I may be wrong on this, but I believe you cannot insure yourself against acting illegally. In that light, I interpret the following court decision as determining that software piracy is legal.

UNIK Associates was in the business of reselling software to businesses. Symantec sued and won a case against UNIK, alleging that it pirated its software products. UNIK then sued its insurance company to make it pay the fine, and has just won. The court argues that the policy covered copyright and trademark infringements.

Today's Wall Street Journal has a special "Business Insight" report, which includes an article on innovation, "Shape of Things to Come", highlighting Apple's recent bid for trademarks related to its iPod and iPhone, and for all we know several other consumer products.

The story about how Apple leveraged its design patents to win these trademarks is a fascinating study in rent-seeking at its finest. They used them as a bridge to "nontraditional trademarks."

What's really interesting is how the Patent examiner suggested changes to Apple's trademark applications so that they could get in under the wire. Sounds like a bit of corruption to me.

Apple has had nothing if not a gigantic first mover advantage over its competitors thanks to rapid and repeated innovation in product design, as well as great execution and saavy marketing. Add it all up and you get a company with a long-term market beating stock, propelled by net operating margins consistently over 20% and a weighted average cost of capital under 10%. Valuepro.net pegs the latter at about 8.6%. Apple long ago earned back its cost of capital on its iPod.

The idea that Apple's recently won trademarks are necessary for the company to earn its shareholders an above average return on capital (or equity) is plainly contradicted by the facts of the case. Too bad the Patent Office examiner doesn't have some economics in his toolkit.

Btw, Apple patented its transparent stairways in its stores, so don't think you can copy their cool design at home.

For your amusement, a 45 page legal treatise by Andrew Beckerman Rodau entitled "The Supreme Court Engages in Judicial Activism in Interpreting the Patent Law in eBay ,Inc. v. MercExchange, L.L.C." The treatise opens with a long, cursory, and misinformed discussion about the economics of patents - misinformed not in the sense that Michele and I disagree with the economics, but that all economists would disagree with the economics. But the amusing part is the criticism of the Supreme Court for judicial activism. Their activism? Not respecting a long tradition of allowing permanent injunctive relief. The humor: the patents in question are business practice patents - for conducting auctions, no less - the real activism was of course the activism of the United States Court of Appeals for the Federal Circuit which created business practice patents whole cloth against an equally long tradition of not allowing them. Not surprisingly I didn't see any mention of this by Rodau in his article.

If you are looking for more IP humor, you might try this. Here is a bit from the abstract:

Origin stories serve both ontological and epistemological functions. They in- fuse everyday life and relations with significance by explaining why things are as they are and by providing guidance for how things should evolve based on what we already understand about our world. Origin stories also literally give a culture life by designating a beginning and a history. Finally, most origin sto- ries are political, legitimating or justifying certain relations of power in society. This Article is a comparative analysis of the "origin stories" that structure several branches of United States intellectual property protection: copyright, trademark and patent law.

Sadly this paper by Silbey is probably closer to the mark than Rodau's.

In reading Robert Pear's excellent article in today's New York Times Business Section documenting the sheer waste associated with patent-oriented rent-seeking by Big Pharma in its lobbying over Congress's current round of attempted patent reform, I was struct by this sequence of quotes and comments on the disagreement between companies that rely on patents and those that don't regarding the proposed reforms of the inequitable conduct doctrine, which allows the courts to invalidate a patent if it is demonstrated that the patentee deliberately withheld or distorted information in the patent application process:

Mr. Armitage, the Lilly executive, said: "The doctrine of inequitable conduct is used so aggressively in litigation that it has unintended consequences. Applicants give the Patent and Trademark Office too much information, to avoid allegations that they concealed anything, and they refuse to explain the information, to avoid later allegations that they engaged in some form of misrepresentation."

James C. Greenwood, president of the Biotechnology Industry Organization, said, "The poor patent examiner gets a dump truck full of information that he has to pore over without any assistance from the applicant."

The number of patent applications 467,243 in 2007 has nearly doubled in the last 10 years and has more than tripled since 1987.

Jon W. Dudas, the under secretary of commerce for intellectual property, said: "We are getting more and more unpatentable ideas, worse and worse quality applications. Historically, in the last 40 years, the allowance rate the percentage of applications ultimately approved hovered around 62 percent to 72 percent. It went up to 72 percent in 2000, but dropped to 43 percent in the first quarter of this year."

On reading this, I started to wonder if anyone had thought about possible open source methods for reviewing patent applications, and, lo and behold, this is something the USPTO is apparently considering. Link here.

19-0. There, I said it. The NFL Patriots are apparently pursuing steps to trademark "19-0" and thus hinder any team that would actually have a perfect season from using its actual win-loss result.

The trademark application would not prevent newspapers from using 19-0 in their columns, as the application is visibly only for silly knick knacks with a 19-0 mark. But the principle is vexing, like trademarking three-peat.

China's patent regime (and I"P" system generally) is growing like a weed. Trademark applications there have increased 60% in five years. The number of patents issued has almost doubled to 850,000.

China has added 50 courts that handle I"P" cases. The lawyers are getting rich and, of course, are preventing non-Chinese firms from filing patents or representing clients in court. In fact, the lawyers are the main beneficiaries of the monopoly formerly known as intellectual property. Isn't monopoly great?

The Economist notes that under Mao private property was considered to be theft of the masses. However, it gets it wrong when it implies that the patent laws enacted in China starting in 1985 (and enforced starting in 2001) were consistent with private property.

Patents are a kind of theft of the masses. As Prodhoun should have said, "intellectual property is theft."

Trademarking a name to prevent others from selling similar goods under a similar name makes only sense if indeed you were the first one to do so since the law was in place. In a fight that has now lasted a decade, the village of Champagne (Switzerland), which happens to be producing wine since at least the 17th century, has been told that it could not use its own name. That name is reserved for wine coming from the French region of Champagne.

Now, the French are big on "appellation d'origine contrôlée", that is, the origin of wines needs to be certified. Given the wide variety of wines, and the fact that some wine growing locations have a bigger reputation, one may want to pretend to be from a region. In your are not from the region, that is fraud that should be covered by usual commercial law (false advertising). Where it gets iffy is when the wine maker is located in the fringes of the region. Does he really belong? This is the core of the French regulation, trying to prevent the dilution of a name.

What the Champagne region (France) is enforcing is preventing the (non-sparkling) wine of Champagne (Switzerland) from diluting the reputation of the Champagne name. Demand for the sparkling Champagne is high, so this did not prevent the Champagne region from expanding its name definition, thus acting exactly against the principle of "appellation d'origine contrôlée" it says it is defending. Sad.

An interesting twist to this is that there is a bakery in the Swiss village selling sticks it calls "flûtes de Champagne", an obvious pun on the situation. They are wildly popular in Switzerland.

Stephen Spear's post yesterday link here reminded me that I had started saving up ridiculous patent, copyright, and trademark stories. I'm not sure repeating these stories changes opinion since the basic rationale for IP protection, that it promotes innovation, is firmly embedded in popular thinking and assiduously promoted by the IP lawyers and owners. But it should, particularly when the legal process can't distinguish what is significant from the absurd.

Anyway, here is the story: T-mobile is demanding that gadget blog site Engadget Mobile stop using magenta in its logo on the grounds that it will confuse customers link here. This is a repeat of a suit that T-mobile brought last year against my-favorite-book.com, a book-on-demand-publisher launched in Germany last May link here. That was a particularly outrageous suit because my-favorite-book varies the color from one ad to another. Neither defendant appears to have stopped using the color.

How do we account for this loss of sense among the plaintiffs? Are they underemployed lawyers who need the fees? Or do they expect the defendant to back down out of fear of the publicity or unwillingness to risk the costs of a court battle? Assuming the case gets to court, why don't judges fine the plantiffs for bringing niggling charges?

Maybe we should have a contest for the worst example.

Following up on Stephen Spear's post on the District judge's ruling against the attempts by the U.S. Patent Office to reign in firms trying to apply for large numbers of patents at once -

The full court decision can be found here [PDF file]. [h/t: CourtHouseNews.com]

While the ruling contains a lot of legalese, the judge also manages to describe in great detail (and relatively simple language) the process involved in patent applications - and why the current system allows firms with large financial and legal resources to get away with murder in the patent realm by being able to outlast the patent office and wear it down. Definitely worth a read.

The end results of the ruling are indeed tragic. However, I have to admit that the judge may have a point when he says that the proposed changes need to come form Congress itself - not from the whims of unelected and unaccountable administrative officials (even though these particular whims are very much welcome). If you give too much lawmaking power to administrators, the day will come when the pendulum swings the other way after pro-monopolist workers come to dominate the Patent Office. But since Congress is frequently bought off by the patent lobby, that leaves the future landscape rather bleak. Hopefully the Supreme Court will continue its attempts at patent reform by enlarging the very incremental steps they have undertook thus far.

I just ran across the website of an old exhibition (which is still ready for new exhibits) that stretches then limits of copyrights and trademarks. illegal-art.org may not necessarily be pleasing to the eye, but it is full of courageous, and even brazen attempts to use or abuse copyrighted and trademarked material, with plenty of lawyer stories. Enjoy the three eared Mickey Mouse, the Iowa prof who trademarked "Freedom of Expression" and sent a cease-and-desist letter to himself, and much more.