South Korea has announced that it has created "a private fund as a weapon to protect Korean intellectual property rights overseas" link here. It will "profit from filing suits against foreign companies accused of infringing Korean trademarks and patents." The fund has partnered with a research institute created by the Ministry of Science and Technology, to act as its proxy in overseas patent suits. The Ministry will receive half of any royalties and private investors, the balance. Currently the research institute has wireless technology patents that it thinks are being infringed overseas by cell phone makers Motorola, Sanyo, Nokia, Sony Ericsson, and Siemens; by wireless service providers Verizon, Sprint, and Cingular and by chip makers Qualcomm and Freescale Semiconductor.

The news article suggests that this is a way to fight back against US patent trolls. It particularly refers to Inter Digital, a U.S. company, which filed a lawsuit of more than US$300 million against Samsung Electronics and LG Electronics for allegedly violating patent rights.

Comment: This may be a response to the Free Trade Agreement recently negotiated with the US which extends IPR to Korea as well as the aggressive behavior of US patent trolls. Consider this the creation of a "national" troll--it creates a troll to beat one.

Mike Masnick at Techdirt link here sends us to the New Yorker to read Exporting I.P. by James Surowiecki link here. The article notes that Free Trade Agreements also promote trade restrictions like the one negotiated with South Korea. "Instead, it requires South Korea to rewrite its rules on intellectual property, or I.P. the rules that deal with patents, copyright, and so on. South Korea will now have to adopt the U.S. and E.U. definition of copyright extending it to seventy years after the death of the author. South Korea will also have to change its rules on patents, and may have to change its national-health-care policy of reimbursing patients only for certain drugs. All these changes will give current patent and copyright holders stronger protection for longer. Recent free-trade agreements with Peru and Colombia insisted on much the same terms."

Note Masnick's criticism of the piece for tumbling to the argument that IP is essential to promote innovation.

The Washington Post's Alan Sipress writes about a new development in valuing intellectual property link here. The notion is that the total market value of a company less the value of its tangible assets reflects the value of its patents, copyrights, trademarks, and trade secrets.

This formulation was arrived at from calculations showing that the market value of companies increasingly reflects their intangible assets. Using the market value of the S&P 500 Index and the accounting value of their tangible assets, an investment research firm called Ocean Tomo estimated that intangibles have gone from 17 percent of total market value in 1975 to 80 percent in 2005. Behind this is the notion that the value of tangibles has gone down through offshoring of goods and services. The article also notes that a stock index based on intellectual capital called the Claymore/Ocean Tomo Patent ETF is traded on the American Stock Exchange.

Comment: Nothing is said about the overall level of the stock market in determining intellectual property values. I suppose it would be possible to factor that in. In any case, the new notion is that the heart of our economy is intellectual capital. This economist would like to see some attempt to estimate total factor productivity in the market value of companies to reflect their differential ability to add value.

Steven Pearlstein writes in the Washington Post today link here (Skip down to the second item in the article)

"Patent Law Comes Back to Earth: For years now, patent law has been a case study in what happens when a specialized bar and specialized magistrates get hold of an area of economic activity. Now the Supreme Court has stepped in to restore patent law to its original purpose, rewarding and encouraging innovation, not stifling it. The unanimous decision will make it harder to obtain and defend patents for obvious "innovations". ... It overturns decades of precedents that any reasonable person ... would have known had outlived their usefulness...."

Is the patent system broken? You be the judge. Here is a case of several examples of prior art that were not caught by the Patent and Trademark Office and are now giving rise to a patent suit by Verizon against Vonage, closing it down for a period and threatening it over the long run link here. Even with the evidence, Verizon's patent will need to be declared invalid, a procedure that may take a long time and cost Vonage money it doesn't have and business it is now unlikely to get.

Here is a new one-investing or rather, joint venturing, in patent trolls link here. DeepNines is suing McAfee over a patent covering "combining an IDS and firewall in a single device", whatever that is. DeepNines is capitalized by a zero-coupon note payable to private equity Altitude Capital Partners, promising buyers a share of the payout from the suit.

Can it get any dumber?

IP Innovation LLC apparently owns a patent on tabs, originally issued to Xerox in 1987 link here. It has now sued Apple for infringement, filed in the patent troll's and forum shopper's favorite venue: Marshall, TX. It is requesting damages in excess of $20 million and an injunction against future sales and distribution of Mac OS X 10.4.

All users of tabs should now join to end this nonsense.

The Federal Communications Commission faces a legacy-defining moment when in the next few weeks it decides how to auction the 60 MHz of spectrum freed up by the move of TV to high definition, according to Gigi Sohn at Public Knowledge link. She has some astute comments on the opportunity to add a third broad-band channel capable of competing with the existing duopoly of cable and DSL channels. She suggests a number of auction rules that would improve the likelihood of a competitive outcome and add substantially to the availability of cheap broadband services.

Sherwin Siy reports on what's happening with the WIPO Broadcast Treaty link here and provides a series of comments, quoted below.

"The US delegation is holding another roundtable on the WIPO next month to discuss the latest draft of the treaty and the next round of negotiations. As others have noted, it's open to the public, so long as you RSVP to the Copyright office by May 5th."

"This latest draft of the treaty looks a little nicer than earlier versions, since it tries to accommodate countries (like the US) that don't have Rome Convention-style property rights in broadcasts. But it's ... clear that it was still drafted as a property rights treaty (with some exceptions thrown in). That means that it doesn't fit with US law, or even with the requirement handed down by the WIPO General Assembly that the treaty be "signal-based."

"Paragraph 2 also says that countries have to prevent "unauthorized retransmissions." This goes beyond protecting broadcasters against signal theft. After all (to make a comparison to copyright for a second), when I quote a paragraph from an article, I'm making an unauthorized copy."

"Even worse, the latest draft of the treaty could ban "unauthorized transmissions" that copyright law would call fair use. Another major problem for public interest tech advocates is the fact that the treaty requires legal protections for "technological protection measures" (TPMs for short) like DRM or a broadcast flag."

"Another major problem for public interest tech advocates is the fact that the treaty requires legal protections for "technological protection measures" (TPMs for short) like DRM or a broadcast flag."

This is another of the attempts to expand the definition of IP and restrict the application of traditional rights. It has to be watched, though it is a long way to completion.

Note that you can comment if you register in advance--by May 5.

David posted about the draft Patent Reform Act, just introduced in the Congress, as I was about to. Another source is link here with its own comments. I quote: "The provisions of the Patent Reform Act would... restrict damages that patent holders can receive for infringement lawsuits, create a new procedure to challenge the validity of a patent after it has been granted, and boost resources for the US Patent and Trademark Office."

"The corporate roster of backers includes Microsoft, IBM, Amazon, and nearly everyone else. Similar legislation failed to pass during the last session of Congress. Other groups, including the pharmaceutical industry and small inventors, have opposed major changes to the patent system."

The special interests gather at the trough. If we have to have patents, this may be a modest improvement. But don't count on it. More important, watch what gets attached to the bill as it wends it leisurely way through the legislative process and the tasty tidbits are on offer.