EU Electronic Communications Law -- a book review

EU Electronic Communications Law – Competition and Regulation in the European Telecommunications Market (second edition), by Paul Nihoul and Peter Rodford, was published last year by Oxford University Press.  IP Finance welcomes this review of it from Fredericka Argent (formerly with the IFPI and now a trainee solicitor in the London office of Covington & Burling LLP):

"With the growth and increasing importance of fixed and mobile technologies, broadcasting networks and the internet industry governing the way we communicate, work and relax, there is no better time as lawyers to have an understanding of the regulations around the electronic communications sector. While this in-depth and well-written book is not light bedtime reading, it could qualify an essential reference book for practitioners and academics in the fields of technology and competition law. Indeed, businesspeople and public bodies in the European telecommunications sector may also find it a useful guide to their industry. The authors state that their aim is to provide a neutral, practical guide to electronic communications law that may help those engaged in commercial litigation and negotiation. They seem to have been successful in this regard.

We are introduced to the book with an explanation that the rules surrounding the electronic communications sector fall into several different but co-existing categories: from rules dealing specifically with electronic activities to rules that apply to competition law generally. The European Parliament, Council and the European Commission regulate different areas, which has led to different institutions and authorities administering different bodies of rules and discrepancies in those rules forming. Although the emphasis in this book is placed on the European Union regulation, the authors stress that there is a need for practitioners to take heed of national laws and international rules agreed within the World Trade Organisation (WTO).

The authors helpfully take us step by step through the various topics and provide a logical framework for tackling each layer of complexity in the regulations. The book is comprehensive but also easy to read as a reference book – both in terms of the content and in terms of the way it is laid out: it is split up into five large chapters and subdivided into several ‘mini-chapters’, which are clearly signposted using headings, a neat layout and a detailed index.

Chapter 1 sets out the background to the creation of the new regulatory framework (the ‘RF’), which is the current framework regulating electronic communications in the European Union (notably, the RF does not directly regulate the content of communications). The multitude of directives and legislative instruments that make up the RF are set out and the relationship between the RF and competition law is examined – this being an important theme running through the entire book. The authors usefully detail scenarios and principles that can be drawn from the related case law. Of particular interest was this chapter’s focus on the elimination of ‘special and exclusive rights’ that were granted to the European electronic communications markets prior to the reform to the RF. The book addresses the economic, political and legal considerations behind the introduction of competition into the communications sector via ‘liberalisation directives’ in the RF – something that was missing under the old European structure, which had created national monopolies for electronic communications undertakings. We are also introduced to the ‘basic regulatory principles’ – such as non-discrimination and transparency – that national bodies are required to observe. The chapter then moves to a discussion of issues relating to the (predominantly private) ownership of telecommunications bodies and the regulation over the acquisition of shares in these undertakings, a topic which may be particularly helpful for lawyers and those working in the telecommunications industry.

Chapter 2 looks at the authorisations and certain formalities that undertakings may be required to comply with before commencing market activity on electronic communications markets. Chapter 3 examines undertakings’ access to facilities in order to engage in market activity and the situation where resources are controlled by third parties. Next, chapter 4 addresses, in detail, the obligation on telecommunications services to provide a universal service (defined as ‘a package of services that are to be made available at a specified quality level to all end users at an affordable price’) in accordance with public policy objectives. Practical issues are also dealt with here, such as how a universal service can be financed.

Perhaps, however, the most interesting chapter of this book is the final one, which was introduced in this second edition. The chapter addresses the protection of users on a contractual level and from the point of view of data protection and privacy in telecommunications. This is a topical issue, and readers will be familiar with the media’s reporting of stories: from internet service providers being asked to take responsibility for the data transmitted by their subscribers, to accusations against search engines and social networks of breaching users’ privacy. Indeed, in July 2012, the European Commission released a consultation on plans to draft new regulations on cyber security in EU businesses . This chapter recognises these concerns, particularly in the online environment, and takes an in-depth look at the nature and scope of the directives that have been implemented to address the issues that arise as well as wider policy thinking. Issues covered include: security questions surrounding traffic data, confidentiality of communications and the storage of information on cookies. The remainder of the chapter examines dispute resolution mechanisms and strategies, a resource that will undoubtedly be helpful to practitioners. The authors address the types of conflict (including inter-institutional conflict) that may emerge in litigation on national, European and international levels from sector specific regulation, liberalisation directives and general competition law and the interaction between these rules in the electronic communications market.

At every stage in this book, the authors take us carefully through various sets of rules and principles that have been established in European Electronic Communications law and the aim to both harmonise and liberalise the EU legislative regime in order to ensure that competition thrives throughout the sector and that the telecommunications industry successfully provides a public service. Key areas of convergence and conflict are drawn out and explained in context, as we are guided through the multi-layered rules, authorities and institutions that regulate this sector. Where appropriate, case law is examined and commercial realities are considered. For any practitioner, academic or businessperson engaged in the telecommunications industry, this book would provide excellent reading material".

Bibliographical details: ISBN: 978-0-19-960186-8. Hard cover, pp 474. Price: £195. Web page here

IP law and business .. or is it economics?

Intellectual Property And Business, edited by Stephen E. Margolis, Professor of Economics and Craig M. Newmark, Associate Professor of Economics, North Carolina State University, is another attractive and star-studded two-volume compendium of "greatest hits" covering that ever-appealing topic of IP law/business.  As the publisher's blurb states:

"The law and economics of intellectual property is attracting increased attention as technological innovation continues to have a major impact on economic growth [and vice versa?].

This authoritative two-volume set brings together the most significant [American -- is there any other?] scholarship on intellectual property. It provides comprehensive coverage, with a mix of theory, empirics and institutional details. The emphasis is on more recent writings, although it also includes some early work that continues to provide the platform for contemporary scholarship [there are a couple of Demsetz classics -- dating back to the days when Tony Sheridan was still playing with The Beatles -- and which, this reviewer, suspects, he probably has several copies of, to be found in other sets of "greatest hits"].

This book will be an essential source of reference for both academics, students and practitioners concerned with this exciting new [!] field of research".

It is conceded without argument that (i) business and economics have plenty to do with one and other and that (ii) these collections are popular both with those who teach law and economics and with those who enrol for their classes -- but it would be good to see a few changes.  Separate compendiums for IP law and economics and IP law and business would be fun, and some materials dealing with non-US scholarship and non-US markets would be good for a comparison with these rock-solid pillars of standard scholarship.

Bibliographic data: published 2010. Two vols, 1,072 pages. Hardback. ISBN 978 1 84720 911 5. Price  £295 (with the publisher's online discount this comes down to £265.50).  Web page here.

Software licences: better than IP rights?

The Software License Unveiled: How Legislation by License Controls Software Access is a short, vibrant book by Douglas E. Phillips (Vice President and General Counsel, Promontory Interfinanciary Network). The web-blurb makes some big claims for it, describing it as follows:

"* First title to combine a practice-oriented survey of "clickwrap" law with a theoretical treatment of legal and economic theory;
* Written by a visionary legal practitioner with extensive experience in software licensing;
* Includes discussion of today's software licenses from both practical and conceptual vantage points, including analysis of license examples, discussion of key judicial decisions, and consideration of theoretical perspectives;
* Explains how the terms of "clickwrap" agreements and other software licenses give rise to a largely unread and unseen law of software, which often displaces intellectual property law;
* Discusses digital rights management ("DRM") and the Digital Millennium Copyright Act ("DMCA") and how these critical developments are and are not related to software licensing;
* Discusses the new version 3 of the General Public License ("GPL"), which applies to Linux and other free software programs;
* Includes a brilliant new perspective on the proliferation of open-source software licenses that will help to frame the ongoing debate within the free and open-source software communities.

Nearly every use of a computer is subject not only to public intellectual property law, but also to the privately-written law of the software license. Although the United States has only one Copyright Act and one set of patent laws, there exist thousands of different licenses - to which millions of computer users legally bind themselves by the click of a mouse, usually without reading anything but the word "agree." How do these proliferating but largely unread licenses affect access to software, one of the economy's most valuable resources? In The Software License Unveiled, visionary practitioner Doug Phillips aims to illuminate the unseen law of software to which the software license gives rise".

Words like 'brilliant' and 'visionary' tell us less about the author and his book than they do about the fact that this work is published from Oxford University Press's New York office rather than from the genteel and discreetly understated grandeur of its Jericho headquarters. American purchasers of IP books are presumably more habituated to hyperbole than are their European brethren and may be disconcerted by its absence.

The phenomenon of the software licence, in its shrink-wrap, web-wrap, browse-wrap and click-wrap guises, has been well known to software lawyers and their clients since the dawn of mass-market PC time (the facts of the early shrink-wrap litigation in ProCD v Zeidenberg took place in 1994, when dinosaurs ruled the information highway and most people still used DOS), though it has been rediscovered with great regularity: as recently as 2007 the prophetic Cory Doctorow could still persuade readers that shrink-wrap licences were "an epidemic of lawsuits waiting to happen".

Doug Phillips has not invented, nor re-invented, concerns regarding software licences of this nature. What he has done, however, is to explain lucidly and enthusiastically, why contract law -- if allowed free rein -- is a far more effective way for a business to protect its rights, control the use of its products and manipulate its relationships with users of its products than are the intellectual property rights that vest in it. Patents can be invalidated and are horrendous to litigate, copyrights can be worked around, trade marks are no serious hazard -- but if you can point to an obligation that you wish to press upon someone else and say, "Look, you've agreed to this and you can't deny it", you are in a far more powerful position. Doug Phillips has not lifted the veil on software licences but he has enabled readers to see clearly through it. In doing so, he has given some clear background to the reasons why you-must-have-agreed licensing provides so much comfort and security to those who invest in new software products.

Bibliographic details: xxi + 204 pages. Hardback. ISBN 978-0-19-534187-4. Price: £55. Book's web page here.

Burning the ships

If you're looking for a book that's light enough in terms of tone and content to read on a long flight, yet rich enough in insights for you not to feeel guilty about leaving all that pressing work untouched while you finish it, then Marshall Phelps and David Kline's Burning the Ships: Intellectual Property and the Transformation of Microsoft is probably the book you're looking for. It never verges on the dull or the irrelevant, but nor does it give away any secrets: the main message is that, so far as designing and executing models for the successful exploitation of intellectual property rights is concerned, (i) attitude is more important than policy; (ii) there is a disjunction between the past -- where we acquire our experience -- and the future, where we deploy it; (iii) sharing and caring can produce better all-round benefits than erecting 'keep-off-the-grass' signs around one's own IP; and (iv) if you have already succeeded on the big stage, your boss is more likely to trust you to gamble the crown jewels than if you haven't.

That seems to this review to be that the wily authors say. but what does the Wiley publisher say?

"At the start of this decade, Microsoft was on the defensive—beset on all sides by anti-trust suits and costly litigation, and viewed by many in the technology industry as a monopolist and market bully. How was it going to survive and succeed in the emerging new era of "open innovation," where collaboration and cooperation between firms, rather than market conquest, would be the keystones of success?
This was the challenge facing Microsoft founder and Chairman Bill Gates. But "like Cortez burning his ships at the shores of the New World," Gates decided to embrace the change that was needed. He recruited Marshall Phelps—the legendary "godfather" of intellectual property who had turned IBM’s IP portfolio into a $2 billion-a-year gold mine—out of retirement and into the cauldron of controversy that was Microsoft. Only this time Phelps’ mission was infinitely more challenging than simply making money from IP. It was to help reform Microsoft’s "man the barricades" culture, encourage the company to abandon its fortress mentality around its technology and share it with others for mutual benefit, and use intellectual property not as a weapon of competitive warfare but as a bridge to collaboration with other firms instead.

Here, for the first time (and 500 collaboration deals later), is the inside story of what one analyst has called "the biggest change Microsoft has undergone since it became a multinational company."

In this book, authors Marshall Phelps and David Kline take the reader inside the dramatic struggle within Microsoft to find a new direction. They offer an extraordinary behind-the-scenes view of the high-level deliberations of the company’s senior-most executives, the internal debates and conflicts among executives and rank-and-file employees alike over the company’s new collaborative direction, and the company’s controversial top-secret partnership building efforts with major open source companies and others around the world. Nothing was held back from this book save for information specifically prohibited from disclosure by confidentiality agreements that Microsoft signed with other companies. Indeed, the degree of access to Microsoft’s inner workings granted to the authors—and the honest self-criticism offered by Microsoft leaders and employees alike—was unprecedented in the company’s 34-year history.

There are lessons in this book for executives in every industry—most especially on the role that intellectual property can play in liberating previously untapped value in a company and opening up powerful new business opportunities in today’s era of "open innovation." Here is a powerful inside account of the dawn of a new era at what is arguably the most powerful technology company on earth".

This web-blurb is probably a good reflection of the style of the book as well as its content. It is unashamedly didactic and justifiably proud, but with the occasional leavening of humility and self-deprecation to prevent the reader loathing Phelps for his success. It is carefully crafted to deliver a persistently upbeat note, leading the reader to recognise that he or she too can succeed in turning around a company the size of Microsoft by tugging at the reins of its IP. I enjoyed it enough to devour it all at a single sitting, but doubt I shall either want or need to repeat the process.

Bibliographic detail: hardback, xxii (I can't imagine that the Latin numbered pages at the beginning were the authors' choice) + 186 pages. ISBN 978-0-470-43215-0. Price £19.99/€25. Book's webpage here.

Book review

The Invisible Edge: Taking Your Strategy to the Next Level Using Intellectual Property is a book that was published this March by the Portfolio imprint of Penguin. The authors are Mark Blaxill and Ralph Eckardt, both of whom are Boston-based managing partners of 3LP Advisors. The book's theme is how to turn intellectual property into "an indispensable source of competitive advantage" (assuming that it wasn't in the first place). The thesis is not new:

"The key to sustainable profits was intellectual property. Yet most managers are unable to see the power of IP because they were trained to focus on more tangible factors".

The authors address their subject with an all-consuming, fact-filled, anecdote-rich zeal that makes the text almost exhausting to read. If you regularly peruse this weblog, you will have been converted to the cause of intellectual property, that amazingly versatile asset the virtues of which are invisible to all but an exclusive sect of visionary management consultants, long before you turn its pages. Probably the best way to use this book is to present it to the President of an old-style manufacturing company that still has some IP moldering away in its filing cabinets (if you can find such a company -- that's not so easy in the UK where making things seemed to die out the day they invented outsourcing) either shortly before you pitch for his business or before billing him for doing so.

Bibliographic details: ISBN 9781101016244 05. 340 pages, hardback. Price: $27.95. Web page here.

IP taxation - a book review

The second edition of Anne Fairpo's Taxation of Intellectual Property has now been published by Tottel. The book's web page describes this as a ‘must have’ for all tax and accountancy practitioners whose lot it is to advise "commercial organisations of all sizes". According to the publishers this book

"- is completely updated the latest legislation including ITEPA 2003, ITTOIA 2005, Income Tax Act 2007;
- Incorporates the Finance Act 2008;
- Considers the impact of R&D tax credits and 2008 increases;
- provides specialist technical guidance for tax practitioners, set in a commercial context".

Anne, who has contributed to this weblog (here), is an IP tax specialist at Wragge & Co. She is a solicitor and Fellow of the Chartered Institute of Tax, where she is also a Council member and a member of technical sub-committees.  If she seems a bit scary to readers of this blog, the good news is that the book is not at all scary. It has a very comfortable feel to it: small pages, clear print, lucidly written in footnote-free prose and packed with short, realistic examples that correspond to client problems -- just what you need for an accessible introduction to this often impenetrable subject.  Best of all, the book comes with an online update blog (here).

Bibliographic detail: ISBN 9781845924881 and 978 1 84592 488 1; xvi + 409 pages paperback; £95. 

Book review

From Assets to Profits: Competing for IP Value & Return is the latest offering from the fertile and enthusiastic brain of Bruce Berman. Bruce -- who has both edited and contributed to this volume -- needs little introduction or explanation in his field of expertise. As CEO of Brody Berman he has acted out the three roles of guru, catalyst and midwife, having postulated new ways of transacting intellectual property, enabled others to do so too and acted out real-life transactional dramas himself. According to the publisher's blurb:

"... From Assets to Profits: Competing for IP Value and Return provides a real-world look at patents, copyrights, and trademarks, how intellectual property assets work and the subtle and not-so-subtle ways in which they are used for competitive advantage. Authoritative and insightful, From Assets to Profits reveals the most relevant ways to generate return on innovation, with advice and essential guidance from battle tested IP pros".

In truth, this is an easier book to read than to put into practice. It is entirely readable, with large print, small pages and short sentences. The ideas that the authors of its individual chapters espouse are crispy expressed, resonant with common sense and richly supported with recent historical data.  No punches are pulled. There are no short cuts.  Success depends on good planning, hard work and being able to respond to a situation in which the only constant is change itself.

The problem is putting the book's excellent premises and sage advice into practice in a business world that is beset by self-doubt, crammed full with variables over which the reader has no control and -- worst still -- in which the people the reader may find himself doing battle with might also have read it.  The IP owner, the licensee, the sublicensee, financial backers and litigation lawyers on both sides all have a vested interest in the system working, but they can pull painfully in different directions where self-interest is involved.  

Bibliographic detail: ISBN: 978-0-470-22538-7. xxiv + 296 pages. Hardcover. Price £28.99/€34.70. Web page here.