One of the things we do not do is pay enough attention to IP developments in other countries. The Economist has a piece entitled "Sharing the wealth; Artists do battle to enrich their heirs link here." The story brings up a subject new probably to most Americans. The operative paragraph is, "For the past two years 4% of the price of a work by a living artist sold through an auction house or by a dealer has been payable to the artist. Sales of less than €1,000 (£796) are exempt, and the tax is capped for anything worth €500,000 or more. Throughout the European Union the tax is payable on sales of works by living artists or those who have died within 70 years; in Britain it is only works by living artists that qualify. The EU allowed Britain this exemption until 2012..... Damien Hirst, Britain's most commercially successful artist, [and] more than 500 signed a letter to the Telegraph urging the government to give them that right. 'Our loved ones often sacrifice a lot to support an artist in the family," [so that] Hirst and his colleagues would like to make sure it is not extended.'" That is a rich extension of copyright with no obvious benefit to society like encouraging innovation.

The Economist notes that the change will have an adverse effects on the British art market and then goes on to note that the gains are collected by only a relative few. "The artist's resale right (ARR) benefits a far smaller proportion of artists than its supporters might assume. A study sponsored by the Antiques Trade Gazette showed that, in the 18 months to August 2007, 10% of the 1,104 artists benefiting from ARR in Britain (around half of whom are British) got 80% of the pot; the bottom 30% received less than £100 each. The royalty has also proved cumbersome and costly to collect.

In the endless saga about royalties from radio stations paid out to artists, Wired reports that a vote on this is expected on Thursday on this, and the two main opponents have been exchanging symbolic gifts in the lead up.

The question is whether radio stations provide a service to artists by promoting their wares on the air, or whether they are exploiting them. Seeing (or rather listening) that radio stations rarely mention who the artist is, the latter would seem to hold. But given that artists often give songs to stations for them to be played, one would argue the opposite. And if the station actually buys the CD, wouldn't it be allowed to play it like a library allows patrons to read its books?

I may be wrong on this, but I believe you cannot insure yourself against acting illegally. In that light, I interpret the following court decision as determining that software piracy is legal.

UNIK Associates was in the business of reselling software to businesses. Symantec sued and won a case against UNIK, alleging that it pirated its software products. UNIK then sued its insurance company to make it pay the fine, and has just won. The court argues that the policy covered copyright and trademark infringements.

The New York Times computer columnist, David Pogue, also writes books on software. He recently published an article complaining that he had given the PDF of one of his books to a few blind people as an act of generosity, and the PDF then appeared all over the internet link here. His column produced a deluge of comment, both favorable and not link here. Commenters suggested making the book for sale in downloadable form and others in free form, arguing that might actually increase sales of the hard copy. Another suggested a test using one of his older texts. Pogue has now agreed to such a test, selling a downloadable PDF, though not the free version.

The free downloadable form of publication is one that readers of this blog will find familiar, since two of its authors have published texts in that form, the most recent of which is available here . We will report the outcome of Pogue's experiment as it becomes available. A lot of us still like to have hard-copy reference books in hand as well as an online copy as we work on our computers so it will be an interesting experiment.

Robert Arnott, head of Research Affiliates Fundamental Indexes, says that rival index fund managers are stealing his idea, which he hopes to patent. He bases his stock index on firms' sales, cash flow, book value, and dividends, all staples of fundamental analysis, which are as old as the hills. Jeremy Siegel, a finance professor and adviser to WisdomTree Investments Inc., a fund company that bases its indexes more narrowly on earnings and dividends, claims, rightly, that Mr. Arnott's idea is not new and that his idea is too basic to be patented. It certainly fails the novelty test. Mr. Arnott's patent has been rejected once, but he's still trying to get his monopoly.

Here is the story.

Here is one patent bid that should not see the light of day.

In the meantime, if you want to buy an index fund, you know which family to buy and which one not to buy. And Wisdom Tree has outperformed Research Affiliates lately.

Robert D. Arnott, Chairman of Research Affiliates, wants to patent a method for a stock index fund based on certain fundamental measures such as revenue, etc. Here is the article.

The problem is that fundamentally-weighted index funds (such as Wisdom Tree's) have been around for some time. More importantly, there is tons of prior art that this method is founded on, such as the research of Fama and French.

Question: if he files a patent on this, can anyone file a brief with the USPTO opposing it? Inquiring minds want to know.

Today's Wall Street Journal has a special "Business Insight" report, which includes an article on innovation, "Shape of Things to Come", highlighting Apple's recent bid for trademarks related to its iPod and iPhone, and for all we know several other consumer products.

The story about how Apple leveraged its design patents to win these trademarks is a fascinating study in rent-seeking at its finest. They used them as a bridge to "nontraditional trademarks."

What's really interesting is how the Patent examiner suggested changes to Apple's trademark applications so that they could get in under the wire. Sounds like a bit of corruption to me.

Apple has had nothing if not a gigantic first mover advantage over its competitors thanks to rapid and repeated innovation in product design, as well as great execution and saavy marketing. Add it all up and you get a company with a long-term market beating stock, propelled by net operating margins consistently over 20% and a weighted average cost of capital under 10%. Valuepro.net pegs the latter at about 8.6%. Apple long ago earned back its cost of capital on its iPod.

The idea that Apple's recently won trademarks are necessary for the company to earn its shareholders an above average return on capital (or equity) is plainly contradicted by the facts of the case. Too bad the Patent Office examiner doesn't have some economics in his toolkit.

Btw, Apple patented its transparent stairways in its stores, so don't think you can copy their cool design at home.

Writing on his website, James Fallows points a finger at CCTV, China's state television network, for running a story warning against pirated or unauthorized copying of its coverage of the Beijing Olympics as violating the "intellectual property rights of CCTV, the official broadcaster" link here.

Fallows sniggers, "I can barely imagine the horror of some group in China copying someone else's proprietary material and distributing it outside the proper channels." And then shows a graphic of what is available at his local video store.

This reminds me once again that developing countries are unlikely to enforce IP rights until they have a vested interest in protecting them when they themselves develop substantial income producing rights. Given the speed with which China is developing, the days of cheap pirated copies have got to be numbered. Too bad.

Adam Liptak calls our attention to a short paper by George Washington University Law School teacher John F. Duffy, which "seems poised to undo thousands of patent decisions concerning claims worth billions of dollars" link here. It challenges the validity of the appointment of judges deciding patent appeals. Liptak seems certain that the challenge is valid but also that legal chaos will result because all those cases would have to be reheard before legitimately appointed judges.

One may hope that the outcome will be as the professor argues because it opens up the opportunity to reject an enormous number of decisions that have since been questioned, such as the one granting business process patents. But given the amount of money at stake, few would write off the ability of legislators and lawyers to "craft a solution" which leaves things as they are. Too bad.

The March 31 issue of Business Week had an interesting article on recent efforts by some fashion designers to sue their copiers, "Put a Patent on That Pleat." Stuart Weitzman and Diane von Furstenberg sued a couple competitors, including Target, which copied von Furstenberg's "spotted frog" print. Target spinelessly caved in and stopped selling its frog knockoffs, saying it respected others' "intellectual property." This is the kind of stuff Ayn Rand meant when she talked about "the sanction of the victim." (N.B. I am neither a Randian, nor an Objectivist; and I oppose her defense of patents and copyrights.)

But lo and behold, movie mogul and impresario Harvey Weinstein, who owns the Halston label, is moving to make its catwalk fashions available right off the runway at Net-a-Porter.com, with the idea of using a first-to-market model to beat the pirates at their own game and garner the rents earned from satisfying the market demands of demanding fashionistas first. Even Mr. Weitzman and others are innovating by designing original creations with new materials and patterns that make it harder for pirates to copy them. Some of the new materials are too expensive for knockoff purveyors to copy.

In September 2007, James Surowiecki revisited "The Piracy Paradox", the tendency noted by law school professors Kal Raustiala and Christopher Sprigman of fashion innovation to flourish in the absence of strong intellectual "property" protection.