Technological Innovation and Intellectual Property

Summary:

Patents as property I

The idea that patents can be analyzed as a property system both regarding its strengths and its weaknesses seems to be gaining currency in influential circles. This post reports on a recent editorial in the Wall Street Journal.

What s wrong with software patents?

This post, continuing summaries from Patent Failure, reviews the evidence on whether software patents have a particular problem, and, if so, what it is and how it might be fixed.

Patent sharks

Summary of recent articles on patent sharks, both old and new.

IP and startups

Theoretical model explores a novel effect of patents for startup firms.

As you may know I am much more favorably inclined towards trademarks than other forms of intellectual property. (Michele is less favorably inclined.) It seems to me a good thing that it is possible to tell who you are doing business with, and no downside monopoly. That may be the purpose of trademark law...but there is another part of creeping IP: the apparent right under trademark law to protect the image of your product. Daniel Monchuk directs us to an article in the WSJ about what seems to me to be trademark abuse. The article is about costume companies that are being sued by trademark holders for providing costumes based on trademarked characters. For the life of me I don't see what this has to do with identity: there is no claim that these costumes are authorized by the trademark holder, nor can a costume based on a comic book be confused for a comic book. Perhaps Justin or someone else who knows more about the law than I do can comment on whether this is a proper use of trademark law as it exists. Certainly if the law allows it, then there is a big problem with trademark law.

A lot is being written about the Anti-Counterfeiting Trade Agreement (ACTA) and given that many readers here will have seen something about it elsewhere link here, here and here I have not posted on the subject. But for those not up to speed on this, the government with strong support from the copyright holders and their lobbying groups has been trying to agree on the wording of trade agreements with many of our main trading partners whose terms were not revealed. They now have been leaked link here. It is widely assumed that the government was proceeding this way to avoid having to open the language of legislation to amendment by Congress. An up-or-down vote on an already negotiated trade agreement would have a better chance of passing as submitted in its present strong form. In addition, it is expected that the government will press other countries to sign up to the same strong terms, i. e., without change, if they want trade agreements with the US.

What has some really upset is the provision to enforce filtering on the internet, to disable such P2P sites as Pirate Bay, and to invade privacy by going through travelers computers and music players when they cross borders. In other words, this is not simply better enforcement but a substantial expansion of the law.

Matt Yglesias link here calls our attention to a paper by Dan Hunter and John Quiggin link here, which Matt calls The Economics of Amateurism and the original study entitles Money Ruins Everything.

Quoting from the original paper, "In the economy of the 21st century, economic and technical innovation is increasingly based on developments that don't rely on economic incentive or public provision. Unlike 20th century innovation, the most important developments in innovation have been driven not by research funded by governments or developed by corporations but by the collaborative interactions of individuals. In most cases, this modality of innovation has not been motivated by economic concerns or the prospect of profit. This raises the possibility of a world in which some of the sectors of the economy particularly the ones dealing with innovation and creativity are driven by social interactions of various kinds, rather than by profit-oriented investment. This Article examines the development of this amateur modality of creative production, and explains how it came to exist. It then deals with why this modality is different from and potentially inconsistent with the typical modalities of production that are at the heart of modern views of innovation policy. It provides a number of policy prescriptions that should be used by governments to recognize the significance of amateur innovation, and to further the development of amateur productivity."

Yglesias comments, "Strong IP makes it more difficult for commercial and non-commercial actors alike to be able to innovate. It compensates for erecting this financial hurdle by creating unique financial incentives toward innovation -- incentives that only help a commercial actor. In a world with weaker IP, more and more work should come from hobbyists, amateurs, and non-profit organizations."

He concludes that the problem is in righting the balance.

But to me the more basic problem is that strong IP has made innovation less likely, not more. Weaker IP should lead to more innovation, contrary to what the public has been led to believe.

In an op-ed for the New York Times, Larry Lessig takes up the question of "orphan works" link here. He begins usefully, reminding us that copyright had to be applied for before 1978, rather than being automatic as ever since. His proposed solution is to provide automatic copyright for 14 years and then requiring registration to extend it. He opposes the current draft law which would put aspiring users of "orphan works" through a complicated and expensive process of trying to find the copyright owner. He also covers special provisions for foreign copyright holders and the transition from the old system to a new one.

He doesn't really address the issue of why it would not be better to go back to the old system and require registration. I suppose he reasons that it is unlikely to be enacted. But that doesn't mean it isn't the better way to go.

Techdirt link here and Slashdot here both offer an hour video of a lecture on IP that is stimulating and well worth watching, particularly for someone like me who is a newcomer to these issues. If you haven't seen it, you have missed a good show and a compelling argument. The lecturer, patent attorney Stephan Kinsella, bills himself as a libertarian but he makes a strong utilitarian argument as well that all the evidence shows that the ostensible gains are exceeded by the costs of the system and that society is clearly poorer as a result. To me the utilitarian argument seems to be the one most likely to succeed with the general public, i.e., that IP is bad for the average person.

Well, not exactly free beer, but Free Beer is an open source beer: you can use its recipe at will and even sell the beer you brew commercially, no questions asked.

Hat tip: Economic Logic.

The United States Puritanical values collided with its neoliberal ideology in passing a law that prevented online gambling. Several companies -- Microsoft, Google, Yahoo -- just paid fined for posting ads for Internet gambling. Antigua and Barbuda protested since the US allows other forms of domestic gambling. They demanded huge compensation for their loss of business. The WTO judgment offers a much smaller amount, but it gives the country the right to violate intellectual property up to $21 million.

Kanter, James and Gary Rivlin. 2007. "In Trade Ruling, Antigua Wins a Right to Piracy." New York Times (22 December). link here

"Antigua and Barbuda won compensation from the United States on Friday in a long-running trade dispute about gambling, but the amount was far lower than the tiny Caribbean nation had been seeking. A World Trade Organization (WTO) arbitration panel granted Antigua's request to levy trade sanctions on U.S. intellectual property, for instance by lifting copyright on films and music to sell it themselves, prompting concern from Washington."

"The WTO panel said Antigua was entitled to compensation of $21 million a year from the United States for being shut out of the U.S. online gambling market. The ruling is only partial consolation for the former British colony, which built up an Internet gambling industry to replace declining tourism revenues, only to find itself shut out of the world's biggest gambling market."

"The award falls far short of what Antigua had demanded -- $3.44 billion in "cross-retaliation," allowing it to seek damages outside the original services sector. Washington had argued Antigua was entitled to only $500,000 in compensation."

Nathan Myhrvold's firm Intellectual Ventures is trying to raise up to $1 billion to buy patents and to help inventors develop inventions. Although IV hasn't sued anyone yet, Mr. Myhrvold won't abjure such an action.

The Wall Street Journal reports here .

One of its goals is to deepen--and no doubt to widen--the "market" for the monopoly formerly known as intellectual property. And that's the rub. So called "IP" is a government-granted monopoly, and therefore is the antithesis of property, as that term is understood under natural law.

Making the market for "IP" more liquid is like making the market for slaves more liquid.

Ron Lurie, an executive at Inflexion Point Strategies LLC, chillingly points out that IV could send letters about its "800 patents that cover your business."

"[N]obody can risk going to court, and they're just going to write you a check."

How would you like to have that letter on your desk?

BoingBoing

The Coop, Harvard's Barnes-and-Noble-run bookstore, has begun to throw out students who "take a lot of notes" about book pricing, stating that their prices are "intellectual property." Apparently, no one with a Harvard Law degree is involved in formulating this notion, as factual matters (such as pricing) are not copyrightable.

Coop President Jerry P. Murphy '73 said that while there is no Coop policy against individual students copying down book information, "we discourage people who are taking down a lot of notes." The apparent new policy could be a response to efforts by Crimsonreading.org -- an online database that allows students to find the books they need for each course at discounted prices from several online booksellers -- from writing down the ISBN identification numbers for books at the Coop and then using that information for their Web site. Murphy said the Coop considers that information the Coop's intellectual property.