Friday, April 27, 2007
Thursday, April 26, 2007
Stewart and Caterina
Verizon/Vonage Lawsuit As A Proxy For What's Wrong With The Patent System
With the news that the federal appeals court has granted a permanent stay on enforcing the injunction placed on Vonage preventing it from signing up new customers, Tim Lee has written up a good article about how the case demonstrates many of the problems with the patent system, from software patents to obvious ideas getting patented to overly broad patents to the fact that companies are now using patents for nuclear stockpiling purposes rather than for innovation. It's an idea that we've discussed here quite a bit, and as Tim says, "Vonage's fundamental mistake was that it chose not to join this arms race. As a result, when Verizon sued, it was completely defenseless." We keep asking for people to explain to us how this is beneficial for promoting innovation, but no one seems to have a good answer. On a related note, Tim points out the latest ridiculous patent on tabbed windows, wondering "would anyone seriously claim that granting legal monopolies on the general characteristics of windowing systems is either necessary or helpful to the progress of the software industry?" Anyone?
Group Of Banks Sues TJX Over Data Breach
One of the reasons that big data breaches, such as the one at TJX, keep occurring, is that there aren't sufficient incentives in place for companies to take this issue seriously. The key then is to develop ways for companies to see value in data security, and to be properly punished for their carelessness. At this point, the government doesn't seem to be doing much on this account, and even if it tried to do something, there's no guarantee that it would be effective, since many government regulations fail to achieve their desired goals. Now, a group of New England banks have filed a lawsuit against TJX, in hopes of receiving compensation for their own expenses from dealing with the situation. Their complaint seems legitimate since it's known that the breach has contributed directly to fraud, which is something that the banks themselves have to combat. As one representative from the group put it, "Right now we've had major breaches from major retailers, and there's very little recourse and little incentive for them to change." While the tort system is often abused, it can be used by legitimately injured parties to get compensation. If the banks are successful in winning damages, it's likely to open up a new (and hopefully effective) avenue in punishing companies that mishandle their data.
Got A Good Credit Score? Rent It To Someone In Need
One of the common consequences for victims of identity theft is that they can see their credit scores get damaged, and because the big credit agencies don't offer much help in monitoring and fixing this, it can be a major hassle to get the problem resolved. Barry Ritholtz to an interesting story about a different kind of fraud, whereby people with good credit scores can sell their credit histories to people who want their own score boosted. Basically, the law states that people are allowed to add an unlimited number of individuals to their credit card accounts; it's mainly intended for parents who want to put their kids on the account. But, various websites have emerged to take advantage of this loophole, enabling people with bad credit histories to improve their score by getting access to a good credit history. It's not clear how widespread this actually is, but it pretty clearly violates the whole point of a credit score, since it's supposed to give the lender some idea of how reliable the borrower is. Fair Isaac, the company that developed the FICO score, says it's currently in talks with the FTC to stop the practice. The question, then, is whether shutting down this loophole will do the trick, or whether credit history brokers will simply find another loophole.
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