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Against Monopoly

defending the right to innovate

Monopoly corrupts. Absolute monopoly corrupts absolutely.





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Apple's Rotten Trademark Gambit

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.


Comments

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

There's a lot of prior art here, of course.

As an Architect, I am quite concerned about how many design patents on Architecture there might be out there. I s there any site out there that is tracking this?

You raise an interesting question. I don't know the answer, but these links might be useful:

"Introduction to Understanding Patents";

"Art and Design Patents and Trademarks";

Sending an e-mail to the contacts mentioned at these links might be fruitful. --Bill


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