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Against Monopoly

defending the right to innovate

Monopoly corrupts. Absolute monopoly corrupts absolutely.





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The Super Bowl and Intellectual Property vs God

The NFL has a rule to limit TV screens to 55 inches at public viewings. The league makes an exception for venues like bars and restaurants that regularly broadcast sporting events. But churches that dare to let their parishioners watch the mayhem on the big screen are coming under fire. Presumably, the league is not protecting intellectual property, but want parishioners to go to bars instead of churches on Sunday.

Alter, Alexandra. 2008. "God vs. Gridiron: As Church Super Bowl Parties Are Busted by NFL." Wall Street Journal (2 February): p. W 1. link here

The WTO, Gambling, and Intellectual Property

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."

Absurd Interpretation of Fairness

This article condemns Radiohead for ripping off consumers by allowing them to pay what they think is appropriate to download the group's new album. Apparently, some consumer might pay Radiohead money that should rightfully go to the major labels. Read this and laugh. "Will Radiohead leave fans high and dry? It may sound preposterous to accuse the British rockers of gouging their followers. The band is letting them decide how much to pay for a downloaded version of new album "In Rainbows." But early indications suggest that Radiohead's loyal followers are paying too much for the band's seventh disc." "According to a poll conducted by United Kingdom music magazine NME, the average fan appears to be willing to pay $10 for a digital copy. Now, that may not sound like a blow out. It's the going price for most records on Apple's iTunes. And that price, in turn, looks to be about right for a digitally downloaded album." "Consider the economics of the average CD. It retails for about $16 and costs about $6.40 to manufacture, distribute and sell in a store, research outfit Almighty Institute of Music Retail says. These costs are essentially zero when music is sold online. That's why iTunes can charge roughly $10 for a downloaded album." "Radiohead's fitter, happier approach slices out even more cost. The band pulled the ripcord on EMI, so it doesn't have to share profits or help pay the label's overhead. As a well-known band it's also able to take the knives out on marketing and promotion costs, cutting these by as much as two-thirds. Subtract these expenses and Radiohead may be able to distribute an album for as little as $3.40 a copy." "Now, fans may be delighted to pay $10 because they think the album is so good and Radiohead deserves the extra cash. But Radiohead prides itself on its anticorporate and anti-materialistic ethos. To avoid letting down fans, it might be more productive to adopt a no-surprises policy and fix a simple, fair charge for its record." Cyran, Robert, Rob Cox and Mike Verdi. 2007. "What Price a Download? Given the Option to Name Their Own Price for Album, Radiohead Fans Overspend." Wall Street Journal (3 October): p. C 14. link here

Prices as Intellectual Property

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.

Patents and Unions

This is really wierd.

Hitt, Greg. 2007. "Patent System's Revamp Hits Wall: Globalization Fears Stall Momentum in Congress." Wall Street Journal (27 August): p. A 3. "A bipartisan effort in Congress to overhaul the patent system -- a priority for some of the nation's biggest technology companies -- is hitting resistance because of concerns the U.S. might be exposed to greater foreign competition. Patent overhaul appeared to be on a fast track earlier this summer. But plans for a quick vote got derailed last month after the AFL-CIO entered the debate, warning that innovation -- and union-backed manufacturing jobs -- might be at risk if the changes were adopted. The union has considerable clout in the Democratic Congress and expressed concerns with provisions that would expose patents to expanded challenges and might limit damages for infringement. "At a time when the Chinese government is constantly being challenged to live up to its intellectual-property obligations, we do not want to take actions that may weaken ours," the AFL-CIO's legislative director, William Samuel, said in the pointed missive that was circulated on Capitol Hill."

Michael Perelman

Music Pirates as Market Researchers

Here is Clear Channel using data on music downloading to sell to to radio stations to build up their listener base so that they can charge more for advertisers. Mcbride, Sarah. 2007. "Pirated Music Helps Radio Develop Playlists." (12 July): p. B 1. "Earlier this year, Clear Channel Communications Inc.'s Premiere Radio Networks unit began marketing data on the most popular downloads from illegal file-sharing networks to help radio stations shape their playlists. The theory is that the songs attracting the most downloads online will also win the most listeners on the radio, helping stations sell more advertising. In turn, the service may even help the record labels, because radio airplay is still the biggest factor influencing record sales. Premiere's Mediabase market-research unit is working on the venture with the file-sharing research service BigChampagne LLC. BigChampagne collects the data while a Premiere sales force of about 10 people pitches the information to radio companies and stations. Premiere declined to disclose how much it charges." "Joe Fleischer, BigChampagne's vice president for sales and marketing, adds that the legality of grabbing music is a separate issue from the insight into peoples' taste the downloads offer." "Mediabase has cut deals with stations at sister company Clear Channel Radio, as well as group-wide deals with Radio One Inc. and Emmis. According to BigChampagne's Mr. Fleischer, the partnership has already surpassed its target of signing up 100 radio stations this year."

Poisonous Intellectual Property Clauses Korea-US Free Trade Agreement

This looks very bad.

Sun, 27 May 2007 19:46:17 +0900 PatchA

Dear all,

Finally, the full text of Korea US FTA was released last Friday. (http://www.mofat.go.kr/mofat/fta/eng/eng_list.htm)

It has many poisonous articles. We are very worried about the IPR chapter and the confirmation letters of IPR have very dangerous things which the former US FTA didn't have.

For examples, both governments agree on the objective of shutting down the internet sites that permit unauthorized reproduction, distribution, or transmission of copyright works. Korean government are shutting down even P2P service and webhard service. I think most of the internet sites including portal, UCC/UGC, blog sites etc.can be shut down by the government.

And it also includes strong enforcement activities on book printing on university campuses.

If this Korea US FTA is passed, then the US will request other countries to include these things in the following FTA. So it needs to have international solidarity activities to stop this kind of US FTA.

Please check below and we welcome of your criticizing opinions or statement to this IP chapter of Korea US FTA. We will post it to our struggle website (http://nofta-ip.jinbo.net) And please forward it to other people world-wide.

Korean Alliance Against the Korea-U.S. FTA and social organizations will have a press conference about the problem of IPR chapter of Korea US FTA on Monday(May 28th).

In soldarity, patcha

============================ Kim Jeong Woo (PatchA) Korean Progressive Network 'Jinbonet' Tel) +82-2-701-7687 Fax) +82-2-701-7112 Web) http://www.jinbo.net Email) i@patcha.jinbo.net / patcha@patcha.jinbo.net ============================

? Confirmation letter (Online Piracy Prevention) - Full text - http://www.mofat.go.kr/mofat/fta/eng/e45.pdf The Parties agree on the objective of shutting down Internet sites that permit the unauthorized reproduction, distribution, or transmission of copyright works, of regularly assessing and actively seeking to reduce the impact of new technological means for committing online copyright piracy, and of providing generally for more effective enforcement of intellectual property rights on the Internet.

Korea also agrees on the objective of shutting down Internet sites that permit the unauthorized downloading (and other forms of piracy) of copyright works, including so-called webhard services, and providing for more effective enforcement of intellectual property rights on the Internet, including in particular with regard to peer-to-peer (p2p) services.

Korea will work to prevent, investigate, and prosecute internet piracy. In doing so, Korea will work with the private sector, the other Party, and other foreign authorities. ? Confirmation letter (Promoting Protection and Effective Enforcement of Copyrighted works on University Campuses) - Full text - http://www.mofat.go.kr/mofat/fta/eng/e46.pdf The Parties recognize the importance of preventing illegal copying and distribution of copyrighted works on university campuses and providing effective enforcement against book piracy. Therefore, consistent with Korea's May 2004 Master Plan for IPR, Korea agrees to continue to increase its efforts to improve awareness of copyright infringement activities and book piracy on university campuses and reduce illegal reproduction and distribution of copyrighted works.

The Full text of IP Chapter is below Intellectual Property Rights - http://www.mofat.go.kr/mofat/fta/eng/e43.pdf Confirmation letter (Internet Service Provider) http://www.mofat.go.kr/mofat/fta/eng/e44.pdf

Confirmation letter (Promoting Protection and Effective Enforcement of Copyrighted works on University Campuses) http://www.mofat.go.kr/mofat/fta/eng/e46.pdf

Confirmation letter (Online Piracy Prevention) - http://www.mofat.go.kr/mofat/fta/eng/e45.pdf

Against Monopoly

Here is a story from the New Scientist. A new drug is discovered that appears to cure cancer. So far, so good. Unfortunately, it is cheap and has no patent. As a result, nobody has an incentive to do tests on it.

Ideally, we need a drug that that can be made expensive.

Here is the article

Coghlan, Andy. 2007. "Cheap, 'Safe' Drug Kills Most Cancers." New Scientist (21 February). link here

"It sounds almost too good to be true: a cheap and simple drug that kills almost all cancers by switching off their 'immortality'. The drug, dichloroacetate (DCA), has already been used for years to treat rare metabolic disorders and so is known to be relatively safe. It also has no patent, meaning it could be manufactured for a fraction of the cost of newly developed drugs."

"Evangelos Michelakis of the University of Alberta in Edmonton, Canada, and his colleagues tested DCA on human cells cultured outside the body and found that it killed lung, breast and brain cancer cells, but not healthy cells. Tumours in rats deliberately infected with human cancer also shrank drastically when they were fed DCA-laced water for several weeks."

"DCA attacks a unique feature of cancer cells: the fact that they make their energy throughout the main body of the cell, rather than in distinct organelles called mitochondria. This process, called glycolysis, is inefficient and uses up vast amounts of sugar."

"Until now it had been assumed that cancer cells used glycolysis because their mitochondria were irreparably damaged. However, Michelakis's experiments prove this is not the case, because DCA reawakened the mitochondria in cancer cells. The cells then withered and died."

"Michelakis suggests that the switch to glycolysis as an energy source occurs when cells in the middle of an abnormal but benign lump don't get enough oxygen for their mitochondria to work properly. In order to survive, they switch off their mitochondria and start producing energy through glycolysis."

"Crucially, though, mitochondria do another job in cells: they activate apoptosis, the process by which abnormal cells self-destruct. When cells switch mitochondria off, they become 'immortal', outliving other cells in the tumour and so becoming dominant. Once reawakened by DCA, mitochondria reactivate apoptosis and order the abnormal cells to die."

'The results are intriguing because they point to a critical role that mitochondria play: they impart a unique trait to cancer cells that can be exploited for cancer therapy,' says Dario Altieri, director of the University of Massachusetts Cancer Center in Worcester."

"The phenomenon might also explain how secondary cancers form. Glycolysis generates lactic acid, which can break down the collagen matrix holding cells together. This means abnormal cells can be released and float to other parts of the body, where they seed new tumours."

"DCA can cause pain, numbness and gait disturbances in some patients, but this may be a price worth paying if it turns out to be effective against all cancers. The next step is to run clinical trials of DCA in people with cancer. These may have to be funded by charities, universities and governments: pharmaceutical companies are unlikely to pay because they can't make money on unpatented medicines. The pay-off is that if DCA does work, it will be easy to manufacture and dirt cheap."

"Paul Clarke, a cancer cell biologist at the University of Dundee in the UK, says the findings challenge the current assumption that mutations, not metabolism, spark off cancers. 'The question is: which comes first?' he says."

Anatomy of a Patent Thicket: MP3

Here you see how all the overlapping claims make intellectual property unmanageable.

Heingartner, Douglas. 2007. "Patent Fights Are a Legacy of MP3's Tangled Origins." New York Times (5 March).

"The confusion stems from the number of companies and institutions -- including Thomson, Royal Philips Electronics and AT&T (through Bell Labs, now part of Alcatel-Lucent) -- that worked to create the MP3 standard almost two decades ago. The patent claims of those and others are increasingly being backed up by aggressive enforcement efforts, including lawsuits and even seizures of music players by customs authorities."

"Until now, the most prominent holder of MP3 patents has been the Fraunhofer Society of Germany, which was founded in 1949 and has become Europe's largest applied research organization. The division that helped develop MP3, the Fraunhofer Institute for Integrated Circuits, earns millions of dollars a year in licensing fees from software makers like Microsoft, which incorporates the format into its Windows Media Player, and from music player manufacturers like Apple. The payments -- typically $2,500 for a video game, or $2 a unit for music players -- are administered for Fraunhofer by the French electronics firm Thomson, which also played a role in the early development of MP3."

The Web site of the Fraunhofer: "Its detailed online history of MP3 portrays the format as an outgrowth of German university research in the 1970s, when German engineers began working on audio compression. One of Fraunhofer's leading audio engineers, Karlheinz Brandenburg, is frequently referred to in the German media as the father of MP3, a title he dismisses."

"But Alcatel-Lucent, which won the court judgment against Microsoft last month, has its own version of that history. It says Bell Labs (whose patent rights Alcatel acquired when it bought Lucent Technologies last year) was the main creative engine behind what went on to become the MP3 standard. 'A common misunderstanding is that Fraunhofer invented MP3,' said John M. Desmarais, the lead lawyer in the Microsoft case for Alcatel-Lucent, which is based in Paris. Though Fraunhofer was involved in the research that led to the MP3 standard issued in 1993, he said, 'Bell Labs had already developed the fundamental technology' in the mid-1980s, 'before Fraunhofer even came on the scene' .... 'MP3 has a lot of parts to it,' and 'two of the key parts are owned by Bell Laboratories,' he said, but 'that doesn't mean that other people don't have an ownership interest'".

"The group that made the MP3 standard official is the International Organization for Standardization, or ISO, a nongovernmental group based in Geneva that sets specifications for items as diverse as shipping containers and dashboard indicators. One of its many internal bodies is the Moving Picture Experts Group, or MPEG, a team of industry specialists established in 1988 to standardize digital multimedia formats."

"Many proposals were submitted for the first standard for audio and video compression, called MPEG-1, which was completed in 1992 and formally published in several parts in 1993. The chosen proposals included Musicam (also known as MPEG-1 Audio Layer 2, a format used in digital broadcasting) and Aspec, which went on to become the basis for MPEG-1 Audio Layer 3, now called MP3."

"Several companies -- including the Dutch electronics giant Philips -- claim patent rights to Musicam, and by extension, to a piece of MP3. 'In the case of MP3, it is very clear that this was not developed only by AT&T, Fraunhofer and Thomson, because it was based upon Musicam,' said Leon van de Kerkhof, a program manager at Philips Applied Technologies who was also a crucial member of the MPEG group at its inception."

"A spokeswoman for Thomson, Martine Esquirou, acknowledged that Fraunhofer and Thomson were not the only holders of MP3-related patents. 'We're not involved in this patent dispute between Microsoft and Alcatel-Lucent,' she said by e-mail. 'Thomson has not and does not license the patents in question'."

"Thomson's licensing program, she said, is based on 20 separate patent families that 'cover at least part of' the MPEG specifications. Thomson licenses these patents to more than 400 hardware and software companies."

"Muddling matters more, many of the companies on Thomson's list of licensees, including Apple, Microsoft, Motorola, Nokia and Samsung, also pay for additional MP3 licenses from Sisvel, an Italian company whose American subsidiary is called Audio MPEG."

"According to Sisvel, the MP3 patents it represents (on behalf of companies including Philips and France Telecom) are “compulsory for complying with the ISO standard.” Sisvel has aggressively enforced these patents -- for example, by having German customs authorities confiscate SanDisk MP3 players from the SanDisk booth at a German trade fair last September. In 2005, Sisvel sued Thomson over licensing fees for MP3 patents that Sisvel said Thompson had stopped paying; they quickly settled."

"In February, a little-known company called Texas MP3 Technologies also entered the fray, suing Apple, Samsung and SanDisk for infringement of what it said were its rightful MP3 patents."

The Degradation of Science: From Bell Labs to Pate

Here is my take on what Michele just wrote:

Bell Labs was once a jewel of American science. After the Justice Department broke up the Bell System, AT&T let Bell Labs deteriorate until it spun them off as part of Lucent. Lucent, in turn, deteriorated until it was bought up by Alcatel, which seems to be now behaving as a patent troll.

Alcatel just won an enormous patent suit against Microsoft -- $1.52 billion for using Bell Labs work on the MP3 format. The suit manner may or may not hold up, but I presume that Alcatel is now preparing suits against others, finally figuring out how it can commoditize the work of Bell Labs.

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