A Korean newspaper is carrying a story about Microsoft, asserting that it is using patents to keep out competitors (link here). It has filed a rising number, starting from 6 in 2000 to 591 in 2005, for a cumulative total of more than 1000. The article notes that MS tried in the past to close a Korean competitor of MS Office by investing $20 million if it stopped writing programs in Korean characters. Local fund raising saved the program with a nationalist public campaign. One of the paper's sources is quoted as saying it is a worldwide drive by MS, not just confined to Korea.

The paper also notes that Korean software companies do not worry much about patents. That may result from the widespread pirating.

Blogger Matt Yglesias has an interesting take on the Digital Millenium Copyright Act and the success of the iPod (http://www.matthewyglesias.com/). When you buy an iPod, the only place you can buy music for it is at the iTunes Music Store. And the only place you can play the tunes is on an iPod, since at the behest of the record companies, the DMCA makes it illegal for anyone to make a player for iTunes .

It's a monopoly essentially created by government.

Okay. It's not about ending the invasion of Iraq, but at least they're standing up for strong American values. You see, the president is not doing enough to help business. The United States has a serious trade deficit and the solution is -- well maybe it's not a solution, but it's the Democratic policy -- stronger intellectual property enforcement. Here is what Nancy Pelosi, the radical congressman from San Francisco says in challenging the weak-kneed policies of President Bush:

"The President's failed economic policies have resulted in another month of record trade deficits, once again highlighting the need for a new direction," said House Democratic Leader Nancy Pelosi. "We must pursue an aggressive trade enforcement agenda so that U.S. businesses and workers do not pay the price for countries that refuse to play by the rules." link to the "Intellectual Property Abuses" press release here

Security software vendor Symantec Corp. has accused Microsoft of abusing its monopoly in deciding which security products can run on its upcoming operating system, Vista. It said Microsoft Corp., which started selling its own security products in May, is deliberately withholding information needed to develop products that work on its new and almost certainly dominant operating system (link here).

While Symantec hasn't filed a formal complaint, it said it is going public to pressure Microsoft to release software development kits that would allow rival products to work with Vista, like a "dashboard designed to show what protection programs are switched on."

European antitrust regulators previously warned Microsoft not to shut out rivals in the security software market as it builds more security into Vista. Symantec said it had faced similar problems with the Windows XP Firewall but Microsoft finally backed down. It believes Microsoft has stopped co-operating with vendors after it entered the security market with its anti-virus and firewall product OneCare.

In response to the Recording Industry Association of America's lawsuit against it last month, the LimeWire file-sharing company filed a counterclaim this week. It charges association members with "anticompetitive practices, restraint of trade, tortuous interference and other claims (info.riaalawsuits.us)."

The New York Times article (link here) cites the RIAA claims but also spells out LimeWire's that the association has refused to work with LimeWire to allow sharing of noncopyrighted files and to send users who wanted copyrighted works to legal sites like iTunes. Instead, it wants Limewire and any other file sharers to partner with iMesh, which Limewire suggests, is controlled by the RIAA members. “LimeWire cites the recording industry's relationship with iMesh, a file-sharing service it sued, but which is now essentially working at the industry's behest, operating a fee-based downloading service.”

The New York Times has a fascinating article about Marshall, Texas, which seems to be a prime location for venue-shopping patent trolls. Your are a couple paragraphs from the article. Then I will make the connection with Texas Instruments, by providing an extract from my book, Steal This Idea.

Creswell, Julie. 2006. "So Small a Town, So Many Patent Suits." New York Times (24 September). "In Marshall, an oft-told joke is that the passage of tort reform was when many local lawyers made the trip from P.I. to I.P. -- that is, they moved out of personal injury and into intellectual property." "The testing of Marshall as a patent battleground began nearly two decades ago, when Texas Instruments, which has its headquarters in Dallas, embarked on an aggressive strategy to make rivals license its patents. If a company would not capitulate or at least negotiate, a Texas Instruments team of lawyers would drag it to court -- increasingly, down the road to the uncluttered courtrooms of Marshall."

"What's behind the rush to file patent lawsuits here? A combination of quick trials and plaintiff-friendly juries, many lawyers say. Patent cases are heard faster in Marshall than in many other courts [a quirk of a local judge, sort of a speed trap for intellectual property]. And while only a small number of cases make it to trial -- roughly 5 percent -- patent holders win 78 percent of the time, compared with an average of 59 percent nationwide, according to LegalMetric, a company that tracks patent litigation."

Here's the extract. Notice the connection with Texas Instruments:

The history of the semiconductor industry exemplifies this trend toward changing the legal structure to aid firms in gaining a competitive advantage from intellectual property rights rather than from developing an edge in productive capabilities. As late as 1981, Roger S. Borovoy, vice-president and chief counsel for Intel Corporation, declared, "In the electronics industry, patents are of no value whatsoever in spurring research and development" (Anon. 1981). A recent study published by the Philadelphia branch of the Federal Reserve System describes the dramatic transition that came soon after Mr. Borovoy's evaluation of the importance of the patent system to his industry: Within the U.S. semiconductor industry, reverse-engineering was a well-established practice. But by the late 1970s, American firms objected to similar behavior by Japanese firms when they began to increase their market share in the more standardized products, such as computer memory chips. The level of competition eventually became so intense that, by the mid 1980s, most American companies abandoned these segments entirely. When it became clear they could no longer dominate Japanese firms on the basis of production technology alone, American firms attempted to consolidate their comparative advantage in research and development. To do this, they would have to find ways of reducing their competitors' ability to reverse-engineer their products. To that end, American companies began to lobby Congress to increase intellectual property protection for their semiconductor designs. In 1984, Congress created a new form of intellectual property right, called mask rights, especially tailored to address the needs articulated by the industry. [Hunt 1999, pp. 19-20] During this period, both Texas Instruments and National Semiconductor were both tottering on the verge of bankruptcy. Irving Rappaport, former vice-president and associate general counsel for intellectual property at National Semiconductor recalled: 'I'm not exaggerating when I tell you that National Semiconductor was only weeks away from bankruptcy in late 1990 .... All the papers had been signed before it was decided to continue the business and give licensing a more aggressive push. And without a doubt, patent fees bought us valuable time in which to complete our restructuring process. For a while there, in fact, three-quarters of our revenues came from patent licenses." [Rivette and Kline 2000, pp. 125-26] Texas Instruments struck first. Typically license fees ran about 1 percent of revenues. In 1987, Texas Instruments raised its royalties on chips to 5 percent (Dwyer et al 1989, p. 79). The company filed a suit against one Korean and eight Japanese semiconductor companies, accusing them of infringing semiconductor patents. The settlements yielded the company more than $600 million in payments, according to a 1990 report. The company became so aggressive in seeking royalties that by 1992 it earned $391 million in royalties, compared to an operating income of only $274 million (Warshofsky 1994, p. 111). In effect, these companies are beginning to transform the semiconductor industry from a manufacturing industry to a service industry, just as the postindustrial utopians would have them do it. According to one industry insider, James Koford of LSI Logic, "Silicon Valley and Route 128 are worlds of intellectual property, not capital equipment and production. Most of the employees of U.S. high technology live in southeast Asia" (cited in Kenney and Florida 1990, p. 237).

That ends the extract.

Finally, the article has a statement from the chief patent counsel for Time Warner, complaining about the expense of intellectual property litigation. Yeah. Right. Time Warner wants to cut back on intellectual property litigation.

"Companies spent 32 percent more on outside counsel for intellectual property litigation in 2003 than in the previous year, Chuck Fish, the chief patent counsel for Time Warner, told the House Judiciary Subcommittee on Courts, the Internet and Intellectual Property earlier this year. Spending for all other litigation rose a mere 1 percent during that time, Mr. Fish said."

The New York Times has a fascinating article about Marshall, Texas, which seems to be a prime location for venue-shopping patent trolls. Your are a couple paragraphs from the article. Then I will make the connection with Texas Instruments, by providing an extract from my book, Steal This Idea.

Creswell, Julie. 2006. "So Small a Town, So Many Patent Suits." New York Times (24 September). "In Marshall, an oft-told joke is that the passage of tort reform was when many local lawyers made the trip from P.I. to I.P. -- that is, they moved out of personal injury and into intellectual property." "The testing of Marshall as a patent battleground began nearly two decades ago, when Texas Instruments, which has its headquarters in Dallas, embarked on an aggressive strategy to make rivals license its patents. If a company would not capitulate or at least negotiate, a Texas Instruments team of lawyers would drag it to court -- increasingly, down the road to the uncluttered courtrooms of Marshall."

"What's behind the rush to file patent lawsuits here? A combination of quick trials and plaintiff-friendly juries, many lawyers say. Patent cases are heard faster in Marshall than in many other courts [a quirk of a local judge, sort of a speed trap for intellectual property]. And while only a small number of cases make it to trial -- roughly 5 percent -- patent holders win 78 percent of the time, compared with an average of 59 percent nationwide, according to LegalMetric, a company that tracks patent litigation."

Here's the extract. Notice the connection with Texas Instruments:

The history of the semiconductor industry exemplifies this trend toward changing the legal structure to aid firms in gaining a competitive advantage from intellectual property rights rather than from developing an edge in productive capabilities. As late as 1981, Roger S. Borovoy, vice-president and chief counsel for Intel Corporation, declared, "In the electronics industry, patents are of no value whatsoever in spurring research and development" (Anon. 1981). A recent study published by the Philadelphia branch of the Federal Reserve System describes the dramatic transition that came soon after Mr. Borovoy's evaluation of the importance of the patent system to his industry: Within the U.S. semiconductor industry, reverse-engineering was a well-established practice. But by the late 1970s, American firms objected to similar behavior by Japanese firms when they began to increase their market share in the more standardized products, such as computer memory chips. The level of competition eventually became so intense that, by the mid 1980s, most American companies abandoned these segments entirely. When it became clear they could no longer dominate Japanese firms on the basis of production technology alone, American firms attempted to consolidate their comparative advantage in research and development. To do this, they would have to find ways of reducing their competitors' ability to reverse-engineer their products. To that end, American companies began to lobby Congress to increase intellectual property protection for their semiconductor designs. In 1984, Congress created a new form of intellectual property right, called mask rights, especially tailored to address the needs articulated by the industry. [Hunt 1999, pp. 19-20] During this period, both Texas Instruments and National Semiconductor were both tottering on the verge of bankruptcy. Irving Rappaport, former vice-president and associate general counsel for intellectual property at National Semiconductor recalled: 'I'm not exaggerating when I tell you that National Semiconductor was only weeks away from bankruptcy in late 1990 .... All the papers had been signed before it was decided to continue the business and give licensing a more aggressive push. And without a doubt, patent fees bought us valuable time in which to complete our restructuring process. For a while there, in fact, three-quarters of our revenues came from patent licenses." [Rivette and Kline 2000, pp. 125-26] Texas Instruments struck first. Typically license fees ran about 1 percent of revenues. In 1987, Texas Instruments raised its royalties on chips to 5 percent (Dwyer et al 1989, p. 79). The company filed a suit against one Korean and eight Japanese semiconductor companies, accusing them of infringing semiconductor patents. The settlements yielded the company more than $600 million in payments, according to a 1990 report. The company became so aggressive in seeking royalties that by 1992 it earned $391 million in royalties, compared to an operating income of only $274 million (Warshofsky 1994, p. 111). In effect, these companies are beginning to transform the semiconductor industry from a manufacturing industry to a service industry, just as the postindustrial utopians would have them do it. According to one industry insider, James Koford of LSI Logic, "Silicon Valley and Route 128 are worlds of intellectual property, not capital equipment and production. Most of the employees of U.S. high technology live in southeast Asia" (cited in Kenney and Florida 1990, p. 237).

That ends the extract.

Finally, the article has a statement from the chief patent counsel for Time Warner, complaining about the expense of intellectual property litigation. Yeah. Right. Time Warner wants to cut back on intellectual property litigation.

"Companies spent 32 percent more on outside counsel for intellectual property litigation in 2003 than in the previous year, Chuck Fish, the chief patent counsel for Time Warner, told the House Judiciary Subcommittee on Courts, the Internet and Intellectual Property earlier this year. Spending for all other litigation rose a mere 1 percent during that time, Mr. Fish said."

The Economist has a nice story on changes in Europes financial markets (link here). In essence, the Markets in Financial Instruments Directive will create a single EU-wide trading place in stocks and other financial instruments. It requires the member states to harmonize their laws and allow qualified firms in one EU member state to compete in all the others. It will also promote greater transparency and allow the use of off-exchange trading. The deadline for the new individual-state enabling legislation is the new year, but it is doubtful whether all will make it.

Another step on the way to a more competitive world market in financial instruments

Searcey, Dionne. 2006. "Sewing and Suing Aren't a Happy Mix For Embroiderers." Wall Street Journal (14 September): p. A 1.

"Janet Ebert, a longtime embroidery hobbyist, logged onto the Internet last year and found images of flowers and cuddly animals. Altering them with special software on her home computer, she created versions of the designs that she stitched on quilts for her five grandchildren. She used a computerized Singer embroidery machine, and sold some of the designs online for about $2 each. A few weeks later, a courier appeared on Ms. Ebert's front porch in House Springs, Mo., with legal papers informing her that she was being sued. The complaint said she had violated copyright law and that some of the designs she had sold belonged to embroidery company Action Tapes Inc., in Dallas." "Sewing and design companies are engaging in piracy disputes similar to those waged by the music, movie and fashion businesses. Some buyers and sellers of designs are confused about the copyright issues buzzing around the honey bees and sunsets they stitch on quilts and clothing."

"Embroiderers used to buy patterns of angels, flowers or other designs published by sewing companies at five-and-dime shops. They would iron the outlines of the designs onto fabric and stitch around them by hand, creating unique, colorful patches on clothing and blankets. Today, many buy digital forms of the designs from sewing company Web sites that offer downloads or disks. The designs are then executed by computerized sewing machines, costing as much as $7,000, that sew the images onto fabric."

"Fed up with such practices, the Embroidery Software Protection Coalition, a small group of sewing companies including Action Tapes, Great Notions Inc., Pfaff American Sales and others, aggressively began pursuing legal action against hundreds of embroidery buffs. Nearly 1,500 have been sent menacing letters on stationery stamped with the coalition's logo -- a stitched-looking letter "C" with a needle and thread attached -- that threaten them with steep fines and court judgments for buying counterfeit embroidery designs. Some of the letters tell the buyers the coalition will back off any legal action if they pay fees for their "past wrongful conduct"."

"Dozens of embroiderers took to online sewing forums to anonymously complain about the coalition's efforts, accusing the coalition of shaking down innocent sewers. In turn, the coalition in June sent a subpoena to Yahoo Inc., which hosts one embroidery forum, to find the identities of sewers such as "suelikessewingtoo" and "nanaanniesews" so it can consider suing them for defamation, according to the coalition."

"In its legal filings, it likened some of the stitchers' online screeds to "terrorist activities" and accuses them of posting slanderous statements "that marched across the Internet bulletin boards and chat groups similar to Hitler's march across Europe"."

"Gary Gardner, president of the coalition, says his group sometimes has no choice but to get tough, even with the little old ladies everyone agrees constitute the largest demographic of embroiderers. "Although they're a grandma, they're not a nice grandma," Mr. Gardner says. "Some of them are outright vicious, even when we point out to them what they're doing is illegal"." "The coalition has a team of investigators who troll online auctioneers such as eBay for obvious counterfeiters offering batches of thousands of designs for low prices."

"When the companies catch counterfeiters, some hand over names of their buyers as part of a legal settlement. In June, Sue Schultz, an embroiderer in Florida, received a letter from the coalition telling her some designs of trucks and cars her husband purchased for her in December 2005 were counterfeit. "We were shocked," Ms. Schultz says. "My stomach was completely upset." When she phoned the coalition, she says, lawyers told her to send a $300 check to make amends. The coalition acknowledges that it sometimes resorts to such demands. Unsure of the legitimacy of the operation, Ms. Schultz did nothing, though she says she now buys designs exclusively from established sellers." "Ms. Schultz and others have complained on Internet forums about the letters that they say amount to a shakedown. Two of them have enlisted the help of an Internet privacy group called the Electronic Frontier Foundation to quash the subpoena sent to Yahoo, aiming to protect anonymity online and citing First Amendment concerns."

"The coalition has since withdrawn the subpoena, but attorney Carole Faulkner says she is working on a new, narrower subpoena and still has plans to sue some forum members for defamation. Corynne McSherry, an attorney for the Electronic Frontier Foundation, says the coalition's "shotgun approach is aimed not at redressing defamation, but at intimidating those who have sought to raise public awareness of its ham-fisted tactics." She says she is pleased the subpoena was withdrawn. Yahoo declined to comment."

The European Commission has warned Microsoft about tying security features into its new operating system, Vista, thus putting other security programs at a competitive disadvantage. A spokesman for the competition regulator, Jonathan Todd, is quoted by the New York Times as saying it was up to Microsoft, as "a near monopolist," to ensure the new software complies with antitrust rules (link here).

Microsoft has responded by suggesting it might have to delay the sale of Vista in Europe.

The regulator had previously ordered Microsoft to sell a version of the current operating system, Windows XP, without Windows Media Player. The stripped version is said to be a poor seller, given that XP with Player is still available. It remains to be seen whether the new requirement will effectively maintain competition.