Senior EPO official warns of tougher patentability standards and higher fees

The latest issue of IAM has now gone to press and will be published at the end of this week. There are a number of highlights, but for the cover story this time around I have gone for a piece written by Ciáran McGinley - the Controller of the EPO and so one of the office's most senior staff members - on the subject of "global patent warming". In the article, Ciáran goes into some detail about what the phrase means and what is causing it. "Incoming volumes are increasing per patent office due to globalisation driven by patent propensity and trade," he writes. "Pendency volumes are also increasing, pretty much independently of what has been happening to pendency times in the different offices. Finally, woolly boundaries are widespread, not just between granted patents but especially among pending applications. It is becoming too much, the system is gradually becoming much warmer. It may not be warm everywhere (yet). It may not be warm in all industrial sectors (yet). But it is definitely temperate."

I guess anyone daft enough to believe in "global warming" nonsense might also be alarmed at the patent system having problems.

An interesting story in the LA Times about the movie "Dark Knight." They went to great lengths to make sure that bootleg DVDs wouldn't hit the streets for the first two days after the movie was released:

Warner created a "chain of custody" to track who had access to the film at any moment. It varied the shipping and delivery methods, staggering the delivery of film reels, so the entire movie wouldn't arrive at multiplexes in one shipment, in order to reduce risk of an entire copy being lost or stolen. It conducted spot checks of hundreds of theaters domestically and abroad, to ensure that illegal camcording wasn't taking place. It even handed out night-vision goggles to exhibitors in Australia, where the film opened two days before its U.S. launch, to scan the audience for the telltale infrared signal of a camcorder.

Warner Bros. executives said the extra vigilance paid off, helping to prevent camcorded copies of the reported $180-million film from reaching Internet file-sharing sites for about 38 hours. Although that doesn't sound like much progress, it was enough time to keep bootleg DVDs off the streets as the film racked up a record-breaking $158.4 million on opening weekend. The movie has now taken in more than $300 million.

The success of an anti-piracy campaign is measured in the number of hours it buys before the digital dam breaks.

Notice: intellectual property didn't play any role in this, and they focused on the doable - keeping the monopoly for a short period of time. I am completely in favor of this: I think a truly short-term monopoly does little social harm, and provides important incentives for creation. But as this makes clear: the police power of the state isn't needed here. And it's absence makes sure that the monopoly is truely short lived. I've long thought that this is the proper use of DRM: don't try to lock down stuff that is years old for decades - clearly a losing proposition - but use it to keep the secret on initial release. If that is accompanied by the DRM-free version to be released after a short pre-announced period of time, the incentives for crackers drops, and it becomes posible to actually keep the secret.

Two web server softwares dominate the market, the open-source Apache, a strong leader, and Microsft's IIS. As c|net reports, Microsoft has decided to support the foundation behind Apache. It seems to be an odd proposition to fund one's main (and winning) competitor. In this case, it seems the Apache license would allow such an oddity: it is not a General Public License (GPL), but rather one that allows to modify Apache then sell the results as one's own. If Microsoft wants to sell a good clone of Apache, having a good Apache to start with makes sense...

Complaints about the high cost of college textbooks grow but are now evoking new responses link here. Randall Stross, professor of business at San Jose State University, writes that Pirate Bay and other torrent sites have challenged the publishers, forcing them to explore new business models or lose most of the income from the copyright. The alternative of choice seems to be a gated site charging a fee and supplemented by the sale of additional teaching materials not included in the text, so the copyright produces income, but less than the sale of hard copies. While it will lower the high cost of accessing text material, it still doesn't beat free, so don't expect the torrent sources to dry up completely.

On the July 24, 2008 show of Free Talk Live, the excellent libertarian radio program, there was a lively and interesting IP discussion between host Ian and three callers, on the anti-IP side, and host Mark, on the mildly pro-IP side. It's interesting to see the sincere but confused and fumbling host Mark utterly unable to articulate a coherent defense, or even definition, of IP, especially in response to intelligent criticism by his callers. Anyway, the show is good and Mark and Ian are both great.

The recorded show (28M MP3) is about 2 hours long; the IP discussion starts at the 1:21:14 (or so) mark.

David--sure, it is understandable why you are "much more favorably inclined towards trademarks than other forms of intellectual property." As you say, "It seems to me a good thing that it is possible to tell who you are doing business with, and no downside monopoly". As I noted here, the primary justification for trademark rights is based on the notion of fraud--that the "infringer" is defrauding his customers by misrepresenting his identity and the source of the goods being sold (see pp. 43-44 of my Against Intellectual Property, pp. 59-63 of Reply to Van Dun: Non-Aggression and Title Transfer, p. 34 of A Theory of Contracts: Binding Promises, Title Transfer, and Inalienability).

But this analysis would give a cause of action to customers, however, not to the holder of the mark, who is not defrauded. Moreover, it would protect the customer only when there is fraud. For example, neither the customer (nor Rolex) should be able to sue Rolex knock-off companies, because people who buy fake Rolexes for $10 are not being defrauded. They know they are buying a cheap knock-off. But trademark law does give trademark holders--not customers--the right to sue infringers, regardless of whether there is really fraud to the consumer.

So while we can condemn fraudulent sales to customers, this is not what modern trademark law prevents. Modern state-run trademark law is almost as bad as cpoyright and patent, even if it has a less-objectionable core or origin. The fundamental problem with trademark law is that it is state law--it is created and administed by the state, which is a criminal organization. To expect justice from the state is like expecting a cat to bark.

Thus we have trademark rights granted to trademark holders, instead of to customers, the real victims of fraud. Thus we have a statutory scheme establishing an arbitrary, artificial legal system and an inept bureaucracy to construe and enforce it. Thus we have ridiculous extensions of trademark to cover "anti-dilution" rights, much as the term and scope of copyright and patent are gradually increased over time. And thus we have the government's courts used like trademark's more infamous cousins, copyright and patent, to stifle competition and squelch free speech. See, e.g., A Bully-Boy Beer Brewer, Straight Talk; 9th Circuit Appeals Court Says Its Ok To Criticize Trademarks After All; Trademarks and Free Speech; Beemer must be next... (BMW, Trademarks, and the letter "M"); Hypocritical Apple (Trademark); ECJ: "Parmesian" Infringes PDO for "Parmigiano Reggiano"; Engadget Mobile Threatened For Using T-Mobile‘s Trademarked Magenta.

Clearly, this is just another example highlighting why the state is worse than useless; it is a harmful criminal organization.

And in fact, US trademark law is unconstitutional. While the US Constitution, to the extent it is legitimate and not just the de facto result of a successful coup d'etat, unwisely authorizes Congress to enact copyright and patent law, no provision is made for trademark law. Instead, trademark law is based on an unconstitutionally expanded reading of the Interstate Commerce clause. As James J. Kilpatrick noted in The Sovereign States: Notes of a Citizen of Virginia, in describing the Supreme Court's illegitimate expansion of power under the guise of the Constitution's interstate commerce clause:

It was an insidious process, conducted with the care of the cat that stalks her prey - now creeping forward, now pausing to sniff the air; now advancing, now lying still as the bird takes alarm; then edging forward again, and so, step by inexorable step, moving to the ultimate seizure.

But it started at the very beginning of the United States. Tom Dilorenzo, in The Founding Father of Constitutional Subversion, explains:

"Hamilton was also likely to be the first to twist the meaning of the Commerce Clause of the Constitution, which gave the central government the ability to regulate interstate commerce, supposedly to promote free trade between the states. Hamilton argued that the Clause was really a license for the government to regulate all commerce, intrastate as well as interstate. For "What regulation of [interstate] commerce does not extend to the internal commerce of every State?" he asked. His political compatriots were all too happy to carry this argument forward in order to give themselves the ability to regulate all commerce in America."

So don't stop with copyright and patent: abolish the unconstitutional Lanham Act, and its unjustifiable grant of trademark rights to trademark holders instead of defrauded customers, and maintain the link to fraud (knockoffs are fine; no anti-dilution law).

You scratch our back, we'll scratch yours. As reported on Patently-O:

Outsourcing of Patent Preparation: PTO Says Beware

In a recent notice, the PTO has indicated that it may be illegal to outsource invention information to a foreign county for the purposes preparing a US patent application.

1. A foreign filing license from the USPTO does not authorize the exporting of subject matter abroad for the preparation of patent applications to be filed in the United States.

2. Applicants who are considering exporting subject matter abroad for the preparation of patent applications to be filed in the United States should contact the Bureau of Industry and Security (BIS) at the Department of Commerce for the appropriate clearances.

Can you just picture thousands of U.S. patent lawyers pumping their fists and collectively hissing Yes!--as the spectre of unscrupulous Indians writing $12,000 patent applications for $1000 recedes... No wonder so many patent lawyers are pro-patent system! The "patent bargain" conventionally refers to the government giving inventors a monopoly in return for their publicly disclosing how the invention works. But I think it has a second meaning. (Cross-posted at Mises Blog.)

Update: See Patent Baristas, Hold Up There On That Outsourcing of Patent Work. The patent bar is loving this!

Something seems to be cooking in software patents, hopefully important news. However, it is a bit early to cheer, as big interests are engaged.

The source of the excitement is that the Patent and Trademark Office seems likely to declare software patents invalid if the expressed PTO view prevails. You can start reading the bare bones of the story here. Then go to the referenced post for a more detailed legal view link here .

The logic is that software patents ought to go. But remember as you cheer that there is a legal and a political process to be worked through and that ain't bean bag.

As you may know I am much more favorably inclined towards trademarks than other forms of intellectual property. (Michele is less favorably inclined.) It seems to me a good thing that it is possible to tell who you are doing business with, and no downside monopoly. That may be the purpose of trademark law...but there is another part of creeping IP: the apparent right under trademark law to protect the image of your product. Daniel Monchuk directs us to an article in the WSJ about what seems to me to be trademark abuse. The article is about costume companies that are being sued by trademark holders for providing costumes based on trademarked characters. For the life of me I don't see what this has to do with identity: there is no claim that these costumes are authorized by the trademark holder, nor can a costume based on a comic book be confused for a comic book. Perhaps Justin or someone else who knows more about the law than I do can comment on whether this is a proper use of trademark law as it exists. Certainly if the law allows it, then there is a big problem with trademark law.

via Aleh Tsyvinski

Sergei Guriev and I (together) and Konstantin Sonin (also from the New Economic School) write a bi-weekly column in Russian business daily Vedomosti (jointly published by the Wall Street Journal and FT).

This week Konstantin wrote a very nice column about your book link here

He also has one of the most popular Russian blogs and there is more stuff here link here

Links for the book are Amazon Cambridge University Press and the free online version

This is the translation of Konstantin's article that Babelfish and I came up with:

There are economic questions, on which, it would seem, agreement between scientists is long established. Until recently these firm truths included the need for patents and copyrights. And here matters rested until the book by the economists of Washington University in Saint Louis Michele Boldrin and David Levine in which they reexamine patents and copyrights. They assert that intellectual property is not necessary: that the inventor or the author can profit even in its absence. Moreover the gain to society as a whole from eliminating it - including the users, who will pay less, and other producers - will be significant.

The standard argument of economists in favor of copyrights and patent rights is as follows. In order to provide incentives for invention, it is necessary to provide some reward afterwards. Patents give rise to a short-term monopoly. The problem is that monopoly is always inefficient. In order to force those, who value goods especially highly, to pay a little more, the monopolist restricts supply relative to the amount that would be sold if the market was competitive. Accordingly, the standard argument of economists is that the inefficiency from the temporary monopoly of patent protection is necessary to pay inventors and give them proper incentives.

Boldrin and Levine, relying on the theory they have developed, show based on numerous examples that the costs of intellectual monopoly are greater than necessary for the stimulus of development. Time after time it happens that the great inventors, whose names are known to us from school, after making their first discovery, switch their energy and not less remarkable resourcefulness to fighting for the right to exclusively obtain profit. The activity of James Watt, father of the first steam machine, for a long time slowed the development of more advanced technology and did not bring any special benefit. Watt earned more when his patents expired and he was forced to implement new developments and compete with his followers.

An even more striking example is drawn from recent history - the innovations that have changed the face of the world in the recent decades: especially the development of computer software. (The book also gives a great deal of attention to the pharmaceutical industry.) Until 1981 it was not possible to patent software (in practice is was not really possible until 1994). The success of software, developed freely without patent, shows that even without monopoly the developers have sufficient incentive to actively produce new innovations. Now almost all the large firms cross-license patents with each other and hurry to patent the smallest technological changes in order to be protected from potential rivals.

What would happen, ask Boldrin and Levine, if the latest book of J. K. Rowling was not copyrighted? Without Rowling's copyright it would not earn worldwide six hundred million dollars, but possibly only six million dollars. This would be due to sales during the first few days, during which time the other publishing houses would not yet have time to produce copies. But perhaps for a French teacher this would be more than enough incentive? Whether selling the "first copy" of an idea creates sufficient stimuli for the innovation, is one of the one of the most difficult issues in the book. But to each traditional argument in favor of patents and copyright the authors provide meaningful answers. They do not always disagree: for example, in discussion of the role of commercial secrets.

In the book of Boldrin and Levine very little is said of Russia, beyond mentioning Alexander Popov's priority in the invention of radio. This is discussed in the chapter about how frequently the rewards from the efforts of a large number of people, who work independently of each other, wind up, because of the patent right, in the hands of one person. In our country the question of intellectual monopoly is discussed in the following context. The obvious benefit from the absence of copyright is greater accessibility. If in the 1990's software had been protected from the piracy, the advance of computer literacy would be much slower. In recent years our government has repeatedly moved in the direction of a stricter observance of patent rights and copyright. In other words, in the opinion the authors of the book Against Intellectual Monopoly, in the incorrect direction.

Perhaps nevertheless Boldrin and Levine - both of them among the most highly-paid academic economists in the world - are not right? The book, although based on long-term investigations, and no matter how convincing, has not changed the prevailing view in the economics profession. However, at a minimum there is something to their line of reasoning: I spent 20 dollars and purchased their book, although it - in complete agreement with the persuasions of the authors - can be downloaded free of charge load from their web site.