Writing in the Washington Post, Melody Petersen reviews OUR DAILY MEDS by Shannon Brown link here. Little in the review is new to readers of this blog, but it is still eyeopening to read the history of Big Pharma. The review's begins, "Once upon a time there was an industry called pharma that was interested in doing well and doing good. Run by doctors and chemists, drug companies employed battalions of researchers whose scientific efforts resulted by mid-century in a flood of life-saving drugs, including antibiotics, vaccines, tranquilizers, antihistamines and steroids. As George Merck, president of the company founded by his father, put it in 1950, "We try never to forget that medicine is for the people. It is not for the profits. The profits follow. . . ."

The review goes on to trace the development of Big Pharma's business model:

Develop or acquire a patented drug;

Forget further R&D as long as sales increase;

Identify a disease, real or imagined, which it treats but preferably doesn't cure for fear of cutting off a lifetime of sales;

Brand it for that condition;

Advertise the hell out of it, as ads are more important to sales than efficacy or developing new drugs;

Develop close competitor drugs to those which are very successful, like the more-than-10 anti-cholestoral drugs;

Ignore drugs for diseases which the rich world doesn't get.

There is more to the story, but that is enough for starters.

Here we have a hugely important and expensive industry that starts out with IP and then twists it to maximize profit. Business school students would regard that as highly innovative, but for the most part, what innovation there is doesn't benefit the consumer. The best I can say for it is that the ads pay for evening television news check them out.

In a recent Mises blog post, Renaming Intellectual Property, I noted that in If Intellectual Property Is Neither Intellectual, Nor Property, What Is It?, Techdirt writer Mike Masnick (who continually has excellent comments on IP policy) discusses various proposd replacements for the misleading term "intellectual property." Contenders include "intellectual monopoly," "intellectual privilege," "imaginary property," and "None of the Above." There are problems with each of these. Masnick concludes: "In general, because of common usage, I don't think it's bad to use the phrase "intellectual property" just so that people know what you're talking about -- but we should be careful to not use it in a way that reinforces the concept that it's property just like other kinds of property."

I tend to agree. What IP law does it give legal (positive) rights to people to try to protect or stimulate innovation or creation. It gives them rights in innovations, creations, recipes, or patterns. If one keeps in mind the distinction between natural and positive rights, then it's easy to see that laws do create legal rights, and of course all rights are, in the end, types of property rights. So IP laws do create (positive, or legal) (property) rights. And they do have to do with products of the mind, or intellect. So "intellectual property" rights seems fine to me, if one realizes that there is a difference between positive right (positive law) and natural rights (natural law).

Still, some ideas came to me (and I own them, I suppose). It would be nice to take the word "property" out, and just refer to the rights conveyed. Copyright gives authors of original works certain (legal) rights to their "works" or creations. Books, songs, paintings are regarded as "original works of authorship". There is an element of "creativity" to these things. Patents give certain (legal) rights to inventors of practical inventions--methods or processes for doing things (recipes) or arrangements of matter (designs). What do inventions and "works of authorship" have in common? One is practical, aimed at some gizmo or method that produces a practical result (a machine or process). Another is aimed at "creative" things--paintings, novels, songs. J. Neil Schulman, in his neo-Randian/Galambosian [I don't know if he would accept this label] IP theory groups them all under the term "logorights," where the "logo" refers to a "pattern". I think this is a pretty good description: a recipe is a type of pattern; as is the design for a practical machine or device. Likewise, original works like paintings, music, etc., are obviously representable digitally, as patterns. Copyright and patent law clearly grant rights ... to whom? To creators--inventors and authors--of "logos"--patterns, such as machine designs, process steps, or the patterns that represent the song, painting, etc.

So, as much as I disagree with Schulman's justification for "logorights," the term is a pretty good one--except that it is so arcane. A variation on it using more standard terms might be better: pattern rights, or perhaps innovation rights. Or, to make the label a bit less "neutral," replace "rights" with "monopolies" or "privileges," since that is what is being granted by the state. So we have "pattern monopolies" or "pattern privileges," "innovation rights" or "innovation privileges."

As I noted in my Austrian Scholars Conference 2008 talk, I think I like the term "pattern privileges" best.

At the recent Austrian Scholars Conference 2008, held March 13-15 (scroll down at the Preliminary Schedule in pdf), Stephan Kinsella chaired a session on the monopoly formerly known as intellectual property. (Okay, this wasn't the actual title.) Paul F. Cwik gave a paper "Is There Room for Intellectual Property Rights in Austrian Economics?" (pdf--scroll down on the left; I couldn't get the other link to work, so I linked to this), in which he argued that there is, and against the position staked out by Kinsella in his paper "Against Intellectual Property". Here is a blog post on it.

The crux of Prof. Cwik's paper is that IP is a public good, based on a natural right to property, and can be fenced off, just as Austrians argue that other public goods can be. His defense of a natural right to IP (he uses copyright as the paradigmatic example, and follows Murray N. Rothbard in claiming that anything created, including an invention, can be copyrighted) essentially consists of the assertion that the created thing, say the word order of a book, is the product of one's labor and should therefore be protected against anyone else's copying it.

Without getting into the public goods debate, which is secondary to the natural rights argument anyway, why does Jones' application of labor to newly homesteaded or otherwise justly owned property give him the right to block Smith or anyone else from making and/or selling or otherwise commercially using their justly acquired copies of his creation? Merely asserting that he has this right, as Prof. Cwik does, doesn't make it a sound argument. After all, neither Smith nor anyone else claims the right to prevent Jones from using his copies of his new creation. Everyone agrees that Jones has the right of first disposal of his property, including the right to sell copies of it. Contrary to what Prof. Cwik thinks, Jones' first mover advantage and the ability to sell complementary and derivative services based on his creation gives him a powerful edge over potential competitors (which of course he is free to squander, hello WebVan and Pets.com--meet Fresh Direct and Petsmart), and enables him at least to have a shot, if not a guarantee, at earning back his cost of capital in a competitive market.

Also, I have a beef with John Locke, Murray Rothbard, and Prof. Cwik. Locke held that a laborer owns his labor; Rothbard et al. have followed him over this cliff. No one owns labor per se, which is an action. How do you own an action? What laborers sell is their labor services; an actor sells his acting services, an assembly line worker sells laborer services, say building a car or at least some action along the assembly line.

So much, then, for the doctrine that he necessarily owns the fruits of his labor, if this is meant literally. If an auto worker tried to walk out at the end of the week with a car that just rolled off the assembly line, I'm guessing he wouldn't get far. His compensation is a wage and contractually attached benefits.

This is also true for Crusoe, laboring on a deserted island. He isn't selling his labor services in a labor market, but he is applying them to whatever he is making, perhaps a fishing net.

A London appeals court has awarded the lead singer of Procol Harum sole royalty rights to the 1967 hit "A Whiter Shade of Pale" link here. It revoked an earlier ruling awarding 40 percent of the royalties to the group's organist for composing the organ theme, on the grounds that his claim was made too late. He had deferred making it, because he feared it would end his work with the group. It may be appealed to the House of Lords.

Whoever writes these little stories must have it in for the legal and intellectual property professions. Maybe we should retitle this category intellectual property law as a joke. If the plaintiff's claim was legitimate once upon a time and the copyright still applies, why shouldn't his claim be legitimate now?

Trademarking a name to prevent others from selling similar goods under a similar name makes only sense if indeed you were the first one to do so since the law was in place. In a fight that has now lasted a decade, the village of Champagne (Switzerland), which happens to be producing wine since at least the 17th century, has been told that it could not use its own name. That name is reserved for wine coming from the French region of Champagne.

Now, the French are big on "appellation d'origine contrôlée", that is, the origin of wines needs to be certified. Given the wide variety of wines, and the fact that some wine growing locations have a bigger reputation, one may want to pretend to be from a region. In your are not from the region, that is fraud that should be covered by usual commercial law (false advertising). Where it gets iffy is when the wine maker is located in the fringes of the region. Does he really belong? This is the core of the French regulation, trying to prevent the dilution of a name.

What the Champagne region (France) is enforcing is preventing the (non-sparkling) wine of Champagne (Switzerland) from diluting the reputation of the Champagne name. Demand for the sparkling Champagne is high, so this did not prevent the Champagne region from expanding its name definition, thus acting exactly against the principle of "appellation d'origine contrôlée" it says it is defending. Sad.

An interesting twist to this is that there is a bakery in the Swiss village selling sticks it calls "flûtes de Champagne", an obvious pun on the situation. They are wildly popular in Switzerland.

Stephen Spear's post yesterday link here reminded me that I had started saving up ridiculous patent, copyright, and trademark stories. I'm not sure repeating these stories changes opinion since the basic rationale for IP protection, that it promotes innovation, is firmly embedded in popular thinking and assiduously promoted by the IP lawyers and owners. But it should, particularly when the legal process can't distinguish what is significant from the absurd.

Anyway, here is the story: T-mobile is demanding that gadget blog site Engadget Mobile stop using magenta in its logo on the grounds that it will confuse customers link here. This is a repeat of a suit that T-mobile brought last year against my-favorite-book.com, a book-on-demand-publisher launched in Germany last May link here. That was a particularly outrageous suit because my-favorite-book varies the color from one ad to another. Neither defendant appears to have stopped using the color.

How do we account for this loss of sense among the plaintiffs? Are they underemployed lawyers who need the fees? Or do they expect the defendant to back down out of fear of the publicity or unwillingness to risk the costs of a court battle? Assuming the case gets to court, why don't judges fine the plantiffs for bringing niggling charges?

Maybe we should have a contest for the worst example.

As reported on Patently-O, after Microsoft was ordered by a jury (where else: the Eastern District of Texas) to pay over $100M in damages for patent infringement, and after losing on appeal to in the CAFC, Microsoft is asking the Supreme Court to overturn the CAFC's requirement that "clear and convincing evidence" be presented to invalidate a patent even when a defendant presents evidence of invalidity that was not considered by the PTO. Microsoft is right. Why there should be any presumption of validity at all for any issued patent, given the PTO's bureaucratic incompetence, is not clear (or convincing).

This is rich.

Via Crain's New York Business.com, Steve Jobs and Apple Computer are suing New York City (a.k.a. the Big Apple) for using an apple logo as part of it's Green New York campaign. The two logos are displayed below, and clearly, they aren't anything alike. It's also hard to believe that anyone would possible confuse the two and walk into a New York City bus shelter looking to buy an iPod, but apparently, Jobs and Co. believe this. Fortunately, the Big Apple's legal counsel has filed a countersuit asking the courts to dismiss the Jobs suit.

I've noted many times that one fallacious line of reasoning in support of intellectual property is the idea that creation is an independent source of rights. In libertarian circles, I have begun to refer to this as "libertarian creationism." I critique this notion, inherent in a recent paper by libertarian philosopher Tibor Machan, in the comments here.

It seems to be current at the University of Florida for professors to sell at inflated prices lecture notes to their students through a publisher called Faulkner. Not surprisingly, enterprising students started selling their own notes, to the point that there are now several businesses competing with each other, and in particular with Faulkner. The latter is now suing one note-taker, on the basis that it copied some material. Apparently, this is not the first suit, and the previous ones were not successful.

This raises several questions. 1) Does intellectual property extend to the spoken word? No, because it is not a tangible medium of expression. With all the recording going on in my classes, I am surprised I am not yet on iTunes (the homonym is not me...), and I would not care. 2) Does intellectual property extend to a summary and interpretation of the original work? No again, or movie reviewers, readers' digests and reporters would be out of business. 3) Does intellectual property extend to those you teach? No again, they came to listen precisely to acquire that knowledge, you cannot and should refrain them from using it. 4) Aren't academics in it for the public good, the dissemination of knowledge? Precisely.

More background material on Open Access News.