Patent Hypocrisy Raises Privacy Concerns

A few posts ago, I reported that the major lobbying muscle in the Internet industry backs a patent “reform” bill (HR 9) called the Innovation Act. I argued in that post that while this reform claims to eliminate nuisance “patent trolls” from clogging up the system with dubious claims, what it really does is eliminate competition from the market.  Because, while the Silicon Valley PR hydra continues to sell the message that intellectual property is an outdated concept in the digital age — one that is chilling the general public’s civil liberties no less — they don’t actually mean that IP is outdated for them, just for everyone else.

Not surprisingly, a web search is no way to get a quick answer as to how many patents these companies hold. Most especially, typing “How many patents does Google have?” into a Google search yields a rather opaque set of first results from the “organizer of all data.” I had to use Bing to get to this article from 2013 in MIT Technology Review, which indicates that since 2007, Google has accelerated its patent activity to the tune of over 1,500 awards per year.  This is still far behind IBM, but not bad for a company that keeps telling the public the USPTO is “overwhelmed” by applications and flimsy claims. This 2012 article from ZD Net estimates that Facebook owned 812 patents at the time of publication, nearly all of these purchased from IBM in a single week as an apparent move to build up its defensive position against litigation from Yahoo! and Mitel.  And this 2014 article in IP Watchdog offers some praise to Facebook for its “more developed” patent strategy in contrast to Twitter vis-a-vis market valuation.

I mention this final example to make the point that there is nothing inherently wrong with these companies availing themselves of IP protections; what’s wrong is the hypocrisy of backing policy change that would create an uneven playing field for big vs small.  To put that in brass tacks, if one of these big boys infringed some IP you created, it isn’t enough that you’d be at a financial disadvantage in a lawsuit, but they’d also rewrite the law to possibly label you a “troll” in order to invalidate your claim in the first place.

But so what? These are the real innovators, right?  They’re innovating a brighter future for everyone and doing it all for free in the name of freedom and open freeness and free openness and disruptive free open innovation and freedom. Right?  Yeah.  So, here’s one of Facebook’s latest patents, Patent No. 9,100,400, which this excerpt from a post by the law firm of Gottlieb Rackman & Reisman explains clearly:

“In the patent, Facebook explains that it has invented a system by which, among other things, it can take the data, specifically your list of friends or your “social network,” and examine the credit ratings of those in your social network. The data is then used to provide information about YOU to lenders, presumably under the theory that “birds of a feather flock together.” If your friends collectively have a good credit rating, the lender might give you loan. If your friends collectively have a poor rating, the lender can close its file on your application. The point here that that lenders who might see some benefit in having data about your social network to judge the likelihood of your ability to pay the loan, or even your willingness to pay it back, will likely be paying Facebook (or any company that Facebook licenses) for the data.”

At the top of the list of magical thinkers I distrust are religious zealots followed closely by actuaries, the latter being too often engaged in devising some alchemical rationale to correlate, for instance, your choice of wardrobe with the insurance premium you should pay.  And we should not be surprised at all — in fact we have already seen other evidence — that social media profiles can become part of your unintended resume, your medical history, your credit-worthiness, your insurability; in short, your worthiness to live among the haves instead of the have nots according to someone’s data-driven decision process.

Now it is possible, that Facebook and lenders will not be able to implement this patented system as described without running afoul of the Equal Credit Opportunity Act, but if adopted, how is this credit based on the company you keep not a potential digital-age means of helping the rich stay rich and the poor stay poor?  When an entity like an insurer, creditor, or potential employer wants to disenfranchise a type of person — black, gay, Mexican, women who have premarital sex! — they devise criteria to avoid direct conflict with anti-discrimination laws.  “We didn’t deny you that loan because you’re black, we denied it because your friends (who didn’t manage to escape the impoverished neighborhood you did) all have bad credit scores.”

So, it’s not hard to imagine a future with a variety of creative, actuarial schematics by which any individual or group may be disenfranchised simply because we have voluntarily made what we used to call “private life” a matter of public record. And because this is the new normal, perhaps we ought to be drawing new legal boundaries regarding personal information and discrimination, but that doesn’t seem to be the kind of reform any of the digital-age leaders want to talk about.

David Newhoff
David is an author, communications professional, and copyright advocate. After more than 20 years providing creative services and consulting in corporate communications, he shifted his attention to law and policy, beginning with advocacy of copyright and the value of creative professionals to America’s economy, core principles, and culture.

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