Astounding...but not at all surprising.

Patent litigation probably couldn't get more high stakes than a Delaware lawsuit currently unfolding against Intel Corp. Transmeta Corp. has accused the Silicon Valley chip giant of infringing on 10 patents in its hugely successful Pentium products.

Yet rather than battle it out in court, Intel is trying to put the brakes on the proceedings. The company is making use of a relatively new government process, known as inter partes re-examination, that is becoming an increasingly popular way for accused infringers to get patents invalidated. It's far less costly than litigation, and even if the patent is upheld, a stall in court proceedings increases the likelihood of a settlement, patent attorneys say.

Since the inter partes procedure started in 1999, the yearly number of these requests has increased dramatically, and U.S. Patent and Trademark Office statistics show the process is likely to result in the invalidation of patents at issue. In 2006 there were 70 requests, and six months into this year, there have already been 90.

And of the inter partes re-exams that have been completed, the patent claims were invalidated 88 percent of the time, according to the PTO.

Read more about it here.

We don't often write about trademarks, but here is a case of some modest interest. An online video joint-venture fiddled around for some time and finally came up with the name, Hulu link here and here. It is a strange choice, as it conveys nothing to me. Then an online custom book publishing company called Lulu sued for trademark infringement because the name was too similar. Does that strike you as confusing? Still, strange things happen with IP. One conjecture is the companies will pursue the case for all the media attention it draws. In any case, another lawyers' delight.

It is a well known secret that California-based burger chain In-N-Out has a 'secret' menu that is not displayed or advertised at any of their stores. It allows people to order items that are not found on any of their limited menus.

When you order a 3x3 burger, or "Animal Style" burger, In-N-Out service people will know what you are talking about.

However, I have a problem with a judge ruling that such terms are trademarks owned by In-N-Out. [PDF alert. Hat-tip Courthousenews.com]

Even if In-N-Out actually registered a trademark in such terms, a minimum requirement for trademark protection demands that the mark actually be used in commerce. If you deliberately hide a mark from the public, you should lose trademark protections. (And no, simply referring to the terms on a company website should not count. If you don't use the mark on the product or place of business, there is no mark to protect.)

Although I recognize the legitimacy of trademarks to protect against actual consumer confusion in the marketplace, I think the judge blew it on this one.

Informal "protection" of the incentive to innovate in magic tricks is discussed in this paper . No IP monopoly required.

The pointer is from Tyler Cowen at marginal revolution .

Yes, I am working on a trick to levitate the Patent and Trademark Office. I'll let a real magician, like David Copperfield make it disappear.

Via Courthousenews.com -

ALEXANDRIA, VA. (CN) – An inventor has sued the U.S. Patent and Trademark Office, challenging new regulations that will limit the number of continuations an inventor can file on an original patent. Plaintiff Triantafyllos Tafas has eight patents and 17 patents pending. He asks the Federal Court to enjoin Sections 1.75 and 1.78 of 72 Fed Reg. No. 161, promulgated on Aug. 21, to take effect Nov. 1, claiming they violate the Patent Act and the Constitution. The revised rules “limit the right of a patent applicant to continue prosecution of applications related to a single invention … substantially change the regulatory landscape under which inventors … have traditionally operated, and, once effective, will frustrate the purposes of the U.S. Patent laws by preventing Dr. Tafas and other similarly situated inventors from realizing the full economic potential of their work.”

Courthouse news has posted a copy of the actual complaint here. [PDF file link.

By the way, just how many patents does Adobe claim are contained in its Reader program? Try to count them as the PDF Reader program loads up.]

It seems that 25% of the population of Los Angeles County consists of "thieves" (at least as some would describe it).

Sample money quotes from the article -

[O]ne in four people in Los Angeles County knowingly bought, copied or downloaded illegal goods in the last year, according to a Gallup Organization survey commissioned by the U.S. Chamber of Commerce and scheduled to be released today.

Although previous studies have documented piracy's toll on the Los Angeles economy, the U.S. Chamber report is the first to focus on the attitudes and behavior of consumers here who knowingly buy fake goods, including bootleg movies, illegally copied CDs, knockoff handbags and counterfeit auto parts.

"The study confirmed what we already knew: That the buying of these products is widespread and is viewed as a victimless crime," said Caroline Joiner, executive director of the chamber's global anti-counterfeiting and piracy initiative.

The 25% piracy rate of Los Angeles County residents surveyed in May and June was slightly higher than the 20% nationwide rate the chamber found last year.

…

Justin Hughes, a law professor and piracy expert at Cardozo School of Law in New York, said Los Angeles might have a higher rate of counterfeiting than other cities because of the high volume of goods flowing through the ports of Los Angeles and Long Beach. But, he added, the latest data reflect broad consumer behavior.

"Most Americans do understand copyright and trademark laws, but it's a bit like speeding laws," Hughes said. "We know they are there, and they're a good thing, but we usually find ourselves going five to 10 miles over the speed limit."

In terms of trying to objectively describe the way many currently perceive their relationship with intellectual property, Professor Hughes' "speed limit" analogy seems to be a fair one. However, it leaves out a crucial component - the direct relationship between the perceived fairness/appropriateness of the law and the incidence of those who will ignore it.

For instance, let us assume that a federally mandated speed limit was increased to 80 mph in the U.S. Would people still continue to go "five to 10 miles over the speed limit"? Surely many would, but it is fair to assume that the overall amount of speeding scofflaws would drastically increase decrease as the overall speed limit increases - and vice versa. If the federally mandated speed limit was instead capped at only 45 mph, then surely the incidence of speeding would increase (not just in terms of the overall number of drivers who would ignore the law, but also in terms of the level of contempt for it. Speeders would likely start averaging 10 to 15 miles over the speed limit, instead of the more casual 5 to 10). They may continue to speed more often and with more vigor, even though they might end up confessing to pollsters that on a purely abstract level, a stricter enforcement of speed limits would be a good thing for society.

There would be a simple reason for this dynamic - many people of perfectly good character would inherently perceive a 45-mile-an-hour speed limit as an abuse of federal authority that would hamper our quality of life well out of proportion to any potential social good such as safety/environmental concerns or energy conservation. Obviously, the definition of a fair and proper speed limit is partially dictated by the state of technology and infrastructure (i.e., the conditions of our road and highway systems, how advanced current automobile engineering and safety features are in any given era, etc.).

So let's bring the analogy back to intellectual property. If we were to analogize the strictness of current intellectual property laws to the speed limit, what would the federally enforced speed limit be today?

I'd argue that it is only about 35-miles-per-hour; a quite unreasonable restriction that hampers human progress to a level far out of proportion to any potential goods that IP legal schemes might have to offer. This too is partially dictated by the current state of our technology and infrastructure (i.e., the Internet, digital technology, how communication has evolved with new media, etc.). That is real the reason why more and more people are simply choosing to ignore the current state of the law and are rightfully guilt free about the situation.

But none of this is preventing the L.A. establishment from lining up to do the bidding of the IP lobby. As the Daily News reports -

The findings were expected to be discussed at the Westin Bonaventure hotel in downtown Los Angeles this morning at a U.S. Chamber of Commerce workshop expected to be attended by several legislators, city council members and local officials, including Mayor Antonio Villaraigosa and City Attorney Rocky Delgadillo.

You don't suppose that the "workshop" might convince local legislatures to help fight for sensible IP reform, do you? Nah. Didn't think so. We all know how these "workshops" play out and what the real goals are here: Creating an even harsher IP environment in order to hang on to the status quo business models for politically connected businesses. One that may very well turn an even higher percentage of the population into "thieves" and "pirates" in their eyes.

"Is Intellectual Property the Key to Success?" by Jeffrey Tucker is posted at the Ludwig von Mises Institute website. A sample:

Merchants are free to attempt to create artificial scarcity, and that is what happens when a company keeps it codes private or photographers put watermarks on their images online. Proprietary and "open-source" products can live and prosper side-by-side, as we learn from any drug store that offers both branded and generic goods inches apart on the shelves.

But what you are not permitted to do in a free market is use violence in the attempt to create an artificial scarcity, which is all that IP legislation really does. Benjamin Tucker said in the 19th century that if you want your invention to yourself, the only way is to keep it off the market. That remains true today.

So consider a world without trademark, copyright, or patents. It would still be a world with innovation perhaps far more of it. And yes, there would still be profits due to those who are entrepreneurial. Perhaps there would be a bit less profit for litigators and IP lawyers but is this a bad thing?

Matt Yglesias pokes into another small absurdity in IP, reporting that defense contractors hold copyrights on weapons designs used by toy replica makers and collects fees for their use link here. Now Congress is going to get involved as one Congressman proposes that design copyrights be owned by the government which paid for the weapon designs and receive the toy makers' fees. For me, there is a bit of confusion here in whether it is a copyright, a trademark, or a design patent that is owned. But there seems to be no doubt that a license is available for a fee and it ought to be the taxpayer who benefits.

In today's Wall Street Journal Business World column, "Yes Logo", Holman Jenkins, Jr. writes that China's disregard of "intellectual property," such as trademarks, will cause firms to underinvest in "reputation" (his parentheses) and quality "and won't take place if they can be freely expropriated by knock-off artists."

Mr. Jenkins adduces not one iota of evidence for this remarkable claim, and ignores the fact that software firms such as Microsoft and many others continue to invest billions in producing new products and brand building. Could it be that they earn much more than their cost of capital even in the face of the rip-off artists thanks to their first mover advantages and ability to sell complementary services, not to mention their already strong postions in the market, strong brands, etc.?

So who needs intellectual property?

South Korea has announced that it has created "a private fund as a weapon to protect Korean intellectual property rights overseas" link here. It will "profit from filing suits against foreign companies accused of infringing Korean trademarks and patents." The fund has partnered with a research institute created by the Ministry of Science and Technology, to act as its proxy in overseas patent suits. The Ministry will receive half of any royalties and private investors, the balance. Currently the research institute has wireless technology patents that it thinks are being infringed overseas by cell phone makers Motorola, Sanyo, Nokia, Sony Ericsson, and Siemens; by wireless service providers Verizon, Sprint, and Cingular and by chip makers Qualcomm and Freescale Semiconductor.

The news article suggests that this is a way to fight back against US patent trolls. It particularly refers to Inter Digital, a U.S. company, which filed a lawsuit of more than US$300 million against Samsung Electronics and LG Electronics for allegedly violating patent rights.

Comment: This may be a response to the Free Trade Agreement recently negotiated with the US which extends IPR to Korea as well as the aggressive behavior of US patent trolls. Consider this the creation of a "national" troll--it creates a troll to beat one.