Tuesday, April 21, 2009

Piracy and the Legal System

The New York Times recently headlined "Four Convicted in Sweden in Internet Piracy Case". The Washington Post headlined "Pirate Bay's fileshare four get year in jail". As a summary, the New York Times wrote: "The court found on Friday that the men — the three founders, Frederik Neij, Gottfrid Svartholm Warg and Peter Sunde, as well as Carl Lundstrom, who provided financing — had aided copyright infringement by operating the site, which provides links to thousands of songs, films, video games and other material, and helps users download them."

What is also interesting is that the New York Times ran an editorial "Unreasonable Search". The editorial concerns 13 year old girl who was strip-searched based on a false report by a fellow student. The Times rightfully concludes that "The invasion of privacy was extreme and the security rationale weak. The court should rule, as a lower appellate court did, that the search was unconstitutional."

Coincidentally, the Washington Post ran the following story "High Court Limits Searches of Suspect's Car After Arrest". In this case the Post writes "In a decision written by Justice John Paul Stevens, an unusual five-member majority said police may search a vehicle without a warrant only when the suspect could reach for a weapon or try to destroy evidence or when it is "reasonable to believe" there is evidence in the car supporting the crime at hand."

What is the relationship of unreasonable search to Pirate Bay? We seem to be developing two legal themes, that are applied in an arbitrary and capricious manner. The media fans the flames of moral outrage when a child or a suspect does not receive due process . However, when it comes so-called intellectual property there is at best silence from the media. Usually the media portrays the copyright owners as a "victim" protecting their property. Not mentioned is the itty bitty detail that the copyright owners are violating the rights of the accused.

For example Mike Masnick writes that the verdict on Pirate Bay is flawed because: "The idea that a toolmaker can be liable for the actions of its users should trouble everyone -- especially when the tools have plenty of legitimate uses as well."

The Electronic Frontier Foundation has an article: "Doctorow's Law: Who Benefits from DRM?" the critical quote is that: "Anytime someone puts a lock on something you own, against your wishes, and doesn't give you the key, they're not doing it for your benefit." A few months ago Walmart, Yahoo, and Microsoft, all attempted to turn off their music servers. So here we have companies who in theory oppose stealing, yet when they deem something is unprofitable they have the ability simply press a "kill switch" and presto the consumer losses their investment in the music. Clearly those who claim that you should respect their property rights have little respect for your property rights. Disabling a consumers product constitutes a form of "stealing".

TechDirt reports: "Senator Feinstein Trying To Sneak ISP Copyright Filtering Into Broadband Stimulus Bill". TechDirt writes: ""allow network management" for "deterring unlawful activity"". If one translates this Newspeak into simple English, it would allow whoever is "authorized" to "read" your data steam without any pretext of a reasonable cause. In fact, the data could be searched based on the mere allegation of wrong doing. If one where to apply this search standard to the girl who was strip-searched based on a false accusation or to the police who searched the car without a warrant - these would turn out to be justifiable actions. Moreover, there would a quagmire over what would constitute an "unlawful" activity. Its a slippery slope, So it amazes me that the media will scream moral outrage on one hand while conveniently ignoring equally atrocious behavior on the other hand. Truly we are in Orwell's world of 1984.

Saturday, April 18, 2009

Pfizer - A Fiefdom for Corporate Managers?

In theory corporate managers manage the corporations they work for, for the benefit of the shareholders. The recent meltdown in our financial institutions has exposed managers who have bankrupted the corporations that they work for. In bankrupting these companies the self-serving managers have paid themselves lavishly while "annihilating" the investment of the shareholders in the company.

Pfizer is a drug company, not a financial institution; but the management of Pfizer appears to be exhibiting the signs that management is operating the company as a fiefdom for management's benefit and not fulfilling their fiduciary duty to work on behalf of the shareholders.

In 1999 Pfizer stock briefly touched $50 a share. Over the past ten years the stock has continued an inexorably decline to $14.16. The dividend has also been severely cut from $1.28 to $.64. Value Line, an investment newsletter recently downgraded the financial health of Pfizer from A++ to A+. Despite this "damage" to the company, the Pfizer Board of Directors (Notice of Annual Meeting of Shareholders) awarded Mr. Kindler $13.1 Million. The proxy statements cites "In view of the accomplishments noted above and the fact that he met all of his targeted goals and exceeded most of them, the Committee and the Board of directors believe that Mr. Kindler has successfully steered the Company during a year of opportunity and challenge, particularly given various Company-specific factors and macroeconomic factors, and that Mr. Kindler was appropriately compensated for 2008 considering overall Pfizer performance, his personal contributions and peer-group competitiveness. " The proxy statement lamely notes that Mr. Kindler's compensation was reduced by 5%.

Value Line (April 17, 2009), in reporting on Pfizer writes: "Pfizer's bid for Wyeth follows two earlier deals, both of which caused integration challenges, ultimately reducing R&D and productivity. Neither the 2000 takeover of Warner-Lambert nor the 2003 combination with Pharmacia succeeded in setting up the company for sustained growth once Lipitor's patent expires in 2011." Value Line also noted that the proposed Wyeth acquisition will result in Pfizer inheriting Wyeth's legal woes and that the acquisition may not solve Pfizer's problems. The financial community apparently does not view this acquisition positively since Pfizer's stock price has continued to decline in value.

How the management of Pfizer can continue to proclaim "progress" in the face of an ongoing continued decline in stock price, a cut in the dividend, and financial downgrades is beyond me. Clearly it is time for a change in the management structure. The annual meeting for Pfizer will be held on April 23, 2009. If you own shares in Pfizer, I would hope that you would vote against management.

PS: We own shares in Pfizer.

Saturday, April 4, 2009

Obama's International DRM Embarrassment

Obema recently visited Europe and gave the Queen of England a gift of an iPod and some DVDs for Mr. Brown. Both Against Monopoly and the Electronic Frontier Foundation. The EFF writes "President Obama reportedly gave an iPod, loaded with 40 show tunes, to England's Queen Elizabeth II as a gift. Did he violate the law when he did so? " Since this is a debatable subject, the EFF concluded: "You know your copyright laws are broken when there is no easy answer to this question." Clearly copyright is broken; but this story is a bit deeper and even more embarrassing than reported.

Reports also surfaced that Obama gave Mr. Brown DVDs that were incompatible with British DVD players. The irony is that the US quest for the use of DRM to protect so-called intellectual property has resulted in an embarrassing international incident that points out how ridiculous DRM and copyright have become when innocent gift giving in the name of world peace becomes a potential "violation" of law!

Quipster writes: "The Region-1 coded DVD’s used in North America, are incompatible with the differently coded DVD’s used in Britain. Poor Gordon Brown not only taxed at the rare opportunity to enjoy a flick with his poor vision at that, but then the additional knock at getting the ugly message at the start of the movie, “wrong region.”

The irony is that Barack Obama likes to surround himself with the most talented and up to date people, not to mention, technological wizards. Ineptly, they were unable to foresee the rather blatant issue of viewing compatibility across the pond."

Another exhibition of arrogant stupidity by our clueless self-serving politicians.