Artificial Intelligence

The White House's Preparing For The Future of Artificial Intelligence report [PDF] states

As a contribution toward preparing the United States for a future in which Artificial Intelligence (AI) plays a growing role, we survey the current state of AI, its existing and potential applications, and the questions that are raised for society and public policy by progress in AI. We also make recommendations for specific further actions by Federal agencies and other actors. 

A companion document called the National Artificial Intelligence Research and Development Strategic Plan lays out a strategic plan for Federally-funded research and development in AI. 

Applications of AI for Public Good 

One area of great optimism about AI and machine learning is their potential to improve people’s lives by helping to solve some of the world’s greatest challenges and inefficiencies. Many have compared the promise of AI to the transformative impacts of advancements in mobile computing. Public- and private- sector investments in basic and applied R and D on AI have already begun reaping major benefits to the public in fields as diverse as health care, transportation, the environment, criminal justice, and economic inclusion. The effectiveness of government itself is being increased as agencies build their capacity to use AI to carry out their missions more quickly, responsively, and efficiently. 

AI and Regulation

AI has applications in many products, such as cars and aircraft, which are subject to regulation designed to protect the public from harm and ensure fairness in economic competition. How will the incorporation of AI into these products affect the relevant regulatory approaches? In general, the approach to regulation of AI-enabled products to protect public safety should be informed by assessment of the aspects of risk that the addition of AI may reduce alongside the aspects of risk that it may increase. If a risk falls within the bounds of an existing regulatory regime, moreover, the policy discussion should start by considering whether the existing regulations already adequately address the risk, or whether they need to be adapted to the addition of AI. Also, where regulatory responses to the addition of AI threaten to increase the cost of compliance, or slow the development or adoption of beneficial innovations, policymakers should consider how those responses could be adjusted to lower costs and barriers to innovation without adversely impacting safety or market fairness.

Currently relevant examples of the regulatory challenges that AI-enabled products present are found in the cases of automated vehicles (AVs, such as self-driving cars) and AI-equipped unmanned aircraft systems (UAS, or “drones”). In the long run, AVs will likely save many lives by reducing driver error and increasing personal mobility, and UAS will offer many economic benefits. Yet public safety must be protected as these technologies are tested and begin to mature. The Department of Transportation (DOT) is using an approach to evolving the relevant regulations that is based on building expertise in the Department, creating safe spaces and test beds for experimentation, and working with industry and civil society to evolve performance-based regulations that will enable more uses as evidence of safe operation accumulates.

Research and Workforce

Government also has an important role to play in the advancement of AI through research and development and the growth of a skilled, diverse workforce. A separate strategic plan for Federally- funded AI research and development is being released in conjunction with this report. The plan discusses the role of Federal R and D, identifies areas of opportunity, and recommends ways to coordinate R&D to maximize benefit and build a highly-trained workforce.

Given the strategic importance of AI, moreover, it is appropriate for the Federal Government to monitor developments in the field worldwide in order to get early warning of important changes arising elsewhere in case these require changes in U.S. policy.

The rapid growth of AI has dramatically increased the need for people with relevant skills to support and advance the field. An AI-enabled world demands a data-literate citizenry that is able to read, use, interpret, and communicate about data, and participate in policy debates about matters affected by AI. AI knowledge and education are increasingly emphasized in Federal Science, Technology, Engineering, and Mathematics (STEM) education programs. AI education is also a component of Computer Science for All, the President’s initiative to empower all American students from kindergarten through high school to learn computer science and be equipped with the computational thinking skills they need in a technology- driven world.

Economic Impacts of AI

AI’s central economic effect in the short term will be the automation of tasks that could not be automated before. This will likely increase productivity and create wealth, but it may also affect particular types of jobs in different ways, reducing demand for certain skills that can be automated while increasing demand for other skills that are complementary to AI. Analysis by the White House Council of Economic Advisors (CEA) suggests that the negative effect of automation will be greatest on lower-wage jobs, and that there is a risk that AI-driven automation will increase the wage gap between less-educated and more- educated workers, potentially increasing economic inequality. Public policy can address these risks, ensuring that workers are retrained and able to succeed in occupations that are complementary to, rather than competing with, automation. Public policy can also ensure that the economic benefits created by AI are shared broadly, and assure that AI responsibly ushers in a new age in the global economy.

Fairness, Safety, and Governance

As AI technologies move toward broader deployment, technical experts, policy analysts, and ethicists have raised concerns about unintended consequences of widespread adoption. Use of AI to make consequential decisions about people, often replacing decisions made by human-driven bureaucratic processes, leads to concerns about how to ensure justice, fairness, and accountability—the same concerns voiced previously in the Administration’s Big Data: Seizing Opportunities, Preserving Values report of 2014, as well as the Report to the President on Big Data and Privacy: A Technological Perspective published by the President’s Council of Advisors on Science and Technology in 2014.2 Transparency concerns focus not only on the data and algorithms involved, but also on the potential to have some form of explanation for any AI-based determination. Yet AI experts have cautioned that there are inherent challenges in trying to understand and predict the behavior of advanced AI systems.

Use of AI to control physical-world equipment leads to concerns about safety, especially as systems are exposed to the full complexity of the human environment. A major challenge in AI safety is building systems that can safely transition from the “closed world” of the laboratory into the outside “open world” where unpredictable things can happen. Adapting gracefully to unforeseen situations is difficult yet necessary for safe operation. Experience in building other types of safety-critical systems and infrastructure, such as aircraft, power plants, bridges, and vehicles, has much to teach AI practitioners about verification and validation, how to build a safety case for a technology, how to manage risk, and how to communicate with stakeholders about risk.

At a technical level, the challenges of fairness and safety are related. In both cases, practitioners strive to avoid unintended behavior, and to generate the evidence needed to give stakeholders justified confidence that unintended failures are unlikely.

Ethical training for AI practitioners and students is a necessary part of the solution. Ideally, every student learning AI, computer science, or data science would be exposed to curriculum and discussion on related ethics and security topics. However, ethics alone is not sufficient. Ethics can help practitioners understand their responsibilities to all stakeholders, but ethical training should be augmented with technical tools and methods for putting good intentions into practice by doing the technical work needed to prevent unacceptable outcomes.

Global Considerations and Security

AI poses policy questions across a range of areas in international relations and security. AI has been a topic of interest in recent international discussions as countries, multilateral institutions, and other stakeholders have begun to access the benefits and challenges of AI. Dialogue and cooperation between these entities could help advance AI R and D and harness AI for good, while also addressing shared challenges.

Today’s AI has important applications in cybersecurity, and is expected to play an increasing role for both defensive and offensive cyber measures. Currently, designing and operating secure systems requires significant time and attention from experts. Automating this expert work partially or entirely may increase security across a much broader range of systems and applications at dramatically lower cost, and could increase the agility of the Nation’s cyber-defenses. Using AI may help maintain the rapid response required to detect and react to the landscape of evolving threats.

Challenging issues are raised by the potential use of AI in weapon systems. The United States has incorporated autonomy in certain weapon systems for decades, allowing for greater precision in the use of weapons and safer, more humane military operations. Nonetheless, moving away from direct human control of weapon systems involves some risks and can raise legal and ethical questions.

The key to incorporating autonomous and semi-autonomous weapon systems into American defense planning is to ensure that U.S. Government entities are always acting in accordance with international humanitarian law, taking appropriate steps to control proliferation, and working with partners and Allies to develop standards related to the development and use of such weapon systems. The United States has actively participated in ongoing international discussion on Lethal Autonomous Weapon Systems, and anticipates continued robust international discussion of these potential weapon systems. Agencies across the U.S. Government are working to develop a single, government-wide policy, consistent with international humanitarian law, on autonomous and semi-autonomous weapons.

Preparing for the Future

AI holds the potential to be a major driver of economic growth and social progress, if industry, civil society, government, and the public work together to support development of the technology with thoughtful attention to its potential and to managing its risks. The U.S. Government has several roles to play. It can convene conversations about important issues and help to set the agenda for public debate. It can monitor the safety and fairness of applications as they develop, and adapt regulatory frameworks to encourage innovation while protecting the public. It can provide public policy tools to ensure that disruption in the means and methods of work enabled by AI increases productivity while avoiding negative economic consequences for certain sectors of the workforce. It can support basic research and the application of AI to public good. It can support development of a skilled, diverse workforce. And government can use AI itself to serve the public faster, more effectively, and at lower cost. Many areas of public policy, from education and the economic safety net, to defense, environmental preservation, and criminal justice, will see new opportunities and new challenges driven by the continued progress of AI. The U.S. Government must continue to build its capacity to understand and adapt to these changes.

As the technology of AI continues to develop, practitioners must ensure that AI-enabled systems are governable; that they are open, transparent, and understandable; that they can work effectively with people; and that their operation will remain consistent with human values and aspirations. Researchers and practitioners have increased their attention to these challenges, and should continue to focus on them. Developing and studying machine intelligence can help us better understand and appreciate our human intelligence. Used thoughtfully, AI can augment our intelligence, helping us chart a better and wiser path forward.

The recommendations are

Recommendation 1: Private and public institutions are encouraged to examine whether and how they can responsibly leverage AI and machine learning in ways that will benefit society. Social justice and public policy institutions that do not typically engage with advanced technologies and data science in their work should consider partnerships with AI researchers and practitioners that can help apply AI tactics to the broad social problems these institutions already address in other ways. 

Recommendation 2: Federal agencies should prioritize open training data and open data standards in AI. The government should emphasize the release of datasets that enable the use of AI to address social challenges. Potential steps may include developing an “Open Data for AI” initiative with the objective of releasing a significant number of government data sets to accelerate AI research and galvanize the use of open data standards and best practices across government, academia, and the private sector. 

Recommendation 3: The Federal Government should explore ways to improve the capacity of key agencies to apply AI to their missions. For example, Federal agencies should explore the potential to create DARPA-like organizations to support high-risk, high-reward AI research and its application, much as the Department of Education has done through its proposal to create an “ARPA-ED,” to support R and D to determine whether AI and other technologies could significantly improve student learning outcomes. 

Recommendation 4: The NSTC MLAI subcommittee should develop a community of practice for AI practitioners across government. Agencies should work together to develop and share standards and best practices around the use of AI in government operations. Agencies should ensure that Federal employee training programs include relevant AI opportunities. 

Recommendation 5: Agencies should draw on appropriate technical expertise at the senior level when setting regulatory policy for AI-enabled products. Effective regulation of AI-enabled products requires collaboration between agency leadership, staff knowledgeable about the existing regulatory framework and regulatory practices generally, and technical experts with knowledge of AI. Agency leadership should take steps to recruit the necessary technical talent, or identify it in existing agency staff, and should ensure that there are sufficient technical “seats at the table” in regulatory policy discussions. 

Recommendation 6: Agencies should use the full range of personnel assignment and exchange models (e.g. hiring authorities) to foster a Federal workforce with more diverse perspectives on the current state of technology. 

Recommendation 7: The Department of Transportation should work with industry and researchers on ways to increase sharing of data for safety, research, and other purposes. The future roles of AI in surface and air transportation are undeniable. Accordingly, Federal actors should focus in the near-term on developing increasingly rich sets of data, consistent with consumer privacy, that can better inform policy-making as these technologies mature. 

Recommendation 8: The U.S. Government should invest in developing and implementing an advanced and automated air traffic management system that is highly scalable, and can fully accommodate autonomous and piloted aircraft alike. 

Recommendation 9: The Department of Transportation should continue to develop an evolving framework for regulation to enable the safe integration of fully automated vehicles and UAS, including novel vehicle designs, into the transportation system. 

Recommendation 10: The NSTC Subcommittee on Machine Learning and Artificial Intelligence should monitor developments in AI, and report regularly to senior Administration leadership about the status of AI, especially with regard to milestones. The Subcommittee should update the list of milestones as knowledge advances and the consensus of experts changes over time. The Subcommittee should consider reporting to the public on AI developments, when appropriate. 

Recommendation 11: The Government should monitor the state of AI in other countries, especially with respect to milestones. 

Recommendation 12: Industry should work with government to keep government updated on the general progress of AI in industry, including the likelihood of milestones being reached soon. 

Recommendation 13: The Federal government should prioritize basic and long-term AI research. The Nation as a whole would benefit from a steady increase in Federal and private-sector AI R and D, with a particular emphasis on basic research and long-term, high-risk research initiatives. Because basic and long-term research especially are areas where the private sector is not likely to invest, Federal investments will be important for R and D in these areas.

Recommendation 14: The NSTC Subcommittees on MLAI and NITRD, in conjunction with the NSTC Committee on Science, Technology, Engineering, and Education (CoSTEM),, should initiate a study on the AI workforce pipeline in order to develop actions that ensure an appropriate increase in the size, quality, and diversity of the workforce, including AI researchers, specialists, and users.

Recommendation 15: The Executive Office of the President should publish a follow-on report by the end of this year, to further investigate the effects of AI and automation on the U.S. job market, and outline recommended policy responses.  

Recommendation 16: Federal agencies that use AI-based systems to make or provide decision support for consequential decisions about individuals should take extra care to ensure the efficacy and fairness of those systems, based on evidence-based verification and validation. 

Recommendation 17: Federal agencies that make grants to state and local governments in support of the use of AI-based systems to make consequential decisions about individuals should review the terms of grants to ensure that AI-based products or services purchased with Federal grant funds produce results in a sufficiently transparent fashion and are supported by evidence of efficacy and fairness. 

Recommendation 18: Schools and universities should include ethics, and related topics in security, privacy, and safety, as an integral part of curricula on AI, machine learning, computer science, and data science. 

Recommendation 19: AI professionals, safety professionals, and their professional societies should work together to continue progress toward a mature field of AI safety engineering. 

Recommendation 20: The U.S. Government should develop a government-wide strategy on international engagement related to AI, and develop a list of AI topical areas that need international engagement and monitoring. 

Recommendation 21: The U.S. Government should deepen its engagement with key international stakeholders, including foreign governments, international organizations, industry, academia, and others, to exchange information and facilitate collaboration on AI R and D. 

Recommendation 22: Agencies’ plans and strategies should account for the influence of AI on cybersecurity, and of cybersecurity on AI. Agencies involved in AI issues should engage their U.S. Government and private-sector cybersecurity colleagues for input on how to ensure that AI systems and ecosystems are secure and resilient to intelligent adversaries. Agencies involved in cybersecurity issues should engage their U.S. Government and private sector AI colleagues for innovative ways to apply AI for effective and efficient cybersecurity. 

Recommendation 23: The U.S. Government should complete the development of a single, government- wide policy, consistent with international humanitarian law, on autonomous and semi-autonomous weapons.

Patent Trolls

The US Federal Trade Commission has released Patent Assertion Entity Activity - A FTC Study [PDF].

The report states

Patent assertion entities (PAEs) are businesses that acquire patents from third parties and seek to generate revenue by asserting them against alleged infringers. PAEs monetize their patents primarily through licensing negotiations with alleged infringers, infringement litigation, or both. In other words, PAEs do not rely on producing, manufacturing, or selling goods. When negotiating, a PAE’s objective is to enter into a royalty-bearing or lump-sum license. When litigating, to generate any revenue, a PAE must either settle with the defendant or ultimately prevail in litigation and obtain relief from the court.

In acquiring and then asserting patents, PAEs target individuals and businesses that already use (at least allegedly) the patented technology. PAE activity therefore results in what often are referred to as ex post patent transactions because any patent license or settlement occurs after someone has developed or marketed the product at issue. This contrasts with ex ante patent transactions in which the technology and related patent rights transfer from an inventor to a manufacturer before the product is developed and marketed. The fact that PAE activity facilitates ex post, as opposed to ex ante, patent transactions has raised policy questions about the role of PAEs in promoting innovation and economic growth.

To begin answering these questions, researchers at several government agencies and academic institutions have studied PAE business models to evaluate the specific impact on patent litigation.

These studies have focused on publicly observable litigation behavior and relied on publicly available litigation data. A deeper understanding of PAE business models, however, requires consideration of behavior that is not publicly observable or available, such as how the entities structure and organize themselves, or their confidential acquisition and licensing terms and data.

The Federal Trade Commission has authority under Section 6(b) of the Federal Trade Commission Act to collect confidential business information and conduct industry studies. We used our authority to study PAE acquisition, litigation, and licensing practices because more data on and analysis of the non-public aspects of PAE business models can enhance the quality of the policy dialogue. Furthermore, to better understand how PAE business models compare with other business models that utilize patent licensing, we conducted a more specific study of the wireless chipset sector, in which not only PAEs, but other non-practicing entities (NPEs) and wireless chipset manufacturers (Wireless Manufacturers) assert wireless-technology patents.

In the general PAE study, the FTC analyzed information from 22 Responding PAEs and over 2,500 of both their Affiliates and other related entities. As explained below, the FTC observed two distinct PAE business models: Portfolio PAEs and Litigation PAEs. Table A.1 provides an overview of the various categories of PAEs discussed in this Report.

We examined the practices of each of these respondents across an almost six-year period between January 2009 and mid-September 2014. Of the related entities, 327 engaged in active assertion behavior, namely, sending demands, suing for patent infringement, or licensing patents, during the study period. In the wireless chipset case study, the FTC compared the behavior of PAEs active in the wireless chipset sector with eight manufacturers and five NPEs that asserted patents in this sector. This report describes our major findings from the study and makes recommendations for future reform.

It states key findings -

The FTC observed two distinct PAE business models: Portfolio PAEs and Litigation PAEs. From the information and data collected from the PAE respondents, we observed two distinct PAE business models for generating revenue through patent assertion: Portfolio PAEs and Litigation PAEs. Within each business model, Study PAE behavior was relatively homogeneous.

 Portfolio PAEs: Portfolio PAEs negotiated licenses covering large portfolios, often containing hundreds or thousands of patents, frequently without first suing the alleged infringer. The value of these licenses was typically in the millions of dollars. Although Portfolio PAEs accounted for only 9% of the reported licenses in the study, they generated 80% of the reported revenue, or approximately $3.2 billion. Portfolio PAEs typically funded their initial patent acquisitions through capital raised from investors, including institutional investors or manufacturing firms.

 Litigation PAEs: Litigation PAEs typically sued potential licensees and settled shortly afterward by entering into license agreements with defendants covering small portfolios, often containing fewer than ten patents. The licenses typically yielded total royalties of less than $300,000. According to one estimate, $300,000 approximates the lower bound of early-stage litigation costs of defending a patent infringement suit. Given the relatively low dollar amounts of the licenses, the behavior of Litigation PAEs is consistent with nuisance litigation. For each separate patent portfolio that they acquired, Litigation PAEs characteristically created a new affiliate entity, which often held ten patents or less. They generally operated with little or no working capital and relied on agreements to share future revenue with patent sellers to fund their businesses. Litigation PAEs filed 96% of the cases in the study and accounted for 91% of the reported licenses, but only 20% of the reported revenue, or approximately $800 million.

 Portfolio PAE licenses generated total royalties that were much larger, on average, than those of Litigation PAE licenses. There was little overlap in the royalties generated by Litigation PAE and Portfolio PAE licenses. Seventy-seven percent of Litigation PAE licenses generated royalties of less than $300,000 per license, and 94% generated royalties of less than $1 million per license. By contrast, 65% of Portfolio PAE licenses generated royalties of greater than $1 million per license, and 10% generated royalties of greater than $50 million per license. The FTC did not observe demand-letter campaigns that, on their own, generated low-revenue licenses. In addition to negotiating licenses and initiating infringement litigation, PAEs may assert their patents by demanding that a target take a license from them. Often these demands take the form of a “demand letter.” 

The FTC did not observe Study PAEs successfully generating low-revenue licenses by sending demands, but not suing the target. This suggests that demand-letter reform, on its own, would not fully address the potential negative repercussions of PAE activity. Instead, most licenses in the sample followed a patent infringement suit against the alleged infringer. Consistent with the fact that Litigation PAEs accounted for 91% of reported licenses, patent infringement suits against the eventual licensee preceded 87% of the licenses in the sample. Litigation preceded 93% of Litigation PAE licenses, but just 29% of Portfolio PAE licenses. Because a significant portion of observed PAE activity passed through the courthouse doors, further analyses of publicly available litigation data likely would be beneficial.

Study PAEs focused on acquiring and asserting Information and Communication Technology (ICT) patents. Of all the patents held by PAEs in the FTC’s study, 88% fell under the Computers and Communications or Other Electrical & Electronic technology categories, and more than 75% of the Study PAEs’ overall holdings were software-related patents.

Although Study PAEs overwhelmingly held ICT and software patents, they asserted those patents against firms in a broad range of industries, including “Retail Trade.” More than 17% of demand recipients, 10% of litigation defendants, and 13% of licensees identified in the study operated in the “Retail Trade” industry, which includes both store retailers that operate fixed point-of-sale operations and non-store retailers, such as Internet merchants that directly sell products.10 Given that most of the patents asserted by Study PAEs were ICT patents, the presence of retailers among the targets of assertion activity in the study suggests that Study PAEs asserted their patents not only against manufacturers of the accused products, but also against firms that were end-users of the products. This finding supports anecdotal evidence that end-users are frequently PAE targets.

Although most Study PAE targets had just one encounter with any Study PAE, a small number of entities were frequent targets of Study PAE activity. Within each category of assertion behavior (demand, litigation, and licensing), most of the observed activity involved a single instance of assertion by any Study PAE against a target. For example, during the study period, 73% of the assertion targets were defendants in only one lawsuit brought by any of the 256 Study PAEs that filed infringement suits, and 13% of the assertion targets were defendants in two lawsuits. Nevertheless, a small number of firms reported multiple encounters with Study PAEs. Of the firms that received demands from Study PAEs, 2% received more than five demands, and one firm received 17 demands. Of the firms that reported licenses with Study PAEs, 2% had licenses with more than nine separate Study PAEs.

Study PAEs disproportionately asserted patents against a relatively small number of firms. These firms most frequently operated in the “Computer & Electronic Product Manufacturing” industry. Indeed, firms in the “Computer & Electronic Product Manufacturing” industry accounted for more than half of the top 25 firms that (1) received the largest number of demands from Study PAEs, (2) were sued most frequently by Study PAEs, or (3) paid the largest royalties to Study PAEs. In addition, while not necessarily receiving the most demands, the top 25 firms that paid the highest amount of license royalties to Study PAEs accounted for 69% of the royalties observed in the study.

In the wireless chipset sector, Litigation PAEs and Wireless Manufacturers asserted patents differently. In the Wireless Case Study, the FTC examined the patent assertion activities of PAEs, NPEs, and manufacturers in the wireless chipset sector to understand better how different business models might affect assertion behavior in the same technological space. We observed that Wireless Manufacturers sent demand letters before executing licenses, while Litigation PAEs sued before licensing their patents. Wireless Manufacturers and NPEs also sent nearly three times as many demand letters as all of the Study PAEs combined. Litigation PAEs brought nearly two-and-a-half times as many patent infringement cases involving wireless patents as Wireless Manufacturers (which collectively accounted for approximately 90% of worldwide chipset sales), NPEs, and Portfolio PAEs combined.

Wireless Manufacturer and Litigation PAE license characteristics also differed markedly. Wireless Manufacturer licenses frequently included field-of-use restrictions, cross-licenses, and complicated payment terms, whereas Litigation PAE licenses involved simple lump-sum payments with few restrictions, if any. Portfolio PAE and NPE license characteristics fell between these two extremes.

A number of scholars have expressed concerns that, because PAEs likely face lower costs and fewer risks of asserting their patents than other patent holders, such as manufacturers, PAEs more aggressively assert their patents. In particular, these scholars are concerned that lower litigation costs may allow PAEs to obtain higher royalties than a manufacturer or NPE would receive.  In the Wireless Case Study, the FTC found that Study PAEs were more likely to assert their patents through litigation than were Wireless Manufacturers. For example, 30% of Portfolio PAE wireless patent licenses and nearly 90% of Litigation PAE wireless patent licenses resulted from litigation, while only 1% of Wireless Manufacturer wireless patent licenses resulted from litigation. The FTC, however, has not attempted to determine if the royalties received by Study PAEs were higher or lower than those that the original assignees of the licensed patents could have earned. The FTC did not have the data to estimate reliably the royalties the original assignee would have received for the patents ultimately licensed by a Study PAE.

Study PAEs had diverse and heterogeneous data-keeping practices. As a result, the FTC does not report how much revenue PAEs shared with others, including independent inventors, or the costs of assertion activity. The FTC sought to evaluate the role of PAE activity in promoting patent monetization for inventors and innovation as part of its study. Towards that end, the FTC requested that Responding PAEs provide detailed data describing how they shared licensing revenue with outside parties and their costs of patent assertion. Responding PAEs used different methods to maintain information describing their revenue sharing and costs, however, which prevented any meaningful comparison of the degree of revenue sharing by PAEs or their assertion costs.

For example, some Responding PAEs viewed payments to outside counsel as a cost of patent assertion, but others viewed such payments as revenue sharing (counsel often received a fixed proportion of licensing royalties). Moreover, the majority of Responding PAEs did not maintain information on assertion costs, and only a few Responding PAEs provided such data at either the Affiliate level or assertion campaign level.14 For these reasons, we did not analyze either the proportion of licensing revenue that they shared with outside parties, or the costs of patent assertion. Due to this limited data, this report does not address the efficiency of PAE business models.

Recommendations for Legislative and Judicial Reform

As observed in the study, infringement lawsuits filed against targets played a key role in the viability and success of the Litigation PAE business model. Ninety-three percent of reported Litigation PAE licenses followed a lawsuit against the eventual licensee and 77% were valued at less than the estimated cost of defending a patent lawsuit through the end of discovery—a threshold below which litigation settlements might be considered nuisance value. In addition, when licenses followed litigation, those litigations tended to settle early; of the cases that settled, 34% did so within six months of filing, 66% within one year, and 83% within 18 months. Although Litigation PAEs generated a minority of the reported PAE licensing revenues in the study, they accounted for the vast majority of total lawsuits filed.

The FTC recognizes that infringement litigation plays an important role in protecting patent rights, and that a robust judicial system promotes respect for the patent laws. Nuisance infringement litigation, however, can tax judicial resources and divert attention away from productive business behavior. With this balance in mind, the FTC proposes reforms to: 1) address discovery burden and cost asymmetries in PAE litigation; 2) provide the courts and defendants with more information about the plaintiffs that have filed infringement lawsuits; 3) streamline multiple cases brought against defendants on the same theories of infringement; and 4) provide sufficient notice of these infringement theories as courts continue to develop heightened pleading requirements for patent cases.

Develop rules and case management practices to address discovery burden and cost asymmetries in PAE litigation. In civil lawsuits, plaintiffs and defendants exchange information relevant to the litigation through disclosures and responses to discovery requests. The Federal Judicial Center notes that discovery in patent litigation “can be exhaustive and exhausting for a variety of reasons,” including broad claims and defenses which require inquiry into product development and financial records, special issues that arise with willfulness and inequitable conduct claims, and “potentially consequential but unpredictable outcome[s]” that can lead to extensive discovery requests and lack of compromise.

Because PAEs do not invent, develop, or manufacture products incorporating their patented technology, they generally have less discoverable information than the party accused of infringement 

They also are not subject to countersuit for patent infringement, and therefore do not face potential discovery relating to infringement counterclaims. A PAE may thus be able to subject a defendant to exhaustive discovery requests while itself facing a relatively light discovery burden. This asymmetry in discovery burden can give PAEs an advantage in litigation. As discussed above, Litigation PAEs settled 66% of their cases within 12 months, and settlements frequently involved lump-sum license payments valued at less than $300,000. The American Intellectual Property Law Association (AIPLA), which periodically surveys the costs of patent litigation, recently reported that defending an NPE patent lawsuit through the end of discovery costs between $300,000 and $2.5 million, depending on the amount in controversy. By this estimate, 77% of Litigation PAEs’ settlements fell below a de facto benchmark for the nuisance cost of litigation. This suggests that discovery costs, and not the technological value of the patent, may set the benchmark for settlement value in Litigation PAE cases.

Because defendants frequently paid less than the estimated value of discovery costs to settle litigation with Study PAEs, and because there is asymmetry in discovery burden between PAE plaintiffs and defendants, Congress, the Judicial Conference of the United States, and individual courts should promote case management practices that take these costs and asymmetries into account. One step toward achieving this goal would be to amend Federal Rule of Civil Procedure 26, which addresses discovery in civil actions, in a way that helps balance these relative burdens. Rule 26 requires parties to meet and confer to discuss, among other things, a plan for discovery. Early disclosure of asserted claims and infringement and invalidity contentions in PAE litigation would help to balance the asymmetries of plaintiff and defendant-side discovery costs. Likewise, measures that would limit discovery before preliminary motions together with provisions to ensure that such motions are decided in a timely manner would help alleviate the asymmetry problem. Furthermore, early disclosure of damages theories would flag potential legal issues for summary judgment motions and provide more information for settlement discussions. In general, any measures that reduce discovery burden and costs while ensuring discovery of information appropriate to the case should be considered.

Amend Federal Rule of Civil Procedure 7.1 to reach a broader range of non-party interested entities or persons. Federal Rule of Civil Procedure 7.1 requires all nongovernmental corporate parties to identify “any parent corporation and any publicly held corporation owning 10% or more of its stock” in its “first appearance, pleading, petition, motion, response, or other request addressed to the court.” The purpose of the rule is to “reach a majority of the circumstances that are likely to call for [judicial] disqualification on the basis of financial information that a judge may not know or recollect.” The FTC observed significant variation in how multi-affiliate Litigation PAEs organized their affiliate companies, many of which existing Rule 7.1 would not cover. To provide defendants and the judiciary with a better understanding of financial relationships relating to firms that may appear in the courtroom, Congress and the Judicial Conference should expand the reportable relationships under Rule 7.1.

Establish procedures encouraging courts to stay a PAE’s infringement action against a customer or end-user, where the PAE has also sued the manufacturer of the accused product under the same theory of infringement. The FTC observed that a significant proportion of PAE targets in the study did not appear to manufacture the allegedly infringing product. For example, Litigation PAEs filed over 15% of their cases against defendants in the “Retail Trade” industry. The Patent Act allows a patent holder to recover from anyone who “uses” the patented invention. Nevertheless, simultaneous litigation by a PAE against a manufacturer and its customers on the same theory of infringement can impose unnecessary judicial and private costs. Should the patent be invalidated in one case, for example, it would make further litigation in the other cases unnecessary. The manufacturer of an accused product typically has a much better understanding of the disputed technology and thus typically is in a better position to defend against the infringement suit than is a customer or retailer. And it is also more likely to have discoverable evidence because it produces the accused product.

Accordingly, to address situations where a PAE sues a manufacturer and its customers on the same theory of infringement, Congress and the Judicial Conference should enact provisions that encourage a district court to stay actions against end-users until the manufacturer suit has been resolved.

As courts continue to address the “plausibility” of pleadings in patent cases, ensure that patent infringement complaints provide sufficient notice to accused infringers. Until the end of 2015, a patent holder could file a complaint in district court by making simple allegations regarding its patent ownership and the defendant’s infringement. The patent holder did not need to identify any claims that were allegedly infringed, or list any accused products. This standard, based on a federal form for pleading patent infringement, applied to all of the infringement claims made by Study PAEs during the FTC’s study period.

In December 2015, however, an amendment to the Federal Rules of Civil Procedure abrogated the use of this form for patent cases. Patent holders, following the pleading standard articulated by the Supreme Court for civil cases generally, now must plead factual allegations that make infringement “plausible.” Because Litigation PAEs generate licensing revenue primarily through litigation, requiring more particularity in a complaint can provide defendants with more information with which to evaluate the nature and scope of their accused infringement. As the courts continue to develop the plausibility standard in patent cases, they should continue to consider the benefits of pleadings that provide sufficient notice to accused infringers.

The FTC concludes

The FTC took its first in-depth look at PAE activity in the hearings leading up to its 2011 report examining technology markets and patent markets: The Evolving IP Marketplace: Aligning Patent Notice and Remedies with Competition.  As the Commission recognized then, consistent with our earlier examinations of patent policy, the patent system makes important contributions to innovation, consumer welfare, and U.S. prosperity, in part because of the patent holder’s right to exclude.

Further investigation of the PAE business model, including a workshop in 2012,33 led the Commission to initiate this study—the first use of its Section 6(b) authority to investigate transactions in the intellectual property marketplace. The research presented in this report uses both public and non-public information to shed new light on PAE business models, including detailed data describing PAE assertion behavior and patent holdings.

Based on the overall findings of this study and consistent with the FTC’s history of recommending improvements to patent law to facilitate the benefits of patent rights, while minimizing practices that can “discourag[e] follow-on innovation, prevent[] competition, and rais[e] prices through unnecessary litigation and licensing,” the FTC recommends that policymakers address PAE litigation asymmetries through procedural and substantive reform.

Vectors

'Victims, vectors and villains: are those who opt out of vaccination morally responsible for the deaths of others?' by Euzebiusz Jamrozik, Toby Handfield and Michael J Selgelid in (2016) JME comments

Mass vaccination has been a successful public health strategy for many contagious diseases. The immunity of the vaccinated also protects others who cannot be safely or effectively vaccinated—including infants and the immunosuppressed. When vaccination rates fall, diseases like measles can rapidly resurge in a population. Those who cannot be vaccinated for medical reasons are at the highest risk of severe disease and death. They thus may bear the burden of others' freedom to opt out of vaccination. It is often asked whether it is legitimate for states to adopt and enforce mandatory universal vaccination. Yet this neglects a related question: are those who opt out, where it is permitted, morally responsible when others are harmed or die as a result of their decision? In this article, we argue that individuals who opt out of vaccination are morally responsible for resultant harms to others. Using measles as our main example, we demonstrate the ways in which opting out of vaccination can result in a significant risk of harm and death to others, especially infants and the immunosuppressed. We argue that imposing these risks without good justification is blameworthy and examine ways of reaching a coherent understanding of individual moral responsibility for harms in the context of the collective action required for disease transmission. Finally, we consider several objections to this view, provide counterarguments and suggest morally permissible alternatives to mandatory universal vaccination including controlled infection, self-imposed social isolation and financial penalties for refusal to vaccinate.

The authors argue

Vaccine-preventable infectious diseases Many vaccine-preventable infections are transmitted between human beings and can cause serious harm or death. Measles, for example, is one of the most infectious known human viruses. It is transmitted via the airborne route, and outbreaks can result from minimal social contact between contagious and susceptible individuals. In most people, measles causes mild disease, but in some cases there are serious sequelae including lung inflammation (pneumonitis), brain inflammation (encephalitis), permanent disability and death. US historical data suggest a death rate of about 1 in every 350–1200 cases. Risks of both complications and death are highest in infants, young children, the malnourished and the immunosuppressed. Prior to widespread measles vaccination, there were, on average, 500 000 cases of measles and 400 deaths per year in the USA.1 Measles previously also accounted for a significant proportion of deaths among young people undergoing chemotherapy for leukaemia. Currently, measles continues to cause 100 000 deaths per year worldwide—mostly in children under 5 years of age in sub-Saharan Africa and India, in communities where vaccination rates remain suboptimal.

Modern inoculations for many common diseases are extremely safe and effectively prevent illness in the vast majority of those vaccinated. Vaccines have played a major role in the eradication of smallpox and near eradication of polio. High rates of vaccination against such diseases also protect those who cannot be safely vaccinated, such as infants and the immunosuppressed, through promotion of herd protection (or ‘herd immunity’). The measles vaccine is especially safe and effective, with significant side effects from vaccination being exceedingly rare. A careful long-term follow-up study of measles, mumps, and rubella (MMR) vaccination found zero deaths due to the vaccine and a less than one in a million chance of encephalitis.

There are several groups that cannot be safely or effectively vaccinated with some vaccines (eg, infants, the immunodeficient and the immunosuppressed). The only way these vulnerable individuals can be effectively protected against common infections, apart from extremely onerous social isolation (eg, ‘boy in a bubble’ scenarios), is through herd protection (achieved by high vaccination rates).ii Herd protection models for measles suggest that well over 90% of a population need to be vaccinated in order to reliably prevent sustained transmission. Recent outbreaks have shown that measles can spread quickly and cause significant harm when vaccination rates fall. The presence of such vulnerable individuals raises questions as to whether these people should bear the burdens of the decisions of others not to vaccinate and to what degree the latter should be considered morally responsible for resultant harms to the former.

In this article, we propose that those who opt out of vaccination are morally responsible (and in particular, blameworthy) for the harms suffered by others as a result of infectious outbreaks. In other words, non-vaccinators are morally blameworthy for the morbidity and mortality caused by infectious diseases that can be prevented by vaccination. Exactly how blame should in practice be apportioned among different individuals is a question that is beyond the scope of this article to resolve: but we show that there is at least one plausible and morally defensible way that blame could be ascribed to non-vaccinators. If our argument is sound, it joins other significant grounds that support public health intervention in this area.

We focus on the example of measles because it is highly contagious in social situations where people merely share the same air. Similar considerations apply to many other common infections transmitted in similar ways, but we leave aside diseases with other modes of transmission, noting that these differences and their moral aspects have received some attention elsewhere.

One way to support our thesis would be to analyse the concept of moral responsibility so as to identify sufficient conditions, and then to show that these conditions apply to non-vaccinators and the harms they cause. While we think this route is defensible, it is difficult to frame in a way that is not question-begging. Any account of sufficient conditions (for moral responsibility) that supports our conclusion is likely to be more contentious than the conclusion itself.

Instead, we adopt the following, two-pronged strategy. First, we simply conjecture that non-vaccinators are responsible for harms and present some relatively uncontentious necessary conditions of moral responsibility. We consider some possible objections to our responsibility thesis, organised around these conditions, and show that they all fail. Thus, we show that there is no knockdown objection to our claim. Second, we argue that there are a number of cases where we do in fact consider individuals blameworthy for harms that bear important similarities to the harms caused by non-vaccinators. The legitimacy of considering individuals responsible in these other cases suggests that it is analogously legitimate to consider non-vaccinators responsible.

Life Insurance Industry Code

I'm somewhat saddened by the surveillance provisions in the new Life Insurance Industry Code of practice (strategically released a day before a major report highlighting bad practice on the part of leading insurers) and by the uncritical acceptance by the mass media of the Financial Services Council's claims.

The Code indicates that one "Key Code Promise" is

We will restrict the use of investigators and surveillance, to ensure your legitimate right to privacy.

The Code more problematically states

8.12 Where we require surveillance to be carried out:

a) alternative methods of verifying information will be sought prior to arranging surveillance; 

b) surveillance will only be arranged where we reasonably believe prior to carrying out the surveillance that your claim appears to be inconsistent with information available to us, and our reasons for this will be documented; 

c) requests for surveillance must be internally reviewed and approved by a senior claims manager; 

d) surveillance will not be conducted in any court or other judicial facility, in any medical or health facility, in any bathroom, change room, lactation room or inside your house; 

e) our investigator will not intentionally lm people in the company of the subject of the enquiry, and where this cannot be avoided, any footage of people in the company of the subject of the enquiry will be pixelated or blurred before being provided by us to any external party such as a court or external dispute resolution body; 

f) we will discontinue surveillance where there is evidence from an independent medical examiner that it is negatively impacting your recovery; and 

g) surveillance investigators will not communicate with neighbours or work colleagues in ways which might directly or indirectly reveal that surveillance is being, will be or has been conducted.

We might well be concerned that the industry is engaged in surveillance "in any court or other judicial facility, in any medical or health facility, in any bathroom, change room, lactation room or inside your house", particularly surveillance that is covert.

Such surveillance will typically be a breach of statute or common law. A promise not to do something that is illegal is unimpressive.

Under "Standards For Investigators" the Code states

10.9 We may engage an investigator to assist us with your claim. If we engage an investigator, in addition to the above obligations, we will require that:

a) surveillance can only be carried out by a licensed private investigator and they must comply with any relevant State and Territory legislation; 

b) the investigator does not use illegal means to carry out the investigation, or induce someone to perform a task or activity that they would not have performed without the involvement of the investigator; 

c) the investigator only collects information relevant to its investigation; 

d) the investigator does not make any threat or promise or offer any inducement to any person when conducting an investigation on our behalf; 

e) the investigator acts in accordance with the standards relating to interviews and surveillance in sections 8.11 and 8.12; and 

f) records of all investigation activities are kept in accordance with the requirements of the Privacy Act 1988.

Requiring that the industry's agents not break the law is not a major achievement and is something reasonably expected of insurers.

HealthMarks

'Leveraging Certification Marks for Public Health' by Margaret Chon and Maria Therese Fujiye in Alberto Alemanno and Enrico Bonadio (eds) The New Intellectual Property of Health (Edward Elgar, 2016) explores

 how certification marks might impact public health via consumer choice rather than by government mandate. Labeling and marking devices such as certification marks could provide greater information to consumers about health-related individual choices, but their full public health impact will be affected by the same factors that throw into question the effectiveness of other forms of disclosure, such as mandatory disclosure of nutrition labeling. These behavioral factors include consumer understanding of the information as well as consumer purchasing responses to this information. Another significant factor affecting their ultimate impact is the capacity of institutions to create and educate consumers about these marks as well as to maintain their informational integrity in the context of powerful countervailing market forces. Reliance upon market forces to promote better public health outcomes does not obviate the role of the state, which plays a crucial role in guarding and shaping core public interest goals, not only to encourage creative solutions to challenging public health problems, but also to constrain regulatory capture by private, market-based stakeholders.

Monoculture

The Australian Competition and Consumer Commission has released a 'Statement of Issues' on moves toward a newspaper monoculture in Queensland, i.e. the proposed acquisition by News Corporation of APN's Australian Regional Media (ARM) operations.

The ACCC states

 The proposed acquisition would combine the two main newspaper publishers in Queensland, adding ARM’s community and regional publications in Queensland and northern New South Wales to News’ extensive portfolio of community, regional, state, and national publications. The ACCC is investigating the effect that this would have on competition for both readers and advertisers. 

“One area of focus is the loss of competition between ARM’s paid regional newspapers and News’ The Courier Mail. If the proposed acquisition proceeds, News will own both The Courier Mail and the local paid newspaper in nearly every city or town in Queensland. This may result in a reduction of quality and diversity of content available to readers. Reinforcing that concern is that both News and ARM have a strong presence in online news through their websites associated with the Queensland newspapers,” ACCC Chairman Rod Sims said. 

“The ACCC is seeking to understand whether the competitive tension between News and ARM is an important factor in maintaining quality and range of content, or whether the threat of readers shifting to alternatives, particularly alternative online news sites, will competitively constrain News after the acquisition.”

It notes that ARM publishes paid daily regional papers in Mackay, Rockhampton, Gladstone, Bundaberg, Hervey Bay, Gympie, Sunshine Coast, Toowoomba, Ipswich and Warwick.  ARM and News both also publish overlapping community papers (mostly free papers with a strong local focus) in Caboolture/Bribie Island, south west Brisbane, Brisbane northern bayside, Logan, and Tweed Heads/southern Gold Coast.

The ACCC is seeking to assess the effect on readers and local advertisers in those areas, and to assess whether the reduction in competition is significant. “The ACCC will be assessing the importance of diversity of local content in these competing community publications. The ACCC is also seeking to understand whether advertising opportunities on other media platforms, such as local radio, pamphlets, and online, will constrain prices for advertising in the ARM and News community newspapers,” Mr Sims said. 

The ACCC helpfully provides an itemisation of ARM’s print publications

 North Queensland (Mackay region) 

Daily Mercury, The Midweek, Whitsunday Times, and Whitsunday Coast Guardian. 

Central Queensland 

The Morning Bulletin, The Observer, Capricorn Coast Mirror, Central Telegraph, and Central Queensland News, 

Wide Bay Burnett 

NewsMail, Fraser Coast Chronicle, The Gympie Times, Guardian, Isis Town and Country, Central and North Burnett Times, Hervey Bay Observer, The Maryborough Herald, Cooloola Advertiser and Hervey Bay Independent. 

South-East Queensland 

Sunshine Coast Daily, Sunshine Coast Sunday, Noosa News, Coolum and North Shore News, Maroochy Weekly, Kawana Weekly, Caloundra Weekly, Nambour Weekly and Buderim Chronicle. 

South-East Queensland 

Caboolture News, Bribie Weekly, The Logan Reporter, The Satellite, Bayside Northern Suburbs Star, The Queensland Times and The Ipswich Advertiser. 

South-West Queensland 

Warwick Daily News, The Chronicle, Stanthorpe Border Post, Dalby Herald, Gatton, Lockyer and Brisbane Valley Star, Laidley Plainland Leader, South Burnett Times, Southern Downs Weekly, Balonne Beacon, The Western Star, Western Times, Chinchilla News and Murilla Advertiser. 

Northern NSW (Gold Coast, Tweed and northern NSW) 

Tweed Daily News, Tweed Daily News – Community Edition, The Northern Star, The Daily Examiner, The Woolgoolga Advertiser, Byron Shire News, Ballina Shire Advocate, Lismore Echo, The Richmond River Express Examiner, Coastal Views, and The Coffs Coast Advocate. 

Specialist publications 

Surat Basin News, Rural Weekly (five editions, including a Northern Territory edition), Big Rigs, CQ Industry, Style Magazine, Seniors Newspaper (eight different editions distributed in South-East Queensland and NSW), and APN Educational Media publications (business-to-business publisher of Education Review, Nursing Review, Aged Care Insite and Campus Review).

Last month the ACCC indicated that it will not oppose the proposed acquisition of The Sunday Times and perthnow.com.au from News Corporation by Seven West Media (SWM), given its view that acquisition on balance is unlikely to "substantially lessen competition for either consumers or advertisers".

It noted in its August 2016 Statement of Issues that SWM has various print publications and online sites throughout Western Australia. SWM’s national media assets include the Seven Network, Pacific Magazines, and interests in Yahoo!7 and Sky News Australia. In Western Australia, it has The West Australian, The Weekend West, thewest.com.au and other media assets, including radio and community and regional newspapers. News is the publisher of various print media and online sites throughout Australia, including The Australian newspaper and news.com.au. In Western Australia, News also publishes The Sunday Times and perthnow.com.au.

The ACCC stated

 “On the consumer side, the large decline in print newspaper readership formed a major part of our analysis. Many consumers in Western Australia are now getting their news online or from other sources,” Mr Sims said. 

“With regards to SWM's ownership of thewest.com.au and the proposed acquisition of perthnow.com.au, we gave consideration to other online news alternatives for West Australians, including Fairfax’s WAtoday.com.au and ABC News’ dedicated Western Australian website.” 

Although some advertisers raised concerns about the loss of competition for advertising opportunities, most acknowledged that print advertising was of declining importance and identified other advertising options they could switch to if WAN attempted to increase rates. “ 

Advertising expenditure in print newspapers in Perth is in steep decline. Most of the advertisers we spoke to after publishing the Statement of Issues are spending less on print newspapers than a few years ago and are finding alternative ways of reaching target audiences, including via digital media,” Mr Sims said.

Online harms and law reform in Ireland

The Law Reform Commission of Ireland has released its report on Harmful Communications and Digital Safety.

 The Commission comments that its report

arises against the reality that we live in a truly interconnected digital and online world. The revolution in telecoms and digital media in the first two decades of the 21st century means that we can communicate with the world through social media on smart phones and other digital devices at virtually any time. This has brought enormous positive benefits, because it has facilitated a new form of online and digital consumer society and also allowed us to participate on a national and international level in civic society and in public discourse generally. This has greatly expanded the capacity to enjoy freedom of expression and of opinions in this jurisdiction and in comparable States.

This freedom has, however, also brought some negative aspects, including a tendency for some online and digital users to engage in communications that cause significant harm to others, including by posting online intimate images without consent and which involve gross breaches of the right to privacy. Examples include the intentional victim- shaming of individuals (overwhelmingly women) sometimes referred to as “revenge porn” (an unhelpful shorthand because it appears to suggest it is “just porn”). Other negative developments include intimidating and threatening online messages directed at private persons and public figures. New forms of technology have also facilitated a new type of voyeurism, sometimes referred to as “upskirting” and “down blousing” in which intimate images are taken and then posted online. In addition, there have also been many instances of online and digital harassment and stalking, which also mirror to some extent the pre-digital versions of these harmful behaviours.

Harmful communications and digital safety: criminal offences and civil law oversight

This project and Report has identified that the existing criminal law already addresses some of the harmful communications described. Not surprisingly, however, it has also identified some gaps that require reform, notably where new forms of communication have been used in harmful ways that could not have been anticipated previously. The Report therefore proposes that the existing criminal law, together with the proposals intended to deal with the new forms of harmful communications, could usefully be consolidated into a single piece of legislation, reflected in Part 2 of the draft Harmful Communications and Digital Safety Bill in Appendix A of this Report.

In addition, the public consultation carried out by the Commission leading to this Report (including a public seminar in 2015 hosted by the Commission, and a 2 day workshop with young people in 2016 facilitated by the Department of Children and Youth Affairs) has also underlined the need to address harmful communications in a wider context, which would include a system of statutory oversight that promotes and supports positive digital safety.

The Report recommends that this should be done under a proposed Office of the Digital Safety Commissioner of Ireland, modelled on comparable offices in Australia and New Zealand, and which could build on the existing Office of Internet Safety located in the Department of Justice and Equality. The proposed Commissioner would have a general oversight and monitoring role, including functions aimed at promoting online and digital safety generally. In this respect the Commissioner would collaborate with other relevant State bodies such as the Ombudsman for Children in the development, with the Department of Education and Skills and the Department of Children and Youth Affairs, of guidance material for young people and schools on what it means to be a safe and responsible digital citizen.

The proposed Digital Safety Commissioner would also oversee and monitor an efficient and effective “take down” system so that harmful communications can be removed as quickly as possible from, for example, social media sites. This would include the publication of a statutory code of practice on take down procedures and associated national standards, which would build on the current non-statutory take down procedures and standards already developed by the online and digital sector, including social media sites. The proposed statutory model envisages that applications for take down of harmful communications would initially be made to the relevant digital or online service provider, such as a social media site. The Digital Safety Commissioner would become involved by way of appeal if the take down procedure did not operate in accordance with the statutory standards – and the Commissioner would also have a general monitoring and supervisory role, as is the case in the Australia and New Zealand systems. These standard-setting and oversight proposals are reflected in Part 3 of the draft Harmful Communications and Digital Safety Bill in Appendix A of the Report.

The Commission is conscious of the important position that Ireland occupies in the digital sector, including the significant presence in the State of many of the leading online and digital multinational firms. In that context, the proposals made in this Report may have an impact not only in Ireland but also some extra-territorial effect outside the State because of the reach of the firms headquartered in Ireland. In this respect, the Report begins in Chapter 1 by noting the increasing regulation internationally of aspects of online and digital communications. This includes through the Council of Europe and the case law of its European Courts of Human Rights, as well as through the European Union and the case law of its Court of Justice, as well as EU legislation that affects this area.

It may be that, ultimately, some aspects of harmful communications, such as the extra- territorial scope of criminal and civil law in this area, will be addressed through regional or global agreements or conventions. For the present, this Report makes recommendations on extra-territoriality that reflect existing law, both in the criminal law and civil law oversight areas. ...

Guiding Principles in the Report

... Chapter 1 of this Report describes the Commission’s general approach to reform in this area. It discusses how the Commission was guided by key principles, including:

• the wider context within which law reform proposals should be considered, in particular the need to have in place solutions that involve education and empowerment concerning harmful digital and online communications; 

• the need to take account of relevant rights and interests, including to ensure that the law contains an appropriate balance between the right to freedom of expression on the one hand and the right to privacy on the other hand; 

• the principle of technology neutrality, which requires a focus on regulating actions and behaviour rather than simply the means used; and 

• the requirement for a proportionate legal response that recognises the respective roles of criminal law and of civil law and regulatory oversight: namely, that criminal law is used only where activity causes significant harm, and that civil law and regulatory oversight includes an efficient and effective take down procedure and a suitable statutory framework.

The wider context for this Report was fully analysed in the 2014 Report of the Internet Content Governance Advisory Group (ICGAG Report), which examined the general policy setting and governance arrangements needed to address harmful online material. In preparing this Report, the Commission has had the benefit of the discussion in the ICGAG Report of this wider context.

In relation to the need to balance the rights to freedom of expression and privacy, the Report discusses their recognition in the Constitution of Ireland as well as in the European Convention on Human Rights (ECHR) and EU law.

As to technology neutrality, this requires that the form of regulation neither imposes, nor discriminates in favour of, the use of a particular type of technology. However, technology neutrality does not necessarily require the same rules online and offline, but rather that the rules in both contexts achieve the same effect. This may require technology specific laws in certain cases. 

With regard to proportionality, this Report applies the harm principle, which requires that responses based on policy, education and the civil law should be prioritised and that the criminal law should only be employed to deal with serious harm. The Report therefore recommends a three level hierarchy of responses to target harmful digital communications: 

• Education: to create user empowerment and foster safe and positive digital citizenship;   

• Civil law and regulatory oversight: where education and related responses are ineffective and the law needs to be employed, civil law should be favoured as it is less onerous than the criminal law; 

• Criminal law: only the most serious harm should be subject to the criminal law.

This hierarchical approach is particularly important in the context of harmful digital communications because the ease with which individuals can post content online means that much internet communication is spontaneous and impulsive, and thus a vast amount of content is posted every day. A hierarchical approach is also necessary because this type of harmful communication often involves children and young people for whom the criminal justice process should be seen as a last resort and only after other responses, such as education or suitable diversion programmes, have been applied.

Reform of Criminal Law Concerning Harmful Communications

Harassment should include online or digital means of communication, and indirect forms

Chapter 2 of the Report begins with a discussion of whether the harassment offence in section 10 of the Non-Fatal Offences Against the Person Act 1997 should be extended to incorporate a specific reference to harassment by online or digital means of communication.

Section 10 of the 1997 Act already applies to direct harassment of a person “by any means”. However, as the Report describes, while this probably applies to direct online or digital harassment, it does not clearly address other forms of online harassment about a person, such as posting fake social media profiles. The Commission therefore recommends that the harassment offence should be amended to include a specific reference to harassment of or about a person by online or digital means: this would offer important clarification as to the scope of the offence.

The Commission also recommends that section 10 of the Non-Fatal Offences Against the Person Act 1997 should be repealed and replaced with an harassment offence that expressly applies to harassment by all forms of communication including through digital and online communications such as through a social media site or other internet medium. As already noted, the Commission considers that this reformed harassment offence should be included in a single piece of legislation that also includes the other offences discussed in this Report ....

Specific offence of stalking

Stalking is an aggravated form of harassment characterised by repeated, unwanted contact that occurs as a result of fixation or obsession and causes alarm, distress or harm to the victim. This element of intense obsession or fixation, which creates an unwanted intimacy between the stalker and the victim, differentiates stalking from harassment.

The Report discusses developments in Scotland and England and Wales where specific stalking offences were introduced in 2010 and 2012 respectively. The experiences of these jurisdictions strongly suggest that the introduction of specific stalking offences led to an increase in reporting and prosecution of stalking. Specifically naming stalking as an offence also carries great significance for victims of stalking, because of the “hidden” nature of the crime as well as its aggravated nature compared to harassment. The Commission therefore recommends that a specific stalking offence should be enacted.

Need to address once-off harmful communications

The Report also considers whether offences are required to target once-off harmful communications. Section 10 of the Non-Fatal Offences Against the Person Act 1997 is limited to persistent behaviour and thus does not apply to a single act that seriously interferes with a person’s peace and privacy or causes him or her alarm, distress or harm. This gap has become particularly apparent with the advance of digital and online communication, because the internet enables instant communication to large audiences, often anonymously (actual or, in some cases, perceived). These features of the online and digital environment mean that even a single communication has the capacity to interfere seriously with a person’s peace and privacy or cause alarm, distress or harm, particularly as internet communications are also difficult to erase completely.

A number of offences other than the harassment offence can be applied to some forms of harmful once-off behaviour, such as sending threatening messages in section 13 of the Post Office (Amendment) Act 1951, misuse of personal data under the Data Protection Acts 1988 and 2003 or “hacking” under the Criminal Damage Act 1991. However, none of these offences deals comprehensively with, for example, non- consensual distribution of intimate images of adults where this is done on a once-off basis, as opposed to persistently.

The Report examines how other jurisdictions, such as Canada, England and Wales, Scotland and the Australian state of Victoria, have legislated for this type of criminal behaviour. This includes offences designed to target non-consensual distribution of intimate images with intent to cause harm (the victim-shaming offence often called “revenge porn”) and other offences designed to target once-off harmful communications (to address what is often referred to as “upskirting” and “down-blousing”).

One of the most significant challenges when legislating for harmful online behaviour is to ensure that any offences are drafted with sufficient precision so that they are not vulnerable to being found unconstitutional on grounds of vagueness. The Report explores how the vagueness doctrine has been applied in the Irish courts as well as discussing pertinent examples of legislation dealing with harmful internet communications that have been found to be unconstitutionally vague in Ireland and other jurisdictions.

Offence of sending or threatening or indecent messages should apply to online communications

The Commission reiterates the recommendation in the 2014 Report of the Internet Content Governance Advisory Group (ICGAG Report) that the offence of sending threatening or indecent messages, in section 13 of the Post Office (Amendment) Act 1951 (which is currently limited to communication by letter, phone and SMS text), should be extended to apply to online communications. The Report recommends that the section 13 offence should be repealed and replaced with an offence of distributing a threatening, false, indecent or obscene message by any means of communication and with the intent to cause alarm, distress of harm or being reckless as to this.

New offence to address once-off intentional online victim-shaming (“revenge porn”)

The Report recommends that there should be a new offence to target the non- consensual distribution of intimate images, including where this involves a once-off incident. This would deal with the victim-shaming behaviour where a person posts or otherwise distributes intimate images such as photos or videos with the intention of causing another person harm or distress (the so-called “revenge porn” cases). The Commission therefore recommends the enactment of an offence involving the distribution of intimate images without the consent of the person depicted in the image and where there is intent to cause alarm, distress of harm or being reckless as to this.

New offence to address other once-off posting of intimate images without consent (“upskirting”)

In some instances, including in the case of young people, intimate images obtained are shared spontaneously or without considering the impact on the person concerned, or are re-distributed by third parties without consent. These cases may not be capable of being prosecuted under the victim-shaming offence recommended above because the intent to cause alarm, distress or harm element may not be present. The Commission therefore recommends that a separate offence should be introduced to target the non-consensual taking and distribution of intimate images without intent to cause alarm, distress or harm. This would address the so-called “upskirting” and “down-blousing” behaviour, which is a form of voyeurism.

Protecting the privacy of victims

The distribution of intimate images has the potential to cause the persons depicted in such images significant harm in the form of distress, humiliation and shame. The victims of such activity may thus be discouraged to report to the Gardaí and pursue a prosecution for fear of generating more publicity for the images in question. The Commission therefore recommends that in any prosecution for a harmful communications offence provided for in the Report, the privacy of the person in respect of whom the offence is alleged to have been committed should be protected.

Consent of DPP for cases involving persons under 17

The Commission recommends that no prosecution for the offences discussed in the Report may be brought against children under the age of 17 except by or with the consent of the Director of Public Prosecutions. The procedural protection reflects the Commission’s strong view that it would be highly undesirable to criminalise children under the age of 17 years for behaviour undertaken as a result of their inherent immaturity and where there is no intention to cause serious distress. It also reflects one of the Commission’s guiding principles in this Report, that in the case of children and young people, the criminal justice process should be seen as a last resort and only after other responses, such as education or suitable diversion programmes, have been applied.

2 year time limit for summary prosecutions

The Commission recommends that the general 6 month time limit for bringing a summary prosecution (in the District Court), in section 10(4) of the Petty Sessions (Ireland) Act 1851, should not apply. Instead a 2 year time limit should apply for summary prosecution of harmful communications offences. Frequently, these cases require the collection of evidence from websites with servers located outside the jurisdiction. Such content can only be obtained through the use of the Mutual Legal Assistance Treaty procedure, which can take up to 18 months to be completed. This is a significant problem in summary proceedings because the 6 month time limit will have expired before the relevant content has been received and so extending this time limit for harmful communications offences to 2 years would ensure that summary prosecutions for such offences will not be prevented by a restrictive time limit. No specific time limit applies to prosecutions on indictment. 

Jurisdiction and extra-territoriality in criminal law 

In general, criminal jurisdiction is territorial, meaning that it is usually limited to offences committed within the territory of the State. Article 29.8 of the Constitution provides that the State may legislate with extra-territorial effect, which must be done expressly. There are a number of examples where the Oireachtas has expressly provided that offences have extra-territorial effect, including under the Criminal Damage Act 1991 and the Sexual Offences (Jurisdiction) Act 1996. The Report recommends extra-territorial effect should apply to the harmful communications offences discussed in the Report, and that the approach taken in the Criminal Justice (Offences Relating to Information Systems) Bill 2016, which concerns a comparable area, should be adopted. 

This would allow for extra-territorial jurisdiction for harmful communications offences where: (a) a harmful communications offence is committed by a person in the State in relation to a means of communication that is located outside the State, (b) a harmful communications offence is committed by a person outside the State in relation to a means of communication in the State or (c) a harmful communications offence is committed by a person outside the State if the person is an Irish citizen, a person ordinarily resident in the State, an undertaking established under the law of the State, a company formed and registered under the Companies Act 2014 or an existing company within the meaning of the Companies Act 2014 and the offence is an offence under the law of the place where the act was committed.

Penalties on conviction

The Report outlines the current penalties that apply on conviction for offences relating to harmful digital communications and makes recommendations for the penalties that should accompany the offences provided for in the Report.

The Commission considers that the maximum penalties for the harassment offence under section 10 of the Non-Fatal Offences Against the Person Act 1997 are sufficient and provide a suitable upper level for penalties that should apply to the reformed harassment offence and to the other 3 intent-based offences proposed in the Report. The Commission therefore recommends that the intent-based offences in the Report should carry, on summary conviction, maximum penalties of a Class A fine (currently, a fine not exceeding €5,000) and/or up to 12 months imprisonment, and on conviction on indictment, an unlimited fine and/or up to 7 years imprisonment.

The Commission recommends that the fifth offence dealt with in the Report, of taking or distributing an intimate image without consent (to deal with so-called “upskirting” and “down-blousing”), should be a summary offence only, and that the maximum penalties on conviction under this offence should be a Class A fine and/or up to 6 months imprisonment.

Intersection with hate crime

The Report has also explored the extent to which the current law on hate crime intersects or overlaps with harmful online and digital communications.

The main legislation designed to deal with hate crime is the Prohibition of Incitement to Hatred Act 1989. The 1989 Act prohibits incitement to hatred against a group of persons on account of their “race, colour, nationality, religion, ethnic or national origins, membership of the travelling community or sexual orientation.” Incitement includes publication, broadcast and preparation of materials. The 1989 Act is not limited to offline behaviour as it extends to words used, behaviour or material displayed in “any place other than inside a private residence.” However, the 1989 Act has been subject to significant criticism for its perceived inefficacy, illustrated by the limited number of prosecutions that have been taken under it.

Ireland intends to ratify the Council of Europe Convention on Cybercrime, and has been encouraged to ratify the Additional Protocol to the Convention concerning the criminalisation of acts of a racist and xenophobic nature committed through computer systems. Ireland is also obliged to implement the 2008 EU Framework Decision on combating racism and xenophobia.

In this respect it is clear that comprehensive reform of hate crime legislation is due to be enacted in the future, and the Commission considers that it would not therefore be appropriate to address separately, in this Report, online hate speech only. Because wide-ranging reform of hate speech is outside of the scope of this project, the Commission recommends that online hate speech should be addressed as part of the general reform of hate crime law.

Digital Safety Oversight, Take Down Procedure and Civil Law

Absence of effective oversight system or civil remedies

Chapter 3 of the Report addresses the need for an oversight system to promote digital safety, including an efficient take down procedure for harmful digital communications.

The chapter begins by describing the existing, non-statutory, content and conduct policies of social media companies and their reporting and takedown processes. The Report then discusses the existing civil remedies that apply in relation to harmful digital communications including the remedies available under the Defamation Act 2009 and remedies for breach of the constitutional right to privacy. The remedies under the Data Protection Acts 1988 and 2003 are also considered as well as the developments that have taken place in EU law on data protection and privacy, including case law of the EU Court of Justice and the 2016 General Data Protection Regulation.

The Report acknowledges that available processes and remedies may not be effective, and that the potential cost, complexity and length of civil proceedings may prevent victims of harmful digital communications from obtaining redress in court. A victim of harmful communications should be able to have a readily accessible and effective take down procedure available to him or her.

(Digital Safety Commissioner would promote internet safety and oversee take down procedures

The Report describes the enactment of New Zealand’s Harmful Digital Communications Act 2015 and Australia’s Enhancing Online Safety for Children Act 2015, which have established statutory bodies to promote online and digital safety and to provide oversight of take down procedures operated by online service providers such as social media sites. 

The Report recommends that an Office of the Digital Safety Commissioner of Ireland should be established on a statutory basis, broadly modelled on the Australian approach. The Digital Safety Commissioner would have functions related to promoting online safety as well as overseeing and monitoring an efficient and effective procedure for takedown of harmful digital communications. 

The Commission considers that the Office of Internet Safety, which was established in the Department of Justice and Equality to take a lead role for internet safety in Ireland, may be a suitable body to take on the role of the Digital Safety Commissioner. The Report notes that this would require decisions by the Government and Oireachtas on the necessary funding and staffing of the Office of the Commissioner, and that these are matters outside the scope of this Commission’s role.

The Commissioner’s educational and promotional roles

The Report recommends that the Digital Safety Commissioner’s functions should include an educational and promotional role concerning digital safety in collaboration with relevant Government Departments and State bodies. In the specific context of internet safety for children and young people, the Report envisages that the Commissioner would liaise with the Ombudsman for Children in the development, with the Department of Education and Skills and the Department of Children and Youth Affairs, of guidance material for young people and schools on what it means to be a safe and responsible digital citizen. It would also include guidance on the use of mediation and restorative processes.

The Commissioner’s oversight and supervision functions

The oversight and supervision functions of the Commissioner would operate in a similar way to the Australian e-Safety Commissioner, requiring digital service undertakings to comply with a statutory code of practice, developed after suitable consultation by the Digital Safety Commissioner. The statutory framework would also include National Digital Safety Standards, which would require the digital service undertaking to have in place a provision prohibiting the posting of harmful digital communications, a complaints scheme whereby users can request free of charge the removal of harmful digital communications, a timeline for responding to complaints and a contact person to engage with the Commissioner.

If the Commissioner were to be satisfied that a digital service undertaking complied with the code of practice and the National Digital Safety Standards, the Commissioner would be empowered to issue a certificate of compliance, which would have the presumptive effect that the digital service undertaking was in compliance with the code and the standards. The Report proposes that the Digital Safety Commissioner should have responsibility for harmful content involving all individuals, adults and children.

Proposed take down procedure

The proposed take down procedure would require a user initially to make his or her complaint directly to the relevant digital service undertaking, such as a social media site. If the content was not taken down in accordance with the time specified in the code of practice, the user could make a complaint to the Commissioner. The Commissioner would then investigate the complaint and if the complaint were to be upheld, the Commissioner would direct the digital service undertaking to remove the specified communication and would revoke the certificate of compliance issued to the provider. If the digital service undertaking were to refuse to comply with the direction of the Commissioner to remove the communication, the Commissioner could apply to the Circuit Court for an order requiring compliance by the undertaking.

Civil restraining orders for harmful communications

Section 10 of the Non-Fatal Offences Against the Person Act 1997, unlike the English and Welsh Protection from Harassment Act 1997, does not allow separate civil proceedings to be brought based on its provisions. However, section 10(3) of the 1997 Act empowers a court to make a restraining order restricting a person from communicating and/or approaching the victim where the person has been convicted of harassment. Section 10(5) of the 1997 Act also allows restraining orders to be made where a person has been acquitted of harassment.

The Report recommends that, in cases involving the harmful communications discussed in this Report, restraining orders should be available without the need to initiate criminal proceedings. This would provide victims with a valuable remedy in cases where criminal proceedings may be unsuitable or undesirable from the perspective of the victim.

Court powers in intended civil proceedings: Norwich Pharmacal orders 

Norwich Pharmacal orders allow for the disclosure of the name and IP address of parties unknown to the plaintiff against whom the plaintiff intends to issue civil proceedings for alleged wrongful conduct.

At present, Norwich Pharmacal orders are not provided for in legislation, and only the High Court can issue them as part of its inherent jurisdiction. This means that the cost of obtaining such orders is high and the remedy is not available to many individuals. The 2014 Report of the Internet Content Governance Advisory Group recommended that the power to make such orders should be placed on a statutory basis and extended to the Circuit Court. The Commission agrees with this recommendation.

Currently, Norwich Pharmacal orders usually involve a two-step mechanism whereby an individual has to first seek an order against the relevant website to disclose user and IP details. Once furnished, these details may lead to data held by a telecoms company, many of whom require a second Norwich Pharmacal order before agreeing to disclosure. The Commission therefore recommends that a one-step procedure be adopted for such orders whereby only one application would be required which would apply to both the relevant website and the telecoms company.

The Commission also recommends that the person alleged to have posted the harmful communication should be given the opportunity of appearing and making representations before the court makes a Norwich Pharmacal order, because at present such orders are granted on an ex parte basis (without notice to the affected party), which may infringe the right to fair procedures and to anonymous speech.

Jurisdiction and extra-territoriality in civil law

The Report also makes recommendations in relation to the extra-territorial role of the proposed Digital Safety Commissioner and in connection with the civil remedies discussed above.

The Report recommends that the territorial scope of these civil aspects of harmful communications should, in general, apply to harmful communications where: (a) such harmful communications affect an Irish citizen or a person ordinarily resident in the State, and (b) the means of communication used in connection with such harmful communications are within the control of an undertaking or company established under the law of the State.

The Commission also recommends that they should have some extra-territorial effect in connection with an Irish citizen or a person ordinarily resident in the State. This should reflect the approach taken in connection with the extra-territorial enforcement of civil proceedings generally, including under the “service out” procedures in the Rules of the Superior Courts 1986. 

The Report therefore recommends that this extra-territorial effect would be where the means of communication used in connection with harmful communications are within the control of an undertaking established under the law of another State but where an Irish court would have jurisdiction to give notice of service outside the State in respect of civil proceedings to which such harmful communications refer.