James DeLong, my opposition at the Cato conference, has a post at "ipcentral" titled "It's Happening." I thought that the "it" he was referring to was the vanishing of new music creation in the fact of piracy, but it seems he means "a loss of flexibility and interoperability." The fact involved is the involvement of the music industry in the cellphone industry - a fact that has been widely reported. Since cellphones are tightly controlled, this makes it easier for the music companies to generate revenue. Why is this a bad thing? DeLong dismisses the P2P culture's ethics with the quotation "it's our music and we have a right to steal it" but this isn't a quotation from anyone - just a reference to a blog post of his own denouncing Wired magazine. I'm sure there are some who just want something for free - but speaking for myself, and I feel confident the other authors of this blog, and the vast majority of those who have reservations about copyright - I am strongly in favor of artists, musicians and others earning money from their creative activities. At issue is not the right to sell - it is the right to monopolize. In the absence of monopoly, the best business model may be to give some things away for free to generate more demand for those things that can easily be sold. This an important model for open source software which generally gives away the computer code - not out of altruism but in order to generate paid demand for their services. If expensive ringtones brings money to musicians - what is wrong with that? And if the business model is one of giving away free MP3s to generate demand for expensive ringtones - what is wrong with that? There have been some complaints about musicians raising ticket prices in the face of less revenue from recorded music - and to those who complain, I would also say - what is wrong with that? What is wrong with a business model in which the recorded music is given away to generate more demand and higher ticket prices for live performances?

DeLong's complaint about interoperability and flexibility being reduced by the de facto reduction of copyright is misplaced. The fact is that one of the main uses of intellectual property is to prevent interoperability - witness the complaints over the closed iTunes platform. But even if there was some loss in this dimension - surely it would be worth the gain in freedom.

Freedom in many ways is at the heart of the debate. DeLong sees the word free and thinks it means beer. Those of us on the other side mean what the open source software movement means "free as in freedom, not free as in beer." The constant accusations that opponents of copyright - or even proponents of copyright who have reservations about particular methods of enforcement - are in favor of theft does him no credit. I might as well say that he is guilty of theft because he uses the English language - because it was invented by someone else. Intellectual property has more in common with slavery than its absence does with theft. The right being claimed by IP absolutists is the right to control my thoughts because it might have something in common with someone else's thoughts. So DeLong, who apparently believes that I support theft, won't mind if I call him a proponent of "intellectual slavery?"

A NYT article (May 9th, p A4), "Vinters with personal flair can't brag on wine labels", discusses how a new trade agreement between the EU and United States puts sharp limits on labeling of wine bottles. It seems small European growers may not be able to indicate they use oak barrels and other methods that would distinguish themselves from the larger, more "industrial" U.S. wine makers.

Jim Bessen's researchoninnovation.org publishes a quarterly newsletter Research on Innovation - now in blog format.

Bessen and Maskin have a lovely paper about sequential innovation. I have reviewed this over at Najecon. There are two key ideas in this paper about why patenting may lead to less rather than more innovation. First, innovators will generally have more information about the value of their invention than existing patent holders whose licenses they will need to build their own project. This prevents efficient licensing by existing patent holders. Second, competition is not likely to dissipate all profitability from a new invention - this is a point that Michele and I have emphasized. Michele and I have also pointed out how the need to license many different patents further inhibits innovation.

The relevance of sequential innovation is brought home by the patenting of the human gene. Consider Jensen and Murray's empirical investigation. Money quote:

Our results reveal that nearly 20% of human genes are explicitly claimed as U.S. IP. This represents 4382 of the 23,688 of genes in the NCBI's gene database at the time of writing (see figure, right). These genes are claimed in 4270 patents within 3050 patent families (28). Although this number is low compared with prior reports, a distinction should be made between sequences that are explicitly claimed and those that are merely disclosed, which outnumber claimed sequences roughly 10:1. The 4270 patents are owned by 1156 different assignees (with no adjustments for mergers and acquisition activity, subsidiaries, or spelling variations). Roughly 63% are assigned to private firms (see figure, above). Of the top ten gene patent assignees, nine are U.S.-based, including the University of California, Isis Pharmaceuticals, the former SmithKline Beecham, and Human Genome Sciences. The top patent assignee is Incyte Pharmaceuticals/Incyte Genomics, whose IP rights cover 2000 human genes, mainly for use as probes on DNA microarrays.

Imagine if you will the not unlikely case of a new pharmaceutical product that requires rights to the entire human gene.

On the trademark front the legal system seems to have a degree of rationality. According to the AP an English Judge ruled against a claim by the Beatles and in favor of Apple computer: Apple computer can continue to use the apple logo in connection with iTunes.

Here is the May 15 Business Week article "Hauling in the Hollywood Hackers".

The FBI, aided by a mole, did a sting operation against some movie file sharing entrepreneurs in California (including a programmer in Connectucut), who were convicted of "criminal copyright infringement," and are facing a total of 54 years in prison and large fines.

The article details how both the hacker-entrepreneurs and the FBI enforcers work. The enforcers mostly go after the top tier of the hackers' network instead of either the lower tiers or the end users, who presumably are also criminals, at least under the copyright statutes. The FBI did arrest an employee of a movie theatre in St. Louis, who loaded a copy of a movie onto the server of a hacker group.

FBI agent Julia B. Jolie compares it to a "gang war." Who's the gang and who's fighting the war?

Free the Hollywood Hackers!

Lilly lost its patent case to Ariad, as detailed in this story.

Lilly claims that Ariad's patent for drugs working through a biological pathway "is equivalent to discovering that gravity is the force that makes water run downhill and then demanding the owners of all the existing hydroelectric plants begin to pay royalties on their use of gravity."

The US PTO is rethinking the validity of Ariad's patent, at Lilly's request. Hopefully it will invalidate the patent. Presumably this would make the 50-odd firms Ariad has sent licensing letters to tell it to take a hike.

An interesting post by Tim Wu at Lessig.

A relatively little-known fact outside of copyright practice is that movie studios regularly purchase the film and television rights to newspaper stories. Yes, newspaper stories, which by their nature, report on facts or ideas, two things the copyright law does not protect. So what are studios buying?

There is a widespread myth that the government monopoly provided by copyright is necessary to sell something: Wu speculates that the studio is worried about being sued. Why don't they pay me for the movie rights then? I have as much chance of suing successfully as the newspaper does. Michele and I have done our best to point out that as a matter of theory ideas are always scarce and command a positive price. Yet the fact that it is true in practice continues to mystify people.

The maker of the BlackBerry wireless e-mail service, Research in Motion (R.I.M), has more patent troubles, and it's fighting back. I don't want to go over the full case against patents, or intellectual property (IP) rights in general, but I do want to restate a powerful argument made by others, such as N. Stephan Kinsella. Some pro-IP folks think it is self-evident that if someone originates an idea he has a natural right to control the manufacture and sale of devices that instantiate that idea. After all, he thought it up. He exerted creative effort. Property rights are said to flow from that creative exertion.

It can't be. No ownership rights flow from thinking, regardless of how important thinking is to production. Ownership flows from other factors, and there are no gaps in the emergence of property rights that have to be filled in by creative thinking. Using Occam's Razor, we just don't need mental effort to justify property rights.

To see this, imagine that Howard Roark's evil twin enters your land without permission and uses your building materials and tools to create an acclaimed and original architectural marvel never seen before. Does this Roark have any rights whatsoever to the building? Of course not. Not even a scintilla of a claim. Why not? Because he didn't own the land or the materials. No degree of creative genius could transfer ownership to him. (And he could not gain ownership by mixing his labor with already owned things.) The real owner has every right to destroy the building without paying Roark a penny.

On the other hand, if Roark had legitimately owned the land and materials, the creation would clearly be his. His prior ownership of the elements of his creation would be sufficient to justify his ownership of the building. Thinking up the ideas embodied in the product adds nothing as far as his property rights are concerned. Prior ownership or original appropriation of unowned resources is not merely necessary to property rights in a product, it is sufficient.

The point is not that thinking is unimportant, only that it is irrelevant to the generation of property rights.

Cross-posted at Free Association.

From today's New York Times:

Do not bother hitting the "reload" button or clearing the cache in your Web browser it will not help. Tuesday's hauntingly familiar headlines about a patent-infringement lawsuit against BlackBerry maker Research in Motion are, in fact, new. The lawsuit, filed by software company Visto, seeks to shut down the popular (and, for some, near-addictive) BlackBerry wireless e-mail service less than two months after a similar suit from patent holding company NTP was settled. . . . There is an important difference between the NTP suit and the latest suit against Research in Motion. Unlike NTP, an entity that lacked business operations, Visto actually competes with Research in Motion, as Forbes.com points out.

Visto co-founder and senior vice president Daniel Mendez was quoted saying, "We're not seeking a royalty, we're seeking an injunction."