Month: March 2016

Walmart’s taxing experience in Puerto Rico

As the New York Times recently reported, a Federal judge has ruled the tax that Puerto Rico levied on Walmart was unlawful. Walmart argued that the tax totaled more than 100 percent of its profits.

From the article:

The judge, José Antonio Fusté of the United States District Court in Puerto Rico, said in his opinion on Monday that it gave him no pleasure to throw out the tax, considering the commonwealth’s dire financial condition. But he said it was unlawful and that Puerto Rico’s crisis was not an excuse “to take revenue that it’s not entitled to, to pay for essential services.”

The new tax was more than triple the old rate, he said, “designed to capture Walmart Puerto Rico, the biggest fish in the pond.”

It also gives me no pleasure to at least partially concur Walmart’s side in this dispute. It’s unrealistic to take the entirety of a business’s profits and expect them to continue operating in your jurisdiction. Puerto Rico is kind of an unusual case: it’s a US territory, but not an actual US state, at least not yet. I don’t know if it’s accurate to say it’s somewhat like a country within a country, but that’s the best description I can come up with. (It does have its own Internet TLD of .pr if that says anything.)

I am no fan of Walmart. I don’t shop there at all, even when the alternative is doing without until another retailer opens up shortly after daybreak. To me, their reputation is a store that sells “cheap crap” and on top of this, pays their employees poverty wages that the rest of us wind up subsidizing with our taxes. As I have blogged previously, the obscene pay their CEO gets doesn’t exactly help their case in my eyes, either.

But the alternative to Walmart prevailing in this lawsuit is even worse. It would basically give Puerto Rico’s government free reign to raise taxes at will, even to the extent of taking over 100% of a company’s profits. That’s a recipe for disaster; Puerto Rico would be shooting itself in the foot by doing this.

So, I applaud the judge for ruling in Walmart’s favor. It was the only sane thing to do.

Sony’s first class DMCA foulup and what it says about fair use in the modern era

TechDirt recently published an article about a Digital Millenium Copyright Act (DMCA) takedown of, oddly enough, a Harvard law professor’s lecture on copyright. That in itself is ironic enough.

What triggered the takedown were clips of different songs, used in the discussion of copyright. This, under copyright law, is called “fair use” and is not considered infringement. And this is where Sony Music Entertainment has screwed up.

Part of the blame has to go to Google (or would it technically be Alphabet now?), who owns YouTube, and who has decided to deploy an automatic music fingerprinting system allowing draconian enforcement of copyrights–and sometimes squashing fair use, possibly on purpose. This quote from the original story is quite telling:

In fact, considering how frequently we hear the RIAA and other copyright system supporters (especially within the recording industry) arguing that what the world really needs is better education on copyright issues so that the public better understands it, it seems particularly stupid to issue a takedown over a free lecture explaining music copyright. But, of course, no one ever suggested that the recording industry is particularly intelligent in how it goes about fighting its peculiar war.

The RIAA has gotten at least one thing right: they have quit suing music listeners for file sharing which infringes copyrights. Unfortunately the MPAA and other industry organizations have not followed suit. (Or maybe I should say, have not followed the distinct lack thereof.)

I, personally, believe the DMCA and other copyright-related laws which were passed during the rise of the Internet’s prominence were not strictly necessary. I despise the tactic of suggestive law names and acronyms which make implied statements subject to debate, such as the horribly named No Electronic Theft (NET) Act, named years before Nina Paley made her famous cartoon as featured on questioncopyright.org. Especially given that such laws are, by their nature, anti-consumer and, ironically, seem to do the most damage to those who obey them.

Case in point: I want to include a 15-second clip from a movie, say, Ghostbusters (1984). Let’s say I have this movie on DVD. Now, DVD has been proven to be trivially crackable, due to restrictions in key size in effect at the time of the format’s introduction. However, the DMCA gives any technology restricting copying the force of law, no matter how effective, and has no fair use exemption. Worse, the anti-circumvention portion of the DMCA has criminal penalties. So despite the fact I could easily copy that 15-second clip for fair use purposes, it’s a violation of the DMCA to do so.

Were I to try to make that copy honestly, using, say, a USB analog video capture device and a DVD player, the USB analog video capture device probably would not let me, either giving a distorted picture, a blank picture, or possibly even shutting down completely. The same would apply if I were to use licensed, legal DVD playback software; the publishers of such software are required to play into Hollywood’s hands and restrict copying the same as a physical DVD player would.

Getting back to the case at hand, were Sony to use a copy-restriction technology on an album, our Harvard law professor could find himself facing criminal charges were he to want to make fair use of it in the same manner. If all this seems Kafkaesque or Orwellian to you, you’re not alone.

I suppose the only saving grace in this is that the FBI honestly has better things to do than prosecute every single violation of the DMCA out there. It doesn’t change the fact this is a dumb law that needs to be overhauled. There need to be real, decisive penalties for those who recklessly or knowingly infringe upon fair use, and any new copyright-related law going forward needs to acknowledge and make a blanket exception for any and all fair use–not leave it up to the Librarian of Congress to make the very few and narrow exceptions.

Growing up in school, I (and my classmates) thought it was outrageous that (based on the teachings of the time) photocopiers in the USSR were rare and locked down against unauthorized access. Three decades later, we’re dangerously close to having the modern-day equivalent of that across the world (not just in the USA).