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Meet your unauthorized federal government

February 03, 2016, 9:15 AM

From Politico

“They tried to clamp down on [permanent reauthorizations] because they thought if we quit doing that, we’ll have to actually stop and take the time and do reauthorizations, which is really well-intended,” said Kevin Kosar, a senior fellow at the R Street Institute and former analyst at the Congressional Research Service. He added: “And they just failed at it.”

 

Philly taxi cartel’s ‘public-private partnership’

February 02, 2016, 4:56 PM

Regulators have a long and lamented history of picking winners and losers among businesses and industries. But they typically at try to appear to be demonstrating impartial judgement when it comes to enforcing those decisions.

Not so in Philadelphia, where it’s alleged the city’s parking authority teamed up with members of the taxi industry not only to oppose legislation legalizing transportation network companies (which is technically legal) but also to conduct active sting operations against Uber drivers to impound their vehicles – which may not be.

The saga of TNC legalization in Pennsylvania generally, and Philadelphia specifically, has dragged on longer than in most other states and cities. The Pennsylvania Public Utility Commission, the state’s relevant regulatory authority, granted TNCs a two-year license to operate in late January 2015. However, that license explicitly excluded the City of Brotherly Love, where the Philadelphia Parking Authority retains authority to prohibit ridesharing.

Reporting by the Philadelphia Daily News suggests that, beginning in 2014, PPA members coordinated with a taxi firm, Freedom Taxi, to oppose statewide TNC legislation. That coordination included communicating about both legislative and grassroots strategy. Ultimately, their efforts yielded success. Viable statewide legislation is only now progressing through the Legislature in Harrisburg.

Uber has decried the coordination between taxis and the PPA on the basis of the PPA’s status as a regulatory body. At a news conference, Uber’s Pennsylvania general manager, Jon Feldman, declared that the PPA “is unelected, unaccountable, and now we know untrustworthy as well.”

Feldman’s frustration is understandable, but such coordination is not actually all that uncommon. Local government entities regularly seek to influence statewide policy.

What is far less common, and far more disconcerting, is the allegation that the PPA worked with the taxi industry to enforce its TNC ban. In the wake of a high-profile sting in which a young veteran had his car impounded, a taxi medallion owner admitted he had participated in sting operations run by the PPA. If true, the PPA’s credibility as an independent interpreter of its enabling legislation is suspect.

Worse, by empowering taxi interests to crack down on their competition with the support of law enforcement, the PPA throws the credibility of its enforcement actions into doubt. It is not unreasonable to wonder whether these stings are a matter of enforcing the law, or a function of industrial sabotage.

For its part, the PPA claims it has undertaken a “collaborative process” to reach a resolution to the TNC question in Philadelphia and that it is Uber that has refused to engage in good faith. But why would Uber engage with them? The recent emails demonstrate that the PPA has been captured by the industry it regulates and is a de facto arm of the taxis’ government affairs team.

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How Republicans weakened Congress and strengthened the presidency

February 02, 2016, 9:12 AM

From Washington Monthly

But the truth is, when it comes to the shift of power away from Congress and to the President, we’ve been walking down that path for a while now. Last week the think tank R Street released a white paper – Restoring Congress as the First Branch – that defines this as a problem and brings together several authors to propose solutions.

 

Free­-market, pro­-consumer groups support federal anti-­SLAPP legislation

February 02, 2016, 7:00 AM

On behalf of the undersigned free­-market organizations, we write to express our strong support for H.R. 2304, the SPEAK FREE Act, and urge you to move it swiftly through maAdd Newrkup. We believe robust free-speech protections are vital not only to preserve individual liberty, but also to facilitate commerce. This bipartisan legislation, introduced by Reps. Blake Farenthold, R­-Texas, and Anna Eshoo, D-­Calif., would bolster First Amendment protections against malicious or frivolous litigation that threatens to stifle free speech and undermine the digital economy.

Each year, a multitude of Americans fall victim to lawsuits called SLAPPs (strategic lawsuits against public participation) that are aimed at unfairly intimidating and silencing them. These kinds of lawsuits are highly effective, despite being without merit, since the legal costs, invasion of privacy, and hassle associated with fighting them is rarely considered a worthwhile use of individuals’ time.

While 28 states have chosen to adopt anti­-SLAPP statutes in some form or another, the federal government has yet to adopt its own standard and provide access to this powerful tool to all Americans who seek to stand up for their free-­speech rights.

The SPEAK FREE Act would give defendants across the nation access to a special motion to dismiss SLAPPs, while also staying discovery. This would change the calculus of fighting meritless claims aimed at intimidation and censorship. In addition, the bill would empower courts to shift fees, so that defendants who prevail on an anti-­SLAPP motion would not have to face the otherwise formidable legal costs.

An increasingly important facet of the digital economy is the ability to provide online reviews or feedback. This ability bestows confidence to consumers to do business with those they’ve never met, whether they are buying a product, hailing a ride, or booking a place to stay in an unfamiliar city. Unfortunately, online reviews increasingly are targeted by SLAPPs, as unscrupulous businessmen seek to censor their critics, rather than working to improve the experiences, products or services they offer.

Another essential function of the innovation economy is creative destruction, wherein new business models disrupt incumbent businesses. But SLAPPs are also used by established firms as a tool to shut down competing startups. In this context, the need to expand access to this powerful tool is greater than ever.

Thus, we urge you to support this legislation to help create a strong national standard to protect free expression and digital commerce against the pernicious threat of useless litigation.

Sincerely,

Mike Godwin, R Street Institute
Wayne Brough, FreedomWorks
Berin Szoka, TechFreedom
Ryan Hagemann, Niskanen Center
Timothy Lee, Center for Individual Freedom
Mytheos Holt, Institute for Liberty
Steve Pociask, American Consumer Institute
Ryan Radia, Competitive Enterprise Institute
David Williams, Taxpayers Protection Alliance

Will the needless secrecy surrounding CRS reports end this year?

February 01, 2016, 6:13 PM

 

Not quite a year back, Rep. Mike Quigley, D-Ill., sought to do a little good for the American public. He offered an amendment to an appropriations bill that would require the Congressional Research Service to post publicly a list of the titles of its reports. Advocates for taxpayers and proponents for government transparency were delighted.

The CRS is an agency in the Library of Congress. Its staff of civil servants produce 1,000 or more reports each year. CRS reports describe government agencies (e.g., the Federal Election Commission); explain policies (e.g., SNAP/food stamps); and tally government spending (e.g., Department of Defense appropriations). Congress does not release these nonpartisan reports as a matter of course, but those within the Beltway know where to find copies. More than 20,000 congressional staff have access to CRS reports, so access is not an issue for lobbyists and policy-insiders.

Quigley explained to House appropriators that CRS reports “often are extraordinarily well-done” and that making the reports available to the public “would empower our constituents with extraordinary information about key issues, policies, and the budgets we are debating here in Congress.” Taxpayers pay $107 million per year to fund CRS and none of its reports contain classified or confidential information. Additionally, two other legislative branch agencies – the Congressional Budget Office and the Government Accountability Office – already release their reports publicly. (See here for a dozen other arguments for public release of CRS reports.)

Quigley’s amendment would not have made the contents of the reports public. All it would have done is enable the public to better know what reports exist. Having a list would enable John Q. Public to more easily request copies of CRS reports through their members of Congress. Quigley’s measure also would have been helpful to congressional staff, who labor to respond to constituents’ vague requests. (“I heard there was a report on agriculture that talked about subsidies. Can you get it for me?”)

Sadly, Quigley’s amendment never got a vote or even a discussion. Someone in the room disliked the amendment and Quigley reluctantly withdrew it.

The whole scene was bizarre and out-of-character for the House, which has shown great willingness to open legislative information and data to the public. No possible harm could come from publishing a list of CRS reports. In fact, such lists have been produced for decades. The CRS publishes an annual report for Congress that details its achievements and enumerates all its new reports, complete with their titles and authors’ names. It would be very easy for the CRS to post these reports on its website. Instead, the agency devotes time and expense to post a redacted version of its annual report that omits the list of reports. Why? Possibly, the House Committee on Administration requires it. But nobody will say publicly.

However, all is not lost. One can find the lists of CRS’s nonredacted annual reports online. Older copies placed long ago in federal depository libraries have been digitized in recent years. (See here for example.) Copies of CRS’ lists of reports for Congress from the past 20 years have been posted online by government transparency advocates (see here and here). These workarounds are not ideal, but they are helpful.

And what about Rep. Mike Quigley? He has not reintroduced his amendment thus far. But that does not mean he has given up the fight. Rather, he joined forces with Rep. Leonard Lance, R-N.J., who wrote legislation calling on CRS to publish entire CRS reports—not just a list of them— on the House Clerk’s website.

Congress will not be in DC much this year, thanks to the election. One hopes it can muster the wee bit of energy needed to put an end to the needless secrecy surrounding CRS reports. The public supports open government and would be grateful for increased access to honest information about their government’s doings.

Annual Report of the Congressional Research Service 2014 by R Street Institute

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FCC targets cable set-top boxes — why now?

February 01, 2016, 9:00 AM

 

With great fanfare, Federal Communications Commission Chairman Thomas Wheeler is calling for sweeping changes to the way cable television set-top boxes work. In an essay published Jan. 27 by Re/Code, Wheeler began by citing the high prices consumers pay for set-top box rentals and bemoaning the fact that alternatives are not easily available.

Yet for all the talk and tweets about pricing and consumer lock-in, Wheeler did not propose an inquiry into set-top box profit margins, nor whether the supply chain is unduly controlled by the cable companies. Nor did Wheeler propose an investigation into the complaints consumers have made about cable companies’ hassles around CableCards, which under FCC mandate cable companies must provide to customers who buy their own set-top boxes.

In fact, he dropped the pricing issue halfway through and began discussing access to streaming content:

To receive streaming Internet video, it is necessary to have a smart TV, or to watch it on a tablet or laptop computer that, similarly, do not have access to the channels and content that pay-TV subscribers pay for. The result is multiple devices and controllers, constrained program choice and higher costs.

This statement seems intentionally misleading. Roku, Apple TV and Amazon Fire sell boxes that connect to TVs and allow a huge amount of streaming content. True, the devices are still independent of the set-top cable box, but there’s no evidence that this lack of integration is a competitive barrier.

A new generation of devices, called media home gateways (MHGs), is poised to provide this integration, as well as to manage other media-based cloud services on behalf of consumers. This is where Wheeler’s proposal should be worrisome. He writes:

The new rules would create a framework for providing device manufacturers, software developers and others the information they need to introduce innovative new technologies, while at the same time maintaining strong security, copyright and consumer protections.

This sounds much more like a plan to dictate operating systems, user interfaces and other hardware and software standards for equipment that, until now, has been unregulated. Wheeler gives no explanation as to how his proposal will lead to lower prices or development of a direct-to-consumer sales channel.

[M]y proposal will pave the way for a competitive marketplace for alternate navigation devices, and could even end the need for multiple remote controls, allowing you to use one for all of the video sources you use.

What Wheeler really wants is FCC management of the transition from today’s set-top boxes to the media home gateways (MHGs) just beginning to appear on the market—a foray into regulating the equipment used on customer premises unseen since the 1960s.

For good reason, the words “media home gateway” never appear in Wheeler’s Re/Code article. By avoiding mention of MHGs, he can play his “lack of competition” card, as he did in last Thursday’s press briefing on his proposal.

There’s more than a whiff of misdirection here. Set-top boxes are a maturing market. An October 2015 TechNavio report forecasts the shipment volume of the global set-top box market to decline at a compound annual rate of 1.34 percent over the period 2014 to 2019. By revenue, the market is expected to decline at a compound annual rate of 1.36 percent during the forecast period. When consumers “cut the cable cord,” as some 21 million have, it’s set-top boxes that get unplugged.

At the same time, TechNavio forecasts the global MHG market to grow at a compound annual rate of 7.82 percent over the same period. Elsewhere, SNL Kagan’s Multimedia Research Group forecasts MHG shipments will exceed 24 million in 2017, up from 7.7 million in 2012. The long list of MHG manufacturers includes ActionTec, Arris, Ceva, Huawei, Humax, Samsung and Technicolor.

MHGs are the “alternative navigation devices” Wheeler coyly refers to in his Re/Code essay. These devices will replace the set-top boxes in use today, but because of their ability to handle Internet streaming, they are likely to be available through more than one channel. That’s why the only way to view Wheeler’s call to “unlock the set-top box” is as a pre-emptive move to extend the FCC’s regulation into the delivery of streaming media.

To be sure, if the FCC mandates integration of streaming options into cable-provided MHGs, streaming companies would gain a stronger foothold into consumers’ homes, which would then allow them to share their apps, gather data on users and, perhaps most lucratively, control the interface on which channels are displayed, as noted by The Verge‘s Ashley Carman.

Yet the streaming companies that would appear to benefit most from this proposal have thus far been quiet. This is [erhaps because Wheeler has made no secret that he believes Apple TV, Amazon Fire and Roku are multichannel video programming distributors (MVPDs), FCC-speak for “local cable companies.”

Is his “unlock the box” plan precisely the opposite? Is it an effort to fold streaming aggregators into the existing cable TV regulatory platform, with all its myriad rules, regulations, legal obligations and—dare we say it—fees and surcharges? You might roll your eyes, but this is the only analysis in which the proposal, which focuses on “device manufacturers, software developers and others,” makes sense.

But does the FCC have the right to require cable companies to share customer data acquired through the infrastructure and software they built and own? It’s yet another iteration of the old unbundled “network elements” model that is consistently shot down by the courts, yet one the FCC can’t seem to get past.

Arcane details aside, the FCC should not be involved in directing evolution paths, operating software or other product features. It creates too much opportunity for lobbying and rent-seeking. History shows that when the government gets involved at the granular level in promoting a specific direction for technology, costs go up and innovation suffers. Capital is diverted into politically favored choices, where it ends up wasted.

The debacles with the Chevy Volt and Solera are just two recent examples of the dangers inherent when bureaucrats try to pick winners, or give a subset of companies in one industry an assist at the expense of others.

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Support streamlined regulation for transportation innovation in Missouri

January 29, 2016, 2:49 PM

Dear Missouri Legislator,

We urge your support for S.B. 991 and H.B. 2330, which seek to provide a streamlined regulatory paradigm for transportation network companies (TNCs) such as Uber and Lyft. The bills – sponsored by state Sen. Bob Onder, R-Lake Saint Louis and state Rep. Kirk Mathews, R-Pacific – highlight the insufficiency of patchwork regulation of innovative transportation services.

The R Street Institute, a free-market think tank based in Washington, has evaluated transportation regulations in cities around the United States. Kansas City, Mo., received some of the lowest marks in the nation for its friendliness to TNCs. Under current law, Kansas City requires full commercial insurance coverage even in so-called “Period 1,” when a driver is neither matched to a passenger nor transporting one. It also levies significant fees on TNC operations, providing a substantial barrier to entry. The city scored only slightly better on taxi regulation, owing to its strict fleet cap of just 500 vehicles.

We support efforts to free the transportation marketplace for TNCs, taxis and other services to reflect technological innovation and clear consumer demand. While TNCs shouldn’t face more onerous and unnecessary regulations than those already weighing down the taxi and limo industries, legacy transportation models deserve some relief, as well. Competition improves offerings for consumers, rather than putting them at risk. Our nation has clearly decided that TNCs are and will remain a vital and economically helpful part of our transportation future.

Our task is to ensure they operate within the bounds of common-sense regulation and oversight, while enjoying the freedom to innovate and create economic opportunity. Both S.B. 991 and H.B. 2330 would move Missouri’s regulatory environment in that direction.

Rather than spending countless hours and dollars attempting to comport with the differing regulatory requirements imposed by Missouri cities, these measures will ensure that TNCs are able to focus on growing their operations, improving transportation and delivery options for consumers and saving lives by reducing drunken driving.

We support efforts to embrace innovations in the transportation marketplace while eliminating a patchwork of government bureaucracy.

Commissioner Jones’ call for coal divestment is just the latest gesture

January 29, 2016, 9:24 AM

From Divestment Facts

As for Commissioner Jones’ announcement itself, it appears to be lacking in substance. According to the think tank R Street Institute, it falls flat for two reasons.

First, that the value of capital investments made by the fossil fuel industry are broadly known and thus already priced into the equity valuations of coal, oil and gas company stocks. Insurance companies have therefore already taken into account medium and long term changes to the market of the stocks they own.

Second, the institute states that escalating regulatory pressure on fossil fuel companies does not necessarily entail a commensurate increase in risk in the short term. Indeed, the fact that coal still makes up almost 40 percent of U.S. electricity generation – not to mention the vast majority of the power consumed in developing world – would suggest that the risk of stranded assets that the Commissioner references is abstract.

Women of The Federalist weigh in on feminism

January 29, 2016, 9:18 AM

From The Federalist

Federalist contributor Lori Sanders, who doesn’t identify as a feminist, said that women are thriving today.

“The women in my generation are so successful, and you know we owe that to the generation of women who came before us,” she said. “But it’s certainly not men that are holding us down right now. If anything, men need help.”

A cost curve that bent way down

January 29, 2016, 9:16 AM

Warby Parker is the most celebrated of the online optical shops upending the traditional eyeglass business. In a market where the average price for a pair of prescription glasses has been near $300, Warby Parker sells hipster-chic frames, complete with lenses, for around $100. Fast Company calls Warby “the first great made-on-the-Internet brand.”

Less chic, but perhaps even more significant, have been discount retailers Zenni Optical and EyeBuyDirect, companies that offer basic corrective lenses in cheap frames for as little as $10 or even less. These companies threaten to disrupt the old ways of doing business—which is just what we expect in a market economy. But such innovations are rare in the business of medicine. Which is why prescription eyeglasses, though just a tiny sliver of the medical sector, may prove to be a big story for the future of health care.

How do the super-discounters make and sell glasses so inexpensively? There are some simple ways they bend the cost curve. They eschew the markups that come with fancy designer brands, and they manufacture the frames themselves, typically in China. And one key difference: They don’t indulge in the sort of price premium that the dominant market-player, Luxottica, has been able to charge.

Cutting the cost of glasses affects related markets as well. A little more than half of adult Americans have vision insurance (and the Affordable Care Act mandates such coverage for almost all children). A vision policy for a married couple costs about $25 a month when purchased from an agent and about $15 a month through an employer, and usually comes with a deductible or copayment. Buying discount glasses out-of-pocket is almost always going to be cheaper than maintaining coverage.

Can the costs of other medical devices be cut as much as the price of glasses? After all, crafting lenses is a fairly routine process, one that’s a lot easier to outsource overseas than, say, crafting and fitting prosthetic limbs.

Which points to some of the real disadvantages that come with super-cheap eyeglasses. Even with express shipping, they take a week or more to arrive; many shopping-mall opticians, by contrast, offer one-hour service. With online retailers, the technical task of making what should be a precise measurement of the distance between pupils is generally done not by an optician, but by the customer. And if you have a difficult prescription—say, a pronounced astigmatism—you’ll find that Warby Parker doesn’t offer online the lenses you need. And then there is the question of quality: Cheap frames and lenses can be, well, cheap.

But for all that, the discounters have found a robust market. There are things the medical system might learn from this quiet revolution. People buying glasses have traditionally written much of the check themselves, making them care about price. This is why the online upstarts have made cost their key pitch (Zenni Optical was originally called “19dollareyeglasses.com” but changed the name when its prices dropped as low as $6.95). Other parts of the health care sector might benefit from this sort of sensitivity to price. While it may not be wise to shop around for discount chemotherapy, the price of routine lab tests could well come down if patients were encouraged to compare costs.

But for patients to bargain-shop, doctors and hospitals would have to post their prices, which almost none currently do. State lawmakers looking to encourage market forces in health care, might consider mandating that, where possible, prices be disclosed in advance.

Perhaps most difficult to accept might be the conclusion that bending the cost curve for health care might require some trade-offs in quality and perks. Prescription eyeglasses that cost less than $10 aren’t going to be as good as those that cost $500, but price is obviously a factor. Some people pay extra for a fancy designer’s name or special lens coatings to resist fingerprints. Others conclude such perks aren’t worth the money. The same could certainly be true for other medical procedures, treatments and devices. The key to making these trade-offs acceptable and fair is in putting those choices in the hands of the consumers themselves and giving them a stake in what the costs are.

The success of online eyewear merchants, who have cut the price of glasses by as much as 90 percent, demonstrates that, even in the notoriously closed and regulated market for health care, disruptive innovation remains possible.

Congress scrambles to settle US-EU data spat this weekend

January 29, 2016, 9:04 AM

Having procrastinated beyond all reason in its duties to help resolve a pressing international disagreement over how U.S. companies use Europeans’ data, the rush is now on for the U.S. Senate to pass its version of the Judicial Redress Act of 2015 before Sunday’s deadline.

The bill is designed to help settle negotiations between the United States and the European Union aimed at replacing a “safe harbor” agreement that was struck down last year when the European Court of Justice ruled the European Commission lacked authority to accept the provision on behalf of member nations.

Without the agreement, which expires Jan. 31, European data privacy regulators would begin prosecute U.S. technology firms for their handling of European users’ personal data. The agreement has been in place for 15 years and was relied on by more than 4,500 U.S. and European firms to provide legal clarity about data transfers from Europe to the United States.

In a 19-1 vote on Jan. 28 – which happens to be the international Data Privacy Day — the Senate Judiciary Committee finally approved a version of the JRA, something the full U.S. House did by voice vote last October. Now the measure must move through the full Senate, back to the House and ultimately to President Barack Obama before the agreement expires.

The European Court of Justice’s ruling amounts to something of a Marbury v. Madison moment for the EU, with the court declaring the European Commission lacks (and has always lacked) the authority to accept on behalf of all member nations. In addition, the opinion found the safe harbor’s lack of redress for privacy violations to be a big problem, on which the commission appears to agree.

The JRA would provide redress (that is, the ability to sue in U.S. courts) for Privacy Act violations to citizens of what it deems “covered countries.” While its purpose obviously is to ameliorate the privacy concerns of certain EU member nations, the EU itself is not specifically mentioned anywhere in the agreement. It could eventually apply to countries outside of the EU. But more importantly, even if the JRA does passed Congress, before or after the deadline, it may not meet the national standards of every individual EU nation.

The Privacy Act confers only a very limited set of rights. Essentially, the JRA would let citizens of “covered countries” sue only if a U.S. firm that holds personal data massively screws up their lives because of misinformation.

Thus, the JRA may not be the cure U.S. tech firms are looking for. The broader problem of data security has no simple solution. As Max Schrems (plaintiff in the case that toppled the old safe harbor) put it: “I don’t see where this conflict is easy to solve.”

The Senate’s trepidation to date makes sense, given the compound effects of a complicated problem and the lack of a true solution. As Andrus Ansip of the European Commission put it “I ask for a bullet proof solution.”

The reality maybe that there is no bullet-proof solution. But the JRA could be a meaningful step in the right direction.

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Cosplay and the courts

January 28, 2016, 3:02 PM

It’s a bird! It’s a plane! It’s a…cease and desist order?

This week, a panic spread among cosplayers that a recent Supreme Court case on copyright infringement might have a negative impact on their craft, if not make dressing up as your favorite superhero illegal. As a cosplayer myself, I have to admit, I was a little jarred. The idea of earning a harshly worded rebuke, if not the threat of litigation, for my hard work is terrifying – all I want to do is dress up as an oversized, spacefaring raccoon and commune with my fellow nerds several times a year. Is that too much to ask, legally speaking?

According to Public Knowledge, which picked up the story as part of their “Copyright Week” coverage, Star Athletica LLC v. Varsity Brands held the potential to outlaw homemade costumes, since it might allow the court to declare that “original” costume designers “have the right to sue others for ‘infringing’ on the look of their costume.” The resulting lawsuits, they claim, could put cosplayers on the hook for thousands of dollars.

The claim isn’t completely without merit; there are cosplayers and prop companies who have faced copyright litigation before, and any decision that expands the landscape of potential copyright violations necessarily impedes creativity. Cosplay has, despite massive growth as a pastime over the last several years, been insulated from major controversy (and regulation), even as the market for cosplay items grows. By expanding copyright liability even a little, production studios easily could cut into emerging markets for accurate costumes and hand-built props, thus affecting fans’ choices.

But that’s no reason to panic. For starters, the case at hand, Star Athletica, LLC v. Varsity Brands, has little to do with costume making, but rather with competing uniform brands who designed strikingly similar cheerleading outfits, with a diagonal stripe across the chest. Varsity claimed that Star violated its copyright, since they believe uniform design must be taken as a whole design, rather than as a collection of design elements. Star countered by noting that cheerleading outfits generally feature many of the same design elements, and that they were not violating Varsity’s copyright simply by putting those elements in a similar order. The U.S. District Court agreed with Star. The Sixth U.S. Circuit Court of Appeals agreed with Varsity.

According to Public Knowledge’s interpretation, the Sixth Circuit put cosplay “in the crosshairs,” since it considered the cheerleading uniform a copyrightable design as a whole. And if the court can consider a cheerleading uniform a copyrightable design, then it can certainly consider a costume a copyrightable design, as a whole. That means, if you knock off a character’s outfit, you could be liable to the designer for violating their intellectual property rights.

Possibly.

It is, fortunately for cosplayers, a bit murkier than that. Copyright law is vague on purpose because the dynamics of art, design and technology are always changing. Design copyrights are generally limited to functional or unique design elements – that is, elements that are identifiable and separable, even when viewed apart from a utilitarian object. The courts consider things like articles of clothing to be utilitarian (a sleeve is always a sleeve, a pant leg is always a pant leg – they’re useful in nature and don’t change much from design to design) and, unless what you add to that clothing is so unique that it revolutionizes the article of clothing itself (that is, is separable), it falls short of earning copyright protection. Since 2006, members of Congress have lobbied to extend sui generis copyright protections to fashion designs, allowing designers to copyright an entire outfit as a “work of art,” but those legislative efforts have failed.

This segment of copyright law has had an impact on cosplay. In a recent case, Volpin Props, an independent prop maker, created a costume based on a carpet design found in the Atlanta Marriott, home of the DragonCon convention, featuring a fabric that copied the carpet design exactly (see the image above). They then sold the fabric on a retail website. Since the carpet’s design was so iconic, and so identifiable apart from the utilitarian nature of the rug, and Volpin was making some money selling fabric with the identifiable design, the cease and desist they received, while inconvenient, was legitimate. The pattern was a design element that was totally separable from the carpet.

The Sixth Circuit decision does complicate the definition of separability, because there, the court determined that you could put certain utilitarian elements together in such a specific, recognizable way that the whole outfit becomes a separable design. For costume-makers, that could mean that a unique combination of elements – such as those identifiable as a uniform belonging to a specific character – is, itself, a separable design. And that’s where Public Knowledge’s argument lies.

But concentrating on separability leaves out a world of copyright jurisprudence. Obviously, a cosplay costume will be identifiable – that’s essentially the point of cosplay. And while most costumes are made up of functional elements (sleeves, pant legs, the occasional bra or underwear), they often have features that demonstrate a connection to a particular fandom, comic-book series, movie, manga or television show. But cosplay costumes usually have a uniqueness that comes from their creator, and that gives cosplayers room to breathe within even established copyright law.

Copyright has a “fair use” and a financial aspect. Before they can rule against cosplayers, courts must consider things like the purpose for which the costume is used, the nature of the original work, how much of the original work was copied and how much was interpreted, and whether the cosplayer’s costume negatively affected the original work. Each costume or prop would have to be judged independently according to those criteria, and in each case, a court would be asked to determine whether the costume was, indeed, a “fair use” of a licensed character.

For the vast majority of cosplayers, most of whom make or source their own props and costumes, and who do so for love of the fandom and not financial gain, there should be nothing to worry about. Studios have been, so far, encouraging of fan participation. Some, like Marvel, actively court cosplayer participation in the lead-up to major box-office premieres. Few cosplayers turn a profit on their work and fewer still can claim their pastime reflects negatively on their source material. For most cosplayers, costuming is an act – and a labor – of love.

Cosplay is also simply too widespread to litigate a copyright case effectively. With thousands now participating in cosplay events, and with the recent proliferation of comic-book conventions, it would be difficult, if not impossible, to serve cease and desist letters to every faux Spider-Man and every homespun Deadpool.

Athletica LLC v. Varsity Brands will, no doubt, be an interesting case to watch, as it could have widespread ramifications for copyright and design, especially for fashion retailers and “fast fashion” outlets that closely mimic runway designs and sell them to the masses. But for cosplayers, there’s reason for cautious optimism. While separability, at issue in Athletica, may have an impact on homemade costume making, there is ample room within the “fair use” provisions to argue that cosplay is, itself, protected. The very nature of cosplay – as a celebration of its source material rather than an outright copy, likely means companies will continue to embrace – not litigate – it in the years to come.

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New Mexico tries once again to legalize ridesharing

January 28, 2016, 12:10 PM

New Mexico is the latest state to undertake an effort to make the operation of ridesharing services, like Uber and Lyft, legal within its borders. With the blessing of Gov. Susana Martinez, Rep. Monica Youngblood, R–Albuquerque, has introduced a bill would end the state’s hitherto fraught relationship with the industry.

Last session, New Mexico was one of only a handful of states to fail in its efforts to pass statewide legislation creating a regulatory framework for transportation network companies. Rep. Youngblood’s previous effort, H.B. 272, enjoyed broad bipartisan support from the state’s House of Representatives but was later killed in the Senate after an intense campaign by the taxi industry to derail the legislation.

The new bill, H.B. 168, can expect a comparable reception in the House to its predecessor, because it is substantially similar. The question is whether or not the Senate is now satisfied that the legislation apportions financial responsibility in a way that it can live with. Both bills are based on a national compromise that was reached between the TNC and insurance industries in early 2015.

Passing the bill will be a race against the clock. New Mexico’s 2016 legislative session ends Feb. 18 at noon.

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  • Insurance debate flares as climate change boosts wildfire risk

    January 28, 2016, 11:36 AM

    From E&E News

    “That’s a huge deal,” said Ian Adams, senior fellow and Western region director of the conservative R Street Institute. “By making the coverage in the FAIR Plan better and by making it the case that you don’t have to be denied by others, it’s effectively making it very, very difficult for private insurance companies to compete.”

    California regulator looks to open the FAIR Plan’s floodgates

    January 28, 2016, 10:51 AM

    In those periods of respite when the State of California is not rocking and rolling atop its various fault lines, it’s often quite literally on fire. In fact, of the top 10 costliest wildfires in U.S. history, California claims seven and sweeps the top five spots. Last year was no exception. The costs of the Valley and Butte fires have been pegged at roughly $1 billion.

    Because of the risk of conflagration, Californians pay top-dollar for fire insurance. For some, the risk is so high that insurance is unavailable through traditional channels. In those cases, such residents have the option of joining what’s called the FAIR Plan. Imaginatively named the “Fair Access to Insurance Requirements Plan,” the plan offers an actuarially sound property insurance policies of last resort. Like many products of last resort, the FAIR Plan is intended to be available when the private market is unable to offer coverage.

    But California Insurance Commissioner Dave Jones is dismayed at what he sees as the private market failing to offer affordable coverage. There is particular irony in Jones’ declaration that private homeowners insurance is too costly, given that he has sweeping authority under California’s Prop 103 system to reject homeowners insurance rates for being excessive – indeed, the law requires him only to accept rates that are actuarially justifiable.

    Last week, in response to this perceived affordability coverage, he announced changes to the FAIR Plan that both increase access to the plan as well as expand the scope of its coverage. To accomplish the first objective, Jones’ order maintains that:

    …for all geographic areas in California, persons seeking basic property insurance through FAIR Plan need not show that they have unsuccessfully attempted to obtain insurance through the normal market provided by admitted insurers or surplus lines brokers, because the Commissioner finds that this erects an artificial barrier preventing or delaying consumers from obtaining coverage.

    This part of the order deals with what’s known as a “declination requirement.” The idea is that, for the FAIR Plan actually to function as a market of last resort, a consumer should have to demonstrate that they have tried and failed to get coverage elsewhere. When the market is truly unable to provide reasonably priced products in a region, products that have already been approved by the commissioner, gathering proof of a refusal to write coverage is no problem.

    Removing the declination requirement, particularly while also removing any geographical limits, is not unlike opening a flood gate to release a wall of water. We don’t have to guess about how the removal of such an “artificial barrier” ends — there is precedent on the matter.

    Florida, like California, had its own FAIR Plan to provide property insurance in the era of redlining. In 2003, Florida merged its FAIR Plan with another last-resort instrumentality that provided windstorm insurance in coastal regions, creating what is today known as the Citizens Property Insurance Corp.

    In 2007, then-Gov. Charlie Crist modified – though he did not eliminate – the declination requirement for Citizens. To qualify, all residents needed to do was to provide a quote showing a premium 15 percent greater than what Citizens was offering. Because Citizens enjoyed state subsidies and was backed by assessments on virtually every property-casualty insurance policy in the state, pretty much everyone became eligible for the program overnight. In fact, the change to the declination requirement was in no small part responsible for making Citizens, for a number of years, the largest property insurer in the nation’s third-largest state. It’s only recently shrunk back to the levels envisioned when it was created.

    The fate of Citizens is not unlike the problems that could soon befall California’s FAIR Plan. It undercuts competition in the voluntary market that provides policyholders with an accurate understanding of their risk.

    In that sense, there is a further irony in the commissioner’s expansion of access to, and coverage provided by, the FAIR Plan, since he recently asked insurers within the state to begin divesting from thermal coal and other aspects of the carbon economy. Obviously he, like we at R Street, believes that there is an increased risk posed to Californians by climate change. Yet when it comes to actually reflecting the increased risk of fires in rates, he refuses to take the steps necessary to allow consumers to better understand the personal peril that climate change poses to them.

    This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.

    Governance experts contribute to R Street study on broken legislative branch

    January 28, 2016, 10:42 AM

    WASHINGTON (Jan. 28, 2016) – Five experts concur that the legislative branch is broken and has ceded too much power to the executive, and they have different ideas about how to fix it.

    In “Restoring Congress as the first branch,” a panel of experts from across the ideological spectrum offers short essays unified around the need for a stronger legislative branch.

    “The need for such examination should be obvious,” writes Kevin R. Kosar, senior fellow and director of R Street’s Governance Project. “A part-time, mostly amateur legislature cannot compete with a colossal, full-time executive branch.”

    In his essay on restoring power to the legislature, he notes that Congress enacts perhaps 50 significant reforms per year, while executive agencies issue more than 4,000 new rules annually.

    Paul Glastris, editor-in-chief of Washington Monthly magazine, discusses how Congress has “lobotomized” itself by reducing support staff dramatically. He notes that the Government Accountability Offices and the Congressional Research Service each now operate at about 80 percent of their 1979 capacity, though these cost-cutting measures actually have done nothing to help shrink the federal government.

    Lee Drutman, senior fellow in the program on political reform at New America, laments the lack of knowledge among congressional staff. Due in part to the same cost-cutting measures enumerated by Glastris, there is a lack of subject matter and policy expertise in congressional offices, who often turn to lobbyists and special-interest groups for information and even to draft legislation.

    Jonathan Rauch, senior fellow at the Brookings Institution, thinks that Congress needs to start over and rebuild the machinery of the institution. Years of ostensible reforms that didn’t take into consideration the realities of governing have only served to weaken Congress further.

    Molly Reynolds, a fellow in governance studies at the Brookings Institution, praises newly elected Speaker of the House Paul Ryan, R-Wis., for instituting some positive reforms, like pledging to cede legislative drafting to committees. However, she notes that some of his moves have done too much to elevate rank-and-file legislators at the expense of committee members.

    Finally, Yuval Levin, editor of National Affairs, lays out steps that could revive the legislative branch, including reasserting the power of the purse, changing the budget process to avoid showdowns and crises, reining in executive rulemaking and enacting statutory definitions of executive discretion.

    To read the collection of essays, click here.

    How To Address Puerto Rico’s Debt Crisis

    January 28, 2016, 10:42 AM
    02/11/2016 - 9:00 am - 11:00 am
    American Enterprise Institute
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    Restoring Congress as the first branch

    January 28, 2016, 10:28 AM

    In late 2014, the R Street Institute launched the Governance Project. Its task is large: to assess and improve the state of America’s system of national self-governance, with particular attention to Congress.

    Why focus on Congress? Quite simply, because most of these governance problems flow from our national legislature’s actions and inactions. The U.S. Constitution made Congress the bedrock of our government. Article I declares “[a]ll legislative Powers herein granted shall be vested in a Congress of the United States.” These include fundamental powers of governance, such as establishing currency and fixing its value, regulating economic activity among the states and with other nations, declaring war, taxing the public and spending those funds. Our national charter also empowers Congress to conduct oversight to ensure our tax dollars are well-spent and our laws “faithfully executed” by the president and the bureaucracy. Hence, to remedy the ills of our federal government necessitates improving Congress.

    The R Street Institute’s Governance Project takes an institutional approach to the problem of governance. It focuses on what Congress does, why it does it and how its workings may be improved. To date, the governance project has published studies and essays on Congress and its role in regulatory policy, the Senate and its amendment process, congressional budgeting and various oversight issues (such as executive branch overreach.)

    This white paper collects essays on congressional governance by incisive thinkers from across the political spectrum. The essays address some of the national legislature’s afflictions and identify potential cures. The first footnote for each piece offers a link to the longer online pieces from which these short pieces are derived. The perspectives vary, but collectively, they underscore the need to right our constitutional system and restore Congress as the first branch

    Who’s responsible for the rise of the Trumpire?

    January 28, 2016, 10:26 AM

    I get it. You’re a principled conservative, anti-abortion advocate, or evangelical Christian against Trump for any number of good reasons. Maybe you’re a policy expert who cares deeply about ideas, a business executive craving political stability or simply a huge Megyn Kelly fan.

    You’ve read National Review‘s “Against Trump” editorial issue. In fact, you’re perusing pretty much every article and social-media post imaginable that affirms your distaste for the Donald. He must be stopped and the latest pundit might have a good idea on how to pull it off.

    “If only people would be reasonable and think,” you’ve said, “Trump wouldn’t have a chance.”

    Oh, I’m sorry.  What part of politics have we geared toward encouraging people to be circumspect and friendly in their approach to solving the various challenges we face?

    For a generation, we’ve let one political leader after another play to our fears, make us suspicious of our neighbors, get away with canned talking points and generally act as if they’re a B-list celebrity rather than a public servant.

    We didn’t beg our leaders to inspire us. We didn’t ask them to take us to the moon. We weren’t looking for someone to lift our spirits and bring us together. We simply settled for politicians who would fight the other guy…all the time…on every issue…regardless of whether common ground actually exists. Pragmatism became a dirty word and a hackneyed purity test took its place.

    Before you rush to blame the political class, keep in mind that they meticulously poll-tested the daylights out of each political advertisement, talking point and attack.  Politicians want to win elections, and the evidence routinely suggests that emotionally provocative fluff is more important to winning our votes than demonstrated ideas and effective leadership.

    Still, we’re surprised that Trump is absolutely destroying his competition on the national stage. It doesn’t look close. While it’s true that polls aren’t always accurate, they routinely provide a sense of political momentum. If all the polling support for Rubio, Bush, Christie, Kasich, Fiorina and Santorum fell behind one of those candidates, he or she would still lag Trump by 12 percentage points according to the latest ABC News/Washington Post poll.

    Sure, it’s possible a candidate could pull a Santorum and win Iowa after polling at 4 percent just two weeks out.

    But put Iowa in context. Rick Santorum and Mike Huckabee won the state in 2012 and 2008, respectively. If that’s any indication, a dyed-in-the-wool conservative like Sen. Ted Cruz, R-Texas, should easily secure Iowa over a candidate like Trump. Yet it’s Trump who still carries the polling lead. That’s particularly significant because it shows his popularity with the Republican base.

    If Trump is able to win Iowa, there’s little standing in his way.

    Even if he loses, he’s far from done. So many “reasonable” conservatives simply can’t accept that Trump could be the nominee, but it’s looking increasingly likely. Many of the same Republicans who find Trump so offensive fostered a political climate where emotion is king and partisan war is evergreen. Why should we expect voters to want anyone other than a candidate who masterfully woos their feelings and fights with just about everyone?

    “Reasonable” Republicans built the foundation for the Trumpire just in time for a candidate to come along who knows a thing or two about building. They cleared the site by defining our politics in terms of friends and enemies and rejecting the complexities of our problems. Political pandering and bellicose sound bites were the cinder blocks. Fear and insecurity served as the mortar. It didn’t matter what foundation emerged because they mostly liked the results. “Reasonable” Republicans didn’t denounce the tactics; they embraced them.

    Then things started to change.

    Most average Americans don’t trust any of their political leaders, and they’re fed up. They don’t want to be reasoned with or sold another political plan. They want to fight. For them, it’s no longer morning in America; they see our nation careening into the darkness of night.

    Many of Trump’s supporters aren’t scrutinizing his policy, consistency or vision. They’re simply looking for someone who won’t go gently into the night that so thoroughly terrifies them. Borrowing the words of poet Dylan Thomas, many want a candidate willing to “rage, rage against the dying of the light.” Right now, Trump fits that description better than anyone else running for the presidency.