how the internet of things will impact you and the law

N S T I T U T E
I
C L E
H OW THE I NTERNET OF
T HINGS W ILL I MPACT
Y OU AND THE L AW
Prepared in connection with a Continuing Legal Education course presented
at New York County Lawyers’ Association, 14 Vesey Street, New York, NY
scheduled for April 12, 2016
Program Chair & Moderator: Christy Burke, Burke & Co.
N Y C L A
Program Co-sponsor: NYCLA's Law and Technology Committee and Evolve Law
Faculty: V. Mary Abraham, Co-founder at Broadli; Chris Colvin, Eaton & Van Winkle; Lance
Koonce, Davis Wright Tremaine LLC, Co-Chair NYCLA's Law and Technology Committee;
Charlie Kwalwasser, Chief Administrative Officer and General Counsel, Quirky, Inc.; Frank
Torres, Sr. Director of Consumer Affairs, Microsoft Corp.
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Board for a maximum of 2 Transitional and Non-Transitional credit hours: 1 Professional Practice; 1 Ethics.
This program has been approved by the Board of Continuing Legal education of the Supreme Court of New Jersey for 2
hours of total CLE credits. Of these, 1 qualifies as an hour of credit for ethics/professionalism, and 0 qualify as hours of
credit toward certification in civil trial law, criminal law, workers compensation law and/or matrimonial law.
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How the Internet of Things Will Impact You and the Law
April 12, 2016; 6:00 PM to 8:00 PM
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New York County Lawyers’ Association
Continuing Legal Education Institute
14 Vesey Street, New York, N.Y. 10007 • (212) 267-6646
How the Internet of Things Will Impact You and the Law
April 12, 2016
6:00 PM to 8:00 PM
Program Chair & Moderator: Christy Burke, Burke & Co.
Program Co-sponsor: NYCLA's Law and Technology Committee and Evolve Law
Faculty: V. Mary Abraham, Co-founder at Broadli; Chris Colvin, Eaton & Van Winkle;
Lance Koonce, Davis Wright Tremaine LLC, Co-Chair NYCLA's Law and Technology
Committee; Charlie Kwalwasser, Chief Administrative Officer and General Counsel,
Quirky, Inc.; Frank Torres, Sr. Director of Consumer Affairs, Microsoft Corp.
AGENDA
5:30 PM – 6:00 PM
Registration
6:00 PM – 6:10 PM
Introduction and Announcements
6:10 PM – 8:00 PM
Discussion
How the Internet of Things will Impact You and the Law
Tues, April 12 from 6-8pm at NYCLA Headquarters (14 Vesey St)
PANEL SPEAKERS:
•
V. Mary Abraham - Co-Founder, Broadli
•
Christy Burke - President, Burke & Company (moderator)
•
Chris Colvin - Partner, Eaton & Van Winkle and Founder, In the House
•
Lance Koonce – Partner, Davis Wright Tremaine
•
Charles Kwalwasser – Chief Administrative Officer and GC, Quirky Inc.
•
Frank Torres – Senior Director of Consumer Affairs, Microsoft
PROGRAM:
Introduction and Session Overview
Christy Burke
Sponsor Welcome from Evolve Law
Jules Miller, Co-Founder
Sponsor Welcome from NYCLA Law and Technology Committee
Lance Koonce, Co-Chair
IoT and Me - Painting the IoT Landscape
V. Mary Abraham
Legal and Regulatory Issues Concerning Personal Use IoT Products
Charles Kwalwasser
IoT Meets IP - Practical Implications of IoT Development and IP Protection,
Litigation and Cybersecurity
Chris Colvin
Big Data and the Internet of Things
Frank Torres
Darwin Talk – Links in the Chain, What Role Can Blockchain Technology Play in
Facilitating the Internet of Things Revolution
Lance Koonce
Final Remarks, Q&A and Conclusion
Christy Burke
IoT and Me
V. Mary Abraham
Broadli Inc. / Columbia University
12 April 2016
Competence
“To maintain the requisite knowledge and skill, a
lawyer should keep abreast of changes in the
law and its practice, including the benefits and
risks associated with relevant technology,
engage in continuing study and education and
comply with all continuing legal education
requirements to which the lawyer is subject.”
- Comment 8, Rule 1.1,
Model Rules of Professional Conduct
http://www.businessinsider.com/jetsons-technology-2013-11
Parallel Universes
•
3.3 billion people are connected to the internet
•
6.4 billion devices are connected to the internet
•
According to Gartner
•
this is a 30% increase since 2015
•
5.5 million new devices will connect every day
•
by 2020 there will be 20.8 billion devices
What’s Going On?
•
Devices communicating with
each other over the internet.
•
Devices making decisions
together over the internet.
•
Devices organizing your home
and work environment.
What happened?
•
Organizations have been using sensors for nearly
a decade BUT
•
now the devices can communicate with each
other (high level of interoperability)
•
now device data can travel across multiple
platforms
•
now we have the tools to collect and analyze
device data
This is NOT a Fad
“Gartner estimates that the Internet of Things (IoT)
will support total services spending of $235 billion
in 2016, up 22 percent from 2015. Services are
dominated by the professional category (in which
businesses contract with external providers in
order to design, install and operate IoT systems),
however connectivity services (through
communications service providers) and consumer
services will grow at a faster pace.”
Millions of Devices
Category
2014
2015
2016
2020
Consumer
2,277
3,023
4,024
13,509
CrossIndustry
632
815
1,092
4,408
VerticalSpecific
898
1,065
1,276
2,880
Total
3,807
4,902
6,392
20,797
Billions of Dollars
Category
2014
2015
2016
2020
Consumer
257
416
546
1,534
CrossIndustry
115
155
201
566
VerticalSpecific
567
612
667
911
Total
939
1,183
1,414
3,010
The Connected Car
On-board diagnostics
Infotainment
Safety sensors
360-degree camera system
Connectivity for mobile devices
The Internet of Things:
Sensors
+ Actuators
+ Networked Intelligence
Sensors
Your Smartphone
•
Monitors location, movements, activity
levels
•
Sensors
•
•
accelerometer
•
gyro
•
video
•
proximity
•
compass
•
GPS
Connectivity (Cellular, WiFi, Bluetooth,
NFC)
Wearables
Proteus Digital Health
•
Sensor-enabled pills
•
a Patch with a sensor inside
•
Discover App
•
Discover Portal
The Connected Home
Mimo uses the best sensor technology available to tell you how your baby is breathing
as well as their body position, sleeping temperature, activity level, and whether they’re
asleep. It’s the first product to provide alerts and send nightly reports on your little one’s
sleep, and it uses your smartphone to connect all your caregivers and keep you
connected. Mimo helps everyone in the family get more quality sleep.
Amazon Dash
•
WiFi connected device that
reorders your favorite
products from Amazon.
•
Push the button, confirm order
on your smartphone, receive
delivery on your doorstep
within days.
•
$4.99 + $4.99 credit after first
purchase.
Amazon Dash >100
Sensors + Actuators
The Jetsons’ Home?
•
Control home electronics from anywhere
you have an internet connection
•
Light Switch
•
Motion Sensor
•
NetCam Wi-Fi Camer
•
Door & Window Sensor
•
Alarm Sensor
•
Mr. Coffee 10-Cup Smart Coffeemaker
•
Holmes Smart Heater
•
Holmes Smart Humidifier
•
Oster Smart Pet Feeder
The Informed Factory
Cognizant, Designing for Manufacturing’s Internet of Things,
June 2014
IoT Enablers
Cognizant, Designing for Manufacturing’s Internet of Things,
June 2014
The Connected Office
Connected Office
•
Sensors track employee arrival/departure
•
Motion sensors trigger light, HVAC, etc.
•
Adjust individual work environment to reflect
personal preferences
•
Printers, coffee makers, vending machines
automatically order resupply when needed
The Connected Office in the Connected Car
Connected Life
IoT for the Layperson
•
Convenience
•
Peace of mind (baby monitor, home security)
•
Personalized environment that responds to your
needs
•
Automation of some manual chores (e.g.,
checking the oven is off and the alarm is on)
•
One remote to rule them all = your smartphone
IoT for the Lawyer
•
Your clients are embedding sensors into every part of their
businesses. How do you help them think through the privacy and
security issues?
•
When sensors can track your every movement, how do you keep
the existence of client meetings confidential? (Inadvertent
Foursquare.)
•
How should you use sensor data in the representation of your
client? What is permissible surveillance?
•
Do you telecommute? How do you keep your home network
secure with so many devices? How do you protect client
confidential materials?
The Dark Side
•
Your home network becomes an attractive target
for hackers and other bad actors.
•
You and your children must learn to behave
defensively in the face of possible surveillance.
•
There are few agreed safety and security
standards.
•
You are relying on the integrity, professionalism
and foresight of a journeyman developer.
Spying on YOU
“Intelligence officials are not the only
ones interested in cracking our hi-tech
homes. Knowing when you are in and
out, what you have and where you
keep it is invaluable information for
thieves. And just think what tales
your devices could tell divorce
lawyers.”
Hello Barbie
Listens and records a child’s conversation,
and then responds like Siri or Cortana.
The ultimate audio surveillance device?
Hello Easy Life
Credits
•
Jetsons: www.businessinsider.com/jetsons-technology-2013-11
•
Men in Black: https://docthewho.wordpress.com/2015/08/18/men-in-black-review/
•
Seamless No Human: http://bit.ly/25Fqb0F
•
Gartner IoT Forecast: http://www.gartner.com/newsroom/id/3165317
•
Car by Doenoe: http://www.freeimages.com/photo/cars-8-1526527
•
Smartphones: http://mashable.com/2012/12/13/smartphone-holiday-wishlist/#UrT9U.2fP8qf
•
Smart watch: http://www.sonymobile.com/global-en/products/accessories/smartwatch-2-wrist-strapse20/
•
Fitbit: http://androidcommunity.com/fitbit-intros-three-new-models-now-with-gps-and-heart-ratesensor-20141028/
•
Adidas MiCoach: http://shop.numetrex.com/product/adidas-micoach-mens-training-shirt-short-sleeve/
•
Vitality GlowCaps: http://www.vitality.net/glowcaps.html
Credits
•
Proteus Digital Health: http://www.proteus.com/how-it-works/
•
Connected Nursery: http://mimobaby.com
•
Amazon Dash: http://amzn.to/1Sw6NcX
•
WeMo: https://en.wikipedia.org/wiki/Belkin_Wemo
•
The Informed Factory: http://www.cognizant.com/InsightsWhitepapers/Designing-for-ManufacturingsInternet-of-Things.pdf
•
Connected Office: http://mutualmobile.com/posts/the-connected-office-what-does-iot-mean-for-theworkplace
•
Connected Car Office: http://www.autoblog.com/2016/01/05/microsoft-harman-connected-car-office/
•
Connected Life: https://backwardstimemachine.wordpress.com/2014/01/27/future-driverless-cars/
•
Spying on you: http://www.theguardian.com/world/2016/feb/10/internet-of-things-surveillance-smart-tvcars-toys
•
Hello Barbie; http://www.theguardian.com/technology/2015/nov/26/hackers-can-hijack-wi-fi-hello-barbieto-spy-on-your-children
IOT MEETS IP
Practical Implications of IoT Development on
IP Protection, Litigation and Cybersecurity
2
“Great things are done by
a series of small things
brought together.”
Vincent Van Gogh
Letter to Theo van Gogh
Oct. 22, 1882
3
“[C]onsumers are deeply concerned
about IOT’s data collection, disclosure
of sensitive information and their lack
of control and awareness of who has
access to the data that’s collected . . .
.”
FTC Chairwoman
Edith Ramirez
March 31, 2016
4
The Future of IP Protection for IoT
• Scope of Potential Subject Matter – Almost Endless
• Cars, drones, and other vehicles
• Coffee makers, ovens, thermostats, alarm systems, lighting, pool cleaners and
every other type of home applicance
• Pacemakers, insulin pumps, smartwatches and other health monitoring
devices
• All types of industrial and office-based devices
• Size of IoT Market ... Potentially Enormous
• IoT is an “ecosystem” (or many ecosystems)
• Likely to explode in an unpredictable way like the app ecosystem, where
multi-billion $ companies have been founded over just the last few years
based on a single smartphone app (Google/Waze, Uber, etc.)
• Easy to Feel Overwhelmed …
• But … It’s Still Just HW and SW ... So we can make some predictions
about IP protection
5
IP Protection for IoT -- Patents
• Where Do We Start … Go Ask Alice
• Section 101 of Patent Act “any new and useful process [or] machine”,
•
•
•
•
•
and laws of nature and abstract ideas have been held to be exceptions
Claim directed to computer-implemented scheme for managing
“settlement risk” (the risk that only one party to an agreed financial
exchange will satisfy its obligations)
CAFC held that claims invalid as abstract idea, and Supremes affirmed
What is clear – SW is patentable (and this should hold true for SW
running on “things” other than computers)
Less clear – when a claim falls within the realm of an abstract idea
(Alice “step 1”), what is needed to “transform” that idea into a patenteligible invention (Alice “step 2”)?
Application of Alice is difficult in practice and case dependent – My
best summary: 1+1=3
6
IP Protection for IoT – Patents (con’d)
• After Alice
• District Courts have invalidated approximate 70% of post-Alice patent
challenges, even higher in some PTO art units
• Main lesson for patent prosecutor is roll up your sleeves and analyze
which claims have passed muster and which have not in your client’s
field or most analogous field
• Examiner interviews probably more important than ever to get “signals”
on individual examiner’s views of how Alice should be applied
• IoT, while very analogous to computers running SW, might also
provide more fodder for Sec 101 arguments, as new IoT devices might
combine with code and other IoT devices in unexpected (and hopefully
patentable) ways
• In addition to arguing Alice “step 1” (not abstract idea) and “step 2”
(idea transformed), consider arguing that client’s claimed invention will
not “pre-empt” basic tools of technological development (In Alice,
Supremes were apparently concerned that innovation would be stifled
more than stimulated by monopolist land grabs)
7
IP Protection for IoT – Copyrights
• Copyright Generally Offers More Certainty in IP Protection
than Patents, But Zone of Protection Generally Narrower
• Oracle v. Google (CAFC May 2014 – cert denied July
2015)
• CAFC ruled that APIs are copyrightable – upholding Oracle’s
claimed copyright in Java APIs, and Google was held to infringe by
using certain Java API’s in Android OS (damages trial coming May
2016)
• Potential to have wide-ranging impact on IoT -- because private
companies can control interoperability via Copyright laws
• Replacing one device (e.g. Nest thermostat) with a
compatible device – IBM vs the “clones” all over again?
• EFF and the “jail break” issue
8
IP Protection for IoT – Trade Secrets
• Sometimes “Forgotten” Arm of IP Protection…
• But Can Be Quite Powerful, Especially For Technology
That is Difficult to Reverse Engineer
• While Not Subject to Uncertainties of Alice, Trade Secrets
Come With Uncertainties of Independent Development &
Reverse Engineering
9
IoT Litigation Issues
• IP Infringement Litigation – Similar Issues to Prosecution
But Generally Higher Stakes for Both Parties
• Cyber attacks – what is the “standard of care” for
prevention of attack, protection of customer data,
employee data in the event of attack?
• Product Liability, Emerging Class Actions
• SW glitch results in injury or property damage
• Cyber attack causes injury or property damage
• Cyber attack invades privacy
• Impact on Discovery Could Be Similar to Addition of e-
Discovery in 1990s and 2000s
• Recalls my first case involving “email overload”
10
Some IoT Considerations for In-House Lawyers
• Impact on IP Strategy
• Innovation could happen anywhere in organization, not just with
“techies” (3D printer example)
• Impact on Litigation & Discovery
• Blurs boundaries between “work” and “home” (mirroring
development of “gig” economy), potential impact on both vicarious
liability and reach of discovery
• Impact on BYOD Policies
• Impact on Employee Privacy/Corporate Cybersecurity
• Location data (working from “home” at local bar)
• Health data (from watch, patch, pacemaker, etc.)
• Entry points for hackers (remote printing of anti-semitic materials)
11
Questions?
12
Thank You!
The White House
Office of the Press Secretary
For Immediate Release
May 01, 2014
FACT SHEET: Big Data and Privacy
Working Group Review
Driven by the declining cost of data collection, storage, and processing; fueled by new online and realworld sources of data, including sensors, cameras, and geospatial technologies; and analyzed using a
suite of creative and powerful new methods, big data is fundamentally reshaping how Americans and
people around the world live, work, and communicate. It is enabling important discoveries and
innovations in public safety, health care, medicine, education, energy use, agriculture, and a host of
other areas. But big data technologies also raise challenging questions about how best to protect
privacy and other values in a world where data collection will be increasingly ubiquitous,
multidimensional, and permanent.
In January, President Obama asked his Counselor John Podesta to lead a 90-day review of big data
and privacy. The review was conceived as fundamentally a scoping exercise, designed to define for the
President what is new about the technologies that define the big data landscape; uncover where and
how big data affects public policy and the laws and norms governing privacy; to ask how and whether
big data creates new challenges for the principles animating the Consumer Privacy Bill of Rights
embraced by the Administration in 2012; and to lay out an agenda for how government can maximize
the benefits and minimize the risks of big data.
The working group—which included Commerce Secretary Pritzker, Energy Secretary Moniz, the
President's Science Advisor John Holdren, the President's Economic Advisor Jeff Zients, and other
Senior Administration Officials—sought public input and worked over 90 days with academic
researchers and privacy advocates, regulators and the technology industry, advertisers and civil rights
groups, the international community and the American public. This review was supported by a parallel
effort by the President's Council of Advisors on Science and Technology (PCAST) to research the
technological trends underpinning big data.
Today, Podesta and the big data working group presented their findings and recommendations to the
President. The review did not set out to answer every question about big data, nor was it intended to
develop a comprehensive policy approach to big data. However, by evaluating the opportunities and
challenges presented by big data, the working group was able to draw important conclusions and make
concrete recommendations to the President for Administration attention and policy development.
SEIZING OPPORTUNITIES
We live in a world of near-ubiquitous data collection where that data is being crunched at a speed
increasingly approaching real-time. This revolution presents incredible opportunities:
•
Big data is saving lives. Infections are dangerous—even deadly—for many babies born prematurely. By
collecting and analyzing millions of data points from a neonatal intensive care unit, one study was able to
identify factors, like slight changes in body temperature and heart rate, that serve as early warning signs
an infection may be taking root—subtle changes that even the most experienced doctors may not have
have noticed on their own.
•
Big data is making the economy work better. Jet engines and delivery trucks now come outfitted with
sensors that continuously monitor hundreds of data points and send automatic alerts when maintenance
is needed. Utility companies are starting to use big data to predict periods of peak electric demand,
adjusting the grid to be more efficient and potentially averting brown-outs.
•
Big data is saving taxpayer dollars. The Centers for Medicare and Medicaid Services have begun
using predictive analytics—a big data technique—to flag likely instances of reimbursement fraud before
claims are paid. The Fraud Prevention System helps identify the highest-risk health care providers for
waste, fraud, and abuse in real time and has already stopped, prevented, or identified $115 million in
fraudulent payments.
Big data also presents powerful opportunities in areas as diverse as medical research, agriculture,
energy efficiency, global development, education, environmental monitoring, and modeling climate
change impacts, among others.
PRESERVING OUR VALUES
The opportunities presented by big data are considerable, but big data raises serious concerns about
how we protect our privacy and other values. For example:
•
Big data tools can alter the balance of power between government and citizen. Government
agencies can reap enormous benefits from using big data to improve service delivery or detect payment
fraud. But government uses of big data also have the potential to chill the exercise of free speech or free
association. As more data is collected, analyzed, and stored on both public and private systems, we must
be vigilant in ensuring that balance is maintained between government and citizens, and revise our laws
accordingly.
•
Big data tools can reveal intimate personal details. One powerful big data technique involves merging
multiple data sets, drawn from disparate sources, to reveal complex patterns. But this practice,
sometimes known as “data fusion,” can also lead to the so-called “mosaic effect,” whereby personally
identifiable information can be discerned even from ostensibly anonymized data. As big data becomes
even more widely used in the private sector to bring a wellspring of innovations and productivity, we must
ensure that effective consumer privacy protections are in place to protect individuals.
•
Big data tools could lead to discriminatory outcomes. As more decisions about our commercial and
personal lives are determined by algorithms and automated processes, we must pay careful attention that
big data does not systematically disadvantage certain groups, whether inadvertently or intentionally. We
must prevent new modes of discrimination that some uses of big data may enable, particularly with regard
to longstanding civil rights protections in housing, employment, and credit.
POLICY RECOMMENDATIONS
No matter how quickly technology advances, it remains within our power to ensure that we both
encourage innovation and protect our values through law, policy, and the practices we encourage in the
public and private sector. To that end, the working group made six actionable policy recommendations
in their report to the President:
•
Advance the Consumer Privacy Bill of Rights because consumers deserve clear, understandable,
reasonable standards for how their personal information is used in the big data era.
•
Pass National Data Breach Legislation that provides for a single national data breach standard, along
the lines of the Administration's 2011 Cybersecurity legislative proposal.
•
Extend Privacy Protections to non-U.S. Persons because privacy is a worldwide value that should be
reflected in how the federal government handles personally identifiable information from non-U.S.
citizens.
•
Ensure Data Collected on Students in School is used for Educational Purposes to drive better
learning outcomes while protecting students against their data being shared or used inappropriately.
•
Expand Technical Expertise to Stop Discrimination because the federal government should build the
technical expertise to be able to identify practices and outcomes facilitated by big data analytics that have
a discriminatory impact on protected classes.
•
Amend the Electronic Communications Privacy Act to ensure the standard of protection for online,
digital content is consistent with that afforded in the physical world—including by removing archaic
distinctions between email left unread or over a certain age.
Data & Civil Rights: Technology Primer
by the Data & Society Research Institute
Data have assumed a significant role in routine decisions about access, eligibility, and
opportunity across a variety of domains. These are precisely the kinds of decisions that have long
been the focus of civil rights campaigns. The results have been mixed. Companies draw on data
in choosing how to focus their attention or distribute their resources, finding reason to cater to
some of its customers while ignoring others. Governments use data to enhance service delivery
and increase transparency, but also to decide whom to subject to special scrutiny, sanction, or
punishment. The technologies that enable these applications are sometimes designed with a
particular practice in mind, but more often are designed more abstractly, such that technologists
are often unaware of and not testing for the ways in which they might benefit some and hurt
others.
The technologies and practices that are driving these shifts are often described under the banner
of “big data.” This concept is both vague and controversial, particularly to those engaged in the
collection, cleaning, manipulation, use, and analysis of data. More often than not, the specific
technical mechanisms that are being invoked fit under a different technical banner: “data
mining.”
Data mining has a long history in many industries, including marketing and advertising, banking
and finance, and insurance. As the technologies have become more affordable and the
availability of data has increased, both public and private sectors—as well as civil society—are
envisioning new ways of using these techniques to wrest actionable insights from once
intractable datasets. The discussion of these practices has prompted fear and anxiety as well as
hopes and dreams. There is a significant and increasing gap in understanding between those who
are and are not technically fluent, making conversations about what’s happening with data
challenging. That said, it’s important to understand that transparency and technical fluency is not
always enough. For example, those who lack technical understanding are often frustrated
because they are unable to provide oversight or determine the accuracy of what is produced
while those who build these systems realize that even they cannot meaningfully assess the
product of many algorithms.
This primer provides a basic overview to some of the core concepts underpinning the “big data”
phenomenon and the practice of data mining. The purpose of this primer is to enable those who
are unfamiliar with the relevant practices and technical tools to at least have an appreciation for
different aspects of what’s involved.
http://www.datacivilrights.org/pubs/2014-1030/Technology.pdf
FTC Report on Internet of Things Urges
Companies to Adopt Best Practices to Address
Consumer Privacy and Security Risks
Report Recognizes Rapid Growth of Connected Devices Offers Societal
Benefits, But Also Risks That Could Undermine Consumer Confidence
For Release
January 27, 2015
In a detailed report on the Internet of Things, released today, the staff of the Federal Trade
Commission recommend a series of concrete steps that businesses can take to enhance and
protect consumers’ privacy and security, as Americans start to reap the benefits from a growing
world of Internet-connected devices.
The Internet of Things is already impacting the daily lives of millions of Americans through the
adoption of health and fitness monitors, home security devices, connected cars and household
appliances, among other applications. Such devices offer the potential for improved healthmonitoring, safer highways, and more efficient home energy use, among other potential
benefits. However, the FTC report also notes that connected devices raise numerous privacy
and security concerns that could undermine consumer confidence.
“The only way for the Internet of Things to reach its full potential for innovation is with the trust of
American consumers,” said FTC Chairwoman Edith Ramirez. “We believe that by adopting the
best practices we’ve laid out, businesses will be better able to provide consumers the
protections they want and allow the benefits of the Internet of Things to be fully realized.”
The Internet of Things universe is expanding quickly, and there are now over 25 billion
connected devices in use worldwide, with that number set to rise significantly as consumer
goods companies, auto manufacturers, healthcare providers, and other businesses continue to
invest in connected devices, according to data cited in the report.
The report is partly based on input from leading technologists and academics, industry
representatives, consumer advocates and others who participated in the FTC’s Internet of
Things workshop held in Washington D.C. on Nov. 19, 2013, as well as those who submitted
public comments to the Commission. Staff defined the Internet of Things as devices or sensors
– other than computers, smartphones, or tablets – that connect, store or transmit information
with or between each other via the Internet. The scope of the report is limited to IoT devices that
are sold to or used by consumers.
Security was one of the main topics addressed at the workshop and in the comments,
particularly due to the highly networked nature of the devices. The report includes the following
recommendations for companies developing Internet of Things devices:
•
•
build security into devices at the outset, rather than as an afterthought in the design process;
train employees about the importance of security, and ensure that security is managed at an
appropriate level in the organization;
•
•
•
•
ensure that when outside service providers are hired, that those providers are capable of
maintaining reasonable security, and provide reasonable oversight of the providers;
when a security risk is identified, consider a “defense-in-depth” strategy whereby multiple layers
of security may be used to defend against a particular risk;
consider measures to keep unauthorized users from accessing a consumer’s device, data, or
personal information stored on the network;
monitor connected devices throughout their expected life cycle, and where feasible, provide
security patches to cover known risks.
Commission staff also recommend that companies consider data minimization – that is, limiting
the collection of consumer data, and retaining that information only for a set period of time, and
not indefinitely. The report notes that data minimization addresses two key privacy risks: first,
the risk that a company with a large store of consumer data will become a more enticing target
for data thieves or hackers, and second, that consumer data will be used in ways contrary to
consumers’ expectations.
The report takes a flexible approach to data minimization. Under the recommendations,
companies can choose to collect no data, data limited to the categories required to provide the
service offered by the device, less sensitive data; or choose to de-identify the data collected.
FTC staff also recommends that companies notify consumers and give them choices about how
their information will be used, particularly when the data collection is beyond consumers’
reasonable expectations. It acknowledges that there is no one-size-fits-all approach to how that
notice must be given to consumers, particularly since some Internet of Things devices may have
no consumer interface. FTC staff identifies several innovative ways that companies could
provide notice and choice to consumers.
Regarding legislation, staff concurs with many stakeholders that any Internet of Things-specific
legislation would be premature at this point in time given the rapidly evolving nature of the
technology. The report, however, reiterates the Commission’s repeated call for strong data
security and breach notification legislation. Staff also reiterates the Commission’s call from its
2012 Privacy Report for broad-based privacy legislation that is both flexible and technologyneutral, though Commissioner Ohlhausen did not concur in this portion of the report.
The FTC has a range of tools currently available to protect American consumers’ privacy related
to the Internet of Things, including enforcement actions under laws such as the FTC Act, the
Fair Credit Reporting Act, the Children’s Online Privacy Protection Act; developing consumer
education and business guidance; participation in multi-stakeholder efforts; and advocacy to
other agencies at the federal, state and local level.
In addition to the report, the FTC also released a new publication for businesses containing
advice about how to build security into products connected to the Internet of Things. “Careful
Connections: Building Security in the Internet of Things” encourages companies to implement a
risk-based approach and take advantage of best practices developed by security experts, such
as using strong encryption and proper authentication.
The Commission vote to issue the staff report was 4-1, with Commissioner Wright voting no.
Commissioner Ohlhausen issued a concurring statement, and Commissioner Wright issued a
dissenting statement.
The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and
unfair business practices and to provide information to help spot, stop, and avoid them. To file a
complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTCHELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online
database available to more than 2,000 civil and criminal law enforcement agencies in the U.S.
and abroad. The FTC’s website provides free information on a variety of consumer topics. Like
the FTC on Facebook (link is external), follow us on Twitter (link is external), and subscribe to
press releases for the latest FTC news and resources.
CONTACT INFORMATION
MEDIA CONTACT:
Jay Mayfield
Office of Public Affairs
202-326-2181
STAFF CONTACT:
Karen Jagielski
Bureau of Consumer Protection
202-326-2509
BIG DATA & THE INTERNET
OF THINGS
perspectives
BIG DATA
big da·ta
NOUN
computing
extremely large data sets that may be analyzed computationally to
reveal patterns, trends, and associations, especially relating to
human behavior and interactions:
"much IT investment is going towards managing and maintaining
big data"
INTERNET OF THINGS
Inter·net of things
NOUN
the interconnection via the Internet of
computing devices embedded in
everyday objects, enabling them to
send and receive data
ALL TOO OFTEN, NEW DATA-DRIVEN
“ TECHNOLOGIES
ARE DEPLOYED WITH LITTLE
CONSIDERATION FOR HOW THEY MAY INTERACT
WITH SOCIETY AS A WHOLE.
danah boyd, founder Data & Society Research Institute
”
TRENDS
•
•
•
•
•
•
•
•
•
•
Data volumes will continue to grow.
Ways to analyze data will improve and more tools will emerge.
Algorithms will be examined.
Big data will be used to make real time decisions.
Analytics will be built into software.
Machine learning is top strategic trend. And so are artificial intelligence and autonomous
agents.
Big data will face huge challenges around privacy.
More companies will have chief data officers.
All companies are data businesses.
Fact and actionable data will be the goal.
Forbes/Tech; 17 Predictions about the Future of Big Data Everyone Should Read; Bernard Marr; March 15, 2016
GOVERNMENT & REGULATORY
ASPECTS
• White House Big Data Report & Privacy Bill of Rights
• Federal Trade Commission focus on Big Data and the Internet of Things
• Congressional (in)Activity
SOCIETAL ASPECTS
Fairmess
and
equality
Privacy & Security
Civil Rights &
Economics
Ethics
Disruptions
Labor & Education
IT IS ABOUT HOW YOU
• Collect
• Use
• Store
• Share
DATA
IT IS ABOUT HOW YOU
• Value
• Respect
• Treat Fairly
CUSTOMERS
IT IS ABOUT
• Transparency
• Disclosure
• Fair Use
CHALLENGES
LIKE ENCRYPTION
BE PREPARED
To be productive, thoughtful, and create an informed discussion.
Device democracy
Saving the future of the Internet of Things
IBM Institute for Business Value
Executive Report
Electronics Industry
Transforming businesses as
the Internet of Things expands
As a global electronics company, we understand the
issues facing the high-tech industry and the continuous
transformation required to thrive. Across the industry,
companies are turning their attention from smartphones and
tablets to a new generation of connected devices that will
transform not just the Electronics industry, but many others.
The IBM Global Electronics practice uniquely combines IBM
and partner services, hardware, software and research into
integrated solutions that can help you deliver innovation,
create differentiated customer experiences and optimize
your global operations.
1
Why is the IoT in peril?
Executive summary
More than a billion intelligent, connected devices
When the first mainframes were sold, even IBM did not imagine a global market larger than a
few thousand devices. Mainframes were the province of the largest governments and enterprises,
used to execute complex managerial and operational tasks. Thanks to technological progress that
has been both relentless and predictable, mainframes were supplemented first by minicomputers,
then microcomputers, personal computers, and most recently, smartphones and tablets. Next up:
smart devices.
already comprise today’s “Internet of Things (IoT).”
The expected proliferation of hundreds of billions more
places us at the threshold of a transformation sweeping
across the electronics industry and many others.
Yet, the dream of a smart, safe and efficient future is
threatened by subscription fees, ubiquitous advertising
and intrusive surveillance. For the IoT to survive the end
of trust and successfully scale from billions to hundreds
of billions of devices, executives need to rethink the
technology strategy, business models and design
principles at its foundation.
This first report of our study shows that a low-cost,
private-by-design “democracy of devices” will emerge
that will enable new digital economies and create new
value, while offering consumers and enterprises
fundamentally better products and user experiences.
Each time the cost of computing power has declined by an order of magnitude, it has, in turn,
kicked off a rise in unit volume – also by an order of magnitude. Even though volume increases
have been so large with each revolution, the time required to achieve that growth has decreased.1
This next revolution, a network of billions of intelligent devices known as the “Internet of
Things (IoT),” will, in some ways, be predictable and similar to past expansions of the
computing world. In other aspects, however, it represents an entirely new approach.
Computing is already widespread in many devices from kitchens to cars, but it is a particular
kind of computing that is cheap and scalable, yet inherently limited: application-specific,
embedded computing.
What is new, and what will power the IoT, is the shift from special purpose computing – often
the minimum necessary for device control – to general purpose computing. Thanks to
Moore’s Law, it is now cheaper and easier to make a device with a powerful general purpose
computer than create a customized embedded device. Very soon, devices from doorknobs to
light bulbs will carry as much compute power and connectivity as the first smartphones.
To guide executives in making strategic IoT investments, and to better understand the
connected future and its impact across industries, we conducted the 2014 IBM Internet of
Things Study. Our study was performed in conjunction with top IBM researchers and
comprised of three research components: technology strategy; business and economic
2
Device democracy
In the emerging device-driven democracy,
power in the IoT will shift from the center
to the edge.
As devices compete and trade in real-time,
they will create liquid markets out of the
physical world.
insights; and product and user experience design. The findings from the initial phase are
explored in this report. Additional analysis and publication of our research findings will
continue in the next phase (see methodology details on page 21).
The confluence of many technology revolutions
The rise of inexpensive general purpose computing has been accompanied by the availability of
inexpensive sensors and actuators that today are cheap enough to embed in a device even if
they are not used. Tremendous advances in cloud computing enable storage and analytics of
In the IoT of hundreds of billions of devices,
connectivity and intelligence will be a
means to better products and experiences,
not an end.
the vast amounts of data generated by these sensors. Fueled by ubiquitous connectivity and the
availability of billions of IP addresses with IPv6, the number of connected devices is forecasted
to surpass 25 billion in 2020, up from 2.5 billion in 2009 and 10 billion today (see Figure 1).2
Figure 1
Each inflection point in the history of computing has triggered an explosion in the number of computing devices
2050
>100 billion
2020
1950
5000
1975
10,000
2003
2009
2.5 billion
2014
10 billion
3
Looking forward, an increase in open web-service application program interfaces (APIs) will
allow devices to connect and work smoothly as part of complex, multi-vendor networks. 3D
printing and digital manufacturing will enable manufacturers to build and deploy devices in
small batches, quickly pioneering new products and solutions.
The result: a proliferation of hundreds of billions of devices that will be no more expensive than
their dumb counterparts, yet able to operate and act as part of complex, integrated systems.
As with prior revolutions, this one will usher in another order-of-magnitude reduction in cost,
as smartphones and tablets that range from US$200 to US$600 are supplemented by smart
devices, such as doorknobs and light bulbs, that cost as little as US$20.
Opportunities for the global economy
Though the IBM mainframe (once System/360, now System z) recently celebrated its 50th
anniversary, the impact of the computer industry on the global economy has been relatively
recent and surprisingly limited. Nobel Prize-winning economist Robert Solow remarked in
1987 that even as PC sales surged into the millions, he could see the impact of computers
“everywhere but in the productivity statistics.”3
In 1987, computers of all kinds were selling around 15 to 20 million annually.4 It was not until after the
year 2000 that economists were able to show a statistically significant impact of computers on
industrial productivity.5 By that time, computer sales were routinely exceeding 300 million
annually.6 Since then, we have gone from 300 to 400 million PCs to nearly a billion smartphones.7
As we go from a billion smartphones toward hundreds of billions of smart devices, the scale of
opportunity from the IoT becomes visible. After over 50 years of gradually growing penetration,
the majority of the global economy is still considered to be in industries that are not
“IT-intensive.” Many of these – like agriculture, transportation and logistics – have not historically
fit well with personal computers that require desks and offices. The IoT will change all that.
4
Device democracy
Figure 2
Why the IoT already needs a reboot
Why today’s Internet of billions of Things won’t scale to the Internet of
hundreds of billions of Things
So far, the first wave of the IoT has focused on very high-value applications. There have been
visible successes in continuous monitoring of jet engines, automated smart meters and
remote healthcare management. But demand has been slow to take off in many areas: only
30 percent of heavy industrial equipment is networked and only 10 percent of smart TVs are
consumers have failed to embrace devices from smart toothbrushes to refrigerators.
c
ck
No
t future-proof
Market expectations and valuations, however, have been enormous – as much as 10 to 20
times revenue, even though revenues have been relatively small, particularly in the consumer
La
of lu
L ack al va
function
e
Internet
of Things
used for Internet viewing.8 Perhaps the slowest area of adoption is home automation, where
of p
rivacy
Bro
k
me
Hig
h
t
os
ess
sin
bu s
n de l
o
space.9 This is largely a result of the cost and complexity of most IoT solutions, as well as
enterprises and entrepreneurs treating the IoT as if it were just another computing platform,
and applying the same set of business models: services, ecosystems, applications and
analytics. Unless executives make big strategic changes, they are set to be disappointed as
they seek to scale today’s IoT solutions to support tomorrow’s hundreds of billions of things
(see Figure 2).
Challenge one: The cost of connectivity
Even as revenues fail to meet expectations, costs are prohibitively high. Many existing IoT
solutions are expensive because of the high infrastructure and maintenance costs associated
with centralized clouds and large server farms, in addition to the service costs of middlemen.
There is also a mismatch in supplier and customer expectations. Historically, costs and
revenues in the IT industry have been nicely aligned. Though mainframes lasted for many
years, they were sold with enterprise support agreements. PCs and smartphones have not
5
historically been sold with such profitable support plans; but with their shorter product life
cycles, that has not been a huge problem. With the IoT, it is unlikely that there will be enough
margin for companies to cover several years of support and maintenance.
The cost of supporting and serving billions of smart devices will be substantial – even
something as simple as maintaining centralized servers that distribute regular software updates.
Challenge two: The Internet after trust
The Internet was originally built on trust. In the post-Snowden era, it is evident that trust in the
Internet is over. The notion of IoT solutions built as centralized systems with trusted partners is
now something of a fantasy. Most solutions today provide the ability for centralized authorities,
whether governments, manufacturers or service providers to gain unauthorized access to
and control devices by collecting and analyzing user data.
In a network of the scale of the IoT, trust can be very hard to engineer and expensive, if not
impossible, to guarantee. For widespread adoption of the ever-expanding IoT, however, privacy
and anonymity must be integrated into its design by giving users control of their own privacy.
Current security models based on closed source approaches (often described as “security
through obscurity”) are obsolete and must be replaced by a newer approach – security
through transparency. For this, a shift to open source is required. And while open source
systems may still be vulnerable to accidents and exploitable weaknesses, they are less
susceptible to government and other targeted intrusion, for which home automation,
connected cars and the plethora of other connected devices present plenty of opportunities.
6
Device democracy
Challenge three: Not future-proof
While many companies are quick to enter the market for smart, connected devices, they have
yet to discover that it is very hard to exit. While consumers replace smartphones and PCs
every 18 to 36 months, the expectation is for door locks, LED bulbs and other basic pieces of
infrastructure to last for years, even decades, without needing replacement.
An average car, for example, stays on the road for 10 years, the average U.S. home is 39 years
old and the expected lifecycles of road, rail and air transport systems is over 50 years.10 A
door lock with a security bug would be a catastrophe for a warehousing company and the
reputation of the manufacturer. In the IoT world, the cost of software updates and fixes in
products long obsolete and discontinued will weigh on the balance sheets of corporations for
decades, often even beyond manufacturer obsolescence.
Challenge four: A lack of functional value
Many IoT solutions today suffer from a lack of meaningful value creation. The value
proposition of many connected devices has been that they are connected – but simply
enabling connectivity does not make a device smarter or better. Connectivity and intelligence
are a means to a better product and experience, not an end.
It is wishful thinking for manufacturers that some features they value, such as warranty
tracking, are worth the extra cost and complexity from a user’s perspective. A smart,
connected toaster is of no value unless it produces better toast. The few successes in the
market have kept the value proposition compelling and simple. They improve the core
functionality and user experience, and do not require subscriptions or apps.
7
Challenge five: Broken business models
Most IoT business models also hinge on the use of analytics to sell user data or targeted
advertising. These expectations are also unrealistic. Both advertising and marketing data are
affected by the unique quality of markets in information: the marginal cost of additional
capacity (advertising) or incremental supply (user data) is zero. So wherever there is
competition, market-clearing prices trend toward zero, with the real revenue opportunity
going to aggregators and integrators. A further impediment to extracting value from user data
is that while consumers may be open to sharing data, enterprises are not.
Another problem is overly optimistic forecasts about revenue from apps. Products like
toasters and door locks worked without apps and service contracts before the digital era.
Unlike PCs or smartphones, they are not substantially interactive, which makes such revenue
expectations unrealistic.
Finally, many smart device manufacturers have improbable expectations of ecosystem
opportunities. While it makes interesting conversation for a smart TV to speak to the toaster,
such solutions get cumbersome quickly and nobody has emerged successful in controlling
and monetizing the entire IoT ecosystem.
So while technology propels the IoT forward, the lack of compelling and sustainably profitable
business models is, at the same time, holding it back. If the business models of the future don’t
follow the current business of hardware and software platforms, what will they resemble?
8
Device democracy
Saving the future of the IoT
Figure 3. The pyramid of digital success: Build a strong technology
foundation, guided by new business models and design for better
experiences
Create
collaborative
value
governments and corporations race to take control of devices and data, we need to save the
IoT. This “rescue” will require business and technology leaders to fundamentally rethink
technology strategy by building solutions for radically lower cost, privacy and autonomy.
1
Create
better
Design rule
products and
experiences
Prepare for
new digital
economies
As the number of connected devices grows from billions to hundreds of billions, and as
Business models that guide these solutions must embrace highly efficient digital economies
and create collaborative value, all while creating improved products and user experiences
(see Figure 3).
2
Business model guidelines
Design for
Design for
Design for
decentralized
trustless
peer-to-peer
commmunication autonomy
systems
3
Technology
principles
Democratizing the digital world
The foundation of modern computing is the very humble work of transaction processing.
From phone calls to electricity metering, to airline reservations, each is a transaction to be
processed. As passengers make reservations, pay for tickets, board planes and receive
frequent flyer miles, every step along the way a transaction is processed, recorded and stored.
Transaction processing isn’t just for “old-school” workloads, either. Every digital interaction like
a message or tweet, is a transaction as well. In today’s web-based world, the scale and volume
of transactions have exploded. The New York Stock Exchange handles 5 million trades a day.11
In contrast, over 5 billion social media transactions are processed every single day.12 Now, along
comes the IoT, further exploding the scale and volume of transactions to be processed.
Indeed, transaction processing could not have scaled to its current level without distributed
computing. Distributed computing has existed for some time now, as have peer-to-peer
systems. But as recent significant advances in peer-to-peer computing meet Moore’s Law, it
will soon be possible to harness the compute power, terabytes of storage and bandwidth that
will be on billions of devices, in millions of locations and sitting idle most of the time for
transaction processing.
9
centers. It’s time for the cloud to move from the data center to your doorknob (see Figure 4).
“The future is already here - it’s just
not very evenly distributed.”
Successful decentralization of the IoT, however, will lie not just in being peer-to-peer, but also
William Gibson, Author13
Adopting peer-to-peer computing to process the hundreds of billions of IoT transactions can
significantly reduce costs associated with installing and maintaining large centralized data
in being trustless: an environment in which there is no need for participants to be trusted and
no centralized, single point of failure.
Figure 4. To be safe, scalable and efficient, Internet of Things networks must be re-architected to gradually shift from
managing billions of devices to hundreds of billions of devices
Before 2005
Today
&
Closed and centralized
IoT networks
2025 and beyond
&
Open access IoT networks,
centralized cloud
Open access IoT networks,
distributed cloud
10
Device democracy
In the absence of a centralized server brokering messages, supporting file storage and
transfers, and arbitrating roles and permissions, any decentralized IoT solution should
support three foundational types of transactions:
• Trustless peer-to-peer messaging
• Secure distributed data sharing
• A robust and scalable form of device coordination.
Peer-to-peer messaging protocols are not new, but emerging trustless peer-to-peer
messaging systems promise to provide a “lightweight” mechanism for highly encrypted,
private-by-design communication among devices on the IoT.14 Our vision is that in the near
future, these trustless peer-to-peer protocols evolve into transport protocols more suited for
the IoT than TCP/IP. Additionally, secure distributed file-sharing protocols have the potential to
replace cloud-based file storage and transfers, enabling secure software and firmware
updates, and direct file sharing among peer devices.
The greatest challenge, however, is not in simply building a decentralized IoT, but one that can
scale universally while maintaining private, secure and trustless transactions. In other words,
the IoT represents a case of billions of players, not all of which can be trusted – some even
malicious – with a need for some form of validation and consensus. And for this, the
“blockchain” offers a very elegant solution.
Why blockchains work for the IoT
A technology breakthrough that has fundamentally changed our notions of centralized authority,
the blockchain is a universal digital ledger that functions at the heart of decentralized financial
systems such as Bitcoin, and increasingly, many other decentralized systems.
11
The blockchain holds a record of every transaction made by every participant. Cryptography
Figure 5
is used to verify transactions and keep information on the blockchain private. Many participants
The blockchain functions as a universal digital ledger facilitating
various types of IoT transactions between devices
verify each transaction, providing highly redundant verification and are rewarded for the
computational work required. By confirming transactions using decentralized consensus,
Universal digital ledger
the blockchain eliminates the need for trust.
While the blockchain may carry regulatory and economic risk as a long-term store of value
(as in the case of Bitcoin), it can be quite revolutionary as a transaction processing tool.15
In our vision of a decentralized IoT, the blockchain is the framework facilitating transaction
processing and coordination among interacting devices. Each manages its own roles and
behavior, resulting in an “Internet of Decentralized, Autonomous Things” – and thus the
democratization of the digital world (see Figure 5).
The role of users
In this democracy of hundreds of billions, users bind with devices using secure identification
and authentication. Users dynamically create and maintain rules of engagement with other
devices. These rules provide a powerful mechanism to define relationships between and
permissions for devices based on user-defined proximity: physical, social or temporal.
Rules could also be defined by 51 percent consensus, as in the case of devices agreeing on
the safety of peer downloadable software updates or banning a misbehaving participant.
User creation and execution of digital checklists based on a pre-defined set of rules aims to
help ensure that the autonomously functioning devices do not fail.
Registration
of new
device
Authentication Contract to barter
of remote
power with other
users
appliances
Checklist for
automobile
safety
12
Device democracy
The role of devices
Devices, on the other hand, are empowered to autonomously execute digital contracts such
as agreements, payments and barters with peer devices by searching for their own software
updates, verifying trustworthiness with peers, and paying for and exchanging resources and
services. This allows them to function as self-maintaining, self-servicing devices.
The power to autonomously trade with other devices opens up whole new business model
opportunities: each device in the network can function as a self-contained business, sharing
capabilities and resources such as compute cycles, bandwidth and power at very low
transaction costs with other devices. Besides the creation of new businesses that tap the
unused capacity of billions of devices, the blockchain also facilitates new markets for service
and consumables associated with those devices.
The role of manufacturers
For device manufacturers and service providers too, a blockchain-based IoT is attractive. It
allows them to transfer maintenance ownership and responsibility to a community of selfmaintaining devices, making the IoT future-proof and saving infrastructure costs on a massive
scale, both during the life of a device and long past its obsolescence.
In this model, users control their own privacy and rather than being controlled by a centralized
authority, devices are the master. The role of the cloud changes from a controller to that of a
peer service provider. In this new and flat democracy, power in the network shifts from the
center to the edge. Devices and the cloud become equal citizens.
Such a device-driven democracy is clearly very compelling for all participants in the IoT
ecosystem. But perhaps its greatest value is at the macro level, not only in creating a scalable
and efficient IoT, but in creating new marketplaces and shaping new business models.
13
Liquifying the physical world
Before the IoT, there was simply the Internet. The Internet of People (as we may come to know
Figure 6
it) has already had an enormous impact on the economy. Its biggest impact, by far, has been
Five vectors of disruption: How the IoT will increase our leverage of
physical assets
in the creation and transformation of markets for digital content such as music, news, maps
and other information.
The IoT will enable a similar set of transformations, making the physical world as liquid,
personalized and efficient as the digital one. Based on historical case studies of digital
disruption, we see five compelling vectors of disruption emerging. They will shift the IoT from
technical curiosity to compelling business strategy (see Figure 6).
Unlocking excess capacity of physical assets
In transforming the market for digital content, the Internet enabled three key elements of
commerce: search, usage and payment. Search became instant and comprehensive. From
music to encyclopedia articles, usage and payment can similarly take place immediately and
entirely online. Some of the transformation that has taken place is a result of the unique
economics of digital content. With a zero marginal cost of reproduction, market clearing
prices for competitive digital markets have reached zero.
The IoT creates the ability to digitize, sell and deliver physical assets as easily as with virtual
goods today. Using everything from Bluetooth beacons to Wi-Fi-connected door locks,
physical assets stuck in an analog era will become digital services. In a device driven
democracy, conference rooms, hotel rooms, cars and warehouse bays can themselves report
capacity, utilization and availability in real-time. By taking raw capacity and making it easy to
be utilized commercially, the IoT can remove barriers to fractionalization of industries that
would otherwise be impossible. Assets that were simply too complex to monitor and manage
will present business opportunities in the new digital economy.
Vectors of disruption
Liquification of the physical
world
Unlock excess capacity of
physical assets
Instantly search, use and pay for
available physical assets
Create liquid, transparent
marketplaces
Real-time matching of supply and
demand for physical goods and
services
Enable radical re-pricing of
credit and risk
Digitally manage risk and assess
credit, virtually repossess and
reduce moral hazard
Improve operational
efficiency
Allow unsupervised usage of
systems and devices, reduce
transaction and marketing costs
Digitally integrate value
chains
Enable business partners
to optimize in real-time,
crowdsource and collaborate
14
Device democracy
Figure 7
Creating liquid, transparent marketplaces
By transforming physical assets and services to behave like the virtual
world, the IoT will create new digital economies
By identifying and matching supply and demand for physical assets and services in real-time,
the IoT will create new marketplaces. These complex, real-time digital marketplaces will build
upon the foundation established by mobile devices and social networks to expand the reach
of this transformation very quickly. They will enable new peer-to-peer economic models and
Unlocking
capacity
foster sharing economies.16 Devices will be able to compete in real-time, be reviewed and
ES
MI
Creating
transparent
marketplaces
NE W
O
AL ECON
GIT
DI
recommended by consensus, and trade on their own, resulting in highly efficient digital
marketplaces.
There is no better historical example of what happens when a continuous flow of capacity
and services meets a powerful set of digital tools to match supply and demand than the role
of Sabre in the airline industry. Uber and Airbnb are the Sabres of today, leading the creation of
Re-pricing of
credit and risk
liquid markets for physical assets such as cars, homes, office cubicles, urban storage, parking
spots and appliances that would not be possible without the IoT.
Radical re-pricing of credit and risk
Another big revolution will be in the creation of personalized risk and credit profiles. The
provision of credit and management of risk today is a crude business, as crude as advertising
was in the era of newspapers and television. Credit bureaus and tax records in mature
western markets sparked a revolution in the availability of consumer credit, but they cover
(crudely) only a tiny portion of the world’s population. Unsecured credit lines in mature
markets like the U.S. are often 8 to 10 times the cost of high quality credit, with remarkably
little variation among customers, a testament to how poorly risk pricing is understood even in
those markets.
15
Instrumentation and digitization enabled by mobile phones and the IoT promise a revolution in
Figure 8
pricing risk and credit. Combining device instrumentation with mobile money, GPS logs and
By reducing transaction and marketing costs, and enabling partnerships
for innovation, the IoT will create new collaborative value
social networks, it will be possible for companies to build much more accurate pictures of real
homes. Together, the unlocking of physical assets, creation of new markets and more
accurate assessment of credit and risk will open the doors to new digital economies
inconceivable before the IoT (see Figure 7).
Finally, there are whole sectors of the economy where information technology is yet to make
any significant impact. In these sectors, not only is there the possibility to unlock assets,
create new markets and better price risk, but the opportunity is highest to improve efficiency
and create entirely new solutions and value (see Figure 8). By definition, it is hard to forecast
entirely new kinds of value, but a good place to start will be those industries that, to date, have
felt little impact from digitization.
Improving operational efficiency
Today, the sector of the economy with the lowest IT intensity is farming, where IT accounts for
just 1 percent of all capital spending. Here, the potential impact of the IoT is enormous.
Farming is capital- and technology-intensive, but it is not yet information-intensive. Advanced
harvesting technology, genetically modified seeds, pesticide combinations, and global
storage and distribution show how complex modern agriculture has become, even without
applying IT to that mix.
Digitally
integrating value
chains
O
LL
ABORATIV
E
LUE
VA
prosperity of consumers, and the spread of modern appliances and other conveniences into
Improving
operational
efficiency
NE W
The expansion of consumer credit at reasonable prices had an enormous impact on the
C
risk, and simultaneously reduce moral hazard and the cost of repossession.
16
Device democracy
Instrumenting and digitizing every step in the agriculture process could yield substantial
returns from close collaboration among farmers, biotechnology companies, farm equipment
manufacturers and capital providers. The array of IoT technologies that can and will be
deployed to make agriculture more productive includes drones to monitor large areas
cheaply, instrumentation for optimized planting and harvesting based on soil and weather
conditions, and field sensors for detailed monitoring.
Digitally integrating value chains
One of the most beneficial ways the IoT will be used is through its ability to integrate value
chains. Using digital technology to integrate value chains has been one of the biggest drivers
of industrial networking technology so far.
Thanks to real-time data feeds, airlines can schedule maintenance and arrange spare parts
to fix defects long before a plane lands. The result: aircraft spend more time in the air earning
money and less time on the ground waiting for maintenance and repairs. These kinds of
high-value services exist today in very limited and closed ecosystems. The IoT will enable
consumers and businesses to operate precisely this kind of value-creating integration across
enterprises and systems at a tiny fraction of the cost of integration in the past. Crowdsourcing
and other open collaboration platforms will further accelerate the creation of shared growth
and innovation.
17
When it comes to enabling virtual vertical integration, there remain relatively few examples of
big industrial successes. Indeed, consortia on the Industrial Internet are just starting the
lengthy process of setting standards. Even as businesses argue over standards, consumers
are racing ahead. Already, there are thousands of system-to-system and system-to-device
integration “recipes” across services and products – slowly being adopted by large
enterprises, but more rapidly by consumers and small businesses that will lead the way.
In the end, the IoT is expected to make the physical world every bit as easy to search, utilize
and engage with as the virtual world. We describe this emerging transformation as the
liquification of the physical world. Just as large financial marketplaces create liquidity in
securities, currencies and cash, the IoT can liquify whole industries, squeezing greater
productivity and profitability out of them than anyone ever imagined possible.
18
Device democracy
Design thinking: Making it better
“Good design is good business.”
As the IoT liquifies the physical world, it will transform many products and experiences by
Thomas Watson, Jr., Former IBM Chairman and CEO
these devices though, networking and remote usage are only secondary features.
embedding connectivity and intelligence in practically everything around us. To most users of
Consumers care most about the primary functional value and user experience.
Tomorrow’s smart devices should create value by applying connectivity and intelligence to
improve the core value proposition of the device: smart cooktops that automatically turn the heat
down when a pot boils over; smart toasters that can tell the difference between golden brown and
burnt; smart washers that can call for maintenance before the product breaks, mix the exact
quantity of detergent needed and use the optimal temperature of water. Consumers will embrace
such solutions because they provide better cooking, less mess, cleaner clothes, increased safety
or greater fitness, not because they are part of complex networks or ecosystems.
First-person technology: What can your device do for you?
Furthermore, in the new democracy of devices where users are in control, devices in the
network should be enabled to act in the best interest of the user, rather than third parties such
as manufacturers, governments or service providers. While architecting the IoT to be
decentralized and autonomous is a step in that direction, design habits also need to evolve to
focus on the value of a connected device to its user. Putting the user first, and designing for
user-centric experiences and value will be critical to adoption of the IoT.
19
As more and more devices around us become connected and intelligent, many physical
products as we know them will be transformed into digital experiences. Many machinehuman interactions will be replaced by machine-machine interactions, and new
machine-human interactions will emerge. A large majority of machine-machine
communication will become invisible while machine-human communication will become
highly interactive (see Figure 9).
As this process unfolds, conventional design thinking will expand. Simple, transparent digital
interfaces will need to seamlessly replace existing physical interactions. And as our
dependence on smart devices increases, it will be essential that these devices are designed
not to fail. Whether for consumers or enterprises, the most successful IoT solutions must be
powerful in their value propositions, simplicity and reliability.
Figure 9
A majority of device communication will be transparent to users, and user interactions will become simple and easy to use
Instrumented
Invisible
Interconnected
Interactive
Intelligent
20
Device democracy
How ready are you for the IoT?
Companies across all industries must grasp the scale of transformation that will occur over
the next decade with the IoT and prepare for its impact. These questions can help to identify
useful steps executives can take toward that goal:
• What are the forecasted infrastructure and maintenance costs to your business to support
the IoT?
• How secure are your IoT solutions today? Do they protect the privacy of users, whether
consumers or enterprises?
• Can your business models survive the longevity of the IoT? Are they built on continuing
revenue expectations from selling data, analytics, software updates and apps?
• What role can your business play in the new digital economies that will form as a result of
the IoT?
• What opportunities exist for your company to improve efficiency and collaborate across the
value chain to create shared innovation and growth?
• Are your smart products and solutions designed to fundamentally improve their core value
propositions in a simple and reliable manner?
21
Methodology: 2014 IBM Internet of Things Study
Our study was comprised of three research components to address the multiple challenges
of a scalable, secure and efficient IoT. We used a “clean sheet approach” and collaborated
with top researchers in IBM to rethink the technology, business models and design concepts
that will shape the connected future.
• Technology strategy: We developed a revolutionary reference architecture for a low-cost,
private-by-design IoT and built concept prototypes to demonstrate feasibility. The next
phase will focus on developing a next-generation platform and partnering externally to
create functional product prototypes.
• Business and economic insights: Our research included a case study approach to
understand historical industry disruptions from digitization to identify the key vectors of
disruption from the IoT. In the next study phase, we are partnering with an economic
research firm to build an industry model to quantitatively establish susceptibility of various
industries to these vectors.
• Product and user experience design: We collaborated with expert user experience and
industrial designers to conceptualize the transformation of physical products into
meaningful digital experiences. In the next phase, we are crowdsourcing ideas related to
these principles to build a set of prototypes that demonstrate greater functional value from
the IoT.
By merging these three streams of research, we offer a tangible vision of the connected future
and findings that can guide executives in making strategic IoT decisions and investments.
22
Device democracy
Winners and losers: A recipe for digital success
The right partner for a changing world
At a macroeconomic level, we are all winners in the IoT future, even though different industries
At IBM, we collaborate with our clients, bringing
will experience a mix of different effects. Overall growth is likely, but profit pools will not be
together business insight, advanced research and
preserved, nor will the distribution of benefits be even. However, winners in the IoT economy
technology to give them a distinct advantage in
will share some common characteristics, as will losers.
today’s rapidly changing environment.
IBM Institute for Business Value
IBM Global Business Services, through the IBM
Institute for Business Value, develops fact-based
strategic insights for senior executives around critical
public and private sector issues. This executive report
is based on an in-depth study by the Institute’s
research team. It is part of an ongoing commitment by
Winners will:
• Enable decentralized peer-to-peer systems that allow for very low cost, privacy and long
term sustainability in exchange for less direct control of data
• Prepare for highly efficient, real-time digital marketplaces built on physical assets and
services with new measures of credit and risk
• Design for meaningful user experiences, rather than try to build large ecosystems or
complex network solutions.
IBM Global Business Services to provide analysis and
Losers will:
viewpoints that help companies realize business value.
• Continue to invest in and support high-cost infrastructure, and be unmindful of security and
For more information
To learn more about this IBM Institute for Business Value
study, please contact us at iibv@us.ibm.com. Follow @
IBMIBV on Twitter, and for a full catalog of our research
or to subscribe to our monthly newsletter, visit:
ibm.com/iibv
Access IBM Institute for Business Value executive
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“IBM IBV” app for iOS or Android from your app store.
privacy that can lead to decades of balance sheet overhead
• Fight for control of ecosystems and data, even when they have no measure of what its value
will be
• Attempt to build ecosystems but lose sight of the value created, probably slowing adoption
and limiting the usage of their solutions.
23
About the authors
Veena Pureswaran has spent more than 10 years in the Electronics industry and has held
leadership positions in product development, strategy and management. She is currently the
Global Electronics Industry Leader at the IBM Institute for Business Value, responsible for
developing thought leadership for the industry. She can be reached at vpures@us.ibm.com.
Paul Brody has spent more than 15 years in the Electronics industry doing extensive
consulting work across supply chain, operations and business strategy. He was formerly
Vice President and North America Leader for the IBM Mobile and Internet of Things practice,
and a founding member of the IBM Industry Academy.
Contributors
John Cohn, IBM Fellow, IBM Corporate Strategy
Peter Finn, Client Architect, IBM Sales and Distribution
Sumabala Nair, Strategy and Analytics Architect, IBM Global Business Services
Sanjay Panikkar, Global SME for Electronics, IBM Global Business Services
24
Device democracy
References
1 Reimer, Jeremy. Total Share: Personal Computer Market Share 1975-2010. December 7,
2012. http://jeremyreimer.com/m-item.lsp?i=137. Accessed on August 29, 2014.
2 Gartner press release. “Gartner Says the Internet of Things Installed Base Will Grow
to 26 Billion Units By 2020.” December 12, 2013. http://www.gartner.com/newsroom/
id/2636073. Accessed on August 29, 2014.
3 Triplett, Jack E. “The Solow productivity paradox: what do computers do to productivity?” Brookings Institution. April 1999. The Canadian Journal of Economics. http://www.
jstor.org/discover/10.2307/136425?uid=3739776&uid=2129&uid=2&uid=70&uid=4&uid=
3739256&sid=21104098246301. Accessed on August 29, 2014.
4 Reimer, Jeremy. Total Share: Personal Computer Market Share 1975-2010. December 7,
2012. http://jeremyreimer.com/m-item.lsp?i=137. Accessed on August 29, 2014.
5 Jorgenson, Dale W., Harvard University; Mun Ho, Resources for the Future; and Jon
Samuels, Johns Hopkins University. “INFORMATION TECHNOLOGY AND U.S. PRODUCTIVITY GROWTH: Evidence from a Prototype Industry Production Account.” November
19, 2010. http://scholar.harvard.edu/files/jorgenson/files/02_jorgenson_ho_samuels19nov20101_2.pdf Accessed on August 29, 2014.
6 Reimer, Jeremy. Total Share: Personal Computer Market Share 1975-2010. December 7,
2012. http://jeremyreimer.com/m-item.lsp?i=137. Accessed on August 29, 2014.
7Ibid.
8 Institute for Business Value analysis.
9 Winkler, Rolfe. “What Google gains from Nest Labs: Data Automation at Heart of $3.2
Billion Deal.” Wall Street Journal. January 14, 2014. http://online.wsj.com/news/articles/
SB10001424052702303819704579321043556056678. Accessed on August 29, 2014.
25
10 Institute for Business Value analysis.
© Copyright IBM Corporation 2015
11 NYSE Transactions, Statistics and Data Library. https://www.nyse.com/data/transactions-statistics-data-library. Accessed on August 29, 2014.
Route 100, Somers, NY 10589
12 The count: Social media counts. Personalizemedia. http://www.personalizemedia.com/
the-count/. Accessed on August 29, 2014.
IBM, the IBM logo and ibm.com are trademarks of International
Business Machines Corp., registered in many jurisdictions worldwide.
Other product and service names might be trademarks of IBM or other
companies. A current list of IBM trademarks is available on the Web at
“Copyright and trademark information” at www.ibm.com/legal/
copytrade.shtml.
13 Gibson, William. “Fresh Air.” NPR. August 31, 1993. http://www.notable-quotes.com/g/
gibson_william.html Accessed on August 29, 2014.
14 Maymounkov, Petar and David Mazières. “Kademlia: A Peer-to-peer Information System
Based on the XOR Metric.” New York University. http://pdos.csail.mit.edu/~petar/papers/
maymounkov-kademlia-lncs.pdf. Accessed on August 29, 2014.
15 “A Next-Generation Smart Contract and Decentralized Application Platform.” GitHub:
ethereum/wiki. https://github.com/ethereum/wiki/wiki/%5BEnglish%5D-White-Paper.
Accessed on August 29, 2014.
16“Peer to peer rental: The rise of the sharing economy.” The Economist. March 9, 2013.
http://www.economist.com/news/leaders/21573104-internet-everything-hire-rise-sharing-economy. Accessed on August 29, 2014.
17 Gartner perspective: IT Spending 2010. http://www.financialexecutives.org/eweb/upload/FEI/Gartner.pdf. Accessed on August 29, 2014.
18 Searls, Doc. “Why we need first person technologies on the Net.” March 19, 2014. http://
blogs.law.harvard.edu/vrm/2014/03/19/why-we-need-first-person-technologies-on-thenet/. Accessed on August 29, 2014.
Produced in the United States of America, July 2015
This document is current as of the initial date of publication and may be
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The information in this document is provided “as is” without any
warranty, express or implied, including without any warranties of
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This report is intended for general guidance only. It is not intended to be
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Please Recycle
GBE03620-USEN-04
Empowering the edge
Practical insights on a decentralized Internet of Things
IBM Institute for Business Value
Executive Report
Electronics Industry
Transforming businesses as
the Internet of Things expands
As a global electronics company, we understand the
issues facing the high-tech industry and the continuous
transformation required to thrive. Across the industry,
companies are turning their attention from smartphones and
tablets to a new generation of connected devices that will
transform not just the Electronics industry, but many others.
The IBM Global Electronics practice uniquely combines IBM
and partner services, hardware, software and research into
integrated solutions that can help you deliver innovation,
create differentiated customer experiences and optimize
your global operations.
1
Testing the foundations of
device democracy
Executive summary
Organizations, both private and public, must prepare to
As the IoT scales exponentially, decentralized networks have the potential to reduce
operate in the incomprehensibly immense Internet of
infrastructure and maintenance costs to manufacturers. Decentralization also promises
Things (IoT) that lies ahead. Our first report in this IoT
increased robustness by removing single points of failure that could exist in traditional
series, “Device democracy: Saving the future of the
centralized networks. By shifting the power in the network from the center to the edges,
Internet of Things,” proposes that decentralization can
devices gain greater autonomy and can become points of transaction and economic value
help address the challenges of cost, privacy and
creation for owners and users.
longevity in scaling the IoT to an inevitable hundreds of
billions of devices.1 In this subsequent report, we
describe how we tested that concept using three goals:
• Validate the future vision for decentralized
systems to extensively augment today’s
centralized solutions;
• Demonstrate foundational IoT tasks without the
use of centralized control; and
• Empower devices to engage autonomously in
marketplace transactions.
To validate the underlying technology vision, IBM jointly developed with Samsung Electronics
the Autonomous Decentralized Peer-to-Peer Telemetry (ADEPT) proof-of-concept (PoC).
This represented the second phase of the 2014 IBM Internet of Things Study.
The primary objective of the ADEPT PoC was to establish a foundation on which to
demonstrate several capabilities that are fundamental to building a decentralized IoT. Though
many commercial systems in the future will exist as hybrid centralized-decentralized models,
ADEPT demonstrates a fully distributed proof.
While many commercialization challenges remain, our PoC validated the feasibility of both
implementing the foundational functions of a decentralized IoT, and enabling device
autonomy in IoT transactions and marketplaces. ADEPT opens the door for the electronics
industry to further explore the challenges and opportunities of potential hybrid models that
can address the complexity and variety of requirements posed by an Internet that continues
to scale.
2
Empowering the edge
As we approach the era of hundreds of billions
of devices, a hybrid IoT will evolve, and the
“edge” will complement the center
Through the partnership with Samsung Electronics and collaboration with the open
Devices on the edge can be empowered to
function autonomously in the IoT
• A W9000 Samsung washer autonomously reordering detergent (B2C)
The edge will become a frontier of new
economic value, creating an Economy of Things
source communities, ADEPT successfully demonstrated four use cases using functional
Samsung products:
• A W9000 Samsung washer autonomously reordering service parts (B2C)
• A W9000 Samsung washer autonomously negotiating power usage (B2C)
• Samsung Large Format Displays (LFDs) autonomously displaying advertising
content (B2B).
By empowering devices to engage autonomously in markets – both financial and nonfinancial – and react to changes in markets, the IoT will create an “Economy of Things.”
Virtually every device and system can potentially become a point of transaction and economic
value creation for owners and users. These capabilities will be crucial to everything from
enabling sharing economies to energy efficiency and distributed storage.
3
Three foundational functions
To perform the functions of traditional IoT solutions without a centralized broker, any
decentralized approach must support three foundational functions (see Figure 1):
• Peer-to-peer messaging
• Distributed file sharing
• Autonomous device coordination.
The ADEPT PoC implemented these functions using three open source protocols: Telehash
for messaging, BitTorrent for file sharing and Ethereum, a blockchain protocol for autonomous
device coordination functions such as device registration, authentication, proximity-based
and consensus-based rules of engagement, contracts and checklists.
Figure 1
In the ADEPT PoC, devices are empowered to perform three foundational functions
Peer-to-peer messaging
Distributed file sharing
Autonomous device coordination
Share
analytics data
Notify
owner
Authenticate
untrusted device
Barter energy,
bandwidth
and computing
power
Make
payment
4
Empowering the edge
Peer-to-peer messaging in a
decentralized IoT must support:
trustless, encrypted messaging and
transport; low latency with guaranteed
delivery; and storage and forwarding
of messages with “hop-on” to other
connected devices.
Peer-to-peer messaging
Peer-to-peer networks are capturing much emerging interest because they provide a good
platform for distributed computing. Today, such networks support a rich list of features,
including selection of nearby peers, redundant storage, efficient search/location of data,
data permanence or guarantee, hierarchical naming, trust and authentication, and anonymity.2
Peers can share computing resources without dependency on a central cloud or server,
thereby optimizing resource utilization and cost involved in subscribing to a central service.
A network of peers with diverse capabilities and resources could further strengthen the
overall stability and performance of the system without dependency on a third party.
Peer-to-peer messaging in a decentralized IoT must support:
• Trustless, encrypted messaging and transport
• Low latency with guaranteed delivery
• Storage and forwarding of messages with “hop-on” to other connected devices.
Distributed Hash Tables (DHTs) can meet such messaging requirements, enabling peers to
search for other peers on the network using a hash table with (key, value) pairs stored in the
DHT.3 Each device can generate its own unique public key-based address (a hashname) to
send and receive encrypted messages with other endpoints.
For ADEPT, of the many messaging protocols considered, an emerging open source
messaging protocol, Telehash, best matched our goals for peer-to-peer messaging. Telehash
is an open source DHT implementation of the Kademlia protocol.4 Our protocol choices were
made based on their current capabilities and our ability to implement them in a PoC. In our
demonstration of a decentralized IoT, Telehash is used primarily for notifications among
devices without using a centralized server.
5
Distributed file sharing
Figure 2
In a decentralized IoT, distributed file sharing enables content distribution such as
An autonomous device coordination framework enables transactions
among devices, from simple registration to complex checklists
propagating software/firmware updates, transfer of device analytics reporting and media
content for files of large orders of magnitude. Such distributed file sharing can also be
achieved securely via distributed peer-to-peer networks using DHT. BitTorrent, a well-known
DHT file sharing protocol was chosen for ADEPT file sharing. In our demonstration of a
decentralized IoT, BitTorrent is used primarily for content distribution without using a
Autonomous device coordination framework
Checklists
centralized server.
Autonomous device coordination
By not requiring a third-party arbiter of roles and permissions, an autonomous device
coordination approach empowers owners of devices to define and manage their own
interactions. Simple device coordination functions include registration and authentication.
More complex interactions require the owner or user to define rules of engagement. These
rules could be proximity-based (physical, social or temporal), consensus-based (selection,
validation or blacklisting), or triggered by other device stimuli.
Contracts
• Agreements
• Payments
• Barter
Rules of engagement
• Proximity-based rules
(physical, social and temporal)
• Consensus-based rules
(selection, validation and blacklisting)
Another form of device coordination is contracts – simple agreements about actions or
control, more complex financial contracts involving payments or barter contracts that allow
Authentication
devices to exchange their resources for a service. Digital checklists allow devices to maintain
themselves to prevent failure.
To implement such an autonomous device coordination framework across a network of
devices in our PoC, we chose the blockchain technology platform (see Figure 2).5
Registration
6
Empowering the edge
Building a blockchain-based IoT
Applying the blockchain concept to the
IoT offers fascinating possibilities that
include maintaining product
information, history, product revisions,
warranty details and end-of-life so
that the blockchain itself can become
the trusted product database.
A blockchain – the technology platform underlying the decentralized financial system
Bitcoin – is a long ledger of transactions shared by participants of the network. A full copy
of the blockchain holds a record of every transaction ever completed in the network. Every
blockchain participant can maintain its own copy of the ledger, although the amount of data
stored will vary based on capability, need and preference. Every block on the ledger contains
a “hash” of the previous block.
This enables blocks to be traced back even to the first (“genesis”) block. It is computationally
prohibitively difficult and impractical to modify a block once it is created, especially as the chain
of subsequent blocks get generated. Blocks in shorter chains are automatically invalidated by
virtue of there being a longer chain – all participants adopt the longest available chain.
Applying the blockchain concept to the world of IoT offers fascinating possibilities. As soon as
a product completes final assembly, it can be registered by the manufacturer into a universal
blockchain representing its beginning of life. Once sold, a dealer or end customer can register
it to a regional blockchain (a community, city or state). When registered, the product remains a
unique entity within the blockchain throughout its life. The possibility of maintaining product
information, history, product revisions, warranty details and end-of-life in the blockchain
means the blockchain itself can become the trusted product database.
For example, imagine a world where a smart device is able to detect a component failure,
check warranty status on the blockchain, place a service order with a contracted service
provider and have the service provider independently verify the warranty claim – again from
the blockchain – all autonomously. In such a world, we would redesign and simplify how we
7
design our master data management systems, after-sales systems, and order processing
and management. A blockchain-based, decentralized IoT can become a truly revolutionary
approach to transaction processing among devices (see Figure 3).
It is important to note that while Bitcoin contains an escalating difficulty in the blockchain
mining process to restrict the issuance of currency, no such restriction is necessary in our
vision of blockchains for the IoT. For the ADEPT implementation of a blockchain-based IoT,
we chose the Ethereum protocol in its alpha version.6 Ethereum’s improvements to the
traditional blockchain approach of Bitcoin, the Turing complete scripting languages it
introduced and its ability to create binding contracts were extremely compelling for our PoC.
Figure 3
The blockchain functions as a distributed transaction ledger for various IoT transactions
Universal digital ledger
Register
new devices
Authenticate
remote users
Barter power with
other appliances
Run checklist for
automobile safety
8
Empowering the edge
Three device types
Devices in the IoT vary widely by computing power, networking capability, storage space,
whether they are AC or battery powered, and stationary or mobile, to mention a few. Devices
will be part of ecosystems that can also require continuously evolving levels of trust. As more
transactions occur between peer devices, trust will evolve between them. What starts as an
interaction between two trustless peers can over time become a semi-trusted or even a
trusted relationship.
So the extent of transaction verification required between devices depends on many factors:
the kind of device, nature of the interaction, kind of relationship between the devices and also
the constraints imposed by device owners on what the devices can and cannot do in specific
circumstances. Based on these considerations, we identified three broad categories of
devices and defined the decentralized IoT capabilities of each (see Figure 4).
Figure 4. Device capabilities get increasingly sophisticated in moving from light peers to standard peers to peer exchanges
Peer exchange
Standard peer
Marketplace management and analytics tools
Transaction verification
Light peer
Device level analytics
Autonomous device coordination framework
Blockchain
Messaging
File transfer
Related peer list
9
Different devices in the IoT support different degrees of ADEPT functionality, depending on
their performance and storage capabilities. At the lowest end are light peers: devices such as
wearables and light switches that perform basic IoT functions like messaging. At the other
end of the device spectrum, peer exchanges on servers or clouds enable more complex
marketplace transactions as peer services.
As these devices become peers of a decentralized network, it is essential that each can
identify itself uniquely to peers in a verifiable manner, retain details on its relationship with
different peers and identify peers unambiguously across protocols. These actions are
achieved by means of a secure peer list.
Light peers
Light peers are devices with low memory and storage capabilities, such as sensors and
devices supporting light applications. Current representatives of light peers include
Raspberry Pi, Beaglebone and Arduino boards.
Light peers perform messaging, retain a light wallet with their blockchain addresses and
balances, and perform minimal file sharing: for example, receiving firmware updates or
sending a transaction summary file to another peer based on a business or functional need.
To obtain its blockchain transactions, a light peer will turn to a trusted peer.
Devices on the edge perform different
roles in a decentralized IoT based on
their capabilities.
10
Empowering the edge
The peer exchange not only supports
transaction verification, but also
functions like a financial exchange by
providing liquidity for transactions
between devices in the marketplace.
Standard peers
In the next few years, we expect processing power and storage capabilities of most products
to increase as the cost of general-purpose computing declines. The incremental cost to
manufacturers or end consumers for increased computing power and storage will be
insignificant.
So washers and refrigerators of the future, for example, will be equipped with higher storage and
processing capabilities that make it possible to meet blockchain requirements for
a specified period of time – not only of themselves but also of light peers in their trusted
environment. We expect such products to become the standard in the years to come.
At the core level, a standard peer is very similar to a light peer, but it retains a part of the
blockchain, based on its capabilities. This could include its own recent transactions, but also
those of other lighter devices in the ecosystem that it holds contracts with. Standard peers
can also support light peers in performing file transfers. They will have capabilities to store
and forward messages to peers and to perform light analytics for themselves and peers.
Peer exchanges
Peer exchanges are high-end devices with vast computing and storage capabilities. In a
decentralized IoT, they are also peers, owned and operated by organizations or commercial
entities and capable of hosting marketplaces. Marketplace components such as analytical
solutions, payment exchanges, fraud detection, trade and legal compliance packages, and
demand-supply matching solutions are supported by peer exchanges, as well as the
integration capabilities required to support and interoperate with other business solutions.
11
Peer exchanges are also potential repositories for a complete copy of the blockchain and
Figure 5
provide blockchain analytical services. The size of blockchains can rapidly increase in
Marketplaces hosted by peer exchanges provide liquidity for transactions
between devices
scenarios where a city or community may have millions of IoT devices. Even standard peers
Peer exchange
with advanced processors and storage may not be able to hold blockchain information for
themselves and the peers they service for more than a few days. However, with the blockchain
being the trusted source of information holding all product transactions, it is important to be
able to access it at a regional or community level going back in time, in some cases back to
Marketplace management and analytics tools
the start of a product’s life.
For example, a solar micro-grid may be commissioned for a decade or a smart street light
may have been registered a few years back. When servicing or support is needed, blockchain
access may verify the first registration or installation details.
Service
lifecycle
Commerce
Peer/device
lifecycle
The peer exchange, somewhat akin to the role performed by current-day financial exchanges,
performs supply and demand balancing across the marketplace. So resources offered by
a set of assets in one community might turn to a peer exchange for buyers in another.
Demand-supply
matching
Content
management
Blockchain
management
Peer exchanges then become more than a large server or cloud offering memory and technical
support They become the lifeline for new economic opportunities – the new “silk roads” –
making possible the liquification of assets described in “Device democracy” (see Figure 5).7
Marketplace security
and privacy
Business
intelligence
12
Empowering the edge
Transforming the IoT into an Economy of Things
By enabling devices to engage autonomously in marketplaces and supporting complex
marketplace transactions, the IoT is expected to improve the utilization and profitability of
physical assets and devices. By transforming every device into a point of transaction and
economic value creation for owners and users, the IoT will create new real time digital
economies and new sources of value. We call this transformation the “Economy of Things.”
To demonstrate the feasibility of a decentralized IoT and its role in creating new digital
economies, the ADEPT PoC use case scenarios spanned a spectrum of devices and
marketplace transactions. A set of B2C and B2B use cases was implemented on functional
Samsung products in close collaboration between IBM and Samsung.
The B2C ADEPT use cases demonstrated how a washer can become an autonomous device
capable of managing its own consumables supply, perform self-service and maintenance,
and even negotiate with other devices – both in the home and outside – to optimize energy
consumption. These use cases can be extended to scenarios where micro-commerce
solutions can be built using a set of ordinary home appliances.
All of these functions were achieved without a central controller orchestrating or mediating
between the devices (see Figure 6). The B2B ADEPT use case demonstrated a decentralized
advertising marketplace using LFDs to share and publish content, all without a centralized
controller (see Figure 7).
13
Figure 6
Figure 7
The ADEPT washer participated autonomously in the consumables, energy and service marketplaces
Large format displays participated autonomously in a decentralized
advertising marketplace
Marketplaces
Consumables
Energy
Service
Advertiser
Delivers content
Retailer - detergent check
Order and payment Confirmation
TV - negotiate power usage
Service vendor - warranty check
Negotiation
Service request
Payment
Confirmation
ADEPT washer
Displays
Share and publish content
Notification
Washer owner
LFD owner
•Receives analytics
•Confirms approval
•Finalizes payment
14
Empowering the edge
From proof-of-concept to commercialization:
A hybrid future
ADEPT shows great promise for tomorrow’s IoT. As “Device democracy” notes, the humble
work of transaction processing is the foundation of modern computing workload.8 Thanks to
major advances in both device technology and software, it is now possible to bring
transaction processing, marketplaces and intelligence to virtually every device, anywhere.
Distributed systems like ADEPT can make businesses and consumers more efficient and
open a huge range of economic opportunities. These technological changes could foretell
the biggest revolution since the origin of general purpose computing and transaction
processing systems.
Future commercial systems may exist as hybrid centralized-decentralized systems depending
on the value, longevity and application of devices on the IoT. The feasibility of ADEPT paves
the way for augmenting today’s centralized IoT solutions with more decentralized capabilities
(see Figure 8).
15
Figure 8
The feasibility of ADEPT paves the way for augmenting centralized IoT solutions with peer-to-peer approaches
IBM IoT platform
Industry solutions
High
Low
Hybrid
Lower complexity
and faster change
management
Device self-care,
lower costs and
fast reaction time
Centralized
Decentralized
Lowest cost on the
device and very little
centralized cost
Lowest long-term
cost structure
Design and
engineer
Operate
Manage
Analyze and optimize
Connect, collect and command
Device
longevity
High
Protocols
Devices
gateways
and assets
Peer-to-peer
connection
ADEPTenabled
devices
Secure
Device
value
Centralized
The ADEPT PoC opens the door for
the electronics industry to further
explore the challenges and
opportunities of potential hybrid
models that can effectively augment
today’s centralized solutions.
16
Empowering the edge
Recommendations
Augment centralized with decentralized
As the IoT continues to grow, IoT practitioners must evaluate opportunities to augment
existing IoT solutions with peer-to-peer models. Low-cost, high-longevity device applications
are good candidates to begin the expansion to a more hybrid IoT. Industries where services
are tightly controlled and economies that incur massive infrastructure costs from digitization
are likely to benefit most from a hybrid model.
Collaborate for change
This report provides insights to IoT practitioners from a functional PoC of a decentralized IoT.
But to develop commercially viable solutions, it is imperative that core technologies be made
more robust to meet the challenges of a peer-to-peer network of hundreds of billions of
devices. Actively engage with the IoT and blockchain communities to take critical steps to
address these challenges.
Act now
Clearly, there are still significant scalability challenges associated with commercializing
distributed systems, as well as security, coordination, intellectual property management, and
identity and privacy issues. One strategy that does offer certainty, however, is not advisable:
sitting on the sidelines and waiting for others to pioneer this technology. Choosing that
seemingly safer option merely raises the likelihood that when today’s risks have been
resolved, it will be difficult to catch up with market leaders.
17
Are you preparing to benefit from the evolving IoT?
Companies across industries must grasp the scale of IoT transformation that will occur over
Related publication
the next decade and get ready for its impact. These questions can help to identify useful
Brody, Paul and Veena Pureswaran. “Device
steps that practitioners and executives can take toward that goal:
democracy: Saving the future of the Internet of Things.”
• How will you forecast the infrastructure and maintenance costs necessary for your
business to support and engage in the IoT?
• How can you evaluate the security of your IoT solutions today? How will they continue to
protect the privacy of users, whether consumers or enterprises?
• What is your plan to help your IoT solutions survive the longevity of the devices they
support?
• To what extent can your existing IoT benefit from a decentralized or hybrid model?
• What opportunities exist for your company to improve efficiency and collaborate across
the IoT community to capitalize on hybrid IoT models ahead?
IBM Institute for Business Value. September 2014.
www.ibm.biz/devicedemocracy
For more information
To learn more about this IBM Institute for Business Value
study, please contact us at iibv@us.ibm.com. Follow @
IBMIBV on Twitter, and for a full catalog of our research
or to subscribe to our monthly newsletter, visit:
ibm.com/iibv
Access IBM Institute for Business Value executive
reports on your phone or tablet by downloading the free
“IBM IBV” app for iOS or Android from your app store.
18
Empowering the edge
About the authors
Veena Pureswaran has spent more than 10 years in the Electronics industry and has held
leadership positions in product development, strategy and management. She is currently the
Global Electronics at the IBM Institute for Business Value, responsible for developing thought
leadership for the industry. She can be reached at vpures@us.ibm.com
Sanjay Panikkar has spent more than 10 years in the Electronics industry leading client
projects on supply chain and smarter electronics. As a member of the Electronics Center of
Competence, he led the PoC implementation of ADEPT with Samsung Electronics. He can be
reached at psanjay@in.ibm.com
Sumabala Nair has spent more than 10 years as a client architect. She is currently a member
of the IBM Global Business Services Business Analytics and Strategy team. She was the
lead architect of the ADEPT PoC with Samsung Electronics and can be reached at
sumanair@in.ibm.com
Paul Brody has spent more than 15 years in the Electronics industry doing extensive
consulting work across supply chain, operations and business strategy. He was formerly the
Vice President and North America Leader for the IBM Mobile and Internet of Things practice,
and a founding member of the IBM Industry Academy.
19
Contributors
The right partner for a changing world
John Cohn, IBM Fellow, IBM Corporate Strategy
At IBM, we collaborate with our clients, bringing
Yunjung Chang, Senior Managing Consultant, IBM Global Business Services
Gurvinder Ahluwalia, CTO Cloud Computing, IBM Global Technical Services
Peter Finn, Client Architect, IBM Sales and Distribution
together business insight, advanced research and
technology to give them a distinct advantage in
today’s rapidly changing environment.
IBM Institute for Business Value
Richard Brown, Executive Architect, IBM Sales and Distribution
IBM Global Business Services, through the IBM
Kevin Daley, Business Architect, IBM Global Business Services
Institute for Business Value, develops fact-based
Joni McDonald, Content Strategist, IBM Sales and Distribution
Angela Finley, Visual Designer, IBM Sales and Distribution
Acknowledgments
The authors would like to thank Dr. WonPyo Hong (President), Dr. JinSoo Yoon (VP and Lead
of Decentralized IoT) and the Media Solution Center development team at Samsung
Electronics, Seoul for their support and collaboration on the ADEPT PoC. We would also like
to acknowledge the contributions of the Ethereum team: Vitalik Buterin, Stephan Tual and
Gavin Wood; and Jeremie Miller of Telehash. We also thank the IBM Design team for their help
with use case design. And finally, we thank the IBM Korea team for their support, as well as the
following IBM colleagues who were involved in the implementation of the ADEPT PoC: Nikhil
Baxi, Amir Kamal, Hari Reddy and JungWon Cho.
strategic insights for senior executives around critical
public and private sector issues. This executive report
is based on an in-depth study by the Institute’s
research team. It is part of an ongoing commitment by
IBM Global Business Services to provide analysis and
viewpoints that help companies realize business value.
20
Empowering the edge
Notes and sources
1 Brody, Paul and Veena Pureswaran. “Device democracy: Saving the future of the Internet of
Things.” IBM Institute for Business Value. September 2014. www.ibm.biz/devicedemocracy
2 Eng Keong Lua, Crowcroft, J., Pias, M., Sharma, R. and Lim, S. “A survey and comparison of
peer-to-peer overlay network schemes.” IEEE Communications Surveys and Tutorials. 2005.
3 Maymounkov, Petar and David Mazières. “Kademlia: A Peer-to-peer Information System
Based on the XOR Metric.” New York University. http://pdos.csail.mit. edu/~petar/papers/
maymounkov-kademlia-lncs.pdf. Accessed on August 29, 2014.
4 Telehash: Encrypted mesh protocol. http://telehash.org. Accessed on March 24, 2015.
5 Leishman, Alexander, latest editor. “A Next-Generation Smart Contract and Decentralized
Application Platform.” GitHub: ethereum/wiki. March 18, 2015. https://github.com/
ethereum/wiki/wiki/White-Paper. Accessed on March 24, 2015.
6 Ethereum: A platform for decentralized applications. https://www.ethereum.org. Accessed
on March 24, 2015.
7 Brody, Paul and Veena Pureswaran. “Device democracy: Saving the future of the Internet of
Things.” IBM Institute for Business Value. September 2014. www.ibm.biz/devicedemocracy
8ibid.
21
© Copyright IBM Corporation 2015
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Produced in the United States of America, April 2015
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Business Machines Corp., registered in many jurisdictions worldwide.
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This report is intended for general guidance only. It is not intended to be
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judgment. IBM shall not be responsible for any loss whatsoever
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The data used in this report may be derived from third-party sources
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IBM makes no representations or warranties, express or implied.
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GBE03662-USEN-02
IBM GLOBAL BUSINESS SERVICES
Executive Summary
Electronics Industry
IBM Institute for Business Value
Empowering the edge
Use case abstract for the ADEPT proof-of-concept
Overview
This use case abstract supplements
the IBM Institute for Business Value
practitioner perspective, “Empowering the
edge: Practical insights on a decentralized
Internet of Things.” These ADEPT B2C
and B2B use cases spanned devices and
capabilities, and were executed with
functional Samsung products in close
collaboration with Samsung Electronics.
This abstract illustrates the value of
devices autonomously performing various
IoT transactions, both financial and
non-financial, thereby potentially creating
new digital economies.
The B2C use cases were implemented for the Autonomous Decentralized
Peer-to-Peer Telemetry (ADEPT) proof-of-concept (PoC) in the second
phase of the 2014 IBM Internet of Things Study. The B2C cases were:
• A W9000 Samsung washer autonomously reordering detergent
• A W9000 Samsung washer autonomously reordering service parts
• A W9000 Samsung washer autonomously negotiating power usage.
The B2B case consisted of Samsung Large Format Displays (LFDs)
autonomously displaying advertising content.
B2C cases: Autonomous washer participates
in the consumables, service and energy
marketplaces
Our set of B2C use cases was demonstrated by a washer, a common
household appliance. Using ADEPT, it became an autonomous device
capable of managing its own consumables supply, performed self-service
and maintenance, and even negotiated with other devices, both in the
home and outside, to optimize energy consumption.
We also envision scenarios where micro-commerce solutions can
be built using a set of ordinary home appliances. Functions such as
warranty checks, payments and notifications would be achieved without
a central controller orchestrating or mediating between the devices – a
revolutionary result based on how appliances generally work today.
1
IBM GLOBAL BUSINESS SERVICES
Executive Summary
Electronics Industry
Use case 1. Consumables marketplace: A washer orders its own
detergent
Today, most appliances with consumables require the user to order or
purchase refills via a retailer. Examples include: printer cartridges,
coffeemaker filters, disposable vacuum cleaner bags, refrigerator water
filters and washer detergent.
The ADEPT washer consumables use case is based on the premise that
appliances of the future will have sufficient intelligence to autonomously manage their consumables by engaging in real-time with a consumables marketplace (see Figure 1). The Samsung washer W9000 used for
demonstration of the PoC can run device-level analytics to detect when
its detergent supply runs low. In addition, the ADEPT-enabled W9000
washer was able to:
• Query the blockchain and determine that there was a pre-existing
contract with a retailer for the refill of detergent
• Request a detergent refill by means of a peer-to-peer message to the
retailer
• Invoke a pre-existing contract with the retailer and make a secure
payment for the order over the blockchain
• Inform the owner via a peer-to-peer message that a replenishment
order was being placed.
The retailer in this case was able to:
• Determine the validity of the contract with the washer on the blockchain
• Receive secure payment through the contract over the blockchain
• Generate the refill order once the payment was received
• Communicate delivery details to the washer by means of a peer-to-peer
message.
Figure 1
IoT transactions for the autonomous washer’s order of a consumable (detergent, in this case).
1 Detergent falls below reorder level
Washer analytics triggers reorder request
2 Washer checks for existing retailer contract on the blockchain
(Ethereum)
3 Washer requests detergent reorder (Telehash)
4 Washer makes payment using existing contract on blockchain
(Ethereum)
5 Retailer creates refill order
6 Retailer dispatches confirmation (Telehash)
7 Washer and retailer notify owner of detergent reorder (Telehash)
In a more complex scenario of this use case, retailers would be able to bid
on the blockchain based on price, inventory or delivery performance, and
consumers (the appliances themselves) could select retailers by consensus.
Such a decentralization of the marketplace opens up economic opportunities in industries that are otherwise very tightly controlled.
2
IBM GLOBAL BUSINESS SERVICES
Executive Summary
Electronics Industry
Use case 2. Service marketplace: A washer requests and pays for its
own maintenance call
The appliance service market today is very fragmented, with neither service
providers nor consumers achieving the highest level of value in the marketplace. The ADEPT PoC attempted to better connect supply and demand in
service marketplaces by leveraging features of the blockchain. Every
ADEPT-enabled device has key information, such as its device ID and
warranty information, registered to the blockchain. Devices also store their
own warranty information in the local peer list. In addition to detecting an
impending part failure, the autonomous washer was able to autonomously
order a service replacement part in the marketplace.
For this use case, the ADEPT washer was enabled to engage in the
following actions (see Figure 2):
• Run device analytics to assess part or component performance. The
washer triggered a service request when an impending part or component failure was detected.
• Query its peer list for local warranty details to determine its own
warranty status
• Identify an appropriate service vendor by checking for peer-rated
consensus over the blockchain
• Once a service vendor was selected, the washer raised a service request to
the service vendor. If the appliance was under warranty, no payments
would be needed. If out of warranty, the appliance, owner and service
vendor could create a new contract to make a payment.
• Upon receiving the request, the service vendor checked the warranty
status of the device in the blockchain
• Upon verification of active warranty coverage, the service request was
then accepted as a service order in the vendor’s service system and the
details were sent to the washer, along with a notification to the owner
• The owner and vendor could negotiate through messaging to confirm
when the service professional would arrive to replace the part.
Figure 2
IoT transactions for autonomous washer service order.
1 Washer detects potential air filter failure
2 Washer checks
warranty status on
the blockchain
(Ethereum)
3 Washer finds
authorized service
center by consensus
on the blockchain
(Ethereum)
4 If in warranty,
washer places
replacement
order
6 Service provider
verifies warranty
status on the
blockchain
(Ethereum)
If in warrany, dispatch
confirmation (Telehash)
5 Washer
notifies
owner of
order details
(Telehash)
7 Service
provider
notifies owner
of service
call details
(Telehash)
In a more complex scenario of this use case, service providers could bid
on the blockchain – based on an inventory of service parts, utilization
and proximity of service personnel, quality of service and other chosen
variables – and consumers would be able to select a service provider by
consensus. Such a decentralization of the service marketplace should improve
profitability in industries that otherwise are not operating at optimal capacity.
3
IBM GLOBAL BUSINESS SERVICES
Executive Summary
Electronics Industry
Use case 3. Energy marketplace: Home appliances negotiate power
usage to reduce costs
Physical assets often have unused capacity or resources a majority of the time.
These resources could include compute power, memory, bandwidth or energy.
Such excess capacity and resource often cannot be effectively utilized due to
insufficient discoverability, security or payment mechanisms.
By improving discoverability, usability and payment mechanisms, ADEPT
enables better resource optimization between devices. A small instance of
this concept is captured in the use case of the ADEPT washer participating
in a power bartering transaction to optimize overall energy consumption.
In this use case, the washer created a contract to negotiate transactions and
payments among power-hungry appliances in the home (see Figure 3).
The washer was enabled to:
• Subscribe to analytics from a feeder that indicated an upcoming spike in
energy price. Accordingly, it determined that a power negotiation with its
peers was required to protect the owner from punitive charges.
• Detect that the TV was operational and request it to “power down.”
(A TV was used for demonstration purposes, but this scenario could apply
to other appliances).
The TV was enabled to:
• Run analytics to recognize that it could not power down because the
request came during peak TV viewing time
• Send a notification to the washer declining to power down and, in turn,
compensate the washer with owner-approved payment, per the contract
• Make a secure payment and delay the washer cycle to a pre-determined time
• Inform TV viewers that an impending power price hike was offset by the
washer delaying its cycle.
Figure 3
IoT transactions for autonomous energy barter between appliances.
1 Owner creates contracts
for devices. For example,
do not turn off TV during
peak viewing hours
2 Washer subscribes to analytics
from feeder. Analytics shows
spike in energy price from
peak usage
3 Washer requests TV
to power down (Telehash)
5 TV declines request to
power down (Telehash)
7 Washer notifies owner
of new wash cycle
4 TV runs analytics to
determine peak
viewing time
6 TV offers secure
payment in exchange
for washer delaying
cycle by 3 hours
An extension of this use case showed the washer negotiating directly with a
community-owned micro-grid. In exchange for a specific number of KWH
of power for one week, the washer was able to offer a pre-determined
number of free wash cycles to community members at a later date, per a
contract between the owner and the community.
4
IBM GLOBAL BUSINESS SERVICES
Executive Summary
Electronics Industry
B2B case: Large Format Displays (LFDs)
participate in the advertising marketplace
Use case 4. Advertising marketplace: Devices control content and
scheduling
Advertising is another marketplace that is highly centralized today with
content tightly controlled by a few large players. Our B2B ADCast use
case demonstrated a decentralized advertising marketplace using Large
Format Displays (LFDs) to share and publish content, all without a
centralized authority (see Figure 4). The LFD owner had multiple
LFDs hosted at strategic locations. In this use case, the LFD owner:
• Published availability of display slots in real time
• Leased display space on the devices to candidates after reviewing their
content.
LFDs participating in this marketplace were enabled to:
• Discover available slots in real time and submit a request to display
content
• Receive content uploaded by the owner through distributed file sharing
• Approve and automatically transmit content to be displayed at appropriate time slots
• Make and receive secure payments for displaying content through the
blockchain.
Figure 4
IoT transactions for an autonomous advertising marketplace
Advertiser
1 Selects target LFDs
2 Requests approval (Telehash)
4 Makes digital payment (Ethereum)
LFD owner
6 Uploads ad content (Bittorrent)
8 Checks usage and revenue analytics
3 Confirms approval (Telehash)
5 Confirms payment (Telehash)
7 Share and publish ad
content (Bittorrent)
5
IBM GLOBAL BUSINESS SERVICES
Executive Summary
Electronics Industry
Authors
Veena Pureswaran
vpures@us.ibm.com
Sanjay Panikkar
psanjay@in.ibm.com
Sumabala Nair
sumanair@in.ibm.
To read the full report associated
with this use case abstract,
visit ibm.com/services/
us/gbs/thoughtleadership/
empoweringedge
To learn more about this IBM
Institute for Business Value
study, please contact us at iibv@
us.ibm.com. Follow @IBMIBV on
Twitter and for a full catalog of our
research, visit: ibm.com/iibv
Access IBM Institute for Business
Value executive reports on your
phone or tablet by downloading
the free “IBM IBV” app for iPad or
Android from your app store.
6
IBM GLOBAL BUSINESS SERVICES
Executive Summary
Electronics Industry
Related publications
Pureswaran, Veena, Sanjay Panikkar, Sumabala Nair and Paul Brody.
“Empowering the edge: Practical insights on a decentralized Internet of
Things.” IBM Institute for Business Value. March 2015. http://www935.ibm.com/services/us/gbs/thoughtleadership/empoweringedges/
Brody, Paul and Veena Pureswaran. “Device democracy: Saving the
future of the Internet of Things.” IBM Institute for Business Value.
September 2014. www.ibm.biz/devicedemocracy
IBM Institute for Business Value
The IBM Institute for Business Value, part of IBM Global Business
Services, develops fact-based strategic insights for senior business
executives on critical public and private sector issues.
The right partner for a changing world
At IBM, we collaborate with our clients, bringing together business
insight, advanced research and technology to give them a distinct
advantage in today’s rapidly changing environment.
7
© Copyright IBM Corporation 2015
IBM Global Services
Route 100
Somers, NY 10589
U.S.A.
Produced in the United States of America
April 2015
All Rights Reserved
IBM, the IBM logo and ibm.com are trademarks or registered trademarks
of International Business Machines Corporation in the United States, other
countries, or both. If these and other IBM trademarked terms are marked on
their first occurrence in this information with a trademark symbol (® or ™),
these symbols indicate U.S. registered or common law trademarks owned by
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Other company, product and service names may be trademarks or service
marks of others.
References in this publication to IBM products and services do not
imply that IBM intends to make them available in all countries in which IBM
operates.
This report is intended for general guidance only. It is not intended to be a
substitute for detailed research or the exercise of professional judgment. IBM
shall not be responsible for any loss whatsoever sustained by any organization
or person who relies on this publication.
The data used in this report may be derived from third-party sources and
IBM does not independently verify, validate or audit such data. The results
from the use of such data are provided on an “as is” basis and IBM makes no
representations or warranties, express or implied.
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GBE03666-USEN-01
Links In The Chain
What Role Can Blockchain Technology Play in Facilitating
The Internet of Things Revolution?
Lance Koonce, Davis Wright Tremaine LLP
dwt.com
What is the Blockchain?
If you don’t yet know, or don’t fully get it, you’re not alone.
dwt.com
The Blockchain in Sixty Seconds
 Blockchain is the technology under the hood of Bitcoin
– But while it started with Bitcoin, it is now being used independently
 A blockchain creates a permanent record or ledger of
transactions
 Distributed across many computers
 Secured by cryptography
 Permits direct transfer of information & value between parties
– Worth saying again: NO INTERMEDIARIES are involved in transfers
 Key to blockchain tech is that the distributed nature of the
system supplies the element of TRUST
dwt.com
Terminology
 Called “blockchain” because it is a chain of (transaction) blocks
 “The Blockchain” or just “Blockchain” are both used to refer to
the technology
 “The Blockhain” is also sometimes used to mean the Bitcoin
Blockchain because for a number of years it was the ONLY
blockchain
– There are many applications already built on top of the
Bitcoin blockchain
dwt.com
Blockchain is Bitcoin’s Core Technology
 Blockchain technology is the
breakthrough that made Bitcoin possible
 Bitcoin runs on a specific blockchain
implementation
 Other blockchains have been built and
are being built that have NOTHING to do
with Bitcoin
dwt.com
A Brief Peek at How a Blockchain Works
 A transaction is initiated between parties
 Transaction sent to all nodes in the network, and
 Each node verifies details of the transaction using
cryptographic methods
dwt.com
A Brief Peek at How a Blockchain Works
 Then, a “block” of verified transactions is assembled
 Block is checked by whole network
dwt.com
A Brief Peek at How a Blockchain Works
 When consensus reached, the block is added to the chain
 Chain is a non-reversible ledger of transactions kept on every
computer in the network
dwt.com
A Brief Peek at How a Blockchain Works
dwt.com
Permanent Record of Transactions
 Distributed ledger of a blockchain is immutable
 Acts as a permanent registry of transactions
 Transparent because each member on the network
can see entire history (though not all details)
dwt.com
NO INTERMEDIARIES Involved in Transfers
 Since the element of trust is
automatically provided by the
network
– Think of it as DISTRIBUTED
TRUST
 No need for middlemen such
as processors and distributors
dwt.com
Example: Wire Transfer to Foreign Bank
Blockchain Transaction
Typical Wire Transfer to Foreign Recipient
dwt.com
Disruptive Power
 Could be as disruptive as the Internet
– The Internet changed how content is distributed, but blockchain
will change the ways transactions and payments are made
– Can radically alter how value is transferred, stored & accounted
 But also creates opportunities:
– Increased efficiencies
– New modes of transacting business
– Some call blockchain tech the foundation of an Internet of Value
dwt.com
Opportunities Outside of Financial Industries
 Blocks of data verified and recorded in a distributed ledger can
contain virtually any type of information.
 Permits a variety of digital assets to be securely exchanged, and
makes the records of those exchanges immutable
 Blockchain infrastructure may be able to support many types of
applications, some just beginning to be identified
 Includes things as diverse as land registries, digital voting, selfexecuting contracts, and royalty tracking/payments for music
dwt.com
What Does This Have to Do with the Internet of Things?
 Key Issue: Centralized or decentralized network?
– Sheer number of devices may overwhelm traditional systems
– Connectivity of devices is paramount (and cost of providing in centralized
manner is very high)
– Security difficult to provide on massive scale
 Device Democracy (an IBM white paper) argues blockchains are key
solution for networks in which growing computing power exists at
the “edge”— in sensors, appliances, and other distributed devices
dwt.com
How the Blockchain May Impact the IoT
 Device Management and Tracking
 Peer-to-Peer Messaging
 Smart Devices
 Payments
 Current Implementations
dwt.com
Device Management
 Devices can be registered to a blockchain-based
registry as soon as it is manufactured
 Can also then be registered by retailers and/or
users as it passes through supply chain
 Allows for tracking of product info, warranties,
software updates, etc. – all immutably linked to
the device
 Also allows for management of end-of-life
status for devices
dwt.com
Data Exchange Tracking
 Computing is essentially the processing of transactions
 The blockchain can be used to record and track transaction
history of individual devices, logging data transfers with:
– Users
– Other connected devices
– Online services
dwt.com
Smart Devices
 Blockchain technology, along with peer-to-peer
messaging, allows devices to act as independent agents,
performing a range of autonomous functions such as:
– Check their own warranties when a component fails, and order
replacements
– Home apliances could “bid” against each other for priority, to
maximize efficiency
– Devices could schedule their own maintenance and servicing
 All devices can become actors in a global data market
dwt.com
Payments and Micropayments
 Blockchain technology can create more efficient
transaction systems for IoT networks
 Blockchain tech helps lower transaction costs, so
may facilitate true micropayment systems, which
in turn allows individual devices to collect revenue
and store it in an account
 Devices can also bid for services using their
accounts
dwt.com
Implementations
 IBM ADEPT: IBM has partnered with Samsung for a proof-of-concept
system of managing IoT devices using blockchain technology and
peer-to-peer messaging
 FILAMENT: Startup that develops ad-hoc mesh networks of smart
sensors for industrial applications, operating on the blockchain.
 ETHEREUM: Develops blockchains with robust software solutions;
recently hosted hackathon to build IoT/blockchain solutions, such as:
– SOLETHER: Project to build an autonomous entity that will give people
electrical energy in exchange for cryptocurrency coins; energy will be
provided by smart devices powered by solar panels
– SLOCKIT: A decentralized autonomous network of smart locks
dwt.com
Thank You!
For more information on the Blockchain as it applies to industries be, please
follow our blog at www.creativeblockchain.com
dwt.com
11
SEP
2015
New study highlights security
Lawyers wanted… to discuss
iManage begins its
trends in legal organizations
the Internet of Things
adventures in Wonderland
Lawyers
wanted…
to discuss
the Internet
of Things
BY CHRISTY BURKE
The IoT is unlikely to affect law firms’ IT
operations directly, says Ron Friedmann,
a consultant at Fireman & Company
and author of the “Strategic Legal
Technology” blog. “IoT will be more
important to manufacturers, embedding
sensors so they can communicate, and
that will produce new opportunities
in factories, pipelines and so on,” he
says. “But IoT will probably not have
a compelling impact on office work at
a law firm.”
Lawyers need to make sure
their voices are heard in debates
about the Internet of Things, says
Christy Burke.
T
he Internet of Things (IoT) is poised
to affect everyone, everything,
everywhere, no doubt including
the legal industry and the clients it
serves. But will it have a drastic impact
on IT operations at law firms? How
can lawyers participate in the IoT
phenomenon in a meaningful way?
2
|
LEGAL IT TODAY
Mary Abraham, author of the
“Optimizing Law Firm Support
Functions” report and the “Above and
Beyond KM” blog, makes a similar point.
“The Internet of Things is all about
connectivity among everyday objects,
but this has limited relevance within law
firms,” she says. “If the firm’s printer is
out of toner and it contacts an office
supply provider to order more, that’s
an example of IoT leading to greater
efficiency. But does that materially
improve the practice of law?”
However, Abraham adds that in the
outward-facing activities of law firms,
such as participating in policymaking
and servicing clients, the IoT presents
a plethora of interesting legal issues.
“IoT is marvelous because it creates an
opening for conversation and education
about new opportunity and risk,”
she says. “Clients will need policy to
address concerns about confidentiality,
privacy, surveillance and financial issues.
Lawyers can play an important role in
this process.”
A role for lawyers
Tata Consultancy Services (TCS) recently
published a report called “Internet of
Things: The Complete Reimaginative
Force” which takes a thorough look at
how IoT will impact 13 industries across
the globe. Satya Ramaswamy, vice
president and global head of TCS Digital
Enterprise, led the team that conducted
the study.
“IoT is a great opportunity for legal
folks to have a place at the table,” he
says. “However, lawyers will need to be
up-to-date on the technology if they are
to participate in developing policies to
govern IoT. The information they need
is available and, if they are willing to get
involved, lawyers can look at it more
comprehensively and deliberately than
engineers can.”
Anyone questioning the idea that
lawyers are needed in IoT discussions
should consider the following scenario
question, they don’t engage. This is a big
loss, because their input is crucial.
“Technology is generally a step ahead
of the law – and IoT technology is many
steps ahead,” says Grady. “If you look
at the groups being formed to discuss
IT, there are often no lawyers involved.
Technologists, entrepreneurs, and policy
wonks are present, but no lawyers. Many
are ceding their ground, saying they are
not current enough on the technology
to participate. Lawyers need to ask
themselves whether they want to remain
visible and relevant or whether they
want to remove themselves from their
role. Technology and entrepreneurs are
moving ahead. Many lawyers are not.”
The implications of the IoT
Grady says some lawyers are interested
in topics related to the IoT, particularly
cybersecurity and privacy issues.
However, the proportion of interested
lawyers is relatively small, given the
pervasive impact these matters will have
on companies and society.
proposed by Ken Grady, lean law
evangelist at Seyfarth Shaw. Think about
the programmers creating the code to
direct a self-driving car. They need to
establish what should happen if a child
darts out into the street and the car
realizes it can’t stop in time. The car
needs to “decide” whether to harm
the child by not braking or potentially
Lawyers need to
act assertively
to claim their
collective seat at
the table, while
seeking education
and involvement in
these inventions as
they hit the public
harm its own passengers by braking
hard and stopping short. The coders will
determine the decisions the car makes in
such circumstances, with lives hanging in
the balance.
It’s clear that lawyers need to be part
of this discussion, not only from an
ethical standpoint but also from a risk
management standpoint to protect
the car manufacturer. If someone gets
injured or killed, is the manufacturer
unquestionably at fault? This is not a
simple call to make. It’s a complex issue
on many levels.
Lawyers must walk a fine line when
setting the ground rules for the IoT.
Technologists and entrepreneurs are
pushing to get the technology approved
and quickly bring it to market. Lawyers
and the courts are trying to determine
the rules and struggling to understand
the technology and the ethical
questions it raises.
Historically, lawyers have been front
and center in such ethical discussions,
but the overwhelming quantity of data
and complexity associated with the IoT
are prompting a lot of them to stay
away. Realizing they are not adequately
informed about the technology in
Lawyers must educate themselves on the
technology. They also need to change
how they are perceived, or they risk
being increasingly excluded. “At times,
lawyers are perhaps seen as slowing
things down so they are intentionally
not invited to have a seat at the table,”
says David Houlihan, principal analyst
covering topics in enterprise risk
management, compliance and policy
management, and legal technology
at Blue Hill Research.
“GCs need to sit down with
engineering, but it’s not straightforward
how that conversation will achieve its
goal,” he says. “Bigger issues will arise
over time as data resulting from IoT
increases exponentially. Therefore, the
discussions on controversial IoT topics
need to happen now, at the beginning
of the IoT groundswell.”
Ramaswamy adds that a host of ethical
and privacy issues will emanate from
IoT data. “IoT will bring implications on
legal,” he says. “One reason is the data
transparency that IoT provides and the
ethics issues it creates. If an insurance
company can track the driving habits
of its drivers to determine insurance
premiums and pricing on an individual
basis, that absolutely has privacy
implications for the customer.”
LEGAL IT TODAY
|
3
He also notes that with the proliferation
of data IoT produces, companies have
enough information to tailor pricing and
marketing based on a “segmentation
of one”. More precisely, this means
that pricing and promotion can be
customized for a particular person
depending on willingness or ability
to pay. Examples like this bring up
rights issues such as discrimination
and privacy. Ramaswamy predicts that
because IoT presents such issues, “there
will likely be a boost on the human side
of law advocating rights and dignity of
the individual”.
Regarding the IoT, lawyers need to act
assertively to claim their collective seat at
the table, while seeking education and
involvement in these inventions as they
hit the public. Optimally, this stepping up
will happen before inventions are widely
introduced. Similarly, entrepreneurs,
corporate executives and inventors need
to seek both inside and outside counsel
to brief them.
4
|
LEGAL IT TODAY
James Manyika and Michael Chui of
McKinsey Global Institute recently
looked at more than 150 specific IoT
applications that exist today or could be
in widespread use within 10 years. Their
conclusion was that these applications
could have an economic impact of
$3.9 trillion to $11.1 trillion per year
by 2025. With staggering numbers like
these, it’s abundantly clear that legal
needs to sit up and take notice – for
financial as well as ethical reasons.
Hopefully the sheer enormity of the
IoT wave will inspire lawyers to insist
on playing an active, central role
in the discussion.
Christy Burke is President of Burke &
Company, a New York-based consulting
firm serving the legal technology
industry. Christy has published
articles and commentary about legal
tech industry trends with Legal IT
Professionals, Marketing the Law Firm,
Law.com, Legaltech News (formerly
Law Technology News) and Legal Tech.
She has also delivered lectures and
moderated panels for the New York
County Lawyers Association (NYCLA),
the New York City Bar Association and
Women in eDiscovery’s NYC Chapter.
For more information, visit
www.burke-company.com
Faculty Biographies
V. Mary Abraham, Co-Founder, Broadli Inc
November 2013 – Present (2 years 6 months)
Broadli is an app designed to make your massive digitally connected network WORK. Our goal
is to digitize serendipity, connecting you to the right people, at the right time for the right
purpose. Download at http://bit.ly/broadli.
Principal
Above and Beyond KM
January 2013 – Present (3 years 4 months)New York, New York
I am a consultant to professional services firms in the areas of knowledge sharing, social media
and knowledge management. I also design and facilitate strategic conversations and educational
sessions for a variety of organizations, including public companies, professional services firms,
professional associations and nonprofits.
(Open)1 honor or award
Adjunct Faculty, M.S. Information and Knowledge Strategy
Columbia University in the City of New York
2013 – Present (3 years)Greater New York City Area
I am a member of the program's curriculum committee, and I also help teach two foundational
courses: (1) Information and Knowledge in the 21st Century Economy and (2) Networks and
Collaboration: Issues and Methods.
Conference Committee Member
International Legal Technology Association (ILTA)
October 2009 – December 2012 (3 years 3 months)
I designed, delivered and facilitated a range of innovative, highly interactive sessions for ILTA's
annual conferences in 2010, 2011 and 2012. These sessions were customized to meet specific
educational goals and learning styles, and received overwhelmingly positive reviews from
attendees.
Counsel
Debevoise & Plimpton LLP
January 2004 – December 2012 (9 years)
I was responsible for all Corporate and Tax Knowledge Managements efforts for Debevoise's
US-law practice. In this role, I provided substantive legal support to lawyers around the world;
worked closely with practice groups to develop practice resources that helped the firm deliver
client services effectively and efficiently; trained lawyers of all levels of seniority; and
collaborated with IT teams to improve the accessibility of knowledge resources.
Associate (Corporate Knowledge Management)
Debevoise & Plimpton LLP
September 2001 – December 2003 (2 years 4 months)
In this role, I systematically built the corporate practice resources for all major practice areas,
and I significantly expanded the Corporate Department's resources on the firm's Intranet.
Associate (Corporate Transactions)
Debevoise & Plimpton LLP
June 1991 – August 2001 (10 years 3 months)
As a member of the Corporate Department's International Practice Group, I worked on
significant international joint ventures, as well as mergers & acquisitions transactions
representing both US and non-US clients.
Honors & Awards
2013 List of Top 25 Influencers in KM
MindTouch
April 2013
From MindTouch: "In an effort to chart the power nodes in the social graph of various
technology industry disciplines, MindTouch has a history of researching and producing a list of
influencers."
http://www.mindtouch.com/blog/2013/04/11/influencers-in-knowledge-management/
burke-company.com
http://burke-company.com/christy-burke/
Christy Burke
Founder and President
Christy Burke founded Burke & Company LLC in 2004, deciding to focus the firm specifically on
legal technology communications. The Company prides itself on finding creative solutions to
help private, entrepreneurial companies succeed in marketing to the legal industry.
Burke began her career at Forbes, Inc. in new business development and advertising sales. Then she entered the
technology communications world as international account supervisor for the $120 million 3Com account at Lowe
Lintas, an Interpublic agency. Burke’s next position at World Software Corporation – makers of Worldox® document
management software – brought her into the legal software niche. During her four years at Worldox, while in charge
of marketing, PR and the company’s reseller channel, the company won many awards and experienced tremendous
growth. Burke leveraged her knowledge and contacts to spin off her own agency in 2004.
Ms. Burke is a columnist for Legal IT Professionals, a popular international online publication. She also has been
published in several journals such as Marketing the Law Firm, Law Practice Today, ILTA’s Peer to Peer, Legal
Management, Legal Tech, Intellectual Property Today, Attorney at Work, and the New Jersey Law Journal.
Burke is a Trustee of Connecticut College, where she received a B.A. in English and Sociology-based Human
Relations and was awarded the Agnes Berkeley Leahy award in 2013 for volunteer excellence. Burke is committed
to giving back on both a local and global scale. She is actively involved in numerous organizations including
Coalition for the Homeless, Plan International, Third Rail Projects and many others. Burke also received the John
Crowe Memorial Award from Rebuilding Jersey City, a non-profit organization that renovates and restores homes for
needy and disabled families.
In addition to her expertise in PR and marketing, Burke is a classical musician who has performed at Carnegie Hall.
She is an avid philanthropist and world traveler.
Burke & Company LLC
1/1
Colvin, Christopher - Eaton & Van Winkle LLP Eaton & Van Winkle LLP
Page 1 of 4
info@evw.com
(212) 779-9910
HOME ABOUT US PRACTICE AREAS ATTORNEYS NEWS & EVENTS CONTACT US
Colvin, Christopher
E-mail: ccolvin@evw.com
Chris Colvin has more than twenty years of
Telephone: (646) 790-2987
experience handling all types of intellectual
Mobile: (212) 619-5378
property and commercial litigation matters,
Fax: (347) 410-8450
including numerous patent, copyright,
trademark, trade secret and false advertising
disputes, complex licensing transactions and
major patent and trademark prosecution
matters. Prior to joining Eaton & Van Winkle,
Mr. Colvin was a partner in the boutique Colvin
Cybersecurity Law & Data
IP law firm and a partner in the Am Law
Privacy Group
100 firm of Kramer Levin Naftalis & Frankel.
Intellectual Property Law
Group
In addition to his law firm experience, Mr.
Colvin has an extensive background serving as
in-house IP and litigation counsel, including a
one-year engagement as an IP litigator in a
Fortune 20 legal department, and lengthy
experience serving as the chief IP counsel and
general counsel for several privatelyheld companies. This experience enables Mr.
Colvin to bring to his law practice a unique
appreciation of his clients’ business needs and
a deep understanding of how legal issues and
business strategies intersect in complex
corporate projects.
Complex
Contract/Commercial
Litigation
Patent Litigation
IP, Copyright and
Trademark Litigation
False Advertising Law
Trade Secret Litigation
Media & Entertainment
Law Group
First Amendment Law
Group
Litigation & Arbitration
Group
Experience
Mr. Colvin’s practice areas include patent, trademark, copyright, trade secret, false advertising, defamation and anticounterfeiting litigation, along with general business litigation. Mr. Colvin also handles complex IP and technology
licensing deals, cyber-security issues and patent and trademark prosecution matters.
Mr. Colvin’s science and engineering background enables him to acquire a deep understanding of his clients’
technology, while his written and verbal communications skills enable him to translate difficult technical and legal
concepts in order to effectively educate and persuade non-technical jurors and judges.
Mr. Colvin earned a Bachelor of Science degree in Aerospace Engineering from Princeton University. After working for
several years as an engineer with IBM, where he designed key components of the U.S. air traffic control system, Mr.
Colvin earned his J.D. from George Washington University Law School, where he was one of only 15 students in his
class awarded seats on both the Moot Court Board and a competitive law journal.
Representative Litigation Matters
Mr. Colvin has successfully handled dozens of complex IP and business litigation matters, resulting in victories or
favorable settlements for his clients. For example, Mr. Colvin:
http://www.evw.com/attorney/colvin-a-christopher/
4/11/2016
Colvin, Christopher - Eaton & Van Winkle LLP Eaton & Van Winkle LLP
Page 2 of 4
Won a complex month-long Lanham Act trial for a pharmaceutical client, including extensive injunctive relief
and one of largest damages awards in Lanham Act history. Bracco v. Amersham (D.N.J.)
Won a Federal Circuit appeal for an international semiconductor equipment manufacturer, vacating the lower
court’s judgment of infringement and a multimillion dollar jury verdict. August v. Camtek (Fed. Cir.)
Secured $0 pre-answer dismissal of patent infringement complaint against U.S. subsidiary of Global 100
technology company. ExitExchange v. NTT America (E.D. Tx.)
Negotiated a comprehensive master service agreement between a leading professional services firm and a
Fortune 50 company
Won motion to transfer declaratory judgment patent action from SDNY to EDTX. CreateThe Group v. GeoTag
(S.D.N.Y.)
Prepared complaint and TRO motion papers for copyright and trade secret theft case for leading business
management software company; Successfully negotiated pre-litigation settlement
Led damages portion of two multimillion dollar patent infringement cases for pioneering e-signature company
Co-led infringement portion of large patent and trade secret case on behalf of leading media and marketing
analytics company
Successfully defended a major semiconductor chip manufacturer against a multimillion dollar patent
infringement action; settled favorably during trial. OPTi v. AMD (E.D. Tx.)
Defeated a copyright infringement action against an apparel manufacturer, resulting in a zero-dollar settlement
and dismissal of the case. Volumecocomo Apparel v. LTC Apparel (C.D. Cal.)
Successfully defended a major automobile manufacturer in a multimillion dollar patent infringement action
relating to vehicle navigation system, resulting in a favorable pre-trial settlement. Triangle Software v.
Volkswagen (E.D. Va.)
Successfully defended a large wine producer in SDNY trademark infringement case, featured on front page of
Wall Street Journal and Law360; obtained favorable pre-trial settlement.. Casella Wines v. The Wine Group
(S.D.N.Y.)
Defeated motions for temporary restraining order and a preliminary injunction brought by patent holder against
large generic drug manufacturer. Graceway v. Nycomed (D.N.J.)
Successfully defended multiple television personalities in a copyright infringement action in SDNY, resulting in
favorable pre-trial settlement. Freeplay Music v. The Wisdom Center (S.D.N.Y.)
Successfully defended a large entertainment company (Sirius Satellite Radio Inc.) in several litigation matters,
including a copyright infringement and breach of contract suit, resulting in zero-dollar settlement
Successfully defended a multi-billion dollar insurance company in an insurance coverage dispute with a media
conglomerate, involving complex underlying copyright liability and damages issues, resulting in favorable pretrial settlement. Music Force v. Viacom (C.D.Cal.)
Won ANDA patent infringement trial in SDNY involving $1.5 billion pharmaceutical product, resulting in
favorable settlement following appellate proceedings. Purdue v. Endo (S.D.N.Y.)
Successfully appealed an adverse false advertising decision, resulting in a reversal of trial court ruling and a
landmark decision regarding the important issue of advertising “puffery” and permitting Papa Johns to retain its
“Better Ingredients. Better Pizza.” slogan which remains in use today. Pizza Hut v. Papa Johns (5th Cir.)
Represented a manufacturer of factory automation systems in a patent infringement appeal to the Federal
Circuit and successfully concluding the subsequent damages phase in the district court. Laitram Corp. v. NEC
(Fed. Cir.)
http://www.evw.com/attorney/colvin-a-christopher/
4/11/2016
Colvin, Christopher - Eaton & Van Winkle LLP Eaton & Van Winkle LLP
Page 3 of 4
Represented Emmy award-winning music producer in a protracted contract and IP dispute with a former
business associate, including numerous appeals, ultimately prevailing on all issues on summary judgment.
Hoover v. Lanois (La.)
Represented the leading producer of decorative stained glass novelty items in a copyright and trade dress
infringement action against a former supplier and bringing a summary judgment motion that precipitated a
favorable settlement of all claims. Joan Baker Designs v. Silver Bay Creations (C.D. Cal.)
Representative Publications And Speeches
Mr. Colvin has written and spoken numerous times on important issues in IP law, law firm management, social media
and cyber security, including the following:
Speaker, LegalTech, 2nd Annual Cyber Security Roundup (February 2015)
Speaker, LegalTech, Minimizing Cyber Security and Litigation Risk (February 2014)
Cyber Warfare and the Corporate Environment, Journal Of Law & Cyber Warfare (August 2013)
A “Third Way” to Staff High-Stakes Litigation Matters, Corporate Counsel Magazine (July 2013)
Chair, Alternative Fee Panel, Corp Counsel’s 25th Annual General Counsel Conference (June 2013)
Advisory Board, The American Lawyer’s Second Annual Litigation Summit and Exposition (November 2012)
Chairman and Speaker, IP Litigation Panel, Corporate Counsel Copyright, Trademark and IP Licensing Forum
(October 2012)
Speaker and Chairman, General Counsel Panel Discussion, The American Lawyer’s New Partner & Corporate
Counsel Forum (October 2012)
Speaker and Chairman, America Invents Act Panel, ALM IP Counsel Forum (March 2012)
Speaker, ALM New Partner Forum (October 2011)
Speaker, ALM Law Firm Marketing & Business Development Leadership Forum(May 2011)
Speaker, Beyond the Basics: Integrated Social Media Marketing for Law Firms (Sept 2011)
National Law Journal article citing effective use of social media in legal industry (Oct 2011)
Wall Street Journal and IP 360 articles featuring Casella v. The Wine Group case (Feb 2011)
HealthLaw 360 article featuring win in Bracco v. Amersham Lanham Act case (March 2009)
Higher Authority: The Supreme Court Sets Its Sights On Patent Rights, Metropolitan Corporate Counsel
(September 2008)
The Truth is Out There: Five Key Points on Willfulness Under the Lanham Act, Atlantic Coast In-House (May
2008)
Be Aware and Take Action on Your IP Rights, Furniture Today (March 2007)
Hatch-Waxman and its Implications for Pharmaceutical Research, IAM Magazine (Feb 2006)
The Human Dimension in IP Valuation, IP Value 2006 (January 2006)
10 Questions for Evaluating a Company’s IP Portfolio, Journal of Corporate Compliance (December 2005)
The American Lawyer “Big Cases” column citing trial win in Purdue v. Endo litigation (Aug 2005)
Bar Admissions
http://www.evw.com/attorney/colvin-a-christopher/
4/11/2016
Colvin, Christopher - Eaton & Van Winkle LLP Eaton & Van Winkle LLP
Page 4 of 4
New York, 2001
Louisiana, 1998
California, 1995
U.S. Patent and Trademark Office, 1994
Court Admissions
U.S. District Court, District of New Jersey, 2004
U.S. District Court, Eastern District of New York, 2001
U.S. District Court, Southern District of New York, 2001
U.S. Court of Appeals for the Fifth Circuit, 1999
U.S. Court of Appeals for the Federal Circuit, 1998
U.S. District Court, Western District of Louisiana, 1998
U.S. District Court, Eastern District of Louisiana, 1998
U.S. District Court, Central District of California, 1995
U.S. District Court, Northern District of California, 1995
Eaton & Van Winkle LLP, 3 Park Avenue 16th Floor, New York, NY 10016 | info@evw.com | (212) 779-9910 | (212) 779-9928
Eaton & Van Winkle LLP is a New York law firm that offers a range of legal services to individuals and businesses in the U.S. and abroad.
Attorneys Practice Areas News & Events Contact Us
Copyright 2016 Eaton & Van Winkle LLP. All Rights Reserved. | Legal Disclaimer | Privacy Policy
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4/11/2016
Lance Koonce - Professionals - Davis Wright Tremaine
Page 1 of 5
Lance Koonce specializes in intellectual property litigation and counseling for clients in the
EDUCATION
advertising, publishing, music, television/film, fashion and consumer products fields, and has
J.D., University of North
Carolina School of Law,
1996, with honors
extensive experience analyzing the implications of emerging technologies. As a litigator, he
has 20 years of experience trying complex commercial cases in state and federal court,
including jury trials. Lance writes and speaks frequently on IP and technology issues, and is
the founder of the CreativeBlockchain.com blog, which focuses on how blockchain technology
intersects with the creative industries.
Lance is also a member of DWT’s Breach Response Team (dwt.com/IncidentResponse).
Representative Experience
China Central Television et al. v. Create New Technology et al.
B.A., English, Duke
University, 1988, with
honors
RELATED PRACTICES
Intellectual Property
Litigation
Media & First Amendment
Privacy & Security
Represented Chinese television broadcasters and DISH Network in copyright and
Defamation & Privacy
trademark infringement action against manufacturer and distributor of "TVpad" set-top box,
Trademark Litigation
found to stream infringing content to users in the United States; secured award of $55 million
Copyright Litigation
in damages. (C.D. Cal. 2015)
Intellectual Property
Digital Media
Moore v. Viacom International Inc.
Defend Viacom in Trademark Trial and Appeal Board trademark opposition proceeding
Trade Secrets (Intellectual
Property)
brought by performing artist Sam Moore in connection with "The Soul Man" television series
Appellate Litigation
on TVLand. (Ongoing)
Government Relations &
Litigation
Institute for New Economic Thinking, Inc. v. Glow Media & Marketing, Inc. et al
Litigation
Represented not-for-profit in litigation over return of domain names from consultant. (S.D.N.Y.
Entertainment
2015)
Internet & E-Commerce
Madyun v. Fuse Advertising, Inc.
Defend advertising agency in connection with right of publicity claims stemming from social
media advertising campaign. (N.Y. Sup. Ct. 2015)
Theft of Ideas
Music
ADMITTED TO PRACTICE
New York, 1996
http://www.dwt.com/people/lancekoonce/
4/11/2016
Lance Koonce - Professionals - Davis Wright Tremaine
Spokeo, Inc.v. Thomas Robins
Submitted amicus brief on behalf of a group of eight media amici urging the U. S. Supreme
Court to overturn the 9th Circuit's ruling allowing a class action alleging violations of the Fair
Credit Reporting Act to go forward without any allegation of an "injury in fact" for standing
under Article III of the US Constitution, and highlighting the damage to media companies
caused by class actions where plaintiffs leverage technical violations of privacy statutes to
threaten enormous statutory damages, severely impacting those companies' business models,
and chilling speech. (U.S. 2015)
Steinbeck v. McIntosh & Otis, Inc., Estate of Elaine Steinbeck, et al.
Page 2 of 5
U.S. Court of Appeals 2nd
Circuit
U.S. Court of Appeals 9th
Circuit
U.S. Court of Appeals
Federal Circuit
U.S. District Court Eastern
District of New York
U.S. District Court Southern
District of New York
Represent literary agency in copyright litigation involving John Steinbeck literary properties.
(C.D. Cal. 2015)
Poquito Mas v. Taco Bell
Represented Taco Bell in trademark infringement action brought by Poquito Mas alleging that
Taco Bell’s use of the slogan "LIVE MÁS" infringes the POQUITO MAS trademark. (C.D. Cal.
2014)
Email hacking matter
Represented international corporation in connection with hacking of sensitive corporate email
accounts. (2014-2015)
In re National Security Letter (Under Seal v. Holder)
Submitted amicus brief challenging the constitutionality of the FBI’s efforts to collect
information about activities protected by the First Amendment and to impose a perpetual,
blanket gag order on the recipient. (9th Cir. 2014)
BWP Media USA v. Advance Magazines
Defended publisher of Lucky Magazine and website against claim of copyright infringement
involving photographs posted by users in online forum. (S.D.N.Y. 2014)
Cyber-extortion matter
Represented large social media site in connection with cyber-extortion threats. (2013)
First Unitarian Church of Los Angeles v. National Security Agency
Submitted amicus brief on behalf of PEN American Center highlighting the chilling effect of
NSA’s sweeping collection of metadata on writers. (N.D. Cal. 2013)
Munchkin Inc. v. Playtex Products LLC
Represented Playtex in false advertising jury trial involving advertising superiority claims as to
the parties’ respective infant care products. (C.D. Cal., 9th Cir. 2011-2013)
Oracle America, Inc. v. Google Inc.
Submitted amicus brief on behalf of former Register of Copyrights supporting Oracle's position
in copyright infringement action that menu command structure of software is protectable
expression under Copyright Act. (2013)
http://www.dwt.com/people/lancekoonce/
4/11/2016
Lance Koonce - Professionals - Davis Wright Tremaine
Page 3 of 5
Schrock v. Wenner Media
Represented Wenner Media, the publisher of Us Weekly, in putative class action for allegedly
sending unauthorized text messages in violation of Telephone Consumer Protection Act and
state privacy laws. (N.D. Ill. 2012)
Conde Nast v. Barry
Successfully represented Conde Nast in action under Anti-Cybersquatting Consumer
Protection Act against notorious domain name infringer, and in subsequent interpleader action
regarding collection of damage award. (S.D.N.Y. 2012)
Erick Van Egeraat v. NBBJ LLC et al.
Defended NBBJ, an architectural firm, in a copyright action brought by a Dutch architect
alleging that NBBJ’s architectural design for a multi-use residential and commercial skyscraper
complex in Moscow, infringed the Dutch architect’s earlier design for that project. Plaintiff
claimed copyright infringement under both United States and Russian copyright law and unfair
competition under the Lanham Act. (S.D.N.Y. 2012)
Haberman v. City of Long Beach, et al.
Successfully appealed to New York Court of Appeals to overturn dismissal of litigation over
denial of building permit, where zoning board of appeals disavowed litigation agreement to
extend zoning variance. In issue of first impression, the Court of Appeals held that counsel for
zoning board could bind the board by signing stipulation, and that no additional public hearing
was required. (N.Y. Sup. Ct. 2012)
Rose Group Park Avenue Corp. v. State Liquor Authority of New York
Representation of catering company operating under shared space arrangement with historic
church, in petition to overturn denial of license application. (N.Y. Sup. Ct. (Commercial
Division) App. Div., 2011-2012)
Digiprotect USA v. John Does
Successfully represented cable ISP in two cases, objecting to subpoenas for subscriber
information. (S.D.N.Y. 2011)
Willagirl LLC v. The Wella Corporation
Represented The Wella Corporation in a trademark infringement suit arising out of Willagirl
LLC’s proposed use of the “Willa” trademark on hair care, skin care and related beauty
products. (S.D.N.Y. 2011)
Cantor Fitzgerald Securities v. Port Authority
Represented Cantor Fitzgerald in its action seeking damages for its business interruption
losses arising out of the 1993 bombing of the World Trade Center. (2010)
Clifton Mallery v. NBC Universal
Represented NBC in a copyright action brought by plaintiffs claiming that the television
program 'Heroes' infringed their copyright in a documentary and manuscript about their lives
http://www.dwt.com/people/lancekoonce/
4/11/2016
Lance Koonce - Professionals - Davis Wright Tremaine
Page 4 of 5
as divination artists. Summary judgment granted for defendants; affirmed by the 2nd Circuit;
certiorari petition denied. 2009 WL 1532494 (2d Cir. 2010) Read more
Hardy Way, LLC v. Preferred Fragrance, Inc.
Defended perfume manufacturer in trade dress, trademark dilution and copyright infringement
litigation involving packaging for alternative designer fragrance. (S.D.N.Y. 2010)
In re Rule 45 subpoena issued to Cablevision Systems Corp.
Successfully moved to quash subpoena seeking private information of individual posting
anonymously on Internet message boards regarding public company, on First Amendment
grounds. (E.D.N.Y. 2010)
Salinger v. Colting
Represented J.D. Salinger in a copyright infringement action against the author, publisher and
distributor of a self-proclaimed sequel to "The Catcher in the Rye." Motion for preliminary
injunction was granted and appealed to the 2nd Circuit where the matter was vacated and
remanded. Permanent injunction entered; case settled. 641 F. Supp. 2d 250 (S.D.N.Y., 2d Cir.
2010)
Steinbeck v. McIntosh & Otis, Inc., Estate of Elaine Steinbeck, et al.
Represented literary agents in copyright action involving termination rights and the John
Steinbeck literary properties. Summary judgment dismissing all claims granted and affirmed by
the 2nd Circuit. 2009 WL 928189, 2010 WL 3995982 (S.D.N.Y., 2d Cir. 2010)
Morisseau v. DLA Piper U.S. LLP, Proskauer Rose LLP, and ALM Media Inc.
Represented DLA Piper U.S., LLP, in New York state court, successfully defeating the
petitioner's motion for pre-action discovery in aid of framing a complaint for libel arising from
the publication of an allegedly false and defamatory article about the petitioner, who was a
party to a federal discrimination lawsuit. Index No. 08100448 (N.Y. Sup. Ct. 2009)
Akamai v. Diaz
Represented employee in litigation brought by former employer for breach of noncompete and
misappropriation of trade secrets. (Mass. Sup. Ct. 2008)
Derek Andrew, Inc. v. Poof Apparel Corp.
Represented clothing designer in a trademark infringement litigation against manufacturer
using counterfeit hangtags. Damages claims tried before U.S. District Court of the Western
District of Washington and affirmed by 9th Circuit. 528 F.3d 696, 87 U.S.P.Q.2d (9th Cir. 2008)
Horizon Media, Inc. v. Leible
Defended employee and new employer in litigation brought by former employer for breach of
restrictive covenants and tortious interference. (N.Y. Sup. Ct. 2008)
Jonesfilm v. Lions Gate Entertainment
http://www.dwt.com/people/lancekoonce/
4/11/2016
Lance Koonce - Professionals - Davis Wright Tremaine
Page 5 of 5
Represented Lions Gate and other defendants in an action instituted by Jonesfilm for alleged
infringement of its claimed trademark in the title of the motion picture "9 1/2 Weeks;" involved
prequel rights; tried before IFTA after two 2nd Circuit appeals; confirmed and affirmed on
appeal to 9th Circuit. 299 F.3d 134 (2d Cir. 2002), 65 F. App'x 361 (2d Cir. 2003) (2d Cir., 9th
Cir. 2008)
Time Inc., et al. v. Budd, et al.
Represented magazine publishers in copyright and trademark infringement action against
website described as 'Napster for the magazine industry.' (S.D.N.Y. 2008) Read more
Webcasting and Internet radio royalties disputes for small commercial webcasters
Representation of the small commercial webcasters in administrative litigation before the
Copyright Royalty Board in Internet Radio royalty rate-setting proceeding. (2007)
Shine v. David M. Childs and Skidmore, Owings & Merrill
Represented architectural firm that designed original Freedom Tower in action involving
alleged copyright infringement of architectural design of Yale architecture student. Settled after
motion to dismiss granted in part. 382 F. Supp. 2d 602 (S.D.N.Y. 2006)
The Knot, Inc. v. Ruben Rotteveel
Represented owner of Brides.com website in case brought by competing bridal website
involving allegations of misappropriation of proprietary business information and trade secrets,
including website functionality. (N.Y. Sup. Ct. 2006)
Estate of J.R.R. Tolkien v. Perry
Represented the Estate of J.R.R. Tolkien as plaintiff in a copyright infringement action against
Inkling Books based on chronology of "Lord of the Rings." Preliminary injunction granted;
settled thereafter. (W.D. Wash. 2003)
Professional & Community Activities
• Co-Chair, Law & Technology Committee, New York County Lawyers Association
• Member, Federal Bar Association
• Former Chairman and Member of Grants Committee; Member – Copyright Society of the
United States
• Founding Editor, Privacy and Security Law Blog
• Former Secretary, Committee on State Courts of Superior Jurisdiction; Member – New
York City Bar Association
• New York State Bar Association
• Elder, Huguenot Memorial Presbyterian Church
• Spring Gala Committee, Pelham Picture House
©1996-2016 Davis Wright Tremaine LLP. ALL RIGHTS RESERVED. Attorney Advertising. Prior results do not guarantee a similar outcome.
http://www.dwt.com/people/lancekoonce/
4/11/2016
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Charles Stuart Kwalwasser - Lawyer Profile
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Charles Stuart Kwalwasser
Gen. Coun.; Quirky Inc.
606 West 28th St.
New York, New York
(New York Co.)
Profile Visibility
#9,087 in weekly profile views out of 100,606 lawyers in New York, New York
#121,753 in weekly profile views out of 1,722,433 total lawyers Overall
Experience & Credentials
Practice Areas
Intellectual Property
University
University of Virginia, B.S.
Law School
Cornell University, J.D.
Admitted
2001
ISLN
916132024
Source: Martindale-Hubbell
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4/11/2016
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Company Description: Microsoft Corporation is
engaged in developing, manufacturing, licensing
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and supporting a range of software products and
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Background
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Consumers Union
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Spokesman
Consumers Union
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Lobbyist
Consumers Union
Education
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undergraduate degree
Georgetown University
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Page 3 of 5
doctor of jurisprudence degree
George Washington University
188 Total References
Web References
Frank Torres Director ...
www.globalnetworkinitiative.org, 2 Feb 2015 [cached]
Frank Torres Director of Consumer Affairs and a Senior Policy Counsel Microsoft
Anchorage Daily News | Minnesota governor signs Internet privacy bill
www.adn.com, 24 May 2002 [cached]
Frank Torres, a spokesman for the Washington-based Consumers Union, said the law is a victory for
privacy advocates and becomes their new minimum goal for national legislation.
"We hope that it sends a strong signal to Congress that it's got to act on Internet privacy, to ensure that
consumers in all the states have the same level of protection," Torres said.
Any federal law would supersede the Minnesota law.
Stewart Baker, an attorney for the U.S. Internet Service Providers Association, moaned when he
learned that Ventura had signed the bill.He warned that ISPs would have problems adapting to
different laws in different states, and consumers would bear the cost.
"In general, I think you have to worry about how much regulation you can expect for $21.95 a
month," he said.
...
Torres said the effectiveness of the Minnesota law depends on developing regulations that stress
simplicity.
"If you're going online, and then this notice pops up, and they ask you to mail something in, it's not
worthwhile," he said."If you have to click through 15 pages, that's not helpful either."
Contact ADN | Forms | Subscriptions | Advertising | Sister SitesDaily News Jobs | Summer
internships | ADN History | ADN Store McClatchy Company Privacy Policy
Mid Florida Local 7138, APWU
www.midfloridalocal.com, 3 April 2003 [cached]
"This is the best bill money can buy," said Frank Torres, a lobbyist for Consumers Union, publisher of
Consumer Reports magazine.
Once the president's tax package and budget have moved through the legislative process, business
groups have a long list of initiatives to pursue.
Computer Repair & IT Services | Orange County Computer, Inc.Orange County Computer INC. |
Southern California's Premier Tech Repair Center
orangecountycomputer.com, 17 Oct 2011 [cached]
Microsoft's Director of consumer affairs and Senior Policy Counsel, Frank Torres, said that they will
work with the agencies to identify other scams as they emerge. Frank also said that, Microsoft will
never cold call customers and ask for their credit cards to charge them for service they don't need.
Computer SecurityOrange County Computer INC.
orangecountycomputer.com, 16 April 2014 [cached]
Microsoft's Director of consumer affairs and Senior Policy Counsel, Frank Torres, said that they will
work with the agencies to identify other scams as they emerge. Frank also said that, Microsoft will
never cold call customers and ask for their credit cards to charge them for service they don't need.
...
Microsoft's Director of consumer affairs and Senior Policy Counsel, Frank Torres, said that they will
work with the agencies to identify other scams as they emerge. Frank also said that, Microsoft will
never cold call customers and ask for their credit cards to charge them for service they don't need.
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Frank Torres | Microsoft Corporation | ZoomInfo.com
Page 4 of 5
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