There is a thoughtful article by Todd Bishop in the Seattle Post-Intelligencer on the Microsoft application to patent a computer method of conjugating verbs. It is thoughtful not only because Todd quotes my earlier post, and talked to Preston McAfee and Mike Masnick, but because he also talked to the people at Microsoft. So it makes sense to discuss: is this kind of patent a good idea or not? Microsoft argues that there is innovation that seems to largely revolve around switching from one language to another. No doubt compared to other computer programs this is an innovation. However, as Preston correctly remarks - it is a feature of every language textbook ever written. So does it make sense to allow every existing idea to be patented the first time it is ever done on the computer? Obviously the only "innovation" is in the specific computer code that achieve the purpose - but that isn't what is patented - anyone else implementing the idea would likely write somewhat different code, and probably wouldn't benefit that much from the "innovator"'s code. Moreover, the purpose of the patent system is to encourage innovation. On the one hand the cost of Microsoft's "innovation" is trivial - you and I could whip up some code in a few hours. On the other hand, the negative impact of the patent on innovation may be substantial - anyone who wants to write a computer translation program or textbook program now has to contend with the Microsoft patent - and how much worse if I take nouns? So regardless of whether Microsoft deserves to be a laughing stock for patenting such an obvious idea, issuing and enforcing patents like this cannot possibly be a good idea.

There is pretty widespread agreement that the patent examination system is broken - too many meaningless patents that then are used by trolls for purposes of blackmail. In addition to public efforts to improve the existing system, there are private efforts. Among the most notable is wikipatents, a "wikipedia" like effort to provide community review of patents. Particularly with respect to prior art, where the patent office has not proved particularly knowledgeable, this potentially can lead to a significant improvement in the awarding of patents by providing greater transparency and informational input to the system. Go check it out.

For a brief primer on how not to run a successful business see the business week article on the new Amazon downloading service. The short version: going out of your way to sell a not very good product at a high price is not a proven formula for business success.

Finally, there's the problem of how to watch these videos on the television, which remains the preferred place to watch for most people. Amazon's service, like others, allows a backup DVD of the digital files to be made, but that backup won't play in regular DVD players thanks to digital rights restrictions. A Windows Media Center PC can be cabled to a TV, but only through a relatively low-resolution S-video line.

Hmmm...a special DVD player or a "Windows Media Center PC" cabled to a TV. Sounds like a winner to me.

Although not strictly focused on issues of monopoly on intellectual monopoly Techdirt provides great coverage of IT issues of public interest - including patent and copyright issues.

This is an older news item - from August 2 - but hasn't been widely reported. The Federal Trade Commission has finally issued a ruling in the Rambus case. Rambus you may recall is a notorious patent troll - famous for never actually building a memory chip, but for collecting royalties. In the ultimate submarine patent manuever, they not only patented an obvious idea and kept it secret, but then joined a standard making body, and without revealing they held a patent on the idea encouraged the body to agree on a standard that infringed their patent. This was a little too much apparently

In June 2002, the FTC charged Rambus with violating federal antitrust laws by deliberately engaging in a pattern of anticompetitive acts to deceive an industry-wide standard-setting organization, which caused or threatened to cause substantial harm to competition and consumers. The Commission complaint alleged that Rambus participated in the Joint Electron Device Engineering Council (JEDEC), a standard-setting organization that "maintained a commitment to avoid, where possible, the incorporation of patented technologies into its published standards, or at a minimum to ensure that such technologies, if incorporated, will be available to be licensed on royalty-free or otherwise reasonable and non-discriminatory terms." According to the FTC complaint, Rambus nonetheless participated in JEDEC's DRAM standard-setting activities for more than four years without disclosing to JEDEC or its members that it was actively working to develop, and possessed, a patent and several pending patent applications that involved specific technologies ultimately adopted in the standards.

The FTC has now ruled unanimously on the matter

In an opinion by Commissioner Pamela Jones Harbour, the Commission found that, through a course of deceptive conduct, Rambus was able to distort a critical standard-setting process and engage in an anticompetitive "hold up" of the computer memory industry. The Commission held that Rambus's acts of deception constituted exclusionary conduct under Section 2 of the Sherman Act and contributed significantly to Rambus's acquisition of monopoly power in the four relevant markets. The Commission has ordered additional briefings to determine the appropriate remedy for "the substantial competitive harm that Rambus's course of deceptive conduct has inflicted."

Chalk one up for the good guys.

(via Preston McAfee) Microsoft has now patented conjugating verbs

A verb conjugating system allows a user to input a form of a verb and display the verb forms. The verb conjugating system allows the user to input the infinitive form or non-infinitive forms of a verb. When a user inputs a non-infinitive form of a verb, the verb conjugating system identifies a corresponding base form of the verb. The verb conjugating system then uses the base form to retrieve and display the verb forms for the verb. The verb conjugating system may highlight the non-infinitive form of the verb within the displayed verb forms to assist the user in locating the verb form of interest.

I think I should grab nouns, and then negotiate with them for the movie rights.

Via Fred Luk an interesting article in the NY Times By Bob Tedeschi about guitarists sharing tips about how to play songs.

In the last few months, trade groups representing music publishers have used the threat of copyright lawsuits to shut down guitar tablature sites, where users exchange tips on how to play songs like "Knockin' on Heaven's Door," "Highway to Hell" and thousands of others.

An industry at war with its customers isn't long for this world.

Via John Bennett. A nice post on fair use over on lifehacker. The upshot: screenshots are still fair use but the future is uncertain.

Not too many posts recently from either Michele (well never from him) or me. We've been giving talks in Australia. We talked about IP at the Macrodynamic Conference at the Australia National University in Canberra. I think we raised some questions in the minds of the audience.

I gave a general audience talk on IP at the Treasury. Australia is famously sympathetic to monopolies. Much anti-trust that would be in the Justice Department in the U.S. is in Treasury in Australia. It was quite a pleasure to meet people who not only meant well, but have their heads screwed on straight. There is always a temptation (and perhaps a paper to be written?) for a government to respond to changes in economic circumstances by "doing something" - generally something stupid. It is fortunate for Australia that they have some public servants who understand that generally the best approach is for government to stay out of the way.

I talked also at Melbourne Business School. I wish I could say that my anti-IP talk was the highlight of the day, but I was paired with Eric Von Hippel of MIT whose talk on user driven innovation was the highlight of the day. The short version: most innovation isn't done by business firms at all, it is done by consumers who improve/invent products for their own use. When it turns out the invention is generally useful, often the firms imitate them. His website is highly recommended.

Finally, I'd be remiss not to draw attention to Josh Gans and his excellent website Core Economics. Aside from some comments on IP and Michele's and my work, there is a great deal of excellent stuff. His post on ownership of the last mile should be read by everyone interested in the internet.

Mikko raised an interesting point in a comment on another thread. I'm moving it here with some remarks of my own. Apropos of decreasing costs of copying/transmitting, Mikko said

Coase's theorem says that when transaction costs are zero, it doesn't really matter which way we allocate the rights, and I have a fleeting feeling that it also applies to IP. Thus, from economical perspective the question becomes what arrangement minimizes the transaction costs.

I should say that I agree with this. Transactions costs are the heart of the problem - and unlike the cost of copying and distribution they aren't going away. It is true that the internet lowers the costs, for example, of micro-purchases, so that IP owners could potentially contract with lots of people, or collect small payments from many people. But while pure transmission costs are either trivially small, or will be shortly, transactions costs are going to zero. In the final analysis, there is the time needed to read and understand an agreement, and technology is helping a great deal with that part of the cost.

As Mikko says, absent transactions costs, IP wouldn't matter that much either way. That isn't an argument that we should have IP if there were no transactions costs. That is, if transactions costs were trivially small, it would be easy enough to finance new creations/inventions by agreeing to create/invent only if the beneficiaries paid in advance. But in fact the transactions costs are quite high - figuring out who the beneficiaries are, how much the product is worth to them, and negotiating agreements with them is pretty expensive. The transactions costs going the other way - when there is IP, trying to prevent people for putting stuff on P2P networks, for example, is also quite high.