Excellent post by Mike Masnick on Techdirt:

It's an ongoing theme around here, but ideas are everywhere. The real trick to making something great often has extremely little to do with the idea, and much more to do with the execution. That's where the real innovation occurs -- in taking an idea and trying to figure out how to make it useful. It's that process that's important, much more than the original idea. As nearly anyone who has brought a product from conception to market will tell you, what eventually succeeds in the market is almost always radically different than the original "idea." That's part of the reason why patents are so often harmful to innovation. The patent is for that core idea, which is rarely the key in making something successful. But by limiting who can innovate off of the idea (or just by making it much more expensive) you're limiting that process of innovation. ... [A]s the founder of [failed company] Cambrian House admitted in explaining the company's changing plans, it wasn't difficult to get people to come up with all sorts of interesting and exciting ideas -- but where the company failed was in getting anyone to actually execute on any of those ideas. Ideas are a starting point -- but it's high time that we stopped worshipping the idea, and started recognizing how much more important execution is in driving innovation.

Jeff Tucker makes a similar point in his article Is Intellectual Property the Key to Success?:

A clue to the copyright fallacy should be obvious from wandering through a typical bookstore chain. You will see racks and racks of classic books, presented with beautiful covers, fancy bindings, and in a variety of sizes and shapes. The texts therein are "public domain," which isn't a legal category as such: it only means the absence of copyright protection. ... But they sell. They sell well. ... The much-predicted disaster of an anti-IP world is nowhere in evidence: there are still profits, gains from trade, and credit is given where credit is due. Why is this? Quite simply, the bookstore has gone to the trouble of bringing the book to market. It paid the producer for the book and made an entrepreneurial decision to take a risk that people will buy it. Sure, anyone could have done it, but the fact is that not everyone has....

As Tucker observed to me--this whole issue speaks directly to the Kirznerian vs. Hülsmannian view of entrepreneurship, and also the Hayekian vs. Salernoian view of calculation.

Or, as my "little buddy"* Gil Guillory wrote me,

This is a key point in VC partner, multiple entrepreneur, and author Rob Adam's A Good Hard Kick in the Ass: Basic Training for Entrepreneurs. The very first chapter is "good ideas are a dime a dozen", with lots of good anecdotes and rules of thumb. One of them: at his VC company, if someone asks them to sign an NDA, they see it as a red flag. What's most important, he says, is having a good execution team. A good execution team is what they fund, even if the idea is not that hot. They'll find a winning idea with a good team. And this is also what Napoleon Hill wrote. And Carnegie. And Martha Stewart. And Jim Collins."

*My 4 year old referred to him and Tom Woods that way after a Boston Legalesque sleepover.

In reading Robert Pear's excellent article in today's New York Times Business Section documenting the sheer waste associated with patent-oriented rent-seeking by Big Pharma in its lobbying over Congress's current round of attempted patent reform, I was struct by this sequence of quotes and comments on the disagreement between companies that rely on patents and those that don't regarding the proposed reforms of the inequitable conduct doctrine, which allows the courts to invalidate a patent if it is demonstrated that the patentee deliberately withheld or distorted information in the patent application process:

Mr. Armitage, the Lilly executive, said: "The doctrine of inequitable conduct is used so aggressively in litigation that it has unintended consequences. Applicants give the Patent and Trademark Office too much information, to avoid allegations that they concealed anything, and they refuse to explain the information, to avoid later allegations that they engaged in some form of misrepresentation."

James C. Greenwood, president of the Biotechnology Industry Organization, said, "The poor patent examiner gets a dump truck full of information that he has to pore over without any assistance from the applicant."

The number of patent applications 467,243 in 2007 has nearly doubled in the last 10 years and has more than tripled since 1987.

Jon W. Dudas, the under secretary of commerce for intellectual property, said: "We are getting more and more unpatentable ideas, worse and worse quality applications. Historically, in the last 40 years, the allowance rate the percentage of applications ultimately approved hovered around 62 percent to 72 percent. It went up to 72 percent in 2000, but dropped to 43 percent in the first quarter of this year."

On reading this, I started to wonder if anyone had thought about possible open source methods for reviewing patent applications, and, lo and behold, this is something the USPTO is apparently considering. Link here.

Pennsylvania has a consumer law that guarantees high prices! According to Pennlive.com:

The 1941 law is intended to prevent businesses from driving others out of business by selling goods at prices below cost. The goal is to protect consumers, because a company that wiped out competitors could then charge any price it wanted.

In this particular case, it prevents Wal-Mart to sell generic prescription drugs for $4, which have to be charged at least $9. Not surprisingly, independent pharmacists are fighting against a change in this law, given that they sell these drugs for $25...

So, we have a law that is supposed to prevent a future monopoly by instituting a cartel.

Chinese internet firms Baidu.com Inc. and Sogou (part of Sohu.com) have been sued in a Chinese court for allowing illegal downloads of music files. Here is the story in today's Wall Street Journal. The plaintiffs are the usual suspects--Chinese based units of the labels. Sony BMG Music, Warner Music Group, and Viviendi are suing both companies; EMI's Gold Label is suing Sogou.

The suits are for relatively small but still unprecedented (by Asian standards) sums ($9 mill for Baidu and $7.5 mill for Sogou), but could open the floodgates for real money, even by Sen. Dirksen's standards.

Baidu has revenue-sharing deals deals in place with many Chinese labels, including EMI. These have been nixed by the other majors.

Meanwhile, MySpace Music has cut a deal with Warner, Sony BMG, and Universal that offers them equity and ad revenue.

Here is the article, from Business Week, April 14.

Following up on Stephen Spear's post on the District judge's ruling against the attempts by the U.S. Patent Office to reign in firms trying to apply for large numbers of patents at once -

The full court decision can be found here [PDF file]. [h/t: CourtHouseNews.com]

While the ruling contains a lot of legalese, the judge also manages to describe in great detail (and relatively simple language) the process involved in patent applications - and why the current system allows firms with large financial and legal resources to get away with murder in the patent realm by being able to outlast the patent office and wear it down. Definitely worth a read.

The end results of the ruling are indeed tragic. However, I have to admit that the judge may have a point when he says that the proposed changes need to come form Congress itself - not from the whims of unelected and unaccountable administrative officials (even though these particular whims are very much welcome). If you give too much lawmaking power to administrators, the day will come when the pendulum swings the other way after pro-monopolist workers come to dominate the Patent Office. But since Congress is frequently bought off by the patent lobby, that leaves the future landscape rather bleak. Hopefully the Supreme Court will continue its attempts at patent reform by enlarging the very incremental steps they have undertook thus far.

PoET has started a website to get instructors to take price into account when assigning textbooks link here. Their high prices have been the subject of this website on a number of occasions, but our preferred solution has been to get authors to post the books on a website and allow them to be downloaded.

PoET makes several points, starting with the fact that instructors have no incentive to take price into consideration and that their publishers do not advertise their prices or even make them easily accessible. With prices of basic texts running at more than $150 a copy, it is not a trivial cost for the student. By posting prices, the website would encourage some competition among providers.

We are happy that someone else is looking at the problem but still like our solution better.

Economic Logic has had this week a series of posts on free goods, including some of my favorites. I frequently listen to Pandora, an incredible internet radio that learns what to play from your preferences, for free. Also, I do all my work with open source software (perl could have been added) and open source operating systems, the only exception being Matlab. Finally, Economic Logic mentions RePEc, that I use all the time as well...

The provision of goods for free tends to lead to monopolies, but as they cannot extract any rent, for once it is not bad.

An "illegal" Mexican immigrant, Adriana Torres-Flores, whose children were born in the U.S., spent several days in an Arkansas jail without food, water and a bathroom, and with a shoe for a pillow. The bailiff forgot about her over the weekend. Her crime? Selling her own property in the form of "pirated" DVDs and CDs. Here is the horrible story.

One of the untold (or too little told) stories about the monopoly formerly known as intellectual property is the assault on liberty (or "civil liberties," for those who think that liberty comes from or is guaranteed by the State) that comes with it.

Fed up with the State already? Here's an intellectual antidote. It's not subtitled "The Libertarian Manifesto" for nothing.

When I wrote about abolishing business method patents yesterday, I missed the possibility that there was a half-way house (halfway to ending all patents), ending software patents. That goal has its own advocacy group, announced just a few days ago link here. And money. That seems doable. Take a look at the webpage for a better idea of how they propose going about it. It won't happen soon, but "know hope".

The Feb. 25 issue of Forbes magazine has an interesting article on the causes and consequences of occupational licensure, "The New Unions".

Licensing laws injure the poor more than anyone (as if you didn't know). In at least one state, you have to be licensed to be a shampoo assistant.

Money fact: estimated annual cost to the U.S. economy: $100 billion.

Depressing fact: occupational licensing is growing.

Next up: tougher state- (and federally-?) mandated requirements for mortgage brokers.

An interior design professor-cum-rent seeker's campaign for monopolistic restrictions in that industry highlights the political process behind licensing. Don't dare call yourself an interior designer if you're merely an interior decorator.

Adam Smith, call your office.