The conventional wisdom among economists is that introducing or strengthening patents (as required by TRIPS) is very bad for developing countries. Whatever benefit there might be from an increase in domestic innovation is sure to be swamped by the great increase in payments to U.S./European patent holders. A very rough rule of thumb would say that if demand is linear, and introduction of patents causes a switch from perfect competition to complete monopoly, the loss to the developing country would be about 1.5 times the gain to the developed country holding the patent. It turns out that the situation may be considerably worse than this.

The American Economic Review has published a careful study by Chaudhuri, Goldberg and Jia which is a case study of a particular pharmaceutical product in India, Quinolones (a key molecular ingredient of several antibiotics). They estimate that the primary loss will be to consumers and not to domestic pharmaceutical producers. The domestic producers may actually gain - the increased cost of quinolones based drugs will lead consumers to switch to domestic drugs based on different molecules, increasing demand for those products. The effect on consumers depends on the extent to which India regulates the prices of imported drugs: the estimates range from $144-$450 million. By way of contrast, the gain to foreign multinationals is estimated to range from $19.6-$53 million, again depending on how much price regulation there is. That is, the loss to India is estimated to be 7-9 times the gain to the (rich) Western exporters. The reason for this is quite striking: CGJ consider in addition to the effect of increased price, patents will cause the products to become less available and accessible. It turns out that lack of availability induced by patents has very significant costs.

Whatever ones overall view of the patent system, it is hard to defend the portion of the system that taxes transfers from a poor country $7-9 so that a rich country may earn an additional $1.

The American Economic Review version of the paper is not available online, but there is a working paper version available here.

A nice piece on BBC by Michael Geist about the U.S. copyright lobby - not only lobbying to force everbody else to comply with whatever we do in the U.S. - but to impose even more draconian restrictions than we do. Why do I think that if they succeed, they will be back lobbying in Congress to change our laws to comply with the "international standard?"

My favorite bit:

In fact, the majority of the world's population finds itself on the list [of countries that don't comply with international standards], with 23 of the world's 30 most populous countries targeted for criticism (the exceptions are the UK, Germany, Ethiopia, Iran, France, Congo, and Myanmar).

Well nice to know that Ethiopia, Congo, and Myanmar are on the "right" side. Obviously their draconian copyright law has led to a great flowering of music, literature, and movies.

Anne Broache, Staff Writer for CNET News.com, (link here) writes that the House Judiciary subcommittee that originates intellectual property laws is cranking up to introduce a patent reform bill. Ideas broached in the piece include enough funding to hire an ample number of examiners and staff; meaningful, low-cost alternatives to litigation, requiring pending patent applications to be made public a certain number of months after being filed so that the public would have a chance to submit prior art; and restrictions on business method patents, a controversial class that grants protection to processes. Based on past experience, the prospects are not great because disagreements among interest groups have prevented real reform.

Those of us committed to intellectual property reform will need to follow this and weigh in with their own representatives and senators the only ones who will listen to individual constituents.

Techdirt earlier reported that Seth Godin, author of "Everyone's an Expert (About Something)," was unhappy because his book was published and for sale after it had been on line for free (link here). The story has now been resolved by the New York Times (link here.)

Originally licensed and published under a Creative Commons license that allows anyone to republish and sell it, Godin objected that it was dishonestly sold as a new edition. The publishers then put it out with a note that it was the same edition as the free one available on line. The author accepted that.

Nevertheless, the fact that the book was for sale produced some criticism of Godin as he could have put it out under a different Creative Commons license that allows anyone to make use of a published work but only on a not-for-profit basis.

It seems to me that the critics have got that wrong. Many people are willing to pay for the convenience of having a hard copy version and producing that has costs. If there is a profit involved, as some critics objected, that motive got the book printed. If the price were too high, others were free to print it as well, likely bringing the price down.

The consumer was well served here, better than if it had been put out under the more restrictive Creative Commons license.

A translation of macrovision's letter to Steve Jobs. (Strictly speaking, I think this is called a "fisking".)

A beautiful podcast by Larry Lessig explaining how the Library of Congress's proposed solution to the problem of orphan works "diligent search" isn't. Something he mentions: the problem with institutions - a University, or a large corporation such as Kinkos/Fedex can't afford to violate copyright. Something implicit in this that he doesn't mention - the proposal is stupid and unenforceable, so people who can ignore it will. That means that everyone will ignore it except large institutions. So we'll buy our own xerox machines and scanners rather than go to Kinkos. And large educational institutions are going to be at a disadvantage in the teaching of things like music, writing, movie making and other creative enterprises - which will to be to the advantage of the small tutor. So the big institutions by supporting this "compromise" are cutting their own throats. So be it.

MICHAEL CRICHTON writes on "Patenting Life" (link here). A few quotes will make its tenor clear. "YOU, or someone you love, may die because of a gene patent that should never have been granted in the first place. Sound far-fetched? Unfortunately, it's only too real." "Gene patents are now used to halt research, prevent medical testing and keep vital information from you and your doctor." "Why? Because the holder of the gene patent can charge whatever he wants, and does."

Strong stuff, well stated.

Both Slashdot and Lessig have links to an Ars Technica article discussing an article by Felix Oberholzer-Gee and Koleman Strumpf soon to appear in the Journal of Political Economy on the impact of file sharing on music sales.

From the abstract

A longstanding economic question is the appropriate level of protection for intellectual property. The Internet has drastically lowered the cost of copying information goods and provides a natural crucible to assess the implications of reduced protection. We consider the specific case of file sharing and its effect on the legal sales of music. A dataset containing 0.01% of the world's downloads is matched to U.S. sales data for a large number of albums. ... Downloads have an effect on sales which is statistically indistinguishable from zero, despite rather precise estimates. Moreover, these estimates are of moderate economic significance and are inconsistent with claims that file sharing is the primary reason for the recent decline in music sales.

The key to their analysis is the use of instrumental variables such as network congestion, song length, and such things as school holidays that should drive downloads but change album sales only indirectly through the effect on downloads. This enables them to separate the impact of downloads from variables that might changes both downloads and album sales.

Also of interest is the issue of album popularity. Downloads have little effect on less popular albums - but a positive effect (one extra sale per 150 downloads) on more popular albums. So apparently if you have something good to sell, giving away free samples isn't a bad idea.

Via Marcia Sean Sean Marcia - and interesting site about collaboration. The blog documents some surprising efforts at collaboration. Did you know, for example, that when computer researcher James Gray disappeared at sea a collaborative distributed computing effort was made to search satelite photographs in an effort to find him?

Mike at Techdirt (link here) points us to Jonathan Lethem's piece in Harpers (link here) which is both an extended discussion of copyright and the abuses it is now suffering, and a poetic evocation of language and imaginative ideas which have come to us through the ages and still inspire literature, ultimately questioning the definition of plagiarism. To make his point, he pulls the reader's leg by making the whole piece up from bits and pieces from other writers and then puts the sources for all of them in an extended set of footnotes, making his point that all of us depend on the work of others and that the current practice of sharply limiting access is a crime against society and human progress.