Here is another IP as a Joke item. Nate Anderson reports that a player in the virtual world game Second Life had "her Nomine-branded avatar skins allegedly ripped off by another user who has been selling counterfeit copies for his own profit." She has now gone to court for violation of her copyright link here. Since the skins can be sold to others for "virtual" Linden dollars, for which there is a real-world dollar market among other game players, the skins can be said to have some value, but only among the demented.

For more on the case, read this link here

It will be interesting to see where the court takes it, in another example of the unreality of IP law. Why not set up avatars of lawyers and a court and a judge and a Congress to revise the law? Then the real-world judge could argue that he does not have jurisdiction and the suit has been brought in the wrong court. Problem solved.

Systems biology--the use of software models that produce outputs acting like living organisms--holds great promise for the pharmaceutical industry. Four drug firms are part of a group using it to learn the effect of new drugs on the heart.

The prospect is that this approach can speed up the drug testing process. A British firm, e-Therapeutics, says it can test the effects of a new compound in two weeks, compared to the usual two years.

Testing can go beyond this though, to assay alternative therapies, such as herbs and clinical nutrition, and possibly to determine the causes of diseases caused by genetic and environmental factors.

Here is the article, "All Systems Go", from The Economist.

After WW II the proprietary drug industry developed a blockbuster model supported by the patent system. Global markets and monopoly rents fueled these firms' stock prices for years, despite the growth of generic competition. But its model is becoming unglued. As blockbusters come off patent, the revenues and earnings from these drugs are becoming more difficult to replace. Some drugs have failed and have been scrapped. Pfizer's recent decision to scrap its hoped-for insulin inhaler blockbuster Exubera after investing more than $2 billion developing it was unprecedented, according to the Wall Street Journal. The patent system itself is under political and legal pressure.

So now these firms are going back to the drawing board and seeking ways to innovate their way out of the mess. Outsourcing, long the bane of the industry, is coming into vogue. Marketing is also being rethought. Big pharma spends one-third or more of its revenues in the U.S. on marketing compared with less than a fifth on R&D. Are sales reps and ad agencies really that innovative?

In addition to changing their R&D focus to encompass personalized medicine and other innovative techniques, proprietary firms are diversifying into generics, diagnostics, biotechnology, and other areas. In diversifying their portfolios, they are hedging their risks, but also increasing their chances of finding new innovations and markets.

Call it the Goldman Sachs model. That firm has prospered by having a good management team, by innovating, and by venturing into new markets. If one market get into trouble, it's so diversified and well managed that it can keep chugging along, innovating as it goes.

The Economist reports in "Beyond the Pill".

Comcast has come under criticism, first for having slowed its broadband users' large file transfers in apparent disregard of their service contracts and more recently for lying about it link here. They seem now to have been caught. They were not the ones restricting usage, but they had hired another company to do it for them link here. In judging this, one needs to remember that Comcast is at best a duopolist in markets with few or no other companies offering broadband .

The one positive fallout of this is that it has revived the campaign for legally enforcing net neutrality. Consumers are simply not sure that they can get a fair shake from competition in these markets.

Fair use is now an issue in the Republican nomination race link here. John McCain used several seconds of Fox News video of a campaign debate in one of his ads which should be all right under fair use, but he has been told to take it down for copyright violation. But two other candidates using similar footage have not been so treated. Where is the fair in this use? Does a copyright owner have the right to enforce it discriminatorily? Get me a lawyer. Better, get rid of copyright.

Gigi Sohn proposes six points to reform copyright in a speech yesterday link here. The complete text is available here. Teeing off from the fact that the scope and duration of copyright has been steadily expanded, limiting innovation, she suggests fair use changes, limits on secondary liability, protection against copyright abuse, better licensing, orphan works reform, and better notification of technological and contractual restrictions on digital media. Most of our readers would prefer abolition of copyright but it isn't going to happen any time soon, so these ideas are worth a lot of discussion.

Interesting paper by Hall and Ziedonis: my summary - firms can produce products or patent litigation, but not both. From a social point of view, it might be better if they focused on the former.

Stephen Spear previously posted on the invalidation of (most of the claims of) the infamous one-click patent. Credit goes to Peter Calveley, whose effort we previously mentioned (and I at least contributed to) here. Mainly though this flies in the face of what I was told was the "conventional wisdom among experts" that in fact this was a good patent.

There was a fascinating panel of pharmaceutical patents yesterday evening. It was hard to walk away with the idea that they are a terribly good idea. It really seems that patents are not a subsidy for innovation, but rather a subsidy for marketing effort. I learned some interesting things I hadn't about how Hatch-Waxman works: there is five years protection independent of patent following successful clinical trials. After that firms face patent challenges - and it seems that generic producers have begun to very aggressively and successfully challenge patents after the five year period is over. The patent holders of course have various legal tricks they use to delay things, but basically I think this is good news. However, Hatch-Waxman applies only to chemical entities, not to biotech. Apparently there is a move in Congress to extend Hatch-Waxman to biotech - needless to say big pharam is aggressively opposing this, but it seems it may actually come off.

Basically five years monopoly is the reward for carrying out clinical trials that everyone can use for free. Left open is why other users of the clinical trials should get them for free; and why on earth we have the pharmaceutical companies carrying out the clinical trials in the first place.

Perhaps also not surprising, but still a very nicely done paper by Petra Moser: inventors patent things when they can't keep them secret. Not stunning support for the idea that patent systems are good because they get inventors to reveal their secrets.