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Date:   8 Jan 2002 12:19:01 -0800
To:   pla@softflare.net
Subject:   Re: tpog

Hello Paul, On Tue, 08 January 2002, "Paul L. Allen" wrote: > On Sat, Dec 29, 2001 at 08:51:11AM -0800, email@greglondon.com wrote: > > On Fri, 28 December 2001, "Paul L. Allen" wrote: > > Everyone in a commodity exchange enters a transaction for their > > own personal profit, gain, advantage. > > And in a free market. It's just that money and relatively fixed > prices obscure the fact. motivation is irrelevant to the notion of energy being conserved. > > In your scenario, my concept of "energy being conserved" is absent > > because you did not mention a free market, an availability of buyers and > > sellers of sheep and pigs. If such a market existed, and if your > > premise that pigs and sheep are of approximately equal meat and > > approximately equal labor to raise them, then a free market would > > find that hogs and sheep are being bought and sold at approximately > > the same price. > > Now consider this. A sheep and a pig of approximately equal meat. A > carpenter who likes both and thinks that they are each worth 5 days of > his labour. But now the sheep farmer is a lot more efficient than the > pig farmer and can raise 20 sheep for the same effort that the pig > farmer needs to raise 10 pigs. you just changed the premise of your previous argument. you previously said "approximately equal amounts of meat and equal amounts of labor to raise". > If all three treat the sheep and the pig as of equal value then the > sheep farmer gets the better deal by far. If the sheep farmer values > his sheep in terms of the labour used to produce them then the other > two get the better deal. and, again, you ignore a Free Market as well. if sheep are easier to raise than pigs, and people like to eat mutton more than bacon, then, you'll likely have more sheep herders than pig farmers. the only way your sheep farmer gains an advantage is if he can somehow prevent anyone else from raising sheep. i.e. if he can maintain a MONOPOLY. Otherwise, the sheep farmer will be forced by competition in a Free Market to sell mutton based on his cost of labor, which will be less than the labor cost of bacon. your scenarios all look at the individual actors as if they are the only people in the world. when you throw in a Free Market, then competition forces the cost of labor to be the main factor in the cost of goods, and therefore, a balance is maintained. > Or consider crappyco and superco that both make bricks. If they both > charge the same price then superco, which is far more efficient, makes > a much bigger profit than crappyco which is very inefficient. If > superco reduces prices to make a less substantial profit then crappyco > eventually goes under. the conservation of energy idea already assumes that everyone will tend to operate in a field where they are most efficient. Yes, a pig farmer trying to raise sheep will be inefficient, but he either learns to adapt, or he goes under. > There is no objective value on anything. It depends not only on > individuals but on circumstances. An expensive entertainment centre > with TV, stereo and the full works is valueless except as a doorstop > in a country where there is no electric power. the idea of conservation of energy does not place intrinsic value in the thing itself. it indicates the energy being traded by buyer and seller are of approximately equal value in the market. Your entertainment center will have no buyers in a place with no electricity. the conservation of energy idea says nothing about a situation where there is product but no sale. It only says that where a transaction occurs between buyer and seller in a free market, there is a conservation of energy. > Another example of value not being conserved is local shops. They may > charge more than big supermarkets further away but when you take > travel time and fuel costs into account they work out cheaper. The > simple act of distribution adds value to a product. travel costs would be part of the buyer's costs, and no buyer would burn $10 dollars of travel time for a $10 widget if they can buy the same widget locally for less than $20. I think you are confusing intrinsic value with what I'm trying to say. > > Therefore, your barter between pig and sheep farmer conserves energy. > > Only in a very simplistic view of the transaction. In reality there > could be a great disparity in the labour involved yet each thinks the > transaction is still worthwhile. They both gain but not to the same > degree. > > Unlike mass/energy, value is not a conserved quantity. see above. > > > The idea that value (or "energy" as you call it) is conserved is > > > false. It is not an objective metric in the first place (what you > > > treasure I deem trash) and it can be both created (by a good cook) or > > > destroyed (by a bad one). Any analysis that starts with the > > > presumption that value is an objective metric which is conserved is > > > fundamentally flawed. Marxism started out with that premise and the > > > result was economic collapse of a large empire. > > > > What I'm calling energy is objectively measurable as "price on a free market". > > I'm not concerned with the individual preferences of someone likes to eat > > mutton and someone else prefers bacon. I'm concerned with the transaction > > between individuals, not the individuals themselves. In the realm of a > > Free Market, such a transaction will tend to balance.The individuals may > > profit or gain by their part in the transaction, but the transaction as > > a whole, from the perspective of the marketplace, is one that tends towards > > being balanced. > > You are confusing a statistical average with the thing itself. you are definitely confusing intrinsic value with what I'm describing. "Thing itself" implies intrinsic value. > In any > transaction your "energy" is not conserved and does not balance. All > sorts of intangibles affect the perceived value of both items exchanged. > To a millionaire a Rolls Royce is cheap; to a tramp a car of any sort > way beyond his means. internal/subjective qualities are irrelevent. I'm talking about strictly objective measures during a transaction between buyer and seller on a free market. > There are things I can afford but do not buy > because the value I place on them is less than their asking price. I > can buy other things that please me more with my money. Were the price > lower I might buy them. > > While all this is obscured by the statistical behaviour of the free > market, in the type of transaction you suppose applies to software it > is all-important. > > > > The next problem is with the history of IP rights. Historically, > > > trade secrets were all there were and they were not granted by > > > governments but coined by the simple process of finding a new way of > > > doing things and keeping it secret. Naturally this applied more > > > frequently to the processes of manufacturing something than the item > > > itself. It is difficult to conceal what a bicycle looks like but it > > > may be possible to conceal the process by which the steel is drawn > > > into tubes suitable for making the frame. > > > > I'm not sure what your specifically disagreeing with here. > > I agree with this paragraph. > > I am saying that it is hard to conceal the construction of an object > but it may well be possible to conceal the processes involved in its > construction. You can know the exact dimensions of something that > could only be manufactured of steel and never of cast iron or any > other material but unless you know how to make steel you can never > duplicate that object. You may not be able to make a trade secret of > a steel bridge but you can make a trade secret of the Bessemer > conversion process by which you make steel economically in large > quantities. > > > > Historically, patents were introduced to *entice* those who > > > successfully kept secret their trade secrets into revealing them with > > > a promise of a limited period of protection. It offered them a > > > gamble. They could keep the trade secret and hope that nobody else > > > figured out how they did it (a risk because what one man can think of > > > so can another) or they could reveal the secret in return for guaranteed > > > protection for a number of years. It was never the intention to make > > > them a gift, as you claim, since those who had successfully kept trade > > > secrets for a long time and could reasonably expect to keep them for > > > much longer still had no need for a "gift" such as that. It was an > > > offer to gamble. Whether or not a person chose to gamble depended on > > > his assessment of the risks and the payoffs. A subjective value > > > decision. > > > > Trade Secrets still exist. And for situations where a business > > believes they can apply them, they would do so. > > So it is not the case that patents were the boon you describe. They > were an inducement for somebody to gamble on the certainty he would > have complete protection for a period of time AND the certainty that > after that time he would have no protection at all against being able > to keep his trade secret for a much longer period. I don't know if I ever used the word "boon". > > However, I'll disagree with: > > "those who had successfully kept trade secrets for a long time and > > could reasonably expect to keep them for much longer still > > had no need for a "gift" such as that" > > > > A Trade Secret would be impossible to apply to a Publicly available > > consumer item, such as your bicycle. > > But it would be possible to apply it to the processes necessary for > its economical manufacture. There are many process patents. > > > If the idea is for company internal use only, then they would > > be wise to use Trade Secrets. However, if a company wishes to > > design a better mousetrap and sell it to the world,then the only > > way to protect their invention is via a Patent. > > Unless the construction of the mousetrap involves a process which is > not obvious from the finished article. Historically patents arose > because of trade secrets on processes. As you point out, if the > device itself can be readily duplicated once seen then there can be no > trade secret and therefore NO NEED for a patent system to induce the > manufacturer to reveal a non-existent secret. if the mousetrap is a new design, never seen before, a patent is absolutely needed as the only means for the inventor to recoup design costs. trade secret laws wont protect a new mousetrap design. once the public buys one trap, the design is public. only patent law will grant the inventor a monopoly on the design. you NEED patent law for this situation. The design is secret, and can be applied for patent protection, and once granted, the design can be sold to the public while the manufacturer maintains a monopoly on the design. > > Same goes for a writer who wishes to sell copies of his book > > on the open market.Once someone buys a single copy, Trade Secret > > law would be insufficient to protect the author. > > Copyright law is another matter. Before printing the matter never > arose. Books were copied by scribes and you paid the scribe to do the > copying not the author for the content. Authors wrote not for payment > from sales of their books but because they were paid to or as a hobby. > > > The Public did not need Patent and Copyright laws. > > The manufacturers and authors needed them. > > Totally untrue. If you look at the reasons given for the creation of > patent laws you'll have to give me a URL to some of these reasons. > you will see that it was for the benefit of the public. > Without copyright laws the public would have far fewer books. What > you see as a law to make authors happy I see as a law to keep the > public happy by giving incentives for people to become authors. > Without copyright laws most authors would find other means of making a > living and the public would suffer. Without patent laws all > manufacturers would keep everything they could secret and the > advancement of knowledge would be retarded. You seem to be missing the concept of "gift" here. A gift is given with no expectation of reciprocation. The law gives the gift in the form of the promise of patent/copyright protection to any inventor/author who creates a new work. The law has no expectation of reciprocation in giving that promise. i.e. the law does not force anyone to invent or write anything. When an inventor takes the public up on the promise and invents something and patents it, they get a 20 year monopoly on the invention. Then the invention, the knowledge, returns to its natural state of "public domain". The inventor recieved a gift in the form of the monopoly. Without the promise of patent protection, the inventor would not have any protection of his invention except what he could manage via trade secret laws. The fact that the gift is of limited duration is irrelevant to the fact that it is still a gift. I mention in my document that a magazine subscription can still be a gift, even though the subscription runs out after a year. The fact that the invention returns to the Public Domain does not detract from the fact that the inventor recieved something that he could not have gotten any other way: 20 years of patent protection is more a gift than no patent protection at all. The fact that the Public can benefit from all this is irrelevant from the fact that the inventor recieved a gift. Patent/Copyright protection is an open-ended promise to anyone who wishes to take on making a new work. you can call it a Commodity Exchange over an extended period of time, but, really, you're missing the subtle distinction between Gift and Commodity. The Public gives the Gift of patent/copyright protection to the Public at large, in hope that it might return to them in some other form, but with no expectation or requirement that anyone actually accept the offer. This is like a farming commmunity as a whole making a promise of a Barn Building to anyone who wants to start farming in the community, in the hopes that it will benefit the community as a whole. Both are gifts. both build community. and neither example forces anyone to take up the offer. > > It is an enticement, yes. But it was an enticement offered > > by the Public not because the Public needed it, but because > > the Public felt that Patents and Copyright could serve the > > Public Good. > > And there you agree with me that it serves the public good. These > days somebody may decide to try his hand at being an author because of > copyright whereas without copyright he would have stuck with his > original job. Small manufacturers do still keep trade secrets; large > manufacturers would like to but dislike the gamble that an employee > might give it away. This does not detract from the fact that patent/copyright is a gift. Copyright/patent law is given without any demand for reciprocation. the law does not require anyone to write or invent anything new ever again. > > > It is debatable if the grant of a patent fits your own definition of a > > > gift exchange. The purpose of creating a system of patents was indeed > > > for public benefit since it was hoped that by releasing a trade secret > > > which one person might never take any further that others would be > > > able to expand upon it and create new techniques and inventions that > > > they would not have thought of had the original secret not been revealed. > > > But the reason a particular individual would decide to apply for a > > > patent rather than keep something a trade secret is not to benefit the > > > public but to maximize revenue from that technique or invention. > > > > Yes. And your assessment is focused solely on the profit motive, > > the selfishness, of the individual. Your pig/sheep barter analogy > > above does the same. > > None of us ever do anything except for selfish reasons. Even if the > reason is that by doing public good we feel better about ourselves it > is still a selfish reason. See Mark Twain's "What is Man?" good grief man. To be human means to be driven. Our drives of consciousness and subconsciousness are the only things that separate us from dirt, gas, and water. Just because we have drives doesn't mean we are not at the same time capable of giving a gift. If you give something with no expectation of reciprocation and if it builds the human bonds between you and the reciever, then you're looking at a gift. if our drives reduce us to nothing more than mechanistic drones doing nothing but satisfying our own selfish needs, then you live in a very sad world indeed. > > Individuals may act for selfish reasons, > > but that is only half of the transaction. > > > > The Public is the other half of that transaction. And the Public > > allowed the individual the rights of patent/copyright protection > > because it would serve the Public Good. > > The public acted, en masse, selfishly by passing a law to entice > people to get a limited period of total protection for their ideas in > order that the public could benefit by them. There was no "let's give > these people a gift". Copyright was not about giving a gift to > existing authors but to entice others to become authors. Patents were > not about giving people a reward for having invented something but to > entice them into revealing the secret. Neither were a gift given > altruistically where no gift need have been given. where did altruism enter into anything? I do not believe I used that word anywhere in The Power of Giftware. you're confusing internal drives with the objective measures of whether a gift was given or not. they are orthogonal to each other. It doesn't matter if the gift was given to make the giver feel good or to qualify for a tax exemption. The requirement for a gift is that it is given with no expectation that the reciever need reciprocate. > > The natural state of ideas is that they are free and only secrets > > have protection. Patent and copyrights grant protection to inventions > > and writings made Public. > > Patents *incidentally* are a gift to those new ideas which could not > be kept secret if devices based upon them were publicly sold; the > primary purpose is to make people reveal secrets that could be kept > secret. Copright is not a gift at all but an inducement to enter into > a specific form of labour for reward. what you call the "primary purpose" reflects the gift coming back to the giver in a new form. what you call "incidental" is the objective measure that shows that patent/copyright is a true gift. and your term "inducement" is nothing more than your subjective, internal interpretation for what meets the objective measure of a gift. > > > It is also my recollection (which I have not checked) that the penalty > > > for revealing a trade secret applies ONLY to those who gained > > > knowledge of that trade secret DIRECTLY from the holder of that > > > secret. I.e., an employee may not reveal his employer's trade secrets > > > and there are penalties for doing so. Should somebody else stumble > > > across the idea independently and tell the world about it, that is > > > without penalty. If you have seen court decisions which say otherwise > > > then it is my understanding that they are wrong. > > > > In tpog.html, section "Trade Secrets", paragraph 4, I say: > > > > "Someone operating in Trade Secret law decides to forgo any protections > > available under patent law. Instead, they choose to maintain a monopoly > > for as long as no one else can independently create the secret. Once > > someone else independently discovers the knowledge of the secret, the > > Trade Secret holder loses any control over the Secret." > > > > So, I believe we are in agreement on this point. > > My recollection is that you imply that a trade secret has some form > of protection other than contract law between the holder of the secret > and those to whom he needs to reveal it. nope, I did not intend that implication anywhere. If you found anything that implied that, please let me know and I'll correct the document, because it would be a mis-type on my part. > > > > > Finally, and this is unpardonable, your strong belief that contracts > > > should apply only to items which are leased for a period of time and that > > > outright purchases should not have a contract. It is true that many > > > purchases have no need of a WRITTEN contract. However, the ESSENCE of > > > contract law is that there is a "mutual exchange of considerations." > > > The exchange of money for goods IS a contract between two parties even > > > if there is no accompanying paperwork. It transfers the right of > > > ownership in exchange for money, for a deed or for any other consideration. > > > Contract law is quite clear that there must be a mutual exchange of > > > considerations for contract law to apply. Contract law does not apply to > > > gifts or to promises because those are unilateral. > > > > > > Any exchange of goods for money (or other considerations) may have written > > > terms and conditions which both parties must agree to. This is not > > > something that is designed to treat one party unfairly (although it > > > may be abused that way) but a simple fact of law. In US jurisdiction > > > in particular, contractual terms may be stricken by a court unless they are > > > equitable to both parties (UK law is less particular about this and is > > > concerned primarily with whether or not both parties understood the terms to > > > mean the same things and were fully cognizant of their implications). > > > A properly-drawn contract PROTECTS people from the other party to the > > > contract defaulting in some way on that which they should have > > > delivered. > > > > The tpog document uses poor wording, "Contracts", paragraph 5: > > > > "In short, contracts are used when you pay for something over time > > (loans) or when you agree to buy/sell service for a period of time > > (your job, your cell phone service)." > > > > Saying contracts "are used" did not intend to mean they "are ONLY used". > > It very strongly implies it. Both examples you give show a period of > payment over time. Other arguments in tpog imply that you believe > contracts should not apply to purchase of software because it is not > paid for over time. I don't believe contracts should apply to mass-sale goods. I don't believe that contracts should be slid in with the "by purchasing this, you agree to the following:" style of contracts, even if the contract is clearly visible on the outside of the package. I don't believe that any contract that negates the standard expectations of a transaction should be trivialized into shrink wrap bullshit. when you enter a contract that negates standard expecations, I believe the seller should have someone walk through the contract with you, answer any questions, and you should then sign on the dotted line to enter the contract. When I got my cell phone at teh store, tehre was a guy behind the counter specifically for cell phones. we did all the paperwork there, and I paid for it there. I believe that's the way it should be. If microsoft (or whoever) wants to sell software without a warranty, they should either put a big "As IS" sticker on it, or they should sell it behind a booth, with a salesman to go over the contract with you where you sign away your expectation of warranty. I refuse to acknowledge trivialized contracts as valid. > > You might enter a contract to purchase something expensive and important, > > etc,and it might not involve a duration of time. You might own the > > item free and clear, and the contract is used to simply explicitely > > state all terms of the transaction. > > > > The focus of the document, however, is to point out that most sales of > > goods are simple transactions without a contract. When you buy a bicycle, > > you usually don't enter into a contract, you simply pay your money and > > take the bike. > > This is legally incorrect. Whenever you make an exchange of > considerations, that is a contract. You may not have a written > contract defining rights and obligations but it is still a contract > governed by contract law. If you give somebody a bicycle as a present > that is a gift not covered by contract law. If you sell somebody a > bicycle for a penny you have entered into a contract. In cases where > somebody wants to make a gift but have it governed by contract law > (for instance, so nobody can dispute the rights to the gift) it is > common to sell it for a nominal sum. That *exchange* constitutes a > contract. What you may not have are any written terms to the contract. I will have to double check my references. I believe that there is some distinction between buying a hammer and buying cell-phone service for a year. Cell-phone service contract can make any arrangement that the parties agree to. Buying a hammer at a store has certain requirements that are not oral and not written between the buyer/seller, but are required by law, such as warranty. I've read the language of some law somewhere, I believe it was UCITA, that draws a distinction between mass-contracts and contracts in general. I'll have to investigate further. > > This in contrast to software sales where you pay your money, take > > the software, and open it at home to find you've entered into a > > contract after teh fact. > > No, you entered into a contract at the point of sale. What many > jurisdictions have ruled is invalid is the attempt to impose > additional terms to the contract by use of shrinkwrap licenses. All > the terms of the contract have to be made clear up front or a court > will simply rule them void. > > I believe that software should be treated as any other product for > > point of sales transactions. If you buy the product free and clear, > > you should not enter into a contract to do so. > > LEGALLY you enter into a contract by making the purchase. What you > are objecting to, quite rightly, is the attempt to impose additional > terms on that contract that were not made obvious at the time the > contract was concluded (the exchange of money for goods). > > > Most software contracts go above and beyond copyright and patent > > protection and attempt to apply Trade Secret levels of protection > > to a device available for Public sale. > > Most software contracts are unenforceable and would be ruled void by a > court of law. Except that UCITA, a state-by-state law, attempts to bless shrink wrap contracts. > > I believe that shrink wrap contracts trivialize the intent of > > aggreement before entering a contract, and trivialize contracts > > as a whole. And I believe that contracts should not be entered into > > for every purchase, for every transaction under the sun. > > Contracts ARE entered to for every exchange transaction under the sun. > That is the legal meaning of the word "contract." > > > Nor do I believe that contracts should be allowed for mass consumer > > products available for purchase to the wide Public, and used in such > > a way as to remove the benefits to the Public Good that were create > > by Patent and Copyright law. > > Here you are arguing about the merits of reverse-engineering clauses > which are contentious whether in a shrinkwrap contract or brought out > into the open at point of sale. It is worth pointing out that the US > Digital Millennium Copyright Act appears to forbid reverse-engineering > whilst EU law permits it under certain circumstances. I cover DMCA and UCITA in my document. I do not like either. > > Patent and Copyright law were created with a balance in mind, > > balancing the individual inventor's incentive with the Public Good. > > There I agree with you. They are an incentive to inventors not a > compulsion. > > > Shrink wrap contracts throw this out the window. > > Shrinkwrap contracts are generally viewed as largely unenforceable. > The extent to which they are enforceable is largely the extent to > which they do no more than reiterate copyright law or grant additional > rights to the purchaser that would not be available under strict > copyright law (i.e., the parts that benefit the consumer would be > upheld). > > There is much precedent in several hundred years of contract law to > the effect that contract terms which are not known to one party at the > time of the transaction are unenforceable. A shrinkwrap license is > exactly that form of contract. And when opening the package voids > your right to return the goods and ask for a refund because you do not > agree to the terms of the contract that you could only find out by > opening the package, contract law takes a very dim view. > > -- > Paul
 
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