcome manufacturing policy initiatives.

Going beyond its funding request for the proposed $1 billion investment in a National Network of Manufacturing Institutes, the first of which was launched in Youngstown, Ohio last August, the budget also calls for the creation of a $113 million Investing in Manufacturing Communities Fund to reward and support regions that develop strategies “that build on the region’s comparative advantages and leverage private-sector resources.” Through these twinned proposals, the Commerce budget seeks funding not only to establish new manufacturing innovation institutes but also to provide incentives for manufacturing-strong regions to craft what are in effect metropolitan business plans—carefully tailored strategies that help regions strengthen their economies by capitalizing on their distinctive assets and attributes.

We’re encouraged that these proposals made it into this year’s budget request. Ideas like the Investing in Manufacturing Communities Fund offer a glimmer of the kinds of smart thinking needed to boost economic growth, one region at a time.

And though the fate of this particular budget request is uncertain at best, it points to the types of pragmatic action that production-oriented metros can take on their own to make the most of their manufacturing prowess and strengthen their economies in the process.

Authors

Mark Muro
Jessica Lee