Philip J Cunningham writes " I was browsing for DVDs on a cold winter afternoon in one of Beijing's finer bootleg shops when I came upon three boxed sets of DVDs critical of communism. One of the pirated sets, produced by Turkish presenter Harun Yahya, promised to detail the horrors of communism from an Islamic perspective, another by an American producer chronicled the uncomfortably bloody rise of modern China and the third contained Tiananmen footage from BBC TV News. Presumably the DVD pirates were in it for the money, but were they also unwittingly making China a freer place?... [T]he copyright zealots, mostly big US companies, with profit first and foremost on the mind, come down firmly on the side of information control and in that sense side firmly with the Beijing authorities."link here

Who would have thought that IP critics were revolutionaries? Stop the MPAA!

Today's Wall Street Journal has an interesting article about an upcoming case on patent licenses (p. B3A). Unfortunately, they seem to have omitted this page from the online edition, as various p. Bs are listed, but not B3A. The search engine failed to retrieve it, so apologies for not providing a link.

The suit is between Quanta Computer Inc. (allied with other Taiwanese computer manufacturers) and a South Korean firm LG Electronics Inc. LG licensed some patents to Intel in 2000, requiring that it tell its customers not to combine Intel chips with non-Intel components, which it did. Some of Intel's customers ignored the restriction, however, so LG sued them for infringement.

LG lost in district court (hooray!), which said that, since LG had granted Intel an unrestricted license to sell its technology, its patents were therefore "exhausted," and apparently (I haven't read the decision) had no further claims on Intel's customers. Unfortunately, the Federal Circuit Court of Appeals reversed the decision (boo!), claiming that the patents weren't exhausted because of the notification Intel had to send its customers.

As is usually the case in these matters, a slew of amicus briefs have been filed, and interested parties are lining up on both sides. (But who speaks for liberty and free markets, the unspoken third corner in this trianglar tussle? Well, this blog for one.)

On one side are the major patent monopolists and patent licensors Qualcomm Inc. and Wi-LAN Inc., which argue that an expansive interpretation of exhaustion could thwart their patent "rights" and restrict their ability to profit from their patents. On the other side are what I'll call minor patent monopolists, Hewlett-Packard Co., Dell Inc. and Cisco Systems Inc.--which are representing the interests of patent licensees in this case. They argue that a narrow interpretation of exhaustion could result in conditional license agreements that enable patentees to obtain royalties up and down the value chain--upstream and downstream from a patentee's customer(s). (That cheer you hear in the background is from the IP lawyers' bar. "You won the case? We win! You lost the case? We win!")

Jim Skippen, the CEO of Wi-LAN, a Canadian wireless patent troll, er licensor, says a broad view of the matter might induce patentees to foist high royalty demands on downstream licensees to compensate for not being able to license upstream firms, such as semiconductor and component manufacturers. Since upstream firms generally indemnify downstream firms against infringement liability, this could lead to conflict between the two groups.

Mr. Skippen is quoted saying: "What will happen is you won't be able to license down the chain so you'll go after the highest-value guy, and guess what, the component guys have all given indemnities."

But Mr. Skippen, what is the ultimate cause of the conflict, or to put it another way, who exactly are you trying to kid, kiddo? Who has the dirty hands here? Forget where the customers' yachts are, where are the customers' rights?

The article notes that "[t]he doctrine of patent exhaustion, also known as first-sale doctrine, is triggered when the first authorized, and unrestricted sale of a patented article takes place." Dell, HP, Cisco, and eBay Inc. jointly filed a brief arguing that it should be incumbent upon a patent holder to assess the economic value of its invention, and that its "first purchaser" should pay full royalty, and pass along the cost of a license to its customers.

A lawyer for IBM hopes the SCOTUS takes a "balanced" view of exhaustion. He says, "We don't think anyone [should] be able to sell, or license someone to sell, a product and then go out and tell the [licensee's] innocent customers who buy that product, "Gee, we got some more news for you, you need a patent license in order to do anything with that product."

The case will be heard Jan. 16.

Here is an interesting take on patent exhaustion with some basic history: The Patent Prospector.

Here is the Intellectual Property Law Blog on the case.

Here is the Wikipedia article on First Sale Doctrine.

Here is an article on pill splitting from Howrey LLP.

This stuff is giving me a headache already. Does anyone have an aspirin? Just don't split it--I don't want you to get sued by some IP legal hotshot for violating a patent, even though it's your property and your idea.

The series continues at the Wateringhole

Adam Liptak has an interesting Sidebar in today's NYT about the Attorney General of Oregon defending the University of Oregon's decision to fight an RIAA subpoena seeking the identities of students the RIAA suspects of sharing music. The University and Attorney General are saying that privacy protection for the University's students is more important than complying with the RIAA subpoena, particularly since this RIAA legal operation more resembles an extortionary shakedown in which violators of copyright are given the opportunity to settle (typically to the tune of three or four thousand dollars) rather than using actual judicial proceedings to determine the approriate compensations.

Writing in the Washington Post today, Marc Fisher observes, "Despite more than 20,000 lawsuits filed against music fans in the years since they started finding free tunes online rather than buying CDs from record companies, the recording industry has utterly failed to halt the decline of the record album or the rise of digital music sharing link here.

"Still, hardly a month goes by without a news release from the industry's lobby, the Recording Industry Association of America, touting a new wave of letters to college students and others demanding a settlement payment and threatening a legal battle."

He then goes to describe the case of "Jeffrey Howell, a Scottsdale, Ariz., man who kept a collection of about 2,000 music recordings on his personal computer, the industry maintains that it is illegal for someone who has legally purchased a CD to transfer that music into his computer." Howell is fighting the case.

The problem here is that plenty of legal precedent exists that what Howell did is within his fair use rights. Once again, the RIAA is trying to extend the reach of copyright, at which it has so far been very successful. But Fisher concludes by noting that the "RIAA's legal crusade against its customers is a classic example of an old media company clinging to a business model that has collapsed."

Know hope!

History is supposedly written by the victors, so there has been very little written on the cultural (as opposed to the legal) history of copyright in the U.S. during the 19th century. Now Eric Anderson has gone a long way toward redressing this imbalance with his superb PhD dissertaion, available online, Pimps and Ferrets: Copyright and Culture in the United States, 1831-1891 , which can be found at questioncopyright.org .

Here is the 1.83 MB Pdf file .

This study fills a yawning gap in copyright history, and offers a radically different focus on the development of this institution from the dominant legal perspective. The bookends are the Copyright Act of 1831, and the International Copyright Act of 1891, but there is a good summary of early American copyright history and its British background.

The controversies, schools of thought, and heroes and villains are well portrayed in this thoroughly researched work. The growing scope, duration, and, especially, complexity of copyright law are highlighted. (No prize for guessing which profession hit the jackpot.) Important legal cases and legislative battles are discussed.

But the most interesting part of the book might be the absorbing discussion of the magazine and newspaper debates over copyright, ranging from the Southern Literary Messenger (which he notes is now online) to the Chicago Daily Tribune (which published dozens of articles opposing international copyright) to Benjamin R. Tucker's magazine Liberty (alas mentioned only in a footnote, which surely undervalues the influence of its decade-long debate--and Lysander Spooner is not mentioned at all, but the obscure John Blair Dabney is, rightly, considering the strength of his argument). If you've ever wondered why the American Copyright Club had such little influence, the answer is here. Like most historians of this subject, he discusses Charles Dickens' American campaign for international copyright, but neglects to mention that Dickens was actually paid royalties by three American publishers, if not by the ones that printed unauthorized editions.

Although he doesn't focus on the economics of copyright, he does discuss the economic impact of protection, the effect of rent-seeking, and the prices of copyrighted and uncopyrighted books in both England and America. "Cheap books" was the battle cry in America and rightly so.

In an illuminating passage, he notes "that many academic approaches ... miss how copyright is -- in practice and in ideology -- a mechanism for regulating the market." He points out that this leads to a misunderstanding of the development of copyright and overemphasizes "romanticized authorial propaganda for causal agents of change." This is only one of several historiographical myths he punctures.

The bibliography is excellent, although articles by libertarian writers N. Stephan Kinsella, Roderick Long, and Tom G. Palmer are listed even though they are not cited or discussed in the text or footnotes. Why this is so I have no idea. Maybe someone who knows the ins and outs of academic publishing better than I do can explain this.

As for the meaning of "Pimps and Ferrets," you'll have to read it to find out. I haven't read anything as interesting in a while.

David Pogue posts responses to his earlier post on the results of his survey of the responses of the young to copyright protection link here and here. The comments again make the point that the young think they don't need to obey copyright restrictions, particularly since they are so complex that most people can't figure out when they are violating them. They also understand that the artists can make money by other means that CDs, like live performances, and that the prices charged by the record companies are grossly high.

Christian Zimmermann had spent a busy Christmas finding material for us. In a breathtaking extension of copyright from 70 to 3000 years, Egypt is copyrighting the pyramid. Sounds like a hoax, but apparently not. Why U.S. companies think that they are going to live by the sword has never been obvious to me - the U.S. is johnny-come-lately to the invention business. Suppose England decides to retroactively extend patents to cover the industrial revolution, and demands license fees on every invention that has used an idea from that period? Or the Saudis retroactively copyright the arabic numerals?

On this cheerful note, an oldie but goodie, also from Christian, the Johnson and Johnson lawsuit against the Red Cross - for using the Red Cross...

Brad DeLong posted this today and it is fitting link here:

(Ooops--it seems to have disappeared, but I copied and put the URL and time of day when it was posted at the end, so it must have been there)

Perhaps the Best Argument for the Destruction of the Music Companies Ever Made

DymaxionWorldJohn

Cogitamus: The Music Industry's talking points: "Hey, we're obsolete.": via Matt, the RIAA gives consumers holiday advice:

Watch for Compilations that are "Too Good to Be True": Many pirates make "dream compilation" CDs, comprised of songs by numerous artists on different record labels who would not likely appear on the same legitimate album together.

So, if you see an album with all of your favourite artists on it, performing the songs you love, for the love of God don't buy it -- it's probably pirated!

, this is their press release. And in it, they explicitly state that pirates are putting together products that people want more than the legitimate variety. This, of course, is why teenagers should be sued in to penury, rather than something as revolutionary as the music industry putting together its own compilations that people want to buy.

Source: Grasping Reality with Both Hands: Economist Brad DeLong's Semi-Daily Journal Address : http://delong.typepad.com/ Date Visited: Tue Dec 25 2007 12:09:56 GMT-0500 (Eastern Standard Time)