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Against Monopoly

defending the right to innovate

Monopoly corrupts. Absolute monopoly corrupts absolutely.





Copyright Notice: We don't think much of copyright, so you can do what you want with the content on this blog. Of course we are hungry for publicity, so we would be pleased if you avoided plagiarism and gave us credit for what we have written. We encourage you not to impose copyright restrictions on your "derivative" works, but we won't try to stop you. For the legally or statist minded, you can consider yourself subject to a Creative Commons Attribution License.


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Unruly Canadians

Canada has permanent-residency on the 301 Watch Lists prepared by the Office of the United States Trade Representatives. A disgrace earned by the state of our domestic copyright law. As Michael Geist revealed this week, the EU has an equally dismal view of Canada. Ongoing efforts to negotiate a trade agreement between Canada and the EU came with a scolding. Here are some of our sins:

1) We provide a copyright term of life plus fifty years, instead of life plus seventy.

2) We insist that ISPs are not liable for the conduct of their users.

3) Our law is antiquated (last major revision was in 1997, as compared to the DMCA of 1998).

4) We have not acceded to WIPO Internet Treaties (which obscures the mundane detail that Canada is compliant with international obligations.)

5) Our current law is precise on one disturbing point: copyright is a set of limited rights. So said our Supreme Court (four times).

6) Instead of listening to our trading partners (current and potential) with respect to changing Canadian law, our Federal Government chose to engage with Canadians. In summer 2009 Ministers James Moore (Heritage) and Tony Clement (Industry) embarked upon a national consultation. 8,000 letters later we are still waiting to see what shape the next law will take, but in the meantime Canadian media industries are holding their own.

PricewaterhouseCoopers recently published their 2009-2013 projections of global media and entertainment industries. In their comparison of consumer spending on media and entertainment in North America, PWC writes:

Canada will be the fastest-growing country, with projected 2.2 percent compound annual increase compared with 1.2 percent compound annual growth for the United States.

Notably, in the category of recorded music (the realm of active copyright lobbyists) both countries show a declining compounded annual growth rate. But Canada's decline is projected to -1% whereas its American counterpart shows -4.7%. Similar comparisons to U.K (-3.9%), France (-7.4%), and Germany (-1.9%) all place the Canadian music scene as more stable. This, despite the state of our copyright law.

File-sharing is worse than murder and child abduction

Jammie Thomas downloaded 24 songs from Kazaa and was sentenced to a fine of US$2,000,000. Joel Tenenbaum downloaded 30 songs and was fined $675,000. These amounts sound improbable, but could have a justification à la Becker: If the fine is high enough, then it should deter everyone from this activity. In fact, if the fine is infinity, then their would be no crime at all. That only works if there is no risk of error in the determination of guilt, in which case, the fine need to be reduced to account for type I errors. The level of a fine then reflects the gravity of an action and the likelihood of errors.

How do the above fines compare to other crimes? Gapers Block uses the Illinois Criminal code to find that file-sharing is worse than arson, child abduction and second-degree murder, among others. This just shows how ill-conceived laws are sometimes, and copyright and patent law unfortunately provides too many examples.

How to Improve Patent, Copyright, and Trademark Law

As I note in my article "Radical Patent Reform Is Not on the Way," Mises Daily (Oct. 1, 2009), there is a growing clamor for reform of patent (and copyright) law, due to the increasingly obvious injustices resulting from these intellectual property (IP) laws. However, the various recent proposals for reform merely tinker with details and leave the essential features of the patent system intact. Patent scope, terms, and penalties would still be essentially the same. In the second article of this two-part series, "Reducing the Cost of IP Law," Mises Daily (Jan. 20, 2010), I propose various reforms to the existing patent system--short of abolition--that would significantly reduce the costs and harm imposed by the patent system while not appreciably, or as significantly, reducing the innovation incentives and other purported benefits of the patent system. I list these changes below in generally descending order of importance, without elaboration, as they are discussed further in "Reducing the Cost of IP Law":

Patent Law

  • Reduce the Patent Term
  • Remove Patent Injunctions/Provide Compulsory Royalties
  • Add a Royalty Cap/Safe Harbor
  • Reduce the Scope of Patentable Subject Matter
  • Provide for Prior-Use and Independent-Inventor Defenses
  • Instantly Publish All Patent Applications
  • Eliminate Enhanced Damages
  • Add a Working/Reduction to Practice Requirement
  • Provide for Advisory Opinion Panels
  • Losing Patentee Pays
  • Expand Right to Seek Declaratory Judgments
  • Exclude IP from Trade Negotiations
  • Other Changes
    • Increase the threshold for obtaining a patent
    • Increase patent filing fees to make it more difficult to obtain a patent
    • Make it easier to challenge a patent's validity at all stages
    • Require patent applicants to specify exactly what part of their claimed invention is new and what part is "old" (e.g., by the use of European-style "characterized in that "claims)
    • Require patent applicants to do a search and provide an analysis showing why their claimed invention is new and nonobvious (patent attorneys really hate this one)
    • Limit the number of claims
    • Limit the number of continuation applications
    • Remove the presumption of validity that issued patents enjoy
    • Apportion damages to be proportional to the value of the patent

Copyright

  • Radically reduce the term, from life plus 70 years to, say, 10 years
  • Remove software from copyright coverage (it's functional, not expressive)
  • Require active registration and periodic re-registration (for a modest fee) and copyright notice to maintain copyright (today it is automatic, and it is often impossible to determine, much less locate, the owner), or otherwise make it easier to use "orphaned works"
  • Provide an easy way to dedicate works to the public domain to abandon the copyright the state grants authors
  • Eliminate manifestly unjust provisions of the Digital Millennium Copyright Act (DMCA), such as its criminalization of technology that can be used to circumvent digital protection systems
  • Expand the "fair use" defense and clarify it to remove ambiguity
  • Provide that incidental use (e.g., buildings or sculptures appearing in the background of films) is fair use
  • Reduce statutory damages

Trademark

  • Raise the bar for proving "consumer confusion"
  • Abolish "antidilution" protection
  • In fact, abolish the entire federal trademark law, as it is unconstitutional (the Constitution authorizes Congress to enact copyright and patent laws, but not trademark law)

[Mises; SK]

Warhol Foundation Accused of Creating Artificial Scarcity Of Artwork To Boost Value

An interesting lawsuit complaint as reported by CourthouseNews.com:

Andy Warhol's estate is behind an "insidious" conspiracy to monopolize the authentication and sale of the late artist's work, according to a complaint in Federal Court. Susan Shaer claims that the Andy Warhol Art Authentication Board routinely defaces authentic Warhol artworks with a "DENIED" stamp, thereby creating "artificial scarcity" and inflating the value of the art owned by the foundation.

By falsely declaring certain works as inauthentic, the board can "systematically exclude Warhol from the marketplace," Shaer says in her 43-page complaint.

Shaer says that without the board's intervention, independent sales would compete with the foundation's holdings in auctions and private sales.

Shaer says board members feel "free to abuse the authentication process in pursuit of their naked self interest."

The board's stamp of approval is necessary for anyone in the world to sell a Warhol work, which allows it to wield "disproportionate power over the Warhol market," according to the complaint.

Read more HERE.

Rather a delicious irony for those familiar with the broader message behind much of Warhol's work.

Puzzled all the way to the bank

Copyright and Racism

The upcoming documentary, Copyright Criminals, shows how copyright has outrageously criminalized the use of sampling, which has been disproportionately popular in hip hop music. In this, it calls to mind the racially disproportionate impact of drug laws on minorities...

Copyright Criminals - Trailer from IndiePix on Vimeo.

[Mises; SK]

Lessons from 60 years of pharmaceutical innovation

An executive at Lilly, Bernard Munos, has written a very revealing and candid article in Nature Reviews Drug Discovery link here.

The article, "Lessons from 60 years of pharmaceutical innovation" confirms what many already know - that the productivity of the pharmaceutical R&D enterprise is declining and has been for some time. Stated differently, the cost per new molecular entity has increased rapidly. This has occurred despite mergers and consolidation in the industry, changes in R&D management structures and changes to the technologies used to discover new drugs.

He also admits that "in many organizations, short-term priorities encourage marginal innovation, which provides more reliable returns on investment, at the expense of major change." He recognizes, in other words, that the current incentive system rewards the development of me-too drugs over novel therapies. Finally, he admits that alternatives to the traditional patent system, including prizes, may be required to boost R&D productivity.

Very encouraging words!

Copying Is Not Theft -- remixed (song and video)

(Hat tip Jules Jeffrey)

[Mises; SK]

Lessig on Copyright Abolitionist "Extremists"

In this talk Larry Lessig explains how copyright law chokes creativity ... but that copyright abolitionists are wrong and extremists. Hunh?

Writers Can Prosper Without Intellectual Property

If composers could set still-unmatched records of productivity without copyrights while managing to earn a living, imagine what writers could do in an environment that did not give them the hope of forever subsisting off past accomplishments. FULL ARTICLE by Gennady Stolyarov II

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