FDI = foreign direct investment

This afternoon we learned that if you give monopolies to foreign investors they will invest more in your country. Historically this was widely used to lure skilled artisans from one country to another. Of course another widely used method was to kidnap them...perhaps as an alternative to developing countries introducing patents under the TRIPS, they should just kidnap foreign investors.

On the bus on the way to the conference we were talking about what Microsoft is up to with the waving of patents and signing of licensing agreements with open source companies. The lunch keynote talk was by Brad Smith senior vice president and general counsel for Microsoft. I'm still catching my breath - at least as I read between the lines Microsoft's plan is to impose a tax on the commercial open source market. Historically the Microsoft model has been one of a broad-based tax - deals with computer manufacturers to pay a fee on every computer sold. Although the short-term revenue from Vista is good Microsoft I believe rightfully fears commoditization of the operating system market. A tax on all operating systems seems like a sure bet for long-term revenues. I'm not at all convinced it will work, but I can understand why they think it is worth a shot.

I am in Berkeley for a conference on the economics of competition and innovation - mostly about patents. It's a good conference, organized by Richard Gilbert, so I thought I'd try my hand at live-blogging. You can access information about the conference, including the papers here. I was a discussant at the morning session, which was quite lively. There were two papers, one a nice clean paper by Carl Shapiro showing how giving stays of injunctions to allow the redesign of products can substantially reduce the hold up problem, and a second paper by Anne Layne-Farrar attacking the Shapiro paper - mostly pointing out that the analysis doesn't apply in many cases. Since Carl didn't argue that it did in those cases, I'm not sure why this was an issue.

The discussion was quite lively. Strangely, I was the quiet one - Carl's model of downstream innovation is one in which patents are completely neutral, which I found useful for pointing out what we should be looking for to determine whether patent systems are a good idea or a bad idea. The wild discussant turned out to be Aaron Edlin who I hadn't met before, but is highly entertaining. He also appears to have no higher regard for the patent system than I do - and said so in no uncertain terms. Interestingly he comes at this from a business perspective - he runs a successful publishing business, BEPress. I think he is part of the majority of the R&D surveys in which they say that patents are only a hindrance to business.

Alex Tabarrok calls our attention to prizes as a means to foster innovation in drugs here. In this case, Bernie Sanders has introduced the Medical Innovation Prize Fund Act of 2007 which provides $80 billion a year to pharmaceutical companies to place their patents in the public domain, thus allowing anybody to make the drug. Drugs developed without patents would also be eligible for prize money.

Tabarrok has some doubts about politicization of the awards but comes down in favor. More details on the bill are here

This blog has posted about prizes before. They still seem like a good idea for drugs because of the wide public benefits.

Nate Anderson has an interesting piece on the lack of understanding among teachers of fair use link here. Researchers wanted to know if confusion over using copyrighted material in the classroom was affecting teachers' attempts to train students to be critical of media link here. The answer was "yes." The study, by the Center for Social Media at American University cites fear of law suits, lack of understanding of the vague rules for fair use, and a desire to avoid controversy.

One example: a teacher had his students create mashups of pop music and news clips to comment on the world around them. The school refused to show them on the school's closed-circuit TV system because "it might be a copyright violation."

Is there a good short clear guide to fair use? Fair use gets 1.7 million Google entries, so there seems to be a need for greater clarity.

Every day brings new outrageous stories concerning intellectual property. Today's by Jordana Lewis involves something this blog reported on in the last few days, publicity rights, and adds a new wrinkle, California's Dead Celebrities Law link here.

You have to read the whole story to get how "property" can be created from nothing more than a memory. It is a stretch to go from saying that permission is required to invade some dead person's privacy to saying that it can be sold. Then one must ask what public purpose is served by this monstrosity. Perhaps the welfare of lawyers? Or the widow of a dead acting coach? link here

Martin Crutsinger writes that the US today started a world wide effort to expand enforcement of copyright link here. "U.S. Trade Representative Susan Schwab said the administration planned to join with other countries to negotiate an Anti-Counterfeiting Trade Agreement that would toughen efforts to confront copyright piracy." The move is initially directed at Canada, the 27-nation European Union, Japan, South Korea, Mexico, New Zealand and Switzerland. Schwab is quoted, "Today launches our joint efforts to confront counterfeiters and pirates across the global marketplace."

Her statement raises a lot of questions. Where do most of the violations occur? I suspect in poor developing countries which are not immediately the target here. But if we rope in the developed countries, copyright enforcement is likely to be part of more free trade agreements, extending the power of the new effort.

Schwab said the new agreement, which the administration hopes to negotiate quickly, would set a higher benchmark for enforcement that countries will be able to join on a voluntary basis voluntary if they want access to US markets. If the wording has to be negotiated among that large a group of countries, one wonders how quickly it can be done.

Schwab is also quoted, "Global counterfeiting and piracy steal billions of dollars from workers, artists and entrepreneurs each year and jeopardize the health and safety of citizens across the world." One may ask who benefits from copyright other than the owner of the copyright, typically a big company. Think Disney and Mickey Mouse, created by the long dead Walt.

So here we go with another effort to expand the reach of our state created monopolies.

Here is the Wikipedia article "Personality Rights" , which covers the so-called right of publicity. Note that in the U.S. this latter right developed out of the "right of privacy," which I think was pioneered by Louis Brandeis in a Supreme Court decision and later elaborated in a famous 1962 Supreme Court case, Griswold v. Connecticut .

Among the many inner contradictions of the right of publicity is the fact that, contrary to what I posted in a previous comment, in the U.S. it applies in only 28 states, not in all 50. So here we have an alleged right that doesn't apply universally. Where is John Locke when we need him? At least "fair use" applies across the board to all copyrighted material in all jurisdictions. (Excuse me while I sneak into your garage and take your car out for a spin around the neighborhood. It's just fair use and I promise to bring it back. And then I'll be hitting a few serves with your tennis racket. And then to sample some food in your fridge. If I don't like it my dog will put a sample on your carpet. :-)

Indiana, a state I spent part of my misspent youth in, is the league leader in this right. Not surprisingly, California and New York have been in the forefront of pushing this right, thanks undoubtedly to the prominence of the entertainment industry (and entertainment attorneys) in these states.

The right of publicity boils down to the alleged right not to have one's image or likeness commercially used without permission or compensation. Although I don't think Tom G. Palmer considered this aspect of "IP" in his 1990 Harvard Journal of Law & Public Policy essay "Are Patents and Copyrights Morally Justified? The Philosophy of Property Rights and Ideal Objects" [PDF], you can probably substitute "publicity right" for "copyright" and understand why this right is a non sequitur.

I'm putting this post under the topic "IP as a Joke."

Catherine Rampell reports another case of copyright overreach link here. This time a mother took a short video of her 13 month old bobbing in time with a song and put it on YouTube. Universal Music charged the song infringed its copyright and it was taken down, but now the mom is suing Universal for abusing copyright law. She makes a pretty reasonable argument to most of you who will read this--"The idea that putting a little video of your kid up on YouTube can mean you have to go to court, and maybe declare bankruptcy and lose your house, is just wrong,"

To be "fair and balanced," the article quotes Douglas Lichtman, a UCLA law professor who advises Viacom on copyright matters, "These companies are sending out 100,000 takedown notices, so of course once in a while there's going to be a fly caught in the ointment, Everyone's trying to be careful, though. They don't want the PR backlash that comes when they make a mistake." That of course is nonsense. The companies don't use any sense of what is reasonable or a significant violation. They don't want to spend the money to examine each of the violations and exercise good judgment. And most people fold, not wishing to bother pursuing the matter.

The article also suggests that another reason for takedowns is the desire to suppress criticism and cites an example among four other cases where the takedown notice was questionable. Another one involves copying a fashion design in the pattern of a fabric--extending copyright to protect fashion designs which are not patentable. Go to the article to read them.

Wired reports:

Disney, CBS, Microsoft, Fox, NBC, Viacom, Dailymotion, MySpace and Veoh Networks announced so-called User Generated Content Principles that appear aimed at stifling fair use. The announcement calls for the "implementation of state of the art filtering technology with the goal to eliminate infringing content on (user-generated content services), including blocking infringing uploads before they are made available to the public."

The Cartel's website can be found here.

Even if you accept current notions of copyright law, here is the biggest problem I have with this concept - It clearly anticipates that media companies will have a primary hand in defining what "fair use" is. This of couse is flat-out unacceptable. The entire concept behind "fair use" is that such "use" will be allowed even in face of express opposition by the copyright owner. Fair use is never "accommodated" as the Cartel suggests. It is instead superceded over express objections to the use of the material.

This is entirely unworkable since "fair use" is ultimately only defined by a court on a case-by-case basis after litigation has been brought forth. Even lawyers can never tell you if something is "fair use" or not. They can only make best guesses of what a court will decide (though their guesses are often disguised as conclusions based on their own biases of what they think fair use ideally ought to be).

Here are 5 different scenarios that all involve the same act of downloading a song:

1. To keep in my personal music library after being exposed to the song elsewhere.

2. To sample the artists work to determine if I might want to purchase it or other works at a later date.

3. To explore lyrics or aspects of the work for a journalistic/scholarly essay that I am working on regarding a history of the music genre.

4. To replace a defective CD that I bought in a store.

5. To replace a purchased CD that I lost or accidentally damaged on my own.

Which of these are "fair use"? The answer is - NOBODY KNOWS! (at least until you a court ruling in your particular case.) Recent court cases would strongly suggest that scenarios 1 & 2 probably won't be considered fair use, but even then, there might be specific facts in individual cases that might lead a court to rule otherwise (and such a ruling would have little use or practicality in terms of establishing precident for future cases with differing facts - even when the differences are hair-splitting). "Fair Use" can be an infinitely flexible concept that judges can use and abuse according to their personal tastes. Any lawyer who tells you that there is a bright line legal rule that prohibits any downloading of songs for personal use under all circumstances is simply smoking crack folks. The odds are certainly stacked against such defendants these days, but there is no bright line rule.

This much is certain, however: Media companies would consider all 5 scenarios to be copyright infringement with no "fair use" invovled. If they are the ones directing websites such as Youtube to remove content based on their edict, then their declaration that "fair use" ought to be "accommodated" is a hollow promise indeed.