The Economist has a nice story on changes in Europes financial markets (link here). In essence, the Markets in Financial Instruments Directive will create a single EU-wide trading place in stocks and other financial instruments. It requires the member states to harmonize their laws and allow qualified firms in one EU member state to compete in all the others. It will also promote greater transparency and allow the use of off-exchange trading. The deadline for the new individual-state enabling legislation is the new year, but it is doubtful whether all will make it.

Another step on the way to a more competitive world market in financial instruments

Searcey, Dionne. 2006. "Sewing and Suing Aren't a Happy Mix For Embroiderers." Wall Street Journal (14 September): p. A 1.

"Janet Ebert, a longtime embroidery hobbyist, logged onto the Internet last year and found images of flowers and cuddly animals. Altering them with special software on her home computer, she created versions of the designs that she stitched on quilts for her five grandchildren. She used a computerized Singer embroidery machine, and sold some of the designs online for about $2 each. A few weeks later, a courier appeared on Ms. Ebert's front porch in House Springs, Mo., with legal papers informing her that she was being sued. The complaint said she had violated copyright law and that some of the designs she had sold belonged to embroidery company Action Tapes Inc., in Dallas." "Sewing and design companies are engaging in piracy disputes similar to those waged by the music, movie and fashion businesses. Some buyers and sellers of designs are confused about the copyright issues buzzing around the honey bees and sunsets they stitch on quilts and clothing."

"Embroiderers used to buy patterns of angels, flowers or other designs published by sewing companies at five-and-dime shops. They would iron the outlines of the designs onto fabric and stitch around them by hand, creating unique, colorful patches on clothing and blankets. Today, many buy digital forms of the designs from sewing company Web sites that offer downloads or disks. The designs are then executed by computerized sewing machines, costing as much as $7,000, that sew the images onto fabric."

"Fed up with such practices, the Embroidery Software Protection Coalition, a small group of sewing companies including Action Tapes, Great Notions Inc., Pfaff American Sales and others, aggressively began pursuing legal action against hundreds of embroidery buffs. Nearly 1,500 have been sent menacing letters on stationery stamped with the coalition's logo -- a stitched-looking letter "C" with a needle and thread attached -- that threaten them with steep fines and court judgments for buying counterfeit embroidery designs. Some of the letters tell the buyers the coalition will back off any legal action if they pay fees for their "past wrongful conduct"."

"Dozens of embroiderers took to online sewing forums to anonymously complain about the coalition's efforts, accusing the coalition of shaking down innocent sewers. In turn, the coalition in June sent a subpoena to Yahoo Inc., which hosts one embroidery forum, to find the identities of sewers such as "suelikessewingtoo" and "nanaanniesews" so it can consider suing them for defamation, according to the coalition."

"In its legal filings, it likened some of the stitchers' online screeds to "terrorist activities" and accuses them of posting slanderous statements "that marched across the Internet bulletin boards and chat groups similar to Hitler's march across Europe"."

"Gary Gardner, president of the coalition, says his group sometimes has no choice but to get tough, even with the little old ladies everyone agrees constitute the largest demographic of embroiderers. "Although they're a grandma, they're not a nice grandma," Mr. Gardner says. "Some of them are outright vicious, even when we point out to them what they're doing is illegal"." "The coalition has a team of investigators who troll online auctioneers such as eBay for obvious counterfeiters offering batches of thousands of designs for low prices."

"When the companies catch counterfeiters, some hand over names of their buyers as part of a legal settlement. In June, Sue Schultz, an embroiderer in Florida, received a letter from the coalition telling her some designs of trucks and cars her husband purchased for her in December 2005 were counterfeit. "We were shocked," Ms. Schultz says. "My stomach was completely upset." When she phoned the coalition, she says, lawyers told her to send a $300 check to make amends. The coalition acknowledges that it sometimes resorts to such demands. Unsure of the legitimacy of the operation, Ms. Schultz did nothing, though she says she now buys designs exclusively from established sellers." "Ms. Schultz and others have complained on Internet forums about the letters that they say amount to a shakedown. Two of them have enlisted the help of an Internet privacy group called the Electronic Frontier Foundation to quash the subpoena sent to Yahoo, aiming to protect anonymity online and citing First Amendment concerns."

"The coalition has since withdrawn the subpoena, but attorney Carole Faulkner says she is working on a new, narrower subpoena and still has plans to sue some forum members for defamation. Corynne McSherry, an attorney for the Electronic Frontier Foundation, says the coalition's "shotgun approach is aimed not at redressing defamation, but at intimidating those who have sought to raise public awareness of its ham-fisted tactics." She says she is pleased the subpoena was withdrawn. Yahoo declined to comment."

Copiepresse, an organisation which manages copyright for the Belgian French- and German-language press has won its suit against Google in a Belgian court which has ordered it to stop reproducing article snippets from French-language newspapers in an unprecedented copyright crackdown over what is a common online practice (link here).

Google, which is planning to appeal the ruling, said that it had removed links to the newspapers from news.google.be and was in the process of taking them down from its news sites in other countries.

Agence-France Presse has brought a similar suit and is seeking monetary damages.

If this becomes widespread, it will really damage Google's usefulness and popularity .

Joe Nocera wrote a fascinating story about a nasty patent suit between a patent-trolling company, whose board is chaired by none other than Paul Allen, and audible.com. The story begins:

Nocera, Joe. 2006. "Tired of Trolls, a Feisty Chief Fights Back." New York Times (16 September). "Patent disputes have become part of the dark underbelly of American business. So-called patent trolls acquire patents, often from bankrupt companies -- and often overly broad patents that should never have been issued by the United States Patent and Trademark Office in the first place. Instead of using them to build a commercial product, they extract licensing fees from companies that are making and selling real products. As The New Jersey Law Journal put it not long ago, "They exist solely to exact a tax"." "The deck is stacked against target companies, even when their product is not infringing. Patent litigation is expensive, and the judicial system tends to be sympathetic to the patent holder. So companies usually come to the obvious conclusion: it makes more sense to pay than to fight. For its part, the patent troll often prices the licensing fee below the cost of litigation, to encourage such behavior." Abuible refuses to settle, spends a million dollars rather than pay the demanded $300,000, only to find out the troll company does not even have legitimate ownership of the patent. "After a year of legal wrangling, Digeo dropped its price. A clearly frustrated Mr. Blaisdell wrote an astonishing e-mail message in May 2006 to Audible's internal lawyers, saying he was "perplexed as to why Audible has not taken Digeo up on its offer to settle for $300K." After all, he pointed out, that was far less than the "high legal fees" Audible was paying. He added, "Surely you understand that the prospect of convincing a Jury that Audible doesn't infringe or that the Patent is invalid is an expensive one." Digeo may or may not be a patent troll, but rarely has the economics of patent trolling been so baldly stated." "As it turns out, Digeo did not have the complete ownership of the patent that it thought it had. Documents that had been turned over to Digeo when it bought the patent showed that Edward Chang, one of the four co-inventors, had died, and that another -- his brother -- had assigned the rights to the patent to the company that later sold the `823 to Digeo." "Edward Chang, however, was very much alive, and his brother had never assigned the rights to anyone. The documents had been forged -- though it's not yet known by whom. The forgery was discovered by Mr. Kelber, the Audible lawyer. Audible then went to Mr. Chang and got him to sell it a license for $70,000. Last month, when this new evidence was presented, a judge ruled that Digeo was entitled to no monetary damages from Audible."

Scott Carpenter has started a nice blog Moving to Freedom on free software and related issues about ideas and intellectual property. Among other things he has a nice post reminding us of Ben Franklin's views of patent law.

Click here to see and hear Weird Al Yankovic's "Don't Download This Song." It's great!

Hat tip: Roderick Long

Slashdot has recently posted a depressing interview with Ray Beckerman, a defense attorney representing people sued by the RIAA. Beckerman is also author of the blog Recording Industry vs The People

The European Commission has warned Microsoft about tying security features into its new operating system, Vista, thus putting other security programs at a competitive disadvantage. A spokesman for the competition regulator, Jonathan Todd, is quoted by the New York Times as saying it was up to Microsoft, as "a near monopolist," to ensure the new software complies with antitrust rules (link here).

Microsoft has responded by suggesting it might have to delay the sale of Vista in Europe.

The regulator had previously ordered Microsoft to sell a version of the current operating system, Windows XP, without Windows Media Player. The stripped version is said to be a poor seller, given that XP with Player is still available. It remains to be seen whether the new requirement will effectively maintain competition.

Greg Mankiw comments on his blog about a Wall Street Journal article [subscription required, so I haven't read it] on the fashion industry lobbying for three years of monopoly power. Thus lies the road to serfdom. Here is an industry that is competitive and people copy each other like mad. Yet Raustiala and Sprigman have shown there is thriving innovation and plenty of profit for everyone involved. It is a great example of how well markets work without the artificial government interference of "intellectual property." Lobbying for government favors isn't about "promoting the progress of science and useful arts" but rather about "a conspiracy against the public, [and] some contrivance to raise prices."

There is a thoughtful article by Todd Bishop in the Seattle Post-Intelligencer on the Microsoft application to patent a computer method of conjugating verbs. It is thoughtful not only because Todd quotes my earlier post, and talked to Preston McAfee and Mike Masnick, but because he also talked to the people at Microsoft. So it makes sense to discuss: is this kind of patent a good idea or not? Microsoft argues that there is innovation that seems to largely revolve around switching from one language to another. No doubt compared to other computer programs this is an innovation. However, as Preston correctly remarks - it is a feature of every language textbook ever written. So does it make sense to allow every existing idea to be patented the first time it is ever done on the computer? Obviously the only "innovation" is in the specific computer code that achieve the purpose - but that isn't what is patented - anyone else implementing the idea would likely write somewhat different code, and probably wouldn't benefit that much from the "innovator"'s code. Moreover, the purpose of the patent system is to encourage innovation. On the one hand the cost of Microsoft's "innovation" is trivial - you and I could whip up some code in a few hours. On the other hand, the negative impact of the patent on innovation may be substantial - anyone who wants to write a computer translation program or textbook program now has to contend with the Microsoft patent - and how much worse if I take nouns? So regardless of whether Microsoft deserves to be a laughing stock for patenting such an obvious idea, issuing and enforcing patents like this cannot possibly be a good idea.