What collecting societies really do.

The political economy of IP is very revealing. In Steal This Idea, I described how the US support for copyrights shifted when the US became a stronger producer from being a stronger net consumer.

When the economy weakens, IP is often used as a means to ratchet up profits.

As far as business methods are concerned, it began with State Street -- a banking patent. Now that others are able to challenge the financial moguls, finance turns against protection.

The rank opportunism of IP and the political hacks who support the various interest groups is appalling.

Columbia Law Professor Ronald Mann has a round-up of how the U.S. Supreme Court has looked upon the lower Federal Circuit's point-of-view when it comes to recent patent law decisions.

It is well worth a read here:

http://www.scotusblog.com/2011/07/ronald-mann-reviews-the-patent-cases-of-ot2010/

Felix Salmon link here goes after Andrew Ross Sorkin for his attack in the New York Times on the banks that successfully used their lobbying power to get Congress to exempt them from business-method patents link here. Sorkin's beef is that the banks have enormous political power, based on their political contributions, while defending such patents as having been successfully blessed by our courts.

Salmon agrees that the banks have great political power but emphasizes the whole questionable field of business-method patents and comes out opposed. More broadly, he objects that we have too many questionable patents and way too much litigation that drives up costs, while adding no benefit to consumers.

It is nice to have another blogger on this side of the argument. More and more are joining the chorus.

APPLE has now received a patent for two fingered gestures on a touchscreen according to this link here and to a much more extensive set of claims by another interpretation link here. For the rest of us, it would appear there is loads of prior art that would preclude granting such a patent but the Patent Office seems unable to resist granting them and extending the monopoly farther and farther. But why should two finger gestures get patented while one finger ones don't?

The broader significance is that the big players in the industry can be challenged, as Google has done, but it looks as if that may be the last. The big guys have circled the wagons and will win unless the patent law gets changed. Chances?

If you read either the newspapers or the business press, you still won't really be sure about the details of Nortel's sale of its patents, but apparently some were sold to a consortium of Microsoft, Apple, etc. and some were sold to individual companies link here. This is being played as a defeat for Google which made an initial bid and subsequent competitive bids but dropped out after the price rose above $4 billion. It might equally be viewed as a victory for Google, having made arch-competitors pay far more than they dreamed of having to.

The real losers here were us consumers who will pay more for things produced under the patents. We will also see less inter-company competition and less innovation. This further cements the already long standing position of the incumbents, which will also restrict innovation.

Still think patents promote innovation?

from kottke.org

"I invented nothing new. I simply assembled the discoveries of other men behind whom were centuries of work. Had I worked fifty or ten or even five years before, I would have failed. So it is with every new thing. Progress happens when all the factors that make for it are ready and then it is inevitable. To teach that a comparatively few men are responsible for the greatest forward steps of mankind is the worst sort of nonsense." -- Henry Ford

'Aside from the unprotectable ideas of (1) brandishing a blow dryer as a weapon, and (2) the characters' fighting poses, there is no plausible basis for a reasonable jury to find that the parties' respective expressions of the concept of a...crime-fighting hairdresser are substantially similar".

So holds the Second Circuit Court of Appeals in affirming the dismissal of a copyright claim here [PDF]:

Cabell v. Sony Pictures

From the NBER Digest:

COUNTERFEITERS: FOES OR FRIENDS? Yi Qian

Counterfeits ... steal demand from low-end authentic products, but [have] positive spillover effects for high-end authentic products.

---

In fiscal 2009, the U.S. Customs and Border Protection seized more than $260 million worth of counterfeit goods, with counterfeit footwear accounting for 40 percent of the total seizures. Counterfeit footwear has topped the seizure list of the customs service for four years. How does the existence of such counterfeits affect the sales of authentic products?

In Counterfeiters: Foes or Friends? (NBER Working Paper No. 16785), author Yi Qian analyzes product data from Chinese shoe companies over 1993-2004. She can study the impact of policy changes, such as the 1995 change in government enforcement efforts in monitoring footwear trademarks in China. That change had different effects on counterfeit entry for branded companies with varying degrees of closeness to the Chinese government.

Qian finds that counterfeits have positive advertising effects for the brand of shoes they copy. However, they have negative substitution effects for the authentic products, driving buyers away from the authentic shoe to the counterfeit one. For sales of high-end authentic products, the positive advertising effect dominates the substitution effect. For sales of low-end authentic products, the negative substitution effect outweighs the advertising effect. All of the effects last for a few years before leveling off. And, these different effects for different products reinforce incentives for authentic producers to innovate and to move upward in the quality portfolio. Finally, after the entry of counterfeiters, market shares for the higher quality products increase while those of the lower end products decline.

Qian tests these results by conducting some surveys and finds similar effects regarding the purchase intent of high-end, medium-end, and low-end branded products. Her subjects' responses suggest that counterfeits signal brand popularity, at least to some consumers. Counterfeits thus appear to steal demand from low-end authentic products, but their presence has positive spillover effects for high-end authentic products.

--Lester Picker

link to the paper

Another review of Against Intellectual Monopoly by Richard Gilbert in the Journal of Economic Literature.