My article "Radical Patent Reform Is Not on the Way" was published today (Oct. 1, 2009) in Mises Daily.

***

Hardly a day passes when we do not hear of one patent abuse or another.[1] Ridiculous patents are issued or filed and companies are enjoined from selling their products. Judgments are issued, and settlements reached, for billions of dollars. (See the Appendix for examples of ridiculous patents and outrageous judgments.) Not surprisingly, there is a growing demand for reform of our patent system.[2]

Whether their demands are modest or radical, the reformers share the belief that the patent system is broken; has gotten out of hand; and is not in sync with our fast-paced, high-tech, open-sourced, digitized world in short, that it needs to be fixed.

FULL ARTICLE

[Mises crosspost]

"It would be remarkable, and certainly unjustified, to find that the plaintiff could copyright the concept of Jesus as forgiver."

District Judge John G. Koeltl, explaining in part why one can't copyright the idea of putting Judas on trial.

Judge Koeltl even had the wisdom to award attorneys' fees to the defendant in this case, stating that there were "indicia of bad faith here."

Continuing on: "The plaintiff's first counsel was warned, before any action had been filed, that there was no colorable copyright infringement claim. The plaintiff nevertheless persisted in obtaining new counsel and filing his complaint. Furthermore, this case has the hallmarks of an abusive lawsuit."

Read the whole decision here.

[Hat-tip: CourthouseNews.com]

Courthouse News reports on a disturbing development -

(CN) - In a decision that could have a profound effect on the future of patent law for medical treatments, the Federal Circuit ruled a test for determining the proper dosage of drugs to treat autoimmune disease is patentable under federal law.

A three-judge panel sent the patent dispute between Prometheus Laboratories and the Mayo Clinic's medical laboratory division back to a federal judge in Southern California, saying the judge incorrectly dismissed Prometheus' infringement claim against Mayo.

Mayo has long used Prometheus' patented test for determining the correct dosage of thiopurine drugs used to treat autoimmune diseases. In 2005 it announced that it would begin selling its own dosage test, prompting an infringement lawsuit from Prometheus.

Read more HERE.

Full legal ruling can be found HERE.

Very nice list by Techdirt's Mike Masnick:

Techdirt Book Reading List 2009

from the food-for-thought dept

A couple years ago, after completing my series of posts on the economics of ideas and infinite goods, I wrote up a reading list of books that were useful in thinking about all of this. With our recent launch of a book version of that series, called Approaching Infinity, I updated that list with a bunch of more recent books (basically, the books sitting on my desk again...), and wanted to share them here. For this post, I'm only writing up short reviews, but plan to revisit some of these books with much more detailed reviews, in the future. Not surprisingly, we'll kick it off with four of the books that I feel are the most important for anyone to read if they're interested in these things. Together, they make up the four books that you can get together (all signed by their authors!) in the Techdirt Book Club package.

The Essentials:

• Moral Panics and the Copyright Wars by William Patry

  Patry, long established as one of the foremost experts on copyright law, has written an outstanding text that discusses how copyright law has been twisted and abused by corporate interests who don't use it for its intended purpose (to promote the progress of creative works) but as a tool to prop up an outdated business model. On top of this, he explores the misleading and inflammatory language used by those seeking to abuse copyright law in this manner. Highly engaging and a must read for anyone who's worried about the state of copyright today. Oh, and as a bonus, Patry has started blogging again in support of the book, after he gave up on blogging a couple years ago.

• The Public Domain by James Boyle

  Law professor James Boyle has been one of the foremost critics of the undue expansion of copyright law over the years, fighting against things like the DMCA and the Sonny Bono Copyright Extension Act. Over the years, he's noticed a troubling trend among some to question why the public domain is even needed so he wrote an entire book to explain why. It's filled with story after story that highlights both the importance of the public domain and how overly aggressive copyright laws have held back the public domain and the creativity that it previously allowed. As a highlight, don't miss the incredible chapter on the birth of soul music by Ray Charles. If today's copyright regime had been in force at the time, we might not have had soul music at all. Think of all the great music we may be missing today thanks to current copyright laws.

• Against Intellectual Monopoly by David Levine and Michele Boldrin

  This book was on the list two years ago, but that was an earlier digital-only draft, as opposed to the full hardcover version now available. Levine and Boldrin are two well-known economists who began investigating the impacts of intellectual property, and were eventually quite disturbed by what they found. That is, they could find no evidence that either copyrights or patents actually achieved their stated intention of "promoting the progress." Instead, they found a lot of evidence that the opposite occurred and that copyright and patent law served to hinder the progress and slow down its pace. Chock full of examples and citations to important studies, this book is a must read for anyone trying to understand the state of today's intellectual property law and how closely it lives up to its stated purpose.

• The Gridlock Economy by Michael Heller

  An excellent addition to the literature on property law and the economics of property. Heller recognized what he refers to as "the tragedy of the anti-commons," when too many property rights get in the way of the efficient allocation of resources, and notes how this has come into play on things like patents and broadcast spectrum. If you're trying to understand the economics of intellectual property, especially if you're a strong believer in property rights (as we are) this is an excellent book to understand where property rights can go too far.

Intellectual Property

• No Law by David L. Lange & H. Jefferson Powell.

  This is an incredibly worthwhile read. I plan to do a much more detailed review shortly. It methodically lays out the argument for how and why copyright law as it's written today clearly violates the First Amendment ("Congress shall make no law... prohibiting the free exercise thereof; or abridging the freedom of speech..."). The book is, at times, a bit dense to read through, but you kind of expect that from two lawyers. However, the detailed and thought provoking look at the history of intellectual property law, along with related legal concepts such as misappropriation and unfair competition -- as well as its detailed dissection of a few key court cases -- is, alone, worth the price of admission. I have some other problems with the book (including its eventual suggestions for how to "fix" copyright law), but there's so much value in the first half of the book that I'd highly recommend it.

• Patent Failure by James Bessen & Michael J. Meurer

  A must read for anyone looking to understand the patent system today. Bessen & Meurer go through a ton of the research that has been done about patent systems, and include a bunch of their own, and make the case that the patent system simply does not work for the majority of industries out there. The book is incredibly strong in detailing study after study after study that details, in an incontrovertible way, that the patent system is fundamentally broken and clearly hinders innovation much more significantly than it helps it.

• Copyright's Paradox by Neil Netanel

  Similar to No Law above, Copyright's Paradox goes into great detail showing how copyright law appears to quite obviously violate the First Amendment, and why that needs to be dealt with.

• The Patent Crisis by Dan L. Burk and Mark A. Lemley

  Mark Lemley should be a familiar name around here for his views on intellectual property, and this book certainly is a worthwhile read. It does a great job laying out the many problems with the patent system and why it often does significantly more harm than good. Where I find it a bit less convincing, however, is in suggesting that the court system can fix these problems. I agree that the current Congressional patent reform bills aren't very good, but I'm not convinced the courts will go anywhere close to far enough in fixing the system.

• Intellectual Property and Theories of Justice Edited by Axel Gosseries, Alain Marciano and Alain Strowel

  This is a collection of academic papers having to do with intellectual property, as related to not just legal and economic arguments, but philosophical ones as well. I don't agree with all of the different papers, obviously, but there's a lot to get your mind churning on different ideas and different approaches to intellectual property issues within this book.

Economics & Innovation

• Free by Chris Anderson

  By now, you should probably already know about this book, but Chris puts into book form much of what we talk about on Techdirt. My review of the book notes that it's well-worth reading, though I think he could have gone farther and could have done a better job anticipating how to respond to the obvious critiques from people who were responding emotionally, rather than based on the actual points raised by the book.

• The Venturesome Economy by Amar Bhide

  This is a fantastic read if you're looking to understand innovation in a global economy. It puts to rests various myths about globalization or off-shoring being bad for the US economy, and shows how innovation itself is global, but the key question is learning how to actually implement ideas, and how to take concepts and continually innovate, rather than just focusing on a small part of the puzzle.

• The Pirate's Dilemma by Matt Mason

  While it suffers from sensationalism, at times (too much so at points), the book does a fantastic job of highlighting example after example after example of how what some people feared as "piracy" was simply a leading indicator of innovation. In every case, the same pattern emerges: some existing industry freaks out over so-called "pirates," but the "pirates" are merely the market telling the industry what it wants, and what's possible. Eventually (often over massive protests from that industry) someone comes along and figures out how to deliver what the market wants -- and to do so profitably. This is a must-read for anyone who calls things "piracy" without understanding the real implications of what's going on.

• Predictably Irrational by Dan Ariely

  A quick and easy read that gets people to rethink certain easy assumptions about economic behavior. While I disagree with the idea that the actions are somehow "irrational," I do think it highlights how there are often more variables at play in an economic analysis than a simplified analysis takes into account. For folks around here, his investigations into how people respond to "free" within an economic model (i.e., they value it more than you would expect) are particularly noteworthy.

• Here Comes Everybody by Clay Shirky

  Pretty much anything by Clay Shirky should be required reading already, but this book is one of the best out there in getting you to understand how the old systems of production and consumption are changing due to enabling technologies, and how the old distinctions between production and consumption are melting away.

• Remix by Larry Lessig

  Not necessarily Lessig's strongest book, but still absolutely worth reading. It goes well with Matt Mason's (and James Boyle's) book above, in getting you to understand the nature of creativity, and the way in which nearly all creativity involves mixing one's own unique ideas with those that have come before.

• What Would Google Do by Jeff Jarvis

  While admittedly it can feel a bit preachy at times, once you get past that aspect of it, you realize that it's a manual for innovative decision making (not just in business). It's about recognizing that businesses by themselves don't get to call the shots any more, and if they don't realize that, they're probably not going to stay in business very long.

• Rebel Code by Glyn Moody

  If you want to understand how the concepts we talk about here can be applied in practice, the open source community is a good place to start. Glyn Moody has written an excellent account of exactly how that came about.

• The Future of the Internet: And How to Stop It by Jonathan Zittrain

  I actually disagree with the conclusions of this book, but there are still a number of good points raised within it, about how there's always a fight between "control" and "openness" in new technologies. Zittrain worries about the trend towards control, though I think in the end the market will settle things, and "control" will lose out to openness in the long run.

• A Culture of Improvement by Robert Friedel

  This rather epic tome goes deep into how innovation occurs in Western Society through a basic mechanism of a "culture of improvement": the idea that when something doesn't work right, we seek out a better solution. If you want to understand how innovation occurs, this is a good starting point.

• From Concept to Consumer by Phil Baker

  We've said it time and again: the real key to innovation is not the idea, but actually implementing it, and innovating to get the idea out there, and to see how you can deliver more of what a consumer needs. Written by someone who's done that many times over, this book is basically a guidebook for those looking to go from the idea stage to actually bringing a product to market. For those who think that the invention is the important stuff, and bringing it to market is just "business stuff," this is a worthwhile read.

Obviously, there have been a ton of other great books that have come out over the past couple of years, but these are the ones that I've kept close to my desk recently, and wanted to share with all of you.

[StephanKinsella.com cross-post]

Following up on An Anti-Patent Patent Attorney? Oh my Gawd!, I was chatting with a friend about the following. I've argued that merely filing for patents is not inherently unlibertarian since patents, like guns, have both legitimate and illegitimate uses. The former being defensive use to ward off patent infringement suits or to countersue someone who sues you first. Still, there's an ... icky ... feeling involved in getting a patent. The following may be a bit inside baseball for patent lawyers but I thought revealing some of the innards of how the process works may be of interest to some readers.

Laymen may not be aware of this but patent "prosecution" work (as filing the patent and interacting with the patent office to get it allowed, is called) is fairly fungible, low-dollar work, compared to other types of IP. To prepare and file a patent application, the patent attorney might charge anywhere from $7k to $15k or more. But patent litigation is much more lucrative (or can be), since the lawyers can get a cut of, or be paid based on the hopes of, multil-million or billion dollar judgments.

Patent lawyers also are often called on to prepare patent opinions. The good thing about these is they are more lucrative than patent prosecution--the attorney can often charge a good $25k or more to prepare one--and they can be completely libertarian. The typical usage is this. Company A is minding its own business and then becomes aware of a patent owned by company B that they are accused of, or otherwise concerned that they might be, infringing by selling a certain product that. Quite often the issue is not clear cut--the patent language is ambiguous and there are a variety of possible legal defenses one might have, that might or might not succeed at trial. If the risk seems high and the product is not important, the company may (a) design around the patent--that is, modify the product's design so that it doesn't infringe the patent; (b) stop making the product; (c) approach the patentee for a possible license. If the risk is low or the product is essential, sometimes there is option (d): keep making the product and pray that you are not sued. Option (c), designing around, sometimes employs an opinion of an attorney that the new design doesn't infringe, or relies on input from patent attorneys as to how to increase the chance that the new design doesn't infringe.

But when option (d) is invoked, then here is the dilemma companies face. If you go to trial, and lose, you may have to pay damages for past infringement--some kind of "reasonable royalty"; and the patentee may be able to get an injunction to force you to stop making the product going forward (which may result in a license with a royalty provision). However, the patent statute also provides for enhanced damages--"the court may increase the damages up to three times the amount found or assessed", in certain cases--which the courts have found to be cases of "willful infringement".

Now, the courts hold that if you get an unbiased opinion from a professional that says you do not infringe the patent, and you rely on this, then even if you lose at trial (and the attorney turns out to have been wrong), then you have a good argument that, although (it turns out) you were infringing, it was not willful since you "sincerely" believed (hoped) that you were not infringing, because you were "relying" on an attorney's opinion.

Thus, when patent litigation is threatened or a possibility, the potential infringer will often pay patent attorneys tens of thousands of dollars to exhaustively research the problem patent(s), and to prepare an opinion that "concludes that the patent is invalid, unenforceable, and/or not infringed." (One of the most recent cases on this is the Seagate case (discussed here), which reduces but does not eliminate the need for such opinions.)

In other words, potential patent victims are so desperate to keep selling their product, that they in effect pay tens of thousands of dollars to get a patent opinion that buys them "insurance"--it basically reduces the risk of treble damages being awarded in the event they lose at trial.

Anyway--I can't see any possible libertarian argument that preparing such a purely defensive opinion is unlibertarian. Indeed, it's heroic, much like income tax defense or criminal defense work.

[Against Monopoly cross-post]

Alistair Kelman is the man who can't exist: he's a forensic computing expert witness and barrister. I guess he and Stephan prove lawyers aren't all bad. Of course the reason for posting is that he has a review of Against Monopoly. But aside from the fact he seems to like the book, like all well done reviews, it doesn't just rehash what we did, but contains value added.

Joe Mullin lists the reasons to be relatively optimistic that the Supreme Court will do the right thing in helping to reign in the abuse of patent law by at least a smidge.

Read it here.

Good news indeed.

The Supreme Court has agreed to hear the very important Bilski v. Doll case which will examine the legitimacy of so-called "business method" patents and other forms of patents that are not tied to a particular machine or transformative device.

This could be the best opportunity yet for the Court to start to reign in the growing cancer that patent law has mutated into.

News summary here.

Details and filings in the case here.

John Spiers was recently in Hong Kong and has a report about IP problems there. Any of our readers who think they might interested in helping can get in touch with him through his website (below)

I bought your book and noted you've made anti-IP presentations in Hong Kong. I have one book on small business international trade, and am working on another which will feature an argument against the individual entrepreneur from seeking IP rights, or even exclusive contracts (I disagree even with your trademark exception, but that is for another day.) I am alarmed by the concerted efforts to promote IP law in Hong Kong and China.

I was there a few weeks ago and read this article: link here

I then emailed the reporter and he replied keen on a follow-up.

Mr. Spiers,

Thank you for writing in to the Standard.

The defendent's details were not revealed by Customs because he has yet to be charged while forensic investigations are still ongoing.

I will follow up with the Department of Justice and Customs at a later date on whether I can obtain his hearing date and location.

You're POV on IP rights is definetly novel and very interesting and look forward to reading what other developments you may have in the case.

Thanks again and I shall reply again to you sometime next week.

Sincerely yours,

Tim Chui The Standard Reporter

Dear Mr. Chui,

I enjoyed your article today on "Customs Nabs Second Cybercriminal" in the Hong Kong Standard.

I have been trading in designed goods with China since the 1970's, and there is a good argument against intellectual property rights, although the argument is not popular. I was interested in your article because it might offer an opportunity to put forth the argument in a legal setting.

I work with a small group of people in USA who endeavor to eliminate intellectual property rights law. The group includes academic, lawyers and business people in USA. I may be able to persuade this group to write a "amicus curiae" brief to teh judge in this case. An amicus curiae brief is where parties not involved in a case plead a point to the judge. One point among others would be the fllow was unemployed, could not afford to pay for the movie, nothing was really "taken" when he downloaded the movie, so, no harm no foul. The lawyers would do a better job of explaining of course.

If you could provide me the name of the defendant and the identifying court and case number, I would attempt to persuade my associates to prepare and submit sucha brief to the court. Should they do so, I would inform you first, so if you wish to have an exclusive story, you would have it. This all may do the defendant some good.

Please let me know if are interested. I look forward to your kind reply.

Sincerely,

John Spiers. www.johnspiers.com

Thompson & Knight lays off lawyers, staff firmwide notes something we're hearing more and more about nowadays--law firms laying off attorneys, due to Great Depression II. As the piece notes, the Dallas-based firm recently "laid off for economic reasons 17 lawyers and 25 support staff in all of its U.S. offices, including Dallas, Houston, New York, Fort Worth and Austin. ... All of the lawyers are associates -- only two of them are first years -- who practiced in real estate or other business-related areas that require bank money to operate."

But not all is lost: "not all of the firm's practices are doing badly by a long shot, [the managing partner] says. 'There are areas of our firm like IP litigation that are going crazy.'"