One reason that I am boycotting the products Adobe Systems sells is its role in the just-failed criminal prosecution of the Elcomsoft company. (The other reason is Adobe's complete and total incompetence at customer service.) The Elcomsoft prosecution, however, seems to have ended in a victory for the good guys:
Posted by DeLong at December 17, 2002 12:50 PM | TrackbackElcomSoft verdict: Not guilty - Tech News - CNET.com: A jury on Tuesday found a Russian software company not guilty of criminal copyright charges for producing a program that can crack antipiracy protections on electronic books. The case against ElcomSoft is considered a crucial test of the criminal provisions of the Digital Millennium Copyright Act (DMCA), a controversial law designed to extend copyright protections into the digital age. The company faced four charges related to directly designing and marketing software that could be used to crack eBook copyright protections, plus an additional charge related to conspiring to do so.
The case was launched in July 2001, when ElcomSoft employee Dmitry Sklyarov was arrested during the Las Vegas Defcon hackers conference after giving a speech about his company's software, which is designed to crack protections on Adobe Systems' eBooks. Prosecutors, working with Adobe, said ElcomSoft's Advanced eBook Processor violated the DMCA. But after protests from programmers, Adobe backed away from its support of the case against Sklyarov, and prosecutors set aside charges against Sklyarov in exchange for his testimony in the case against his employers. During the trial, which lasted two weeks, the government said ElcomSoft created a tool for burglars and characterized the company as an affiliate of hacker networks that was determined to sell the Advanced eBook Processor despite its questionable legality. U.S. Assistant Attorney Scott Frewing charged that company representatives knew all along that they were violating the DMCA by designing and offering the software to the public. The defense, in turn, argued that ElcomSoft acted responsibly, removing the software from the Web just days after learning of Adobe's concerns. Both Sklyarov and ElcomSoft president Alexander Katalov testified that they did not think their software was illicit and did not intend for it to be used on books that had not been legally purchased. Under cross- examination by the defense, an Adobe engineer acknowledged that his company did not find any illegal eBooks even after hiring two firms to search the Web for unauthorized copies.
Because both the defense and prosecution agreed that ElcomSoft sold software designed to crack copyright protections, the case essentially turned on ElcomSoft's state of mind during the period it was offering the software. After much wrangling among attorneys over the definition of the word "willful," the judge told jurors that in order to find the company guilty, they must agree that company representatives knew their actions were illegal and intended to violate the law. Merely offering a product that could violate copyrights was not enough to warrant a conviction, the jury instructions said.
I'm no fan of large, arrogant software companies-- but there's another side to Adobe's story. Adobe has originated and propagated several fundamental technologies, in particular, Postscript, PDF, and scalable computer fonts. These are important and 'good' things, from any computer user's point of view.
I'm not exactly arguing that, therefore, one should overlook their sucky business practices-- but to do good things in the software industry, you first have to survive. Software is (for some reason) a business environment where every competitor will eat your lunch, if you let them.
Posted by: Matt on December 18, 2002 05:08 AMHere's something that has always been puzzling to me. People like to talk of "cutthroat competition" in the software industry, but if competition is indeed intense, where's the pressure on the margins? According to Media General (courtesy of MSN Money), five-year average return on assets in Application Software industry is 8.1%. Compare this to 2.4% for S&P 500 or 1.7% for Auto Manufacturers - Major. After-effects of the tech boom? Looks unlikely; trailing 12-month ROAs are 7.9%, 1.5%, and 0.9%, respectiely... So in all honesty, software industry seems to be much more about access to distribution channels than about innovation or competition...
Posted by: Nikolai Chuvakhin on December 18, 2002 09:53 PMI think the jury gave ElcomSoft a pass out of sympathy. Since there is no requirement of actual harm under the charges, the prosecution made its case. But for the David vs. Goliath nature of the parties, ElcomSoft would be toast.
Which isn't to say I like Adobe. Heck. They don't even have en eBook reader that works in Mac OS X.
Posted by: Mac Diva on December 19, 2002 12:16 PMI have to say that, among the engineers here at Adobe anyway, no one thought the elmcosoft persecution was a good idea. The first we heard of it was when it hit the press, and a lot of us wrote comments to our executives decrying the case.
The point about margins is a good one though. Adobe hasn't had a quarter with under 20% profit margin for at least three years. Despite this, we just laid off 300 people. It's all about satisfying the shareholders.
Another thing which is interesting about the software industry is that, because software is so complex, it benefits the consumer to have only a small number of products to choose from, both in terms of training time and interoperability. So it is an essentially ogliopolistic industry by nature. Makes you wonder if it should be regulated in the public interest; certainly most would agree that Microsoft has way too much market power.
Posted by: Anonymous Adobe Engineer on January 10, 2003 05:02 PM